Allahabad High Court
Managing Director M/S Indofil Chemical ... vs State Of U.P. And Another on 8 July, 2019
Author: Sudhir Agarwal
Bench: Sudhir Agarwal
HIGH COURT OF JUDICATURE AT ALLAHABAD (A.F.R.) Court No. - 34 Case :- APPLICATION U/S 482 No. - 899 of 2005 Applicant :- Managing Director M/S Indofil Chemical Company Opposite Party :- State Of U.P. And Another Counsel for Applicant :- Nitin Gupta,G.S.Chaturvedi Counsel for Opposite Party :- Govt. Advocate Hon'ble Sudhir Agarwal,J.
1. Heard Sri G.S. Chaturvedi, learned Senior Advocate assisted by Sri Nitin Verma, learned counsel for applicant and learned AGA for State of U.P.
2. This application under Section 482 Cr.P.C. has been filed praying for quashing of proceedings in Complaint Case No. 8976 of 2004 under Sections 29 (1)(a) of Insecticide Act, 1968 (hereinafter referred to as "Act, 1968"), Police Station- Kavi Nagar, District- Ghaziabad.
3. It is submitted that Managing Director of M/s Indofil Chemical Company was made an accused in a complaint filed under Section 29 (1)(a) of Act, 1968 on the ground that Insecticide seized at the sale premises of accused-1 Rishipal Singh, was sub-standard and, therefore, Company was indulged in manufacturing of sub-standard insecticide and has committed an offence under Section 29(1)(a) of Act, 1968. Complainant has not impleaded 'Company' at all and only Managing Director has been implicated though manufacturer is the Company and if no offence is said to have been committed by Company, vicarious liability cannot be fastened upon Managing Director of the Company, hence, prosecution of only Managing Director of Company is not maintainable. Reliance is placed on a Supreme Court's judgement in Sharad Kumar Sanghi vs. Sangita Rane (2015) 12 SCC 781.
4. Learned AGA on the contrary, submitted that insecticides having been found sub-standard i.e. spurious, amounts to sale of mis-branded insecticides and an offence under Section 29(1)(a) read with Section 3(k)(viii) of Act, 1968 has been committed, hence, prosecution has rightly been instituted against seller as well as manufacturer. Referring to Section 33, he said that where an offence is committed by a Company, every person who was in charge of, or responsible for Company for conduct of its business is deemed to be guilty of an offence and such person is equally responsible for prosecution of said offence.
5. It is not in dispute that accused-1 was the seller and accused-2 is Managing Director of the Company who said to have manufactured alleged misbranded insecticides.
6. When an offence is committed by a Company, it is governed by Section 33 of Act, 1968 which reads as under:-
"33. Offences by companies.-- (1) Whenever an offence under this Act has been committed by a company, every person who at the time the offence was committed, was in charge of, or was responsible to the company for the conduct of the business of, the company, as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly:
Provided that nothing contained in this sub-section shall render any such person liable to any punishment under this Act if he proves that the offence was committed without his knowledge or that he exercised all due diligence to prevent the commission of such offence.
(2) Notwithstanding anything contained in sub-section (1), where an offence under this Act has been committed by a company and it is proved that the offence has been committed with the consent or connivance of, or is attributable to any neglect on the part of, any Director, Manager, Secretary or other officer of the company, such Director, Manager, Secretary or other officer shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly.
Explanation.--For the purpose of this section,--
(a) "company" means any body corporate and includes a firm or other association of individuals; and
(b) "director", in relation to a firm, means a partner in the firm." (emphasis added)
7. Having gone through aforesaid submissions and relevant provisions of Act, 1968, I find that vicarious liability of officers of the Company who may be said to be responsible to the Company for conduct of his business or was in-charge thereof would arise only when an offence has been committed by a Company. If no offence has been committed by a Company and the Company is not one of the accused, question of vicarious liability of its officials will not arise.
8. Construing a similar provisions contained in Section 141 of Negotiable Instruments Act, 1881 (hereinafter referred to as "Act, 1881"). Court in Aneeta Hada and Others Vs. Godfather Travels and Tours Private Limited and Others (2012) 5 SCC 661, said that commission of offence by Company is an express condition precedent to attract the vicarious liability of others. Court said, when a Company can be prosecuted then only persons mentioned in other categories could be vicariously liable for the offence subject to the averments in the petition and proof thereof. Court further said:
"we arrive at the irresistible conclusion that for maintaining the prosecution under Section 141 of the Act, arraigning of a company as an Accused is imperative." (emphasis added)
9. Following the above dictum in Himanshu Vs. B. Shivamurthy and Others (2019) 3 SCC 797, Court said :
"In the absence of the company being arraigned as an accused, a complaint against the appellant was therefore not maintainable".
10. In the present case, Company itself has not been impleaded at all. Once Company is not made an accused, alleging vicarious liability only against Managing Director, complaint cannot be maintained.
11. Section 33 of Act, 1968 also make it clear that in absence of Company as an accused, complaint only against Managing Director is not maintainable. The offence when committed by Company, the further question of vicarious liability of others will arise.
12. There is another aspect in the matter. In the entire complaint filed by Insecticide Inspector/ District Agricultural Protection Officer, Ghaziabad, I do not find any allegations made against applicant as to how he was vicariously liable for offence under Section 29(1)(a) of Act, 1968. The entire complaint reads as under:-
^^dhVuk'kh vf/kfu;e 1968 dh /kkjk 29 ¼1½ ,0ch0lh0 ds rgr mDr okn fuEu fcUnqvksa ij vk/kkfjr gS& 1- vfHk;qDr la[;k ,d v/kksekud dhVuk'kd jlk;u dk Hk.Mkj.k drkZ ,oa fodzsrk gSA 2- vfHk;qDr la[;k nks v/kksekud dhVuk'kd jlk;u dh mRiknu bdkbZ ds eSusftax Mk;jsDVj gSaA 3- fnukad 28-1-04 dh izkr% yxHkx 9 cts ftykf/kdkjh egksn;] xkft;kckn }kjk nwjHkk"k ij v/kksgLrk{kjh dks ;g lwfpr djrs gq, fd ,d udyh dhVuk'kd jlks;uksa dks QSDV~h idM+h x;h gSA ftldk leLr Hk.Mkj iqfyl rRdky dfouxj Fkkuk igqapdj ,df=r dhVuk'kd jlk;uksa ds Hk.Mkj dk fof/kor fujh{k.k djds vko';d dk;Zokgh dhVuk'kh vf/kfu;e ds vUrxZr djuk lqfuf'pr djsaA ftykf/kdkjh }kjk nwjHkk"k ij fn;s x;s funsZ'kksa ds ifjikyu esa v/kksgLrk{kjh rRdky Fkkuk dfouxj igqaps ,oa iqfyl }kjk ,df=r fd;s x;s dhVuk'kd jlk;uksa dh fLFkfr dk fujh{k.k fd;kA Fkkus esa miyC/k leLr dhVuk'kd jlk;uksa dk Hk.Mkj tks Fkkus dh QnZ ds vuqlkj Jh _f"kiky flag] bZ&71 cqyUn'kgj jksM] vkS|ksfxd {ks= xkft;kckn dk lanfHkZr gSA Jh _f"kiky flag bl irs ij fcuk dhVuk'kh fodz; ykbZlsal izkIr fd;s dhVuk'kd jlk;uksa dk O;kikj dj jgs gSaA Jh _f"kiky flag dk LFkkbZ irk ,l0ch0&81] 'kkL=huxj ¼xkft;kcknA½ 4- dhVuk'kh vf/kfu;e 1968 dh /kkjk 20 ds vUrxZr ftyk d`f"k j{kk vf/kdkjh xkft;kckn dks dhVuk'kh fujh{kd ds vf/kdkj izkIr gS ftlds vUrxZr fnukad 28-1-2004 dks dfouxj Fkkuk ifjlj esa ,df=r fofHkuu dhVuk'kd jlk;uksa esa ls eSUdkstsc 75 izfr'kr Mcyw0 ih0 cSp la[;k&Vh0 709 ftldh mRiknu frfFk 3@03 ,oa vfUre iz;ksx frfFk 2@05 tks eSllZ b.MksfQy dSfedYl dEiuh] fujykSu gkml iksLV ckDl ua0&9112 eqEcbZ }kjk fufeZr Fkh] dk uewuk fof/kor gkvfjr dj lhy eksgj fd;k x;kA mlh le; QkeZ 20rS;kj fd;k x;kA pwafd Jh _f"kiky flag iq= Jh cyjke flag iqfyl vfHkj{kk ¼dLVMh½ esa Fks] blfy, uewus dh ,d lhycUn FkSyh ,oa QkeZ&20 dh ,d izfr Fkkuk dfouxj ¼xkft;kckn½ esa izkIr djk nh x;hA Jh gfj'pan dkSf'kd d`f"k j{kk i;Zos{kd ,oa Jh bUnziky flag ofj"B lgk;d dk;kZy; ftyk d`f"k j{kk vf/kdkjh] xkft;kckn esjs lkFk ekStwn FksA 5- uewus dh ,d lhycUn FkSyh ftl ij dksM la[;k&,0 173 vafdr dj fof/kor :ii=&21 i=kad 1506 fnukad 20-1-04 ds lkFk dk;kZy; ds i=kad&1509 fnukad 29-1-04 ds }kjk la;qDr funs'kd ¼d`0j0½ m0iz0] d`f"k Hkou y[kuÅ ds ;gka fo'ys"k.k djkus gsrq Hksth x;hA 6- la;qDr funs'kd d`f"k j{kk m0iz0] d`f"k Hkou y[kuÅ us vius i=kad 30 fnukad 05-04-04 ds }kjk uewus dh fo'ys"k.k fjiksVZ dhVuk'kh fo'ys"kd moZjd ,oa dhVuk'kh xq.k fu;a=.k iz;ksx'kkyk okjk.klh ds i=kad ih0vkj0 545 fnukad 29-3-04 Hksth gSA ftlesa eSUdkstsc 75 izfr'kr Mcyw0 ih0 cSp la[;k&Vh0 709 ¼dksM la[;k&,00173½ ds mDr uewus dks feLczk.MsM ¼v/kksekud½ ?kksf"kr fd;k gSA 7- uewuk feLczkUMsM ¼v/kksekud½ gksus dh lwpuk dk;kZy; ds iathd`r i=kad 233 fnukad 29-4-04 ds }kjk Jh _f"kiky flag iq= Jh cyjke flag ,l0ch0&81] 'kkL=huxj ¼xkft;kckn½ ,oa fuekZrk dEiuh dks Hkst nh x;h gSA 8- vfHk;qDr la[;k ,d us fcuk dhVuk'kh fodz; ykbZlsal ds dhVuk'kd jlk;uksa dk Hk.Mkj.k] mRiknu ,oa fodz; vkfn dj dhVuk'kh vf/kfu;e 1968 dh /kkjk ¼1½ ,0ch0lh0] ,oa vfHk;qDr la[;k nks us dhVuk'kh vf/kfu;e 1968 dh /kkjk 29 ¼1½ ,0 ds vUrxZr n.Muh; vijk/k fd;k gSA 9- U;k;ky; esa vfHk;kstu nk;j djus gsrq dhVuk'kh vf/kfu;e 1968 dh /kkjk 31 ¼1½ ds vUrxZr ftykf/kdkjh xkft;kckn us fnukad 21-8-04 dks viuh Lohd`fr iznku dj nh gSA vr% vkils vuqjks/k gS fd vfHk;qDr la[;k 1] ,oa 2 dks ryc Qjekdj n.Muh; dk;Zokgh djus dk d"V djsaA** "The aforesaid suit u/s 29(1) (a)(b)(c) of the Insecticides Act, 1968, is based on the following points: -
1. The accused 1 is a storer and seller of the misbranded insecticides.
2. The accused 2 is the Managing Director of the manufacturing unit of the misbranded insecticides.
3. Giving information to the undersigned at around 9:00 a.m. on 28.01.2004, the District Magistrate, Ghaziabad, while informing that an illegal factory manufacturing insecticides has been unearthed, instructed that the undersigned should immediately reach the Kavinagar Police Station and ensure to take necessary action under the Insecticide Act after examining the chemicals kept there.
In compliance with the directives of the District Magistrate, the undersigned immediately reached the Kavinagar Police Station and examined the insecticides kept by the police there. As per the memo of the police station, the store of insecticides is of Shri Rishipal Singh, E-71, Bulandshahr Road, Industrial area, Ghaziabad, and he trades in insecticides from this address without obtaining any licence. The permanent address of Shri Rishipal Singh is SB - 81, Shastri Nagar (Ghaziabad).
4. District Agricultural Defense Officer (Krishi Raksha Adhikari) has been vested with the power of the Insecticide Inspector u/s 20 of the Insecticides Act, 1968, under which out of the insecticides collected on the campus of the Police Station - Kavi Nagar, the Mancozeb was 75 percent with WP Batch No. - T. 709, the manufacturing date of which is 3/03 and expiry date is 02/05; it was manufactured by M/s Indofil Chemicals Company, Nirlaun House, Post Box No. 9112, Mumbai and its samples were sealed after being signed properly. At that very time, Form 20 was prepared. Since Sri Rishipal Singh s/o Sri Balram Singh was in police custody, a sealed pouch of sample and a copy of Form 20 were made available to P.S. Kavinagar (Ghaziabad). Sri Harishchand Kaushik, Krishi Raksha Paryavekshak and Sri Indrapal Singh, Senior Assistant, Office of the Zila Krishi Raksha Adhikari, Ghaziabad were present with me.
5. A sealed pouch of sample with Code No A-173, alongwith duly filled Form 21 no 1506 dated 20.1.04 were sent to the Joint Director ( Kri.Ra.) U.P., Krishi Bhawan, Lucknow for analysis.
6. The Joint Director, Krishi Raksha, U.P., Krishi Bhawan, Lucknow vide letter 30 dated 05.04.04 has sent analysis report of the sample vide letter no P.R. 545 dated 29.3.04 of the Fertiliser Analyst and Fertiliser Quality Control Laboratory, Varanasi, wherein the aforesaid sample of Mancojeb 75 percent W.P. Batch no T-709 (Code No A00173) has been declared to be misbranded.
7. Information regarding the sample being misbranded has vide registered office letter no 233 dated 29.4.04 been sent to Sri Rishipal Singh s/o Sri Balram Singh, S.B.-81, Shastri Nagar (Ghaziabad) and to the manufacturing company.
8. Without possessing licence for sale of insecticides, accused no 1 has by involving himself in storage, production, sale, etc, of insecticides, committed an offence punishable under section 1(a)(b)(c) and so did accused no 2 u/s 29 (1) (a) of the Insecticides Act.
9. The District Magistrate on 21.8.04 granted permission u/s 31 (1) of the Insecticides Act, 1968 for bringing prosecution.
Hence, accused nos 1 and 2 may please be summoned and punishment proceedings be taken."
(emphasis added) (English Translation by Court)
13. Managing Director of Company can be responsible for vicarious liability only when there are specific allegations as to how he is responsible vicariously for the offence in question. Nothing has been said in the entire complaint in respect of role of the applicant to make him vicariously liable for the offence under Section 29(1)(a) of Act, 1968.
14. In Maksud Saiyed Vs. State of Gujarat and Others (2008) 5 SCC 668, Court said :
"it is obligatory on the part of the complainant to make requisite allegations which would attract the provisions constituting vicarious liability".
(emphasis added)
15. In Sharad Kumar Sanghi Vs. Sangita Rane (2015) 12 SCC 781, Court said:
"When a complainant intends to proceed against the Managing Director or any officer of a company, it is essential to make requisite allegation to constitute the vicarious liability." (emphasis added)
16. In S.M.S. Pharmaceuticals Ltd. Vs. Neeta Bhalla and Another (2005) 8 SCC 89, while dealing with an offence under Section 138 of Act, 1881, Court said:
"It is necessary to specifically aver in a complaint under Section 141 that at the time the offence was committed, the person accused was in charge of, and responsible for the conduct of business of the company. This averment is an essential requirement of Section 141 and has to be made in a complaint. Without this averment being made in a complaint, the requirements of Section 141 cannot be said to be satisfied." (emphasis added)
17. The same principle has been reiterated in Maharashtra State Electricity Distribution Co. Ltd. and Others Vs. Datar Switchgear Ltd. and Others (2010) 10 SCC 479 and GHCL Employees Stock Option Trust Vs. India Infoline Ltd. (2013) 4 SCC 505.
18. In Sharad Kumar Sanghi (supra) Court also said:
"When a company has not been arrayed as a party, no proceeding can be initiated against it even where vicarious liability is fastened on certain issues."
(emphasis added)
19. In view of above discussion, proceedings initiated against applicant for committing offence under Section 29(1)(a) of Act, 1968 cannot be sustained.
20. Application is accordingly allowed. Proceedings initiated against applicant in Complaint Case No. 8976 of 2004 under Sections 29 (1)(a) of Act, 1968, Police Station Kavi Nagar, District Ghaziabad, are hereby quashed.
Order Date :- 8.7.2019 Siddhant Sahu