Madhya Pradesh High Court
S.K. Shukla vs The State Of Madhya Pradesh on 5 April, 2018
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HIGH COURT OF MADHYA PRADESH
MCRC 12662/2015
Mr.S.K.Shukla vs. State of MP
Gwalior, dtd. 5/4/2018
Shri Ramesh Saboo with Shri Saurabh Agrawal, counsel
for the applicant.
Shri Devendra Chaubey, Public Prosecutor for the
respondent/ State.
This application under Section 482 of CrPC has been filed
for quashing the order dated 23/12/2014 passed by Judicial
Magistrate First Class, Vidisha in Criminal Case No.3128/2014.
The necessary facts for the disposal of the present
application in short are that a complaint has been filed against
the applicant for an offence under Sections 3(zz)(iii), 26(2)(i),
27(1) r/w Section 59 of the Food Safety and Standards Act,
2006 (hereinafter referred to as ''the Act''), Regulation
2.2.2(6), (10) and 2.3.1. (5) of the Food Safety and Standards
(Packing and Labeling Regulations, 2011 (hereinafter referred
to as "Regulations") and also under Section 3(zf) (A) (iii), 3(zf)
(c) (i), 26(2)(ii), 27(1) r/w Section 52 of the Act on the
allegation that the applicant is a nominee of Satya Sai Agroils
Private Limited (hereinafter referred to as ''the Company'')
which is carrying on business of manufacture of Soya Badi,
Soya Lecithin, Soya Flour and Fortune Refined Soyabean Oil etc.
and the factory is situated at Sanchi Road, Vidisha. On
23/07/2014, the Food Safety Officer inspected the Company
and took the sample of Fortune Soya Chunks, Soya flour,
Fortune Refined Soyabeen Oil etc. manufactured and packed by
the Company. A panchnama was prepared. The sample was
sent to Food Analyst and according to the report of Food
Analyst, the sample of Soya Badi was found to be unsafe under
the Act and the sample of Soya flour was found to be
misbranded and unsafe under Regulation 2.2.2(6), (10) and
2.3.1. (5) of the Regulations and under Sections 3(zf) (A) (iii),
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3(zf) (c) (i), 26(2)(ii), 27(1) r/w Section 52 of the Act. The
designated officer sent copy of the report to the applicant. The
sanction for prosecution to file a complaint under Section 36 of
the Act was granted and accordingly, the complaint has been
filed for offence under Sections 3(zz)(iii), 26(2)(i), 27(1) r/w
Section 59 of the Act, Regulation 2.2.2(6), (10) and 2.3.1. (5)
of the Regulations and under Sections 3(zf) (A) (iii), 3(zf) (c)
(i), 26(2)(ii), 27(1) r/w Section 52 of the Act.
The Trial Court took cognizance of offence by order dated
23.12.2014.
Challenging the order taking cognizance, the present
application has been filed.
Although several grounds have been taken by the
applicant, but the counsel for the applicant confined his
argument to a singular question of law. It is submitted by the
counsel for the applicant that according to the complaint itself,
the principal/primary accused in the present case is Satya Sai
Agroils Private Limited and thus, without impleading the
Company as an accused, the applicant cannot be prosecuted,
merely being the nominee of the Company. The applicant can
be held vicariously liable only when the Company is made an
accused. Since the liability is penal in nature, therefore, strict
interpretation of law is required. Thus, in order to attract the
principle of ''vicarious liability'', then the prosecution must
prove that the offence was committed by a Company. Since
Company is a juristic person, therefore, without arraigning the
Company as an accused the applicant cannot be held variously
liable.
Per contra, it is submitted by the State counsel that the
applicant is the nominee of the Company and, therefore, he can
be prosecuted even in absence of the Company.
Heard the learned counsel for the parties.
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Section 66 of the Food and Safety and Standards Act,
2006 reads as under:-
"66. Offences by companies.- (1) Where an
offence under this Act which has been committed by
a company, every person who at the time the
offence was committed was in charge of, and 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 where a company has different
establishments or branches or different units in any
establishment or branch, the concerned Head or the
person in-charge of such establishment, branch,
unit nominated by the company as responsible for
food safety shall be liable for contravention in
respect of such establishment, branch or unit:
Provided further that nothing contained in this
sub-section shall render any such person liable to
any punishment provided in 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."
The Supreme Court in the case of Aneeta Hada Vs.
Godfather Tours and Travels (P) Ltd. reported in (2012) 5
SCC 661 has held as under :
"25. In Halsbury's Laws of England, Vol. 11(1), in Para
35, it has been laid down that in general, a corporation
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is in the same position in relation to criminal liability as
a natural person and may be convicted of common law
and statutory offences including those requiring mens
rea.
26. In 19 Corpus Juris Secundum, in Para 1358, while
dealing with liability in respect of criminal prosecution,
it has been stated that a corporation shall be liable for
criminal prosecution for crimes punishable with fine; in
certain jurisdictions, a corporation cannot be convicted
except as specifically provided by the statute.
27. In H.L. Bolton (Engg.) Co. Ltd. v. T.J. Graham &
Sons Ltd. Lord Denning, while dealing with the liability
of a company, in his inimitable style, has expressed
that: (QB p. 172)
"... A company may in many ways be
likened to a human body. It has a brain and
nerve centre which controls what it does. It also
has hands which hold the tools and act in
accordance with directions from the centre.
Some of the people in the company are mere
servants and agents who are nothing more than
hands to do the work and cannot be said to
represent the mind or will. Others are Directors
and managers who represent the directing mind
and will of the company, and control what it
does. The state of mind of these managers is
the state of mind of the company and is treated
by the law as such."
In certain cases, where the law requires
personal fault as a condition of liability in tort,
the fault of the manager will be the personal
fault of the company. The learned Law Lord
referred to Lord Haldane's speech in Lennard's
Carrying Co. Ltd. v. Asiatic Petroleum Co. Ltd.,
AC at pp. 713-14. Elaborating further, he has
observed that:
"... in criminal law, in cases where the
law requires a guilty mind as a condition of a
criminal offence, the guilty mind of the
Directors or the managers will render the
company itself guilty."
28. It may be appropriate at this stage to notice the
observations made by Mac Naghten, J. in Director of
Public Prosecutions v. Kent and Sussex Contractors
Ltd.: (All ER p. 124)
"... A body corporate is a 'person' to whom,
amongst the various attributes it may have,
there should be imputed the attribute of a mind
capable of knowing and forming an intention--
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indeed it is much too late in the day to suggest
the contrary. It can only know or form an
intention through its human agents, but
circumstances may be such that the knowledge
of the agent must be imputed to the body
corporate. Counsel for the respondents says
that, although a body corporate may be capable
of having an intention, it is not capable of having
a criminal intention. In this particular case the
intention was the intention to deceive. If, as in
this case, the responsible agent of a body
corporate puts forward a document knowing it to
be false and intending that it should deceive, I
apprehend, according to the authorities that
Viscount Caldecote, L.C.J., has cited, his
knowledge and intention must be imputed to the
body corporate."
29. In this regard, it is profitable to refer to the
decision in Iridium India Telecom Ltd. v. Motorola Inc.
wherein it has been held that in all jurisdictions across
the world governed by the rule of law, companies and
corporate houses can no longer claim immunity from
criminal prosecution on the ground that they are not
capable of possessing the necessary mens rea for
commission of criminal offences. It has been observed
that the legal position in England and the United
States has now been crystallised to leave no manner
of doubt that the corporation would be liable for crimes
of intent.
30. In the said decision, the two-Judge Bench has
observed thus: (Motorola Inc. case, SCC p. 98, para
59) 7 M.Cr.C. No. 8057 of 2009 "59. The courts in
England have emphatically rejected the notion that a
body corporate could not commit a criminal offence
which was an outcome of an act of will needing a
particular state of mind. The aforesaid notion has been
rejected by adopting the doctrine of attribution and
imputation. In other words, the criminal intent of the
'alter ego' of the company/body corporate i.e. the
person or group of persons that guide the business of
the company, would be imputed to the corporation."
31. In Standard Chartered Bank, the majority has laid
down the view that: (SCC p. 541, para 6)
"6. There is no dispute that a company is
liable to be prosecuted and punished for criminal
offences. Although there are earlier authorities
to the effect that corporations cannot commit a
crime, the generally accepted modern rule is
that ... a corporation may be subject to
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indictment or other criminal process, although
the criminal act [may be] committed through its
agents."
It has also been observed that there is no
immunity to the companies from prosecution
merely because the prosecution is in respect of
offences for which the punishment is mandatory
imprisonment and fine.
32. We have referred to the aforesaid authorities to
highlight that the company can have criminal liability
and further, if a group of persons that guide the
business of the companies have the criminal intent,
that would be imputed to the body corporate. In this
backdrop, Section 141 of the Act has to be
understood. The said provision clearly stipulates that
when a person which is a company commits an
offence, then certain categories of persons in charge
as well as the company would bedeemed to be liable
for the offences under Section 138. Thus, the statutory
intendment is absolutely plain. As is perceptible, the
provision makes the functionaries and the companies
to be liable and that is by deeming fiction. A deeming
fiction has its own signification.
33. In this context, we may refer with profit to the
observations made by James, L.J. in Levy, In re, ex p
Walton, which is as follows: (Ch D p. 756)
"... When a statute enacts that something
shall be deemed to have been done, which in
fact and truth was not done, the court is entitled
and bound to ascertain for what purposes and
between what persons the statutory fiction is to
be resorted to."
34. Lord Asquith, in East End Dwellings Co. Ltd. v.
Finsbury Borough Council, had expressed his opinion
as follows: (AC pp. 132-33)
"If you are bidden to treat an imaginary
state of affairs as real, you must surely, unless
prohibited from doing so, also imagine as real
the consequences and incidents which, if the
putative state of affairs had in fact existed, must
inevitably have flowed from or accompanied it.
... The statute says that you must imagine a
certain state of affairs; it does not say that
having done so, you must cause or permit your
imagination to boggle when it comes to the
inevitable corollaries of that state of affairs."
35. In Bengal Immunity Co. Ltd. v. State of Bihar the
majority in the Constitution Bench have opined that
legal fictions are created only for some definite
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purpose.
36. In Hira H. Advani v. State of Maharashtra, while
dealing with a proceeding under the Sea Customs Act,
especially sub-section (4) of Section 171-A wherein an
enquiry by the Customs Authority is referred to, and
the language employed therein, namely, "to be
deemed to be a judicial proceeding within the meaning
of Sections 193 and 228 of the
Penal Code", it has been opined as follows: (SCC p.
680, para 37)
"37. ... It was argued that the legislature
might well have used the word 'deemed' in sub-
section (4) of Section 171 not in the first of the
above senses but in the second, if not the third.
In our view, the meaning to be attached to the
word 'deemed' must depend upon the context in
which it is used."
37. In State of T.N. v. Arooran Sugars Ltd. The
Constitution Bench, while dealing with the deeming
provision in a statute, ruled that the role of a provision
in a statute creating legal fiction is well settled.
Reference was made to Chief Inspector of Mines v.
Karam Chand Thapar, J.K. Cotton Spg. and Wvg. Mills
Ltd. v. Union of India, M. Venugopal v. LIC and Harish
Tandon v. ADM, Allahabad and eventually, it was held
that when a statute creates a legal fiction saying that
something shall be deemed to have been done which
in fact and truth has not been done, the Court has to
examine and ascertain as to for what purpose and
between which persons such a statutory fiction is to be
resorted to and thereafter, the courts have to give full
effect to such a statutory fiction and it has to be
carried to its logical conclusion.
38. From the aforesaid pronouncements, the principle
that can be culled out is that it is the bounden duty of
the court to ascertain for what purpose the legal fiction
has been created. It is also the duty of the court to
imagine the fiction with all real consequences and
instances unless prohibited from doing so. That apart,
the use of the term "deemed" has to be read in its
context and further, the fullest logical purpose and
import are to be understood. It is because in modern
legislation, the term "deemed" has been used for
manifold purposes. The object of the legislature has to
be kept in mind.
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59. In view of our aforesaid analysis, we arrive at the irresistible conclusion that for maintaining the prosecution under Section 141 of the Act, arraigning of 8 a company as an accused is imperative. The other categories of offenders can only be brought in the drag-net on the touchstone of vicarious liability as the same has been stipulated in the provision itself. We say so on the basis of the ratio laid down in C.V. Parekh which is a three-Judge Bench decision. Thus, the view expressed in Sheoratan Agarwal does not correctly lay down the law and, accordingly, is hereby overruled. The decision in Anil Hada is overruled with the qualifier as stated in para 51. The decision in Modi Distillery has to be treated to be restricted to its own facts as has been explained by us herein-above.'' In the case of Sharad Kumar Sanghi Vs. Sangita Rane reported in (2015) 12 SCC 781, it has been held by the Supreme Court as under :-
"11. In the case at hand as the complainant's initial statement would reflect, the allegations are against the Company, the Company has not been made a party and, therefore, the allegations are restricted to the Managing Director. As we have noted earlier, allegations are vague and in fact, principally the allegations are against the Company. There is no specific allegation against the Managing Director. When a company has not been arrayed as a party, no proceeding can be initiated against it even where vicarious liability is fastened under certain statutes. It has been so held by a three-Judge Bench in Aneeta Hada v. Godfather Travels and Tours (P) Ltd. in the context of the Negotiable Instruments Act, 1881."
This Court by order dated 20.02.2017 passed in M.Cr.C.No.1301 of 2011 (Managing Director vs. State of M.P.) has held as under :-
"Thus, as the Marico Industries Limited, Mumbai has not been arrayed as an accused, therefore, the prosecution of the applicant in his official capacity is not permissible because he cannot be vicariously held liable for the offence committed by the Company unless and until, the Company which is a juristic entity is arrayed as an accused."
Thus, if the facts of the present case are considered in the light of the judgments, then it would be clear that Satya Sai Agroils Private Limited is the manufacturer of soya products, 9 however, the Company has not been made an accused and the applicant is being prosecuted in the capacity of nominee of the Company. The applicant cannot be held vicariously liable for offence committed by the Company in absence of prosecution of Company. Therefore, this Court is of the considered view that as the Company which is the manufacturer of soya products, has not been arraigned as an accused, the applicant cannot be held vicariously liable. There is no allegation against the applicant in his personal capacity. Therefore, the prosecution of the applicant, is bad in law.
Hence, the application succeeds and is hereby allowed. The order dated 23/12/2014 passed by Judicial Magistrate First Class, Vidisha in Criminal Case No.3128/2014 is quashed.
(G.S. Ahluwalia) Judge AKS