Bombay High Court
V. K. Chauhan And Others vs The State Of Maharashtra And Another on 22 November, 2018
Author: V. K. Jadhav
Bench: V. K. Jadhav
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
BENCH AT AURANGABAD
CRIMINAL WRIT PETITION NO. 426 OF 2013
1. Shri V. K. Chauhan
Age 73 years, Occ. Chairman
and Managing Director
of M/s. Parle Products Limited
Vile Parle (East), Mumbai 400 057
2. Shri R.K. Chauhan,
(dead)
3. Shri S.P. Chauhan,
Age 65 years, Occ. Managing Director
of M/s. Parle Products Limited
Vile Parle (East), Mumbai 400 057
4. Shri A.V. Chauhan,
Age 45 years, Occ. Executive Director
of M/s. Parle Products Limited
Vile Parle (East), Mumbai 400 057
5. M/s. Parle Products Limited
R/o. M/s. Parle Products Limited
Vile Parle (East), Mumbai 400 057 ...Petitioners
Authorized Officer,
versus
1. The State of Maharashtra
2. Shri B.N. Chavan,
Food Inspector
O/o The Assistant Commissioner,
Food an Drugs Administration (M.S.)
Parbhani ...Respondents
.....
Mr. D.T. Kharmate with Mr. Amit Yadkikar, advocates for the petitioners
Mr. P.K. Lakhotiya, A.P.P. for respondents
.....
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CORAM : V. K. JADHAV, J.
Date of Reserving
the Order : 01.11.2018
Date of pronouncing
the Order : 22.11.2018
O R D E R :-
1. Being aggrieved by the order of framing of charge passed by the learned Chief Judicial Magistrate, Parbhani dated 27.11.2012 in Regular Criminal Case No. 555 of 2001 and the said order is confirmed by the Additional Sessions Judge, Parbhani by judgment and order dated 15.4.2013, in Revision petition No. 120 of 2012, the petitioners original accused Nos. 19 to 23 in the said R.C.C. No. 555 of 2001, have preferred this criminal writ petition.
2. Brief facts giving rise to the present writ petition are as follows:-
a) On 8.11.2000, a sample of Parle G Gluco Biscuits 100g x 15 packets was drawn by respondent No.2 Food Inspector from the premises of accused No.1 at Parbhani and it was sent for analysis to Public Analyst, State Public Health Laboratory, Jalgaon. On 14.12.2000, the Public Analysis, District/Public Health Laboratory, Jalgaon had declared the said sample to be of not standard quality.
On 7.9.2001 the Joint Commissioner (Aurangabad Division) FDA, ::: Uploaded on - 24/11/2018 ::: Downloaded on - 25/11/2018 01:38:44 ::: crwp426.13 -3- accorded his sanction as provided under Section 20(1) of the Prevention of Food Adulteration Act 1954 (hereinafter for short called as "the Act of 1954), after considering all relevant papers sent to him by respondent No.2 Food Inspector. Thus, respondent No.2 complainant has initiated the prosecution in the court of learned Chief Judicial Magistrate, Parbhani.
b) The petitioners are members of the Board of Director of M/s. Parle Products Limited, a public limited company, duly incorporated under the provisions of Companies Act, having its registered office at Vile Parle (East), Mumbai. Admittedly, petitioner No.5 company is manufacturer of Parle Glucose Biscuits and the said Biscuits alleged to have been sold at Parbhani by accused No.1. The petitioner Nos. 1 is Chairman and Managing Director. Petitioner No.2 was then Managing Director, who at present is no more. Petitioner No.3 is also Managing Director and petitioner No.4 is Executive Director of petitioner No.5 Parle Products Limited Company. The petitioners are prosecuted in their corporate capacity as detailed above, by holding them responsible and vicariously liable for the offences as alleged in the complaint in terms of provision of sections 16 and 17 of the Act of 1954.
c) On 11.9.2002 recording of evidence before the charge came ::: Uploaded on - 24/11/2018 ::: Downloaded on - 25/11/2018 01:38:44 ::: crwp426.13 -4- to be commenced and it was ended on 30.10.2012. The prosecution has examined the respondent/Food Inspector and further relied upon various documents annexed with the complaint and also produced the same during the course of evidence before charge. Respondent No.2 original complainant was not subjected to cross examination by any of the accused persons, including the present petitioners. By order dated 27.11.2012, the learned Chief Judicial Magistrate, Parbhani has framed charge against the accused persons, including the present petitioners and turned down the request of the petitioners for discharging them under sub-section (1) of Section 245 of the Criminal Procedure Code.
d) Being aggrieved by the order of framing charge, the petitioners herein have preferred criminal Revision application No. 120 of 2012 before the Sessions Court at Parbhani and the Additional Sessions Judge, Parbhani, by judgment and order dated 15.4.2013 dismissed the said revision by confirming the order passed by learned Chief Judicial Magistrate, Parbhani. Hence, this writ petition.
3. Learned counsel for the petitioners submits that the petitioner Nos. 1, 3 and 4 (petitioner No.2 died during pendency of this writ petition) came to be prosecuted in their corporate capacity for the ::: Uploaded on - 24/11/2018 ::: Downloaded on - 25/11/2018 01:38:44 ::: crwp426.13 -5- offence committed by their Mumbai based company M/s. Parle Products Limited (petitioner No.5 herein), which alleged to have been manufacturing Parle Glucose Biscuits through accused No. 18 at Nagpur. So far as the role of petitioner Nos. 1 to 4 is concerned, their names have been mentioned in the last paragraphs of the complaint and there is no whisper or any other evidence to show nexus, involvement, indulgence or participation of any of the petitioners in day to day activities of their company at Nagpur through the processor of food products under reference. Learned counsel submits that petitioner Nos. 1 to 4 are arraigned as accused by virtue of their designation in absence of any oral or documentary evidence recorded before framing of charge to show that they were in charge of day to day business of their company and were also responsible for the conduct of day to day business of the said company in terms of sub-section (4) of Section 17 of the Act of 1954 and/or the offence was committed with their consent or connivance or was attributable to any negligence on their part. Learned counsel submits that the prosecution has come out with a story of drawing sample of food in absence of brand name of the product and as such, no charge can be framed against the petitioners for having committed alleged offences, as detailed in the complaint. Learned counsel further submits that the complaint came to be filed after expiry of shelf life of the products and thus entire prosecution is not maintainable in the ::: Uploaded on - 24/11/2018 ::: Downloaded on - 25/11/2018 01:38:44 ::: crwp426.13 -6- eyes of law. The Director of the Central Food Laboratory does not have any authority or jurisdiction to examine or analyze an article of food beyond its expiry period i.e. BEST BEFORE. The right of the accused guaranteed under Section 13(2) of the Act of 1954 stood frustrated and as such the prosecution is not maintainable due to inordinate and intolerable lethargy caused by the prosecution.
4. Learned counsel for the petitioners further submits that in terms of sub-section (2) of Section 17 of the Act of 1954, the person so nominated to be in charge and responsible to the company for the conduct of its business shall be proceeded against unless it is shown that the offence was committed with the consent/ connivance/ negligence of any other Director, Manager, Secretary or other officer of the company in which case the said person can also be proceeded against or punished for the commission of the said offence. It is only where no person has been nominated under sub-section (2) of Section 17 of the Act of 1954, then every person, who at the time of commission of offence or in charge and/or responsible to the company for the conduct of its business can be proceeded against and punished under the law. Learned counsel further submits that in the instant case, the petitioners came to be prosecuted merely because they are holding certain designations in the company. There is no evidence and even of whisper of shred of evidence about their ::: Uploaded on - 24/11/2018 ::: Downloaded on - 25/11/2018 01:38:44 ::: crwp426.13 -7- involvement in the affairs of the company when the offence alleged to have been committed by the company. There are no averments to that effect in the complaint and even respondent No.2 the Food Inspector has not deposed anything about it before the Court.
5. Learned counsel for the petitioners has not pressed other points advanced during the course of his submissions except the grounds as discussed above in terms of provisions of Section 17 of the Act of 1954. Learned counsel submits that both the courts below have erroneously held the petitioners prima facie responsible merely for the reason that there is no nomination as provided under sub- section (2) of Section 17 of the Act of 1954. Both the courts below have not considered that there is no evidence at all against the petitioners indicating their involvement in the day to day affairs of the company or they are responsible in the day to day affairs of the company in any manner. Learned counsel submits that the order of framing of charge does substantially affect the person's liberty. The responsibility of framing of charge is that of the Court and it has to be judiciously considered the question of doing so. It is the duty of the Court to consider judiciously whether the material warrants the framing of charge and it cannot blindly accept the decision of the prosecution that the accused be asked to face the trial. ::: Uploaded on - 24/11/2018 ::: Downloaded on - 25/11/2018 01:38:44 :::
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6. Learned counsel for the petitioners in order to substantiate his contentions, placed reliance on the following cases:-
i) R. Banerjee and others vs. H.D. Dubey and others, reported in (1992)2 SCC 552,
ii) Municipal Corporation of Delhi vs. Ram Kishan Rahtago ad others, reported in (1983) 1 SCC 1,
iii) Saroj Kumar Poddar vs. State (NCT of Delhi) and Anr, reported in (2007) 3 SCC 693,
iv) Maksud Saiyed vs. State of Gujarat and Ors, reported in (2008) 5 SCC 668
v) S.K. Alagh vs. State of Uttar Pradesh and others, reported in (2008) 5 SCC 662
vi) Pepsico India Holings Pvt. Ltd. vs. Food Inspector and Anr. reported in (2011) 1 SCC 176
vii) Thermax Limited and ors. vs. K. M. Johny and others, reported in (2011) 1 SCC 412,
viii) GHCL Employees Stock Option Trust vs. India Infoline Ltd., reported in (2013) 4 SCC 505,
ix) Sunil Bharti Mittal vs. Central Bureau of Investigation, reported in (2015) 4 SCC 609,
x) Sharad Kumar Sanghi vs. Sangita Rane, reported in (2015) 12 SCC 781, ::: Uploaded on - 24/11/2018 ::: Downloaded on - 25/11/2018 01:38:44 ::: crwp426.13 -9-
xi) R. Kalyani vs. Janak C. Mehta and others, reported in (2009) 1 SCC 516,
xii) Keki Hormusji Gharda and others vs. Mehervan Rustom Irani and another, reported in (2009) 6 SCC 475,
xiii) Managing Director, Castrol India Limited vs. State of Karnataka, reported in 2017 (2)FAC 562
xiv) Asutosh Bhailal Rao and Ors. vs. State of Maharashtra, reported in 2018 ALL MR (Cri.) 32.
xv) Municipal Corporation of Delhi vs. Ghisa Ram, reported in 1975 (1) FAC 186, xvi) State of Maharashtra vs. Vinayak Mahadeorao Waze, reported in 2005 (2) FAC 126 xvii) Rohit Mull vs. State of Goa, reported in 2006 (1) FAC 57, xviii) Shivkumar vs. State of Maharashtra, reported in 2010 (2) FAC 239 xix) State of Maharashtra vs. Shivkumar, reported in 2011 (1) FAC 41 xx) Manish s/o Nandkishor Pediwal vs. State of Maharashtra, reported in 2014 ALL MR (Cri) 4257, xix) Himanshu Rambabu Prasad vs. State of Maharashtra, reported in 2013 (2) FAC 460.
xxi) Sakhahari Vyankatrao Borlepawar vs. State of Maharashtra, reported in 2013 (2) FAC 420, ::: Uploaded on - 24/11/2018 ::: Downloaded on - 25/11/2018 01:38:44 ::: crwp426.13 -10- xxii) Roy Kunjukutty Charan vs. State of Maharashtra, reported in 2013 (1) FAC 185 xxiii) Charandas Vallabhdas Mariwala vs. State of Maharashtra, reported in 2014 (2) FAC 392, xxiv) Rajendra Dhanpal Zele vs. State of Maharashtra, reported in 2015 (2) FAC 221, xxv) Ashutosh Bhaiyalal Rao vs. State of Maharashtra, reported in 2018 ALL MR (Cri.) 32, Bombay.
7. Learned A.P.P. for the respondents submits that the evidence of the Food Inspector being not challenged due to non-availment of cross examination stating 'cross examination reserved till framing of charge' on dated 30.10.2012 and thus the evidence being left un- rebutted, the Learned Chief Judicial Magistrate, Parbhani has rightly ordered for framing the charges against the Petitioners which has been confirmed by the Learned Additional Sessions Judge, Parbhani. Learned APP submits that the prosecution has led the evidence before charge and there was no cross examination till framing of charge. The evidence left without cross examination leads to acceptance till framing of charge for the word 'biscuits' and also with regard to compliance of Rule 17(i) and 18 of P.F.A. Rules.
8. Learned A.P.P. for the respondents further submits that as ::: Uploaded on - 24/11/2018 ::: Downloaded on - 25/11/2018 01:38:44 ::: crwp426.13 -11- regards ground No. B in the petition is concerned the evidence led by the prosecution has been left unchallenged by reserving cross examination till framing of charge. The petitioners are respectively (1) Chairman and Managing Director, (2) Managing Director, (3) Managing Director and (4) Executive Director as stated in the information being provided by the company as well as in the present petition. They are not only Directors but having managerial and executive position in the board of directors. There was no cross examination by the petitioners on the evidence led by prosecution. The learned APP submits that the capacity and status of all the petitioners has been mentioned as accused nos. 19 to 23. The petitioners are holding the posts as stated above and they are not mere directors and the role of petitioners is also mentioned in para 13(F) of the complaint.
9. Learned APP further submits that the Chief Judicial Magistrate, Parbhani has rightly considered the evidence, documents, allegations and in view of no challenge by way of any suggestions or cross examination, for the same has rightly inferred in para 10 at the end stating that the evidence at prima facie stage of framing charge indicates the involvement of accused Nos.19 to 23 being manufactures and this has been concurred by the learned Additional Sessions Judge, Parbhani. The contentions raised before the learned ::: Uploaded on - 24/11/2018 ::: Downloaded on - 25/11/2018 01:38:44 ::: crwp426.13 -12- Additional Sessions Judge, Parbhani have been discussed while dismissing the Criminal Revision Petition No. 120 of 2012 in the matter. Learned APP further submits that the name of food article viz. 'Biscuit' is mentioned in the consent and the alleged name Parle G Gluco Biscuit includes the name of the food article as per appendix B i.e. Biscuit. The case of Cadbury referred pertains to issuing process and not framing of charge. The petitioners have not cross- examined the witness. Learned APP further submits that the sample in this case has been sent to the Central Food Laboratory where it was examined and was found to be fit for analysis. Hence, non- compliance of Section 13(2), if any, as alleged has no effect on the case. The petitioners had the opportunity to rebut the evidence.
10. Learned APP for the respondents further submits that the writ petition by the petitioners has been verified by a third person and he is not amongst the petitioners. There is no authority by the petitioners for the same, so the person verifying the petition has no locus standi to do so. Learned APP lastly submits that, there is no substance in the Writ Petition filed by the petitioners and the same deserves to be dismissed.
11. Learned A.P.P. for the respondents in order to substantiate his contentions, placed reliance on the following cases:- ::: Uploaded on - 24/11/2018 ::: Downloaded on - 25/11/2018 01:38:44 :::
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i) Amit Prakash Jaste vs. State of Maharashtra and another, reported in 2015 ALL M.R. (Cri) 4897,
ii) Rallies India Ltd. vs. Poduru Vidya Bhushan and Ors., reported in 2011 (13) SCC 88,
iii) K.K. Ahuja vs. V.K. Vora and Anr. reported in 2009 (10) SCC 48
iv) S.M.S. Pharmaceuticals Ltd. Vs. Neeta Bhalla and another, reported in 2005 CRI.L.J. 4140.
12. I have carefully considered the submissions made by the learned counsel for respective parties. With their able assistance, I have perused the memo of petition, grounds taken therein, annexures thereto, affidavit in reply, the complaint and the documents produced during the course of the oral evidence of the complainant .
13. In the case of R. Banerjee and ors vs. H. D. Dubey and ors (supra), relied upon by learned counsel for the petitioners, the Supreme Court in para 4 of the judgment, has made the following observations;-
"4. It is clear from the plain reading of section 17 that where an offence under the Act is alleged to have been committed ::: Uploaded on - 24/11/2018 ::: Downloaded on - 25/11/2018 01:38:44 ::: crwp426.13 -14- by a company, where the company has nominated any person to be in charge of, and responsible to, the company for the conduct of its business that person will be liable to be proceeded against and punished for the commission of the offence. Where, however, no person has been so nominated, every person who at the time of the commission of the offence was in charge of, and responsible to, the company for the conduct of its business shall be proceeded against and punished for the said crime. Even in such cases the proviso offers a defence, in that, the accused can prove his innocence by showing that the offence was committed without his knowledge and notwithstanding the exercise of due diligence to prevent it. The scheme of sub-section (1) of section 17 is, therefore, clear that cases where a person has been nominated under sub-section (2) of section 17, he alone can be proceeded against and punished for the crime in question. It is only where no such person has been nominated that every person who at the time the offence was committed was in charge of, and was responsible to, the company for the conduct of its business can be proceeded against and punished. The proviso, however, lays down an exception that any such person proceeded against shall not be liable to be punished if he proves that the offence was committed without his knowledge and that he had exercised all due diligence to prevent the commission thereof. Sub-section (2) of section 17 empowers the company to authorise any of its Directors or Managers to exercise all such powers and take all such steps as may be necessary or expedient to prevent the commission by the company of any offence under the Act. It further empowers the company to give notice to the Local (Health) Authority in the prescribed form that it has nominated a Director or Manager as the person responsible ::: Uploaded on - 24/11/2018 ::: Downloaded on - 25/11/2018 01:38:44 ::: crwp426.13 -15- to the company for the conduct of its business. This has to be done with the written consent of the nominated Director or Manager. Where a company has different establishment or branches or units, different persons may be nominated in relation to the different establishments/ branches/units and the person so nominated shall be deemed to be the person responsible in respect of such establishment, branch or unit. Sub-section (4) of section 17 overrides the preceding sub- section and posits that where an offence has been committed by a company and it is proved that the offence was 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, other than the one nominated, such Director, Manager, Secretary or other officer shall also be deemed guilty and be liable to be proceeded against and punished for the same. This sub- section,therefore, makes it clear that notwithstanding the nomination under sub-section (2) of section 17 and notwithstanding clause (a)(i) of sub- section (1) of section 17, any Director, Manager, Secretary or other officer of the company, other than the nominated person, can be proceeded against and punished if it is shown that the offence was committed with his consent or connivance or negligence. It is crystal clear from the scheme of section 17 that where a company has committed an offence under the Act, the person nominated under sub- section (2) to be in charge of, and responsible to, the company for the conduct of its business shall be proceeded against unless it is shown that the offence was committed with the consent/connivance/ negligence of any other Director, Manager, Secretary or Officer of the company in which case the said person can also be proceeded against and punished for the commission of the said offence. It is only ::: Uploaded on - 24/11/2018 ::: Downloaded on - 25/11/2018 01:38:44 ::: crwp426.13 -16- where no person has been nominated under sub-section (2) of section 17 that every person, who at the time of the commission of the offence was in charge of and was responsible to the company for the conduct of its business can be proceeded against and punished under the law."
14. In the case of Saroj Kumar Poddar vs State (NCT of Delhi) and another (supra) relied upon by learned counsel for the petitioners, the Supreme Court in para 14 to 17 of the judgment, has made the following observations;-
"14. Apart from the Company and the appellant, as noticed hereinbefore, the Managing Director and all other Directors were also made accused. The appellant did not issue any cheque. He, as noticed hereinbefore, had resigned from the Directorship of the Company. It may be true that as to exactly on what date the said resignation was accepted by the Company is not known, but, even otherwise, there is no averment in the complaint petitions as to how and in what manner the appellant was responsible for the conduct of the business of the Company or otherwise responsible to it in regard to its functioning. He had not issued any cheque. How he is responsible for dishonour of the cheque has not been stated. The allegations made in paragraph 3, thus, in our opinion do not satisfy the requirements of Section 141 of the Act.
15. Our attention, however, has been drawn to the averments made in paragraphs 7 and 10 of the complaint petition, but on a perusal thereof, it would appear that therein merely allegations have been made that the cheques in question were presented before the bank and they have been dishonoured.::: Uploaded on - 24/11/2018 ::: Downloaded on - 25/11/2018 01:38:44 :::
crwp426.13 -17- Allegations to satisfy the requirements of Section 138 of the Act might have been made in the complaint petition but the same principally relate to the purported offence made by the Company. With a view to make a Director of a Company vicariously liable for the acts of the Company, it was obligatory on the part of the complainant to make specific allegations as are required in law.
16. The question came up for consideration before a 3-Judge Bench of this Court in S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla and Another [(2005) 8 SCC 89] wherein upon consideration of a large number of decisions this Court opined:
(SCC pp.98-99, paras 10-11) "10. While analysing Section 141 of the Act, it will be seen that it operates in cases where an offence under Section 138 is committed by a company. The key words which occur in the Section are "every person".
These are general words and take every person connected with a company within their sweep.
Therefore, these words have been rightly qualified by use of the words:
"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 etc."
What is required is that the persons who are sought to be made criminally liable under Section 141 should be at the time the offence was committed, in charge of and responsible to the company for the conduct of the business of the company. Every person connected with the company shall not fall within the ambit of the ::: Uploaded on - 24/11/2018 ::: Downloaded on - 25/11/2018 01:38:44 ::: crwp426.13 -18- provision. It is only those persons who were in charge of and responsible for conduct of business of the company at the time of commission of an offence, who will be liable for criminal action. It follows from this that if a director of a Company who was not in charge of and was not responsible for the conduct of the business of the company at the relevant time, will not be liable under the provision. The liability arises from being in charge of and responsible for conduct of business of the company at the relevant time when the offence was committed and not on the basis of merely holding a designation or office in a company.
Conversely, a person not holding any office or designation in a Company may be liable if he satisfies the main requirement of being in charge of and responsible for conduct of business of a Company at the relevant time. Liability depends on the role one plays in the affairs of a Company and not on designation or status. If being a Director or Manager or Secretary was enough to cast criminal liability, the Section would have said so. Instead of "every person"
the section would have said "every Director, Manager or Secretary in a Company is liable"....etc. The legislature is aware that it is a case of criminal liability which means serious consequences so far as the person sought to be made liable is concerned. Therefore, only persons who can be said to be connected with the commission of a crime at the relevant time have been subjected to action.
11. A reference to Sub-section (2) of Section 141 fortifies the above reasoning because Sub-section (2) envisages direct involvement of any Director, Manager, Secretary or other officer of a company in ::: Uploaded on - 24/11/2018 ::: Downloaded on - 25/11/2018 01:38:44 ::: crwp426.13 -19- commission of an offence. This section operates when in a trial it is proved that the offence has been committed with the consent or connivance or is attributable to neglect on the part of any of the holders of these offices in a company. In such a case, such persons are to be held liable. Provision has been made for Directors, Managers, Secretaries and other officers of a company to cover them in cases of their proved involvement."
It was further opined: (SCC pp. 102-03, para 18) "18. To sum up, there is almost unanimous judicial opinion that necessary averments ought to be contained in a complaint before a persons can be subjected to criminal process. A liability under Section 141 of the Act is sought to be fastened vicariously on a person connected with a Company, the principal accused being the company itself. It is a departure from the rule in criminal law against vicarious liability. A clear case should be spelled out in the complaint against the person sought to be made liable. Section 141 of the Act contains the requirements for making a person liable under the said provision. That respondent tails within parameters of Section 141 has to be spelled out. A complaint has to be examined by the Magistrate in the first instance on the basis of averments contained therein. If the Magistrate is satisfied that there are averments which bring the case within Section 141 he would issue the process. We have seen that merely being described as a director in a company is not sufficient to satisfy the requirement of Section 141. Even a non director can be liable under Section 141 of the Act. The averments in the complaint would also serve the purpose that the ::: Uploaded on - 24/11/2018 ::: Downloaded on - 25/11/2018 01:38:44 ::: crwp426.13 -20- person sought to be made liable would know what is the case which is alleged against him. This will enable him to meet the case at the trial."
17. This aspect of the matter has also been considered recently by this Court in Sabitha Ramamurthy & Anr. v. R.B.S. Channabasavaradhya [2006 (9) SCALE 212] stating: (SCC p.585, para 7) "Section 141 raises a legal fiction. By reason of the said provision, a person although is not personally liable for commission of such an offence would be vicariously liable therefor. Such vicarious liability can be inferred so far as a company registered or incorporated under the Companies Act, 1956 is concerned only if the requisite statements, which are required to be averred in the complaint petition, are made so as to make the accused therein vicariously liable for the offence committed by the company. Before a person can be made vicariously liable, strict compliance of the statutory requirements would be insisted"
15. In the case of GHCL Employees Stock Option Trust vs India Infoline Limited (Supra) relied upon by learned counsel for the petitioners, the Supreme Court in para 12, 14 and 19 of the judgment, has made the following observations;-
"12. From bare perusal of the complaint and the allegations made therein, we do not find in any of the paragraphs that the complainant has made specific allegations against respondent Nos.2 to 7. In paragraph 2 of the complaint, it is alleged that respondent Nos.2 to 6 are looking after the day-to-day affairs of the Company. With whom the complainant or its authorized ::: Uploaded on - 24/11/2018 ::: Downloaded on - 25/11/2018 01:38:44 ::: crwp426.13 -21- representative interacted has also not been specified. Although in paragraph 11 of the complaint it is alleged that the complainant on numerous occasions met accused Nos.2 to 7 and requested to refund the amount, but again the complainant has not made specific allegation about the date of meeting and whether it was an individual meeting or collective meeting. Similarly, in paragraph 17 of the complaint, there is no allegation that a particular Director or Managing Director fabricated debit note. In the entire complaint there are bald and vague allegations against respondent Nos.2 to 7.
14. Be that as it may, as held by this Court, summoning of accused in a criminal case is a serious matter. Hence, criminal law cannot be set into motion as a matter of course. The order of Magistrate summoning the accused must reflect that he has applied his mind to the facts of the case and the law applicable thereto. The Magistrate has to record his satisfaction with regard to the existence of a prima facie case on the basis of specific allegations made in the complaint supported by satisfactory evidence and other material on record.
19. In the order issuing summons, the learned Magistrate has not recorded his satisfaction about the prima facie case as against respondent Nos.2 to 7 and the role played by them in the capacity of Managing Director, Company Secretary or Directors which is sine qua non for initiating criminal action against them. Recently, in the case of M/s. Thermax Ltd. & Ors. vs. K.M. Johny & Ors. [(2011) 13 SCC 412] while dealing with a similar case, this Court held as under :-
"38. Though Respondent No.1 has roped all the appellants in a criminal case without their specific role or participation in the alleged offence with the sole ::: Uploaded on - 24/11/2018 ::: Downloaded on - 25/11/2018 01:38:44 ::: crwp426.13 -22- purpose of settling his dispute with appellant- Company by initiating the criminal prosecution, it is pointed out that appellant Nos. 2 to 8 are the Ex- Chairperson, Ex-Directors and Senior Managerial Personnel of appellant No.1 - Company, who do not have any personal role in the allegations and claims of Respondent No.1. There is also no specific allegation with regard to their role
39. Apart from the fact that the complaint lacks necessary ingredients of Sections 405, 406, 420 read with Section 34 IPC, it is to be noted that the concept of 'vicarious liability' is unknown to criminal law. As observed earlier, there is no specific allegation made against any person but the members of the Board and senior executives are joined as the persons looking after the management and business of the appellant- Company."
16. In the case of Sunil Bharti Mittal vs. Central Bureau of Investigation (Supra), relied upon by learned counsel for the petitioners, the Supreme Court in para 42 of the judgment, has made the following observations;-
"42. No doubt, a corporate entity is an artificial person which acts through its officers, directors, managing director, chairman etc. If such a company commits an offence involving mens rea, it would normally be the intent and action of that individual who would act on behalf of the company. It would be more so, when the criminal act is that of conspiracy. However, at the same time, it is the cardinal principle of criminal jurisprudence that there is no vicarious ::: Uploaded on - 24/11/2018 ::: Downloaded on - 25/11/2018 01:38:44 ::: crwp426.13 -23- liability unless the statute specifically provides so."
17. In the case of R. Kalyani vs Janak C. Mehta and others (supra) relied upon by learned counsel for the petitioners, the Supreme Court in para 32 of the judgment, has made the following observations;-
"32. Allegations contained in the FIR are for commission of offences under a general statute. A vicarious liability can be fastened only by reason of a provision of a statute and not otherwise. For the said purpose, a legal fiction has to be created. Even under a special statute when the vicarious criminal liability is fastened on a person on the premise that he was in- charge of the affairs of the company and responsible to it, all the ingredients laid down under the statute must be fulfilled. A legal fiction must be confined to the object and purport for which it has been created."
18. In the case of Keki Hormusji Gharda and others vs Mehervan Rustom Irani and another (supra) relied upon by learned counsel for the petitioner, the Supreme Court in para 18 has referred the observations given by the Supreme court in the case of Pepsi Foods Ltd. & Anr. vs. Special Judicial Magistrate & ors. as follows:-
"18. In Pepsi Foods Ltd. & Anr. vs. Special Judicial Magistrate & ors. [(1998) 5 SCC 749], this Court held as under: (SCC p.760, para 28) "28. Summoning of an accused in a criminal case is a serious matter. Criminal law cannot be set into motion as a matter of course. It is not that the ::: Uploaded on - 24/11/2018 ::: Downloaded on - 25/11/2018 01:38:44 ::: crwp426.13 -24- complainant has to bring only two witnesses to support his allegations in the complaint to have the criminal law set into motion. The order of the Magistrate summoning the accused must reflect that he has applied his mind to the facts of the case and the law applicable thereto. He has to examine the nature of allegations made in the complaint and the evidence both oral and documentary in support thereof and would that be sufficient for the complainant to succeed in bringing charge home to the accused. It is not that the Magistrate is a silent spectator at the time of recording of preliminary evidence before summoning of the accused. The Magistrate has to carefully scrutinize the evidence brought on record and may even himself put questions to the complainant and his witnesses to elicit answers to find out the truthfulness of the allegations or otherwise and then examine if any offence is prima facie committed by all or any of the accused."
19. In the backdrop of the ratio laid down by the Supreme Court in the aforesaid cases, I have carefully gone through the contents of complaint, averments made in the petition, annexures thereto, affidavit in reply filed by respondents and the documents produced during the course of the oral evidence of the complainant. It appears that respondent No.2 Food Inspector has received the complaint from one Dr. Sunil Jadhav, R/o. Parbhani. The said complaint is part of record. Dr. Sunil Jadhav has filed the said ::: Uploaded on - 24/11/2018 ::: Downloaded on - 25/11/2018 01:38:44 ::: crwp426.13 -25- complaint on 8.11.2000 with the authorities alleging therein that after purchasing the Parle Glucose Biscuits from the shop of accused No.1 at Parbhani and after testing the said biscuits, he had noticed crumble of glass mixed in the contents of biscuits. The said doctor Mr. Jadhav has also given list of the persons, who had similar experience about the said Parle Glucose Biscuits and they suffered because of the same. Accordingly, the respondent complainant has visited the premises of accused No.2. Accused No.1, who was looking after the business of sale and stock of aforesaid food articles, was present there. After disclosing the identity, the respondent complainant had purchased the food article biscuits as sample as detailed in the Form VII which is Parle G Gluco Biscuits 100gm pkd.8/00. After completing the formalities, the respondent complainant has sent one sealed packet of sample to the Public analyst, State Public Health Laboratory, Jalgaon by post. On 21.12.2000 the respondent/complainant has received the report of the sample from the Public Analyst, State Public Health Laboratory, Jalgaon through Local (Health) authority and Assistant Commissioner, Food and Drugs Administration, Parbhani. It has been reported that the sample does not conform to the standard as provided in Appendix B of PFA Rules 1955. The respondent complainant had enquired and collected all necessary information. It has been revealed during the course of enquiry that the said product ::: Uploaded on - 24/11/2018 ::: Downloaded on - 25/11/2018 01:38:44 ::: crwp426.13 -26- of Parle Glucose Biscuits was received from the Firm of accused No.18. Accused No. 9 on behalf of accused No.18 has submitted information as sought and disclosed that the firm of accused No.18 had entered into a contract of processing with the firm of accused No.23 (petitioner No.5 herein). In para F of the complaint, it has been specifically alleged that the present petitioners have manufactured the same for sale, stocked for sale, distributed the same for sale and sold adulterated food article Biscuits through M/s. Shivam Foods, Nagpur and thereby committed offence contravening the provisions of Section 7(i), 2(ia) (a) punishable under section 16(1) (a) (ii) and Section 7(i), r/w/ Section 2(ia) (m) punishable under section 16(1) (a)
(i) r.w. Section 17 of the Prevention of the Act of 1954 and the Rules there under. The respondent complainant has also deposed before the court in the similar lines.
20. The provision of Section 17 of the Act of 1954 is reproduced below:-
"17. Offences by companies.--
(1) Where an offence under this Act has been committed by a company--
(a) (i) the person, if any, who has been nominated under sub-
section (2) to be in charge of, and responsible to, the company for the conduct of the business of the company (hereinafter in this section referred to as the person responsible), or ::: Uploaded on - 24/11/2018 ::: Downloaded on - 25/11/2018 01:38:44 ::: crwp426.13 -27-
(ii) where no person has been so nominated, 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; and
(b) 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 provided in this Act if he proves that the offence was committed without his knowledge and that he exercised all due diligence to prevent the commission of such offence.
(2) Any company may, by order in writing, authorise any of its directors or managers (such manager being employed mainly in a managerial or supervisory capacity) to exercise all such powers and take all such steps as may be necessary or expedient to prevent the commission by the company or any offence under this Act and may give notice to the Local (Health) Authority, in such form and in such manner as may be prescribed, that it has nominated such director or manager as the person responsible, along with the written consent of such director or manager for being so nominated.
Explanation.--Where a company has different establishments or branches or different units in any establishment or branch, different persons may be nominated under this sub-section in relation to different establishments or branches or units and the person nominated in relation to any establishment, branch or unit shall be deemed to be the person responsible in respect of such establishment, branch or unit.
::: Uploaded on - 24/11/2018 ::: Downloaded on - 25/11/2018 01:38:44 :::
crwp426.13 -28- (3) The person nominated under sub-section (2) shall, until--
(i) further notice cancelling such nomination is received from the company by the Local (Health) Authority; or
(ii) he ceases to be a director or, as the case may be, manager of the company; or
(iii) he makes a request in writing to the Local (Health) Authority, under intimation to the company, to cancel the nomination [which request shall be complied with by the Local (Health) Authority.] whichever is the earliest, continue to be the person responsible:
Provided that where such person ceases to be a director or, as the case may be, manager of the company, he shall intimate the fact of such cesser to the Local (Health) Authority:
Provided further that where such person makes a request under clause (iii), the Local (Health) Authority shall not cancel such nomination with effect from a date earlier than the date on which the request is made.
(4) Notwithstanding anything contained in the foregoing sub-
sections, 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, [not being a person nominated under sub-section (2) 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 purposes of this section-- ::: Uploaded on - 24/11/2018 ::: Downloaded on - 25/11/2018 01:38:44 :::
crwp426.13 -29-
(a) "company" means any body corporate and includes a firm or other association of individuals;
(b) "director", in relation to a firm, means a partner in the firm; and
(c) "manager" in relation to a company engaged in hotel industry, includes the person in charge of the catering department of any hotel managed or run by it."
21. Thus, keeping in mind the ratio laid down by the Supreme Court in the aforesaid cases as well as after going through the provisions of Section 17 of the Act of 1954, the averments made in the complaint, the evidence before the charge, the documents which are annexed with the complaint and also referred during the examination in chief of the respondent complainant, it appears that the respondent complainant has simultaneously sought information from Shivam Foods, Nagpur, a firm actively engaged in processing of manufacturing the biscuits for Parle Products Limited, Mumbai and also from the Parle Products Ltd. Mumbai. Upon going through the contents of letter dated 9.2.2011 addressed to the petitioner No.5 Parle Products Limited, Mumbai by the respondent original complainant Food Inspector, it appears that the information was sought on the points, viz. (i) copy of agreement between Parle Products Limited and Satyam Food Products, Khamgaon, (ii) copy of Article of Association of Parle Products Limited, (iii) No. of P.F.A. licence hold by Parle Products Ltd. and it's validity (copy of licence ::: Uploaded on - 24/11/2018 ::: Downloaded on - 25/11/2018 01:38:44 ::: crwp426.13 -30- may please be supplied) (iv) Name and address of nominee, if any, (as per section 17 of the Act of 1954) alongwith copy of nomination.
22. Furthermore, as per the communication dated 24.5.2001, Exh.169 the information was sought from petitioner No.5 the Parle Products Limited in respect of the same points as mentioned above. The prominent amongst them, the name and address of the persons responsible for conduct of business of Parle Products Limited and also name and address of the nominees, if any (as per Section 17 of the Act) alongwith copy of nomination. By letter dated 15.6.2001 Exh.174, the petitioner No.5 Parle Products Limited informed to the respondent complainant that Memorandum and Article of Association of the company has been sent for printing after changes and it will be sent to the respondent positively after the print is received. It has been also informed that the name of the Directors of the company will feature on the documents which will answer the query made by the respondent complainant. After much persuasion, petitioner No.5 Parle Products Limited by letter dated 28.6.2001 informed the names of the present petitioners. Admittedly, there is no nomination of any person under sub-section (2) of Section 17 to be in charge of, and responsible to, the company for the conduct of the business of the company, the petitioner No.5 Parle Products Limited by letter dated 28.06.2001 has communicated the names of the petitioners Nos. 1 to ::: Uploaded on - 24/11/2018 ::: Downloaded on - 25/11/2018 01:38:44 ::: crwp426.13 -31- 4 by showing their designations as petitioner No.1 V.K. Chauhan, Chairman and Managing Director, petitioner No.2 R.K. Chauhan, Managing Director, petitioner No. 3 S.P. Chauhan, the Managing Director, petitioner No. 4 A.V. Chauhan, Executing Director. In terms of provisions of section 17 (1) (a) (ii) if petitioner No.5 has communicated the names of petitioners as in charge and responsible for the conduct of business of the company, prima facie, the complaint shall be liable to be proceeded against them. Furthermore, proviso to Section 17(1) makes it clear that if any of such person if proves that the offence was committed without his knowledge and that he exercised all due diligence to prevent the commission of such offence, then he shall not be liable to any punishment provided under the Act.
23. I have also carefully gone through the agreement between M/s. Shivam Foods, Nagpur and petitioner No.5 Parle Products Limited. The agreement is titled as agreement for processing / Job work. It has been agreed between them that the said firm M/s. Shivam Foods shall process at its own proposed factory; biscuits out of the material given by Parle and as per the orders placed by Parle in terms of the agreement, as per the standards and specifications of Parle and as per the manufacturing process and quality control standards (includes brands, designs, etc.) prescribed from time to ::: Uploaded on - 24/11/2018 ::: Downloaded on - 25/11/2018 01:38:44 ::: crwp426.13 -32- time by Parle. It further appears that the processing activities has been undertaken by the firm in pursuance to the orders of Parle and processing would be on the biscuits out of the material given by Parle. The term process has also been exhaustively dealt with in the agreement. In view of the same, I do not find any substance in the submissions that no role has been attributed to the petitioners in the management of day to day affairs of the company being carried out in the premises of accused No.18 at Nagpur. During the course of hearing, it was brought to my notice that petitioner No.5 Parle Products Limited has appointed various other companies across the country to process material supplied by them and finished products are being sold under the brand name of Parle Glucose Biscuits and other various brand names.
24. In view of above discussion, I do not think that the petitioners are merely arraigned as accused only because of the designation they hold. It further appears from the communication sent by the respondent complainant that after much persuasion, petitioner No.1 Parle Products Limited has not supplied copy of Memorandum and Article of Association. The petitioner No.5 Parle Products Limited, while communicating the names of the petitioners, in the said letter dated 28.6.2001 informed the respondent complainant that the said communication would answer the query made by the respondent ::: Uploaded on - 24/11/2018 ::: Downloaded on - 25/11/2018 01:38:44 ::: crwp426.13 -33- complainant.
25. In the instant case, no person has been nominated under sub-section (2) of section 17 of the Act of 1954 and as per the communication sent by petitioner No.5 the Parle Products Limited, the petitioners, at the time of commission of offence, were in charge and responsible for the company for conduct of its business, the complaint shall be proceeded against the petitioners. It is always open for the petitioners to raise plea in terms of proviso to sub- section (1) of Section 17 of the Act of 1954 that the offence was committed without their knowledge and that they exercised all due diligence to prevent the commission of such offence, then they shall not be liable to any punishment provided under the Act of 1954. I find no fault in the order passed by the courts below. Resultantly, I find no substance in the writ petition. Hence, the following order:-
ORDER Writ petition is hereby dismissed.
(V. K. JADHAV, J.) rlj/ ::: Uploaded on - 24/11/2018 ::: Downloaded on - 25/11/2018 01:38:44 :::