Madhya Pradesh High Court
S.K. Shukla vs The State Of Madhya Pradesh Thr. on 22 March, 2018
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HIGH COURT OF MADHYA PRADESH
MCRC 12658/2015
Mr.S.K.Shukla vs. State of MP
Gwalior, dtd. 22/03/2018
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 29/12/2014 passed by Judicial
Magistrate First Class, Vidisha in Criminal Case No.3171/2014.
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)
r/w Section 59 of the Food Safety and Standards Act, 2006
(hereinafter referred to as ''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 Oil, Soya Badi 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, 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 was found to be unsafe under Sections 3
(zz)(iii) and 26(2)(i) 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)(ii), 26(2)(i) r/w Section 59 of the Act.
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
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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.
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:
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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 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
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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--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,
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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 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
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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
purpose.
36. In Hira H. Advani v. State of Maharashtra, while
dealing with a proceeding under the Sea Customs
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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 8 prosecution under Section 141 of the Act, arraigning of 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."9
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, 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 29/12/2014 passed by Judicial Magistrate First Class, Vidisha in Criminal Case No.3171/2014 is quashed.
(G.S. Ahluwalia) Judge MKB Digitally signed by MAHENDRA KUMAR BARIK Date: 2018.03.24 15:48:41 +05'30'