G.S.Nagpal vs State of Punjab

Harmohinder Kaur Sandhu, J.

On 13.5.1991 Shri Harpal Singh, Fertilizer Inspector, Fatehgarh Churian inspected the premises of M/s Tej Trading Company, Ajnala Road, Fatehgarh Churian Shri Rajak Mal, representative of the Company was present at that time. The Fertilizer Inspector after disclosing his identity informed him that he wanted to draw the sample of fertilizer and then he drew sample from four bags out of the stock of 205 bags of Kissan Brand Zink Sulphate 21% according to the rules. The fertilizer so collected from four bags which weighed about 1200 gms. was mixed thoroughly and was divided into three equal parts. The same. was then transferred into three separate neat, clean and dry polythene bags. One part of the sealed sample was sent to fertilizer Testing Laboratory, Ludhiana for analysis and the other two parts of the sample were deposited in the Office of Chief Agricultural Officer, Gurdaspur. The sample on analysis was declared as nonstandard by the Analytical Chemist Fertilizer Testing Laboratory, Ludhiana. On receipt of the report, a complaint was filed against the proprietor of the firm M/s TeJ Trading Company and the present petitioner who is the Managing Director of the Manufacturing firm M/s Kissan Zinc (India) Pvt. Ltd., 281, East Mohan Nagar, Amritsar, for violation of Clause 19(1)(a) of Fertilizer (Control) JUDGMENT 1985 read with Sections 7 and 12AA of the Essential Commodities Act, 1955 in the Court of Additional District & Sessions Judge, Gurdaspur exercising the powers of Special Judge.

Shri G.S. Nagpal, Managing Director of M/s Kissan Zinc Pvt. Ltd. has filed the present petition under Section 482 of the Code of Criminal Procedure for quashing the complaint, referred to above, and all consequent proceedings arising therefrom on the various grounds mentioned in the petition. It was also alleged that the complaint against the Managing Director of the Company alone was not maintainable when the Company had not been made an accused. To hold any person liable, it was necessary to aver that the person to be prosecuted was Incharge of and was responsible to the Company for the conduct of its business but in the complaint, there was no such averment against the petitioner. The complaint, therefore, could not proceed against him in view of the provisions of Section 10 of the Essential Commodities Act, 1955.

In the return filed by the respondent, it was maintained that the petitioner had issued authority letter under his signatures to M/s. Tej Trading Company, Ajnala Road, Fatehgarh Churian for the sale of ISI Marked Kissan Brand Zinc Sulphate Agricultural Grade. He has also replied to the show cause notice under his signatures. He was given a chance of personal hearing. He, therefore, could not escape responsibility under Clause 19(1)(a) of Fertilizer (Control) JUDGMENT 1985.

I have heard the learned counsel for the parties.

Although various grounds were taken in the petition for quashing the complaint pending against the petitioner yet at the time of arguments, learned counsel for the petitioner confirmed himself to the ground contained in para 9 of the petition and asserted that since the Company had not been made an accused, the petitioner who was only the Managing Director, could not be fastened with any criminal liability. More so, when there was no averment in the complaint that he was Incharge of and was responsible to the Company for the conduct of its business. Under Section 10 of the Act a persons Incharge of and responsible to the Company for the conduct of its business was to be deemed guilty of the contravention in addition to the Company and in the absence of Company, the complaint was liable to be quashed against the petitioner. I find that this contention of the learned counsel is quite tenable. Section 10 of the Act deals with the offences by Companies and it reads as under :

"(1) If the person contravening an order made under Section 13 is a Company, every person who, at the time the contravention was committed, was incharge of, and was responsible to the company for the conduct of the business of the Company as well as Company, shall be deemed to be guilty of contravention and shall be liable to be proceeded against and punished accordingly.

Provided that nothing contained in this subsection shall render any such person liable to any punishment if he proves that the contravention took place without his knowledge or that he exercised all due diligence to prevent such contravention.

(2) Not withstanding anything contained in subsection (1) whereon offence under this Act has been committed by a Company and it is provided 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."

From the above provisions, it is very well made out that when the offence is committed by a Company then the Company is responsible, so also the person Incharge or responsible to the Company for the conduct of its business. Non arraigning of the Company as an accused person in such circumstance is fatal infirmity in the prosecution of the Managing Director of the Company alone. The matter was considred by the Apex Court in The State of Madras v. C.V. Parekh, AIR 1971 Supreme Court 447, where the question was whether the two persons who were Incharge of and were responsible to the Company for the conduct of the business of the company and who made sale in contravention of provisions of Clause 5 of the Iron and Steel (Control) JUDGMENT were liable for the commission of the offence and it was observed.

"The liability of the persons incharge of the company only arises when the contravention is by the company itself. Since, in this case there is no evidence and no finding that the Company contravened clauses 5 of the Iron and Steel (Control) JUDGMENT the two respondents could not be held responsible. The actual contravention was by Kamdar and Villabhadas Thacker and any contravention by them would not fasten responsibility on the respondents. The acquittal of the respondents is, therefore, fully justified. The appeal fails and is dismissed."

In the light of the ratio of above decision, in the case of Sham Sunder Bassi v. The State of Punjab, 1991(3) Recent Criminal Reports 199 where an Area Manager alone was prosecuted for contravention of Fertilizer Control JUDGMENT 1957, it was held that prosecution against Area Manager alone without arraigning the company as accused was a fatal flaw and the complaint against the Area Manager was liable to be quashed on that ground.

In the present case, there are no averments in the complaint that the petitioner was Incharge of and was responsible to the Company for the conduct of its business nor the Company was arraigned as accused. The complaint against him, therefore, cannot proceed in this ground alone.

As a result, I allow this petition, quash the complaint Annexure P2 and consequent proceeding arising therefrom, qua the petitioner.