Hansraj Vallabhdas Mariwala and Others vs State of Maharashtra

V.M. Deshpande, J.�This application is filed under Section 482 of the Code of Criminal Procedure for quashing Regular Criminal Case No. 29 of 1993, filed for the charge that the applicants are guilty for the offence punishable under Section 7(i), 2(ia)(a), 2(ia)(b), 2(ia)(c), 2(ia)(m) r/w Sections 16(1a)(i) and 16(1)(a)(ii) and 17 of the Prevention of Food Adulteration Act, 1954, pending on the file of Chief Judicial Magistrate, Aurangabad along with the order of issuance of process, passed by the Chief Judicial Magistrate, dated 24.2.1993, which was confirmed by the learned Additional Sessions Judge, Aurangabad by judgment and order, dated 9.9.1999 in Criminal Revision No. 182 of 1993. Shri P.D. Patki, at the relevant time was the Food Inspector. He visited the shop of M/s. J.P. Surana, which was situated at Gulmandi, Aurangabad and collected sample of "Safola" refined edible oil. Needless to mention, the complaint asserts that at the time of obtaining sample, the Food Inspector followed the required procedure. The sample was sent to the public analyst on 28.2.1992.

The Public Analyst sent his report bearing No. 112, dated 31.3.1992 to the Medical Officer, Municipal Corporation Aurangabad, which in turn was sent to the Food Inspector. According to the report, the sample was not in conformity and was found to have caster seed oil. Thereafter he obtained necessary sanction from the competent authority.

With these basic facts Shri P.D. Patki, Food Inspector filed a complaint on 24.2.1993 against the applicants and others in the court of Chief Judicial Magistrate, Aurangabad bearing Regular Criminal Case No. 29 of 1993.

The applicant Nos. 1 to 6 are the Directors of the applicant No. 7.

SUBMISSIONS

The learned Senior counsel Shri Sunil Manohar appearing for the applicants submitted that the complaint is liable to be dismissed, since it lacks the assertion of material particulars against the Directors that they are incharge of conduct of business or responsible for day-to-day affairs. He submitted that the averments are vague. Except bald statement that accused are the Directors, there is nothing in the complaint to connect them in day-to-day affairs of the Company or violation in question.

His second limb of argument is that the indefeasible right of the applicants, as envisaged under Section 132 of the Prevention of Food Adulteration Act, 1954 for short, "the Act" is denied to them.

According to him, the prosecution itself is filed after an inordinate delay i.e. after more than 12 months from the date of the seizure of sample i.e. on 27.2.1992 and 11 months from the date of public analyst report i.e. on 31.3.1992. Thus, a valuable right under Section 132 of the Act is completely denied, as the sample given by the local authority is completely rendered unfit for analysis. He submitted that there is no explanation available in the entire complaint for such an unexplained delay resulting into denial of fair trial to the present applicants.

It is his submission that the shelf life of the product in question i.e. "Safola" edible Kardi oil is nine months and after nine months the sample is rendered unfit for analysis. From the complaint, he pointed out that the sample was drawn on 27.2.1992 from the business premises of M/s. J.P. Surana, who is shown as accused No. 1 in the complaint and though the report of the public analyst is dated 31.3.1992, the complaint is filed after a period of 12 months from the date of taking of the samples. Therefore, he submitted that continuance of the complaint is nothing but an abuse of process of law, and hence, the application needs; to be allowed. He placed reliance on various reported decisions of the Apex Court and this court in order to buttress his afore said points.

Per contra, learned Additional Public Prosecutor submitted that since the complaint was disclosing the necessary material, the learned court below has rightly issued process, which is confirmed by the Revisional Court. In so far as the delay is concerned, the learned Additional Public Prosecutor submitted that the delay has occurred due to the administrative exigencies and it can be explained at the time of trial.

CONSIDERATION

In order to decide the controversy, it would be useful to have a glance to Section 17 of the Food Adulteration Act, 1954. Section 17 reads as under:

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 hereafter in this section referred to as the person responsible, or

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.

Any company may, by order in writing, authorize 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 of 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, alongwith 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.

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 Cl. 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.

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

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."

Further Section 13 of the Act deals with the report of the Public Analyst. Sub-section 2 of Section 13 of the Act reads as under:

"13. Report of public analyst.--

............................

On receipt of the report of the result of the analysis under sub-section 1 to the effect that the article of food is adulterated the Local Health Authority shall, after the institution of prosecution against persons from whom the sample of the article of food was taken and the person, if any, whose name, address and other particulars have been disclosed under Sec. 14A, forward, in such manner as may be prescribed, a copy of the report of the result of the analysis to such person or persons, as the case may be, informing such person or persons that if it is so desired, either or both of them may make an application to the Court within a period of ten days from the date of receipt of the copy of the report to get the sample of the article of food kept by the Local Health Authority analysed by the Central Food Laboratory.

........................"

It is the settled principle of law that summoning an accused in criminal case is a serious matter. Hence, criminal law cannot be set in motion as a matter of course.

In the present case, admittedly the complainant has not asserted in the complaint as to who is the nominee under Section 172 of the Act of the Company. Therefore, the present case will be governed by Sub-clause ii of clause a of sub-section 1 of Section 17 of the Act. Sub-clause ii mandates that where no person is nominated, every person who at the time of offence committed was in charge will be responsible for the act of the company when it goes to prosecute the company for the offences committed under the Act.

In that behalf, the observations of the Hon''ble Apex Court in Pepsico India Holdings Pvt. Ltd. Vs. Food Inspector and Another, , which are reproduced herein under, in my view, will be the governing factor.

"50. As mentioned hereinbefore, the High Court erred in giving its own interpretation to the decision of this Court in S.M.S. Pharmaceuticals Ltd.''s case supra, which was reiterated subsequently in several judgments, some of which have been indicated hereinabove, and relying instead on the decision of Rangachari''s case supra, the facts of which were entirely different from the facts of this case. It is now well established that in a complaint against a Company and its Directors, the Complainant has to indicate in the complaint itself as to whether the Directors concerned were either in charge of or responsible to the Company for its day-to-day management, or whether they were responsible to the Company for the conduct of its business. A mere bald statement that a person was a Director of the Company against which certain allegations had been made is not sufficient to make such Director liable in the absence of any specific allegations regarding his role in the management of the Company."

Further in the case of State of NCT of Delhi through Prosecuting Officer, Insecticides, Government of NCT, Delhi Vs. Rajiv Khurana, the Hon''ble Apex Court in paragraph 17 has observed as under:

"17. The ratio of all these cases is; that the complainant is required to state in the complaint how a Director who is sought to be made an accused, was in charge of the business of the company or responsible for the conduct of company''s business. Every Director need not be and is not in charge of the business of the company. If that is this position with regard to a Director, it is needless to emphasise that in the case of non-Director officers, there is all the more necessary to state what were his duties and responsibilities in the conduct of business of the company and how and in what manner he is responsible or liable."

It will also be useful to reproduce sub-section 1 of Section 141 of the Negotiable Instruments Act, 1881, which reads as under:

"141. Offences by companies.

If the person committing an offence under section 138 is 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 nothing contained in this sub-section shall render any person liable to punishment if he proves that the offence was committed without his knowledge, or that he had exercised all due diligence to prevent the commission of such offence.

Provided further that where a person is nominated as a Director of a company by virtue of his holding any office or employment in the Central Government or State Government or a financial corporation owned or controlled by the Central Government or the State Government, as the case may be, he shall not be liable for prosecution under this Chapter.

Notwithstanding anything contained in sub-section 1, where any 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 relating to a firm, means a partner in the firm. "On close scrutiny of Sub-section 1 of Section 141 of the Negotiable Instruments Act, 1881 and Section 17 of the Prevention of Food Adulteration Act, 1954, it is clear that those are some what similar in nature.

It is to be noted that S.M.S. Pharmaceuticals Ltd. Vs. Neeta Bhalla and Another, was referred to the Larger Bench by the Two Judge Bench of the Apex Court on certain questions. Question b which was posed to the Larger Bench was as under:

b. Whether a Director of a company would be deemed to be in charge of, and responsible to, the company for conduct of the business of the company and, therefore, deemed to be guilty of the offence unless he proves to the contrary.

The Hon''ble Apex Court in the case of S.M.S. Pharmaceuticals Ltd. cited supra in paragraph 19 found as under:

"19. To sum up, there is almost unanimous judicial opinion that necessary averments ought to be contained in a complaint before a person 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 the respondent falls within the 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 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."

Ultimately, the Larger Bench gave its answer to question b posed in Reference as under:

"b. The answer to the question posed in sub-para b has to be in the negative. Merely being a director of a company is not sufficient to make the person liable under Section 141 of the Act. A director in a company cannot be deemed to be in charge of and responsible to the company for the conduct of its business. The requirement of Section 141 is that the person sought to be made liable should be in charge of and responsible for the conduct of the business of the company at the relevant time. This has to be averred as a fact as there is no deemed liability of a director in such cases."

On the touchstone of afore said principle, if the facts about the role of the Directors as asserted in the complaint is examined, then it is clear that the complaint is lacking from the material particulars and it does not show as to who are the persons incharge and responsible for day-to-day conduct of the business of the Company. Section 171 a ii of the Act mandates that the person must be responsible and incharge of the Company for the conduct of the business of the Company at the time of offence. Therefore, the nomenclature is not important. Merely because a person is Director or Manager that does not mean that ipso facto he is incharge and responsible for the conduct of the business of the Company. There must be clear, cut accusation in the complaint that the person by whatsoever nomenclature is incharge and responsible for the conduct of the business of the Company, if such person is to be prosecuted.

Even the learned Additional Public Prosecutor was unable to point out about the whisper of the allegation about the role of the applicants in commission of the alleged offence. What is expected in the complaint for making the persons like petitioners vicariously liable is that the complaint should clearly state that the accused in his/their capacity as a Director was in charge and was responsible to the day-to-day affairs of the company for the conduct of the business of the company. Further in absence of the averments in the complaint in clear words that the offence is committed with the consent and connivance or it is attributable to any neglect on the part of a person, such person cannot be held to have committed the offence under the Act.

Further, there is no accusation in clear words in the entire complaint that the Directors are responsible for the product not in conformity with the standard. In absence of such clear accusation it is really difficult to hold that such Directors can be prosecuted by taking the aid of sub-clause ii of clause a of sub-section 1 of Section 17 of the Act.

In so far as Section 13 of the Act is concerned, mentioning of few dates, as found in the complaint, will be important and useful to test the argument on behalf of the parties to the present application.

In the present case, admittedly the shelf life of the product was nine months.

From the dates, as afore mentioned, it is clear that the proposal for obtaining sanction was sent to the competent authority after nine months of the receipt of the public analyst report.

Sub-section 3 of Section 13 of the Act reads as under:

Report of Public Analyst:..............

The certificate issued by the Director of the Central Food Laboratory under sub-section 2B shall supersede the report given by the public analyst under sub-section 1.

.............................."

The Apex Court way back in the year 1967 in a case Municipal Corporation of Delhi Vs. Ghisa Ram, has observed as under:

"7. It appears to us that when a valuable right is conferred by s. 132 of the Act on the vendor to have the sample given to him analysed by the Director of the Central Food Laboratory, it is to be expected that the prosecution will proceed in such a manner that that right will not be denied to him. The right is a valuable one, because the 120 certificate of the Director supersedes the report of the Public Analyst and is treated as conclusive evidence of its contents. Obviously, the right has been given to the vendor in order that, for his, satisfaction and proper defence, he should be able to have the sample kept in his charge analysed by a greater expert whose certificate is to be accepted by Court as conclusive evidence in a case where there is denial of this right on account of the deliberate conduct of the prosecution, we think that the vendor, in his trial, is so seriously prejudiced that it would not be proper to uphold his conviction on the basis of the report of the Public Analyst, even though that report continues to be evidence in the case of the facts contained therein."

The learned Senior counsel, in my view, was right in making submissions that the delay in launching the prosecution has hampered the valuable right of the applicants because they could not exercise the said right.

This court is in full agreement with the submissions of the learned Senior counsel that, 1 it would have been hazardous to exercise the said right because the accused could never be sure that the sample will not undergo the change after its shelf life; and 2 the Central Food Laboratory would not have been in a position to tell the condition of the sample on the date of its seizure or around the said date, because the report will be on the date of the examination at a belated stage.

It is clear that delay is solely attributable to the prosecution only, if the delay is caused by the accused, then surely the accused are not entitled to raise the ground that their right to get the sample retested by the Central Food Laboratory is hampered. In my view, the dates disclosed clearly state that the negligence is on the part of the complainant.

It is to be noted that Section 132 of the Act states that the report of the public analyst is to be sent to the person from whom sample was taken after the institution of the prosecution. The matter is not res integra in view of the decision of the State of Maharashtra vs. Bhagvandas Gopaldas Bhate 1977 (1) FAC 123 that without instituting the prosecution it is no use serving the Public Analyst''s report on the accused.

In so far as the submission of the learned Additional Public Prosecutor that due to administrative exigencies there is delay in launching the prosecution is already disapproved by this court in a reported judgment in the case Shivkumar alias Shiwalamal Narumal Chugwani vs. State of Maharashtra 2010 (2) FAC 239. Therefore, if the delay is solely attributable to the prosecution, then it is clear that the indefeasible right of the applicants is in clear breach.

A specific ground is raised in the application by amendment that the shelf life of the product in question was nine months and after nine months the sample is rendered unfit for analysis. There is no dispute as to the said statement of fact from the complainant. In the said backdrop, it is clear that the prosecution was launched after the period of 12 months from the date of taking of sample.

In order to avail the indefeasible right available in view of Section 132 of the Act, the complainant was under obligation to launch the prosecution as early as possible and in any case before eight months from the date of the manufacture of the sample oil. Allowing to lapse the said period and launching the prosecution nearly after 12 months is nothing but an act on the part of the complainant to nullify the indefeasible right of the accused persons.

Therefore, this court is of the view that the said right is denied resulting in the denial of fair trial.

EVALUATION

In the light of the basic pleadings against the present applicants as found in the complaint and the submissions advanced in the light of law laid down by the Apex Court leads me to conclude that the complainant has failed to make necessary averments in the complaint vis-�-vis the present applicants that they are responsible for the day-to-day affairs of the company. Further, in absence of any material to show that their exist prima facie nexus between the applicants and alleged crime, it is really difficult to hold that the applicants can be prosecuted. Merely because the applicants are the Directors, as alleged in the complaint, the complainant cannot draw a presumption with regard to their involvement without specific averments in respect of their control over day-to-day business of the company.

Further, in the light of the chronology of dates mentioned in the preceding paragraph of this judgment, it is clear that the valuable right as available to the applicants under Section 132 of the Act was defeated, resulting into denial of fair trial to the applicants. The above conclusions of mine, leads me to pass the following order.

ORDER

i. Regular Criminal Case No. 29 of 1993, pending on the file of Chief Judicial Magistrate, Aurangabad is quashed and set aside against the applicants to their extent only and consequently it is dismissed against them.

ii. The order passed by the Chief Judicial Magistrate, Aurangabad, dated 24.3.1993 in Regular Criminal Case No. 29 of 1993 is hereby quashed and set aside qua the present applicants only.

iii. Rule is made absolute in the above terms.

iv. Application allowed.