Hindustan Unilever Limited vs State Of Madhya Pradesh

Hemant Gupta, J

The challenge in the present appeals is to an order passed by the High Court of Madhya Pradesh, Jabalpur on 9.1.2020 whereby the revision filed

by Shri Nirmal Sen, appellant/Nominated Officer (Incharge) of the Hindustan Unilever Limited [Hereinafter referred to as “Companyâ€.], was

allowed, however the matter was remitted back to the trial court to revisit the evidence adduced by both the parties, so far it relates to the appellants,

Nirmal Sen and the Company. The operative part of the order reads thus:

“8. If the company-Hindustan Lever Limited is acquitted of the charges, the said benefit will also directly go to the applicant. In view whereof, this

Court finds a glaring and patent defect in the judgment of the trial Court as well as in the judgment of the appellate Court, thus, this Court, in these

premises, finds it fit to interfere in the judgment of the trial Court in exercise of the revisional jurisdiction under Section 401(1) of Cr.P.C., hence, this

Court is inclined to set aside the conviction and sentence passed against the applicant being a nominated person of the company and remitted back the

matter to the trial Court for passing fresh judgment considering the company-Hindustan Lever Limited that had already been arrayed as an accused

along with the applicant.

In view of aforesaid discussions, this revision is allowed. The impugned conviction and sentence passed against the applicant is hereby set aside and

the matter is remitted back to the trial Court to revisit the evidence adduced by both the parties and also revisit its judgment dated 16/06/2015, so far

as it relates with the applicant and company-Hindustan Lever Limited thereafter again pass a separate judgment after providing opportunity of hearing

to the applicant as well as the company-Hindustan Lever Limited without getting prejudice with the discussions made by the appellate Court and this

Court.â€​

Brief facts leading to the present appeals are that a complaint was filed by Shri H.D. Dubey, Inspector, Food and Health, on the basis of a sample

taken on 7.2.1989 in respect of Dalda Vanaspati Khajoor Brand Ghee manufactured by the Company, in terms of the provisions of The Prevention of

Food Adulteration Act, 1954 [For short, the ‘1954 Act’]. The sample of Vanaspati Ghee was taken from the godown of Lipton India Limited

which was found to be adulterated as the melting point was found to be 41.8 degree centigrade which is higher than the normal range i.e. as against

31-41 degree centigrade. Initially, the complaint was filed against the Directors of the Company as well as that of Lipton India Limited. However, the

said proceedings came to be decided by this Court in a judgment reported as R. Banerjee & Ors. v. H.D. Dubey & Ors. (1992) 2 SCC 552 wherein it

was held as under:

“12. In the result, the appeals are allowed. The order of the learned Magistrate as well as the impugned order of the High Court are set aside. The

matters are remanded to the learned trial Magistrate with a direction to inquire into the question whether the nomination forms nominating H. Dayani

and Dr Nirmal Sen were received and acknowledged by the Local (Health) Authority competent to receive and acknowledge the same. This question

will be considered as a preliminary question and the learned magistrate will record a finding thereon. If he comes to the conclusion that the nomination

forms had been acknowledged by the competent Local (Health) Authority he shall drop the proceedings against the Directors of the company, other

than the company and the nominated persons. If on the other hand he comes to the conclusion that the prescribed forms had been acknowledged by a

person other than the competent Local (Health) Authority he will proceed against all the persons who are shown as the accused in the complaint i.e.

all the Directors including the nominated person and the company. The appeals are allowed accordingly.â€​

In terms of the directions of this Court, it appears that the learned trial court passed an order on 6.7.1993 absolving the Directors of the Company

and the prosecution was ordered to continue against the appellant Nirmal Sen. The said order is not on record but it appears that no proceedings were

continued against the Company inasmuch as it has four accused, namely, Lipton India Limited, Mohd. Saleem, Harish Dayani and Nirmal Sen were

arrayed as accused.

The Act was then repealed and the Food Safety and Standards Act, 2006 [For short, the ‘2006 Act’] came into force on 23.8.2006.

The learned trial court vide judgment dated 16.6.2015 convicted the appellant/Nominated Officer under various provisions of the 1954 Act. The

learned trial court held as under:

“58. That on the basis of the above complete evidence analysis, it is certified that on the day of the incident, the accused Dr. Nirmal Sen was a

nominee of Hindustan Limited Company and the goods of the said company were given to the palm plantation oil vanaspati from Godown Rathore

Clearing and Forwarding Agency, Panagar, Jabalpur, Mohd. Salim. Sale of Vanaspati by Hindustan Liver Limited to the complainant food inspector

H.D. Dubey went to purchase there. At the time when the said product was sold, the adulteration was came in light, and according to rule 32(f) of the

Act, the details were not even duly marked, which comes under the category of false impression in print of the packet or pouch.

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Therefore, the accused Dr. Nirmal Sen was found to be guilty under Section 2(1G)(K) r/w Section 32(F)/7(i)/16(A)(i) and Section 2(ia)(m) r/w

7(i)/16(1)/(a) (i) of Food Adulteration Act, 1954 and Food Adulteration and Prevention Act under Section 14 r/w Rule 2(A) r/w Section

7(v)/16(1C).â€​

A complete reading of the order passed by the trial court does not lead to an inference that the Company was represented at any stage during the

course of trial. It is to be noted that in the aforementioned judgment, there was no order passed by the learned trial court to convict the appellant-

Company of any offence. The appellant Nirmal Sen contested the proceedings and was convicted by the trial court.

In an appeal against the said judgment, the learned Additional Sessions Judge held that the prosecution was found to be maintainable against

Rathore Clearing and Forwarding Agency and the Company but the same was not mentioned in the impugned judgment and order. The Court held as

under:

“31. ….As per order dated 6.7.1993, the Hindustan Lever Limited also has been held accused, but erroneously, it could not have been mentioned

in the impugned judgment and order. As per law, any company is a legal personality and it cannot be undergo imprisonment sentence. The appellant

Nirmal Sen being the nominee for the offence of the aforesaid company, has been punished. In such situation, the appellant does not seem to be

entitled for get any benefit only on the mere technical grounds.â€​

The learned counsel for the appellant placed reliance on the judgment of this Court reported as Nemi Chand v. State of Rajasthan (2018) 17 SCC

448 before the learned Additional Sessions Judge, in support of the argument that pursuant to the repeal of the Act, only punishment of fine has been

contemplated under the 2006 Act. Thus, since the provisions of the 2006 Act are beneficial to the accused, the accused is entitled to such benefits

provided by the 2006 Act. It was found that the decision in Nemi Chand has been passed in exercise of the jurisdiction conferred on the constitutional

courts, but the First Appellate Court does not have any such specific constitutional power. The Court rejected the applicability of the 2006 Act as the

punishments imposed under the repealed Act have been saved by Section 97 of the 2006 Act.

The Court held as under:

“39. There is no doubt in it that as a result of amendment made by the post facto laws, if the sentence given for any offence is lessened or rejected

then the accused is entitled to get benefit of it under Article 20 of the Constitution of India. But is also mentionable that the accused has been

prosecuted and sentenced under the “Act†of 1954 in the matter under consideration and in place of it, the Food Safety and Standard Act, 2006

has been implemented since 24.08.2006. By section 97 (1) of this new Act, the Act of 1954 has been repealed but it also has been provided that action

could be kept continued under the repealed Act and any such penalty, confiscation or punishment could be charged like it that as if this Act be not

passed.

Thus, with regard to the offence occurred before the date of implementation of the new Act, the provisions of the “Act†of 1954 have

applicability and it cannot be held the punishment has been lessened by amending in the offence under Section 16 of the old Act by the new Act. It

seems from the records that the case has remained pending for several years before the Ld. Trial Court but several Stays submitted by the accused

persons are also responsible for this delay and on this ground, they are not entitled for any sympathy. Keeping in view to the gravity of the offence, the

sentence awarded to the appellant Nirmal Sen by the Ld. Subordinate Court in the case seems in accordance with law and of appropriate and no need

to interfere in it does not seem.â€​

With the aforesaid discussion, the learned Additional Sessions Judge affirmed the conviction of the appellant/Nominated Officer but the conviction

of the accused Harish Dayani and Mohd. Saleem was set aside and they were acquitted.

The High Court in its order noticed that if the Company is acquitted of the charges, the said benefit will also directly go to the appellant/Nominated

Officer. A glaring and patent defect in the judgment of the trial court as well as in the judgment of the appellate court was observed by the High

Court. Thus, the conviction and sentence passed against the appellant, being a nominated person of the Company, was set aside and the matter was

remitted back to the trial Court for passing fresh judgment.

Before this Court, two-fold arguments were raised by the learned counsels for the appellants. Dr. Abhishek Manu Singhvi, learned senior counsel

appearing on behalf of the appellant/Nominated Officer argued that the appellant was charged for the violation of Section 2(ia)(m) read with Section

7(i) of the Act. Such violation attracted a sentence of not less than six months and up to 3 years and a fine of Rs.1,000/- under Section 16(1)(a)(i),

whereas under the 2006 Act, the punishment of such adulteration which is related to only higher melting point is fine of Rs.5 lakhs and Rs.1 lakh under

Sections 3(1)(zx) and 3(1)(i) respectively. The reliance is placed upon judgments of this Court in T. Barai v. Henry Ah Hoe & Anr. (1983) 1 SCC

177, Nemi Chand and Trilok Chand v. State of Himachal Pradesh Criminal Appeal No. 1831 of 2010 decided on 1.10.2019.

Mr. Siddharth Luthra, learned senior counsel for the appellant-Company raised an argument that the Company was not convicted by the trial

court. Therefore, the High Court in revision could not have passed an order of retrial, more so when the Company was not given any notice of being

heard. Since there was no order of conviction by the trial court, as also no opportunity of hearing was given, such order is in contravention of sub-

section (2) of Section 401 of the Code of Criminal Procedure, 1973 [For short, the ‘Code’]. Section 401 (2) of the Code reads thus:

“401(2). No order under this section shall be made to the prejudice of the accused or other person unless he has had an opportunity of being heard

either personally or by pleader in his own defence.â€​

We do not find any merit in the arguments raised by Dr. Singhvi with respect to the punishment provided under the 2006 Act. The judgment of this

Court in T. Barai is consequent to amendment in the Act when Section 16A was inserted by the Parliament. Similarly, the judgment in Nemi Chand

was a judgment arising out of the amendment in the Act only. The benefit of amendments in the Act, has been rightly granted to the accused in an

appeal arising out of the proceedings under the Act. But in the present case, the Act has been repealed by Section 97 of the 2006 Act, however, the

punishments imposed under the Act have been protected. Section 97 of the 2006 Act, which came into force on 5.8.2011, is as follows:

“97. Repeal and savings.â€"(1) With effect from such date* as the Central Government may appoint in this behalf, the enactment and orders

specified in the Second Schedule shall stand repealed:

Provided that such repeal shall not affect:â€

(i) the previous operations of the enactment and orders under repeal or anything duly done or suffered thereunder; or

(ii) any right, privilege, obligation or liability acquired, accrued or incurred under any of the enactment or orders under repeal; or

(iii) any penalty, forfeiture or punishment incurred in respect of any offences committed against the enactment and orders under repeal; or

(iv) any investigation or remedy in respect of any such penalty, forfeiture or punishment,

and any such investigation, legal proceedings or remedy may be instituted, continued or enforced and any such penalty, forfeiture or punishment may

be imposed, as if this Act had not been passed:

(2) If there is any other law for the time being in force in any State, corresponding to this Act, the same shall upon the commencement of this Act,

stand repealed and in such case, the provisions of Section 6 of the General Clauses Act, 1897 (10 of 1897) shall apply as if such provisions of the

State law had been repealed.

(3) Notwithstanding the repeal of the aforesaid enactment and orders, the licences issued under any such enactment or order, which are in force on

the date of commencement of this Act, shall continue to be in force till the date of their expiry for all purposes, as if they had been issued under the

provisions of this Act or the rules or regulations made thereunder.

(4) Notwithstanding anything contained in any other law for the time being in force, no court shall take cognizance of an offence under the repealed

Act or orders after the expiry of a period of three years from the date of the commencement of this Act.â€​ (Emphasis Supplied)

Section 6 of the General Clauses Act, 1897 provides the effect of repeal as under:

“Where this Act or any Central Act or Regulation made after the commencement of this act repeals any enactment hitherto made or hereafter to

be made, then, unless a different intention appears, the repeal shall not-

(e) affect any investigation, legal proceeding or remedy in respect of any such right, privilege, obligation, liability, penalty, forfeiture or punishment.......

and any such investigation, legal proceeding or remedy may be instituted, continued or enforced, and any such penalty, forfeiture or punishment may

be imposed as if the Repealing Act or Regulation had not been passed.â€​

In terms of Section 6 of the General Clauses Act, 1897, unless dif-ferent intention appears, the repeal of a statute does not affect any investigation,

legal proceeding or remedy in respect of any such right, privilege, obligation, liability, penalty, forfeiture or pun-ishment and any such investigation, legal

proceeding or remedy may be instituted, continued or enforced, and any such penalty, forfeiture or punishment may be imposed as if the Repealing

Act or Regulation had not been passed. But in the 2006 Act, the re-peal and saving clause contained in Section 97 (1)(iii) and (iv) specifically provides

that repeal of the Act shall not affect any in-vestigation or remedy in respect of any such penalty, forfeiture or punishment and the punishment may be

imposed, “as if the 2006 Act had not been passedâ€. The question as to whether penalty or prosecution can continue or be initiated under the

repealed provi-sions has been examined by this Court in State of Punjab v. Mohar Singh AIR 1955 SC 84, wherein this Court examined Section 6 of

the General Clauses Act which is on lines of Section 38(2) of the Interpretation Act of England. It was held as under:

“6. Under the law of England, as it stood prior to the Interpretation Act of 1889, the effect of repealing a statute was said to be to obliterate it as

completely from the records of Parliament as if it had never been passed, except for the purpose of those actions, which were commenced,

prosecuted and concluded while it was an existing law [ Vide Craies on Statute Law, 5th edn, p. 323] . A repeal therefore without any saving clause

would destroy any proceeding whether not yet begun or whether pending at the time of the enactment of the Repealing Act and not already

prosecuted to a final judgment so as to create a vested right [ Vide Crawford on Statutory Construction, p. 599-600w]. To obviate such results a

practice came into existence in England to insert a saving clause in the repealing statute with a view to preserve rights and liabilities already accrued

or incurred under the repealed enactment. Later on, to dispense with the necessity of having to insert a saving clause on each occasion, Section 38(2)

was inserted in the Interpretation Act of 1889 which provides that a repeal, unless the contrary intention appears, does not affect the previous

operation of the repealed enactment or anything duly done or suffered under it and any investigation, legal proceeding or remedy may be instituted,

continued or enforced in respect of any right, liability and penalty under the repealed Act as if the Repealing Act had not been passed. Section 6 of the

General Clauses Act, as is well known, is on the same lines as Section 38(2) of the Interpretation Act of England.

The offence committed by the respondent consisted in filing a false claim. The claim was filed in accordance with the provision of Section 4 of the

Ordinance and under Section 7 of the Ordinance, any false information in regard to a claim was a punishable offence. The High Court is certainly

right in holding that Section 11 of the Act does not make the claim filed under the Ordinance a claim under the Act so as to attract the operation of

Section 7. Section 11 of the Act is in the following terms:

“The East Punjab Refugees (Registration of Land Claims) Ordinance 7 of 1948 is hereby repealed and any rules made, notifications issued,

anything done, any action taken in exercise of the powers conferred by or under the said Ordinance shall be deemed to have been made, issued, done

or taken in exercise of the powers conferred by, or under this Act as if this Act had come into force on 3rd day of March, 1948â€​.

……………….The truth or falsity of the claim has to be investigated in the usual way and if it is found that the information given by the claimant is

false, he can certainly be punished in the manner laid down in Sections 7 and 8 of the Act. If we are to hold that the penal provisions contained in the

Act cannot be attracted in case of a claim filed under the Ordinance, the results will be anomalous and even if on the strength of a false claim a

refugee has succeeded in getting an allotment in his favour, such allotment could not be cancelled under Section 8 of the Act. We think that the

provisions of Sections 47 and 8 make it apparent that it was not the intention of the Legislature that the rights and liabilities in respect of claims filed

under the Ordinance shall be extinguished on the passing of the Act, and this is sufficient for holding that the present case would attract the operation

of Section 6 of the General Clauses Act. It may be pointed out that Section 11 of the Act is somewhat clumsily worded and it does not make use of

expressions which are generally used in saving clauses appended to repealing statutes; but as has been said above the point for our consideration is

whether the Act evinces an intention which is inconsistent with the continuance of rights and liabilities accrued or incurred under the Ordinance and in

our opinion this question has to be answered in the negative.â€​

In another judgment reported as Tiwari Kanhaiyalal & Ors. v. Commissioner of Income Tax, Delhi (1975) 4 SCC 101, the assessments were

completed under the Income Tax Act, 1922 after the Income Tax Act, 1961 came into force. There was search on the premises of the assessee. The

revised returns were filed after the Income Tax Act, 1961 came into force. The penalty proceedings were initiated and it was levied under the 1961

Act. Later, the complaints were filed alleging commission of the offences under Section 277 of 1961 Act. Another set of complaints were filed under

the Income Tax Act, 1922. This Court held that the complaints under the 1922 Act remains unaffected. It was held as under:

“7. It is advisable to discuss and dispose of a new point which arose during the hearing of these appeals. Sub-section (1) of Section 297 of the 1961

Act repealed the 1922 Act including Section 52. In sub-section (2) no saving seems to have been provided for the launching of the prosecution under

the repealed Section 52 of the 1922 Act. It does not seem correct to take recourse to clause (h) of Section 297(2) to make the offences come under

Section 277 of the 1961 Act as was endeavoured to be done by the respondent in the first 12 complaint petitions. But then from no clause under sub-

section (2) a different intention appears in this regard from what has been said in Section 6 of the General Clauses Act. On the facts alleged the

criminal liability incurred under Section 52 of the 1922 Act remains unaffected under clause (c) of Section 6 of the General Clauses Act….â€​

Thus, in view of Section 97 of the 2006 Act, as also under Section 6 of the General Clauses Act, 1897, the proceedings would continue under the

Act. No benefit can be taken under the 2006 Act as the prosecution and punishment under the Act is protected.

The judgment of this Court in Trilok Chand is the only judgment which has given benefit of the 2006 Act and the sentence was imposed by

imposing a fine of Rs.5,000/-. The attention of the Court was not drawn to Section 97 of the 2006 Act, which protects the punishments given under the

repealed Act. Therefore, the order in Trilok Chand is on its own facts.

However, we find merit in the argument of Mr. Luthra that the order of remand by the High Court to the trial court against the Company cannot

be sustained for the reason that such an order was passed without giving an opportunity of hearing, as contemplated under Section 401(2) of the Code.

The question thus now narrows down as to whether the course adopted by the High Court to remand the matter to the trial court after more than 30

years to cure the defect which goes to the root of the trial, though permissible in law, is justified.

A three-Judge Bench of this Court in Aneeta Hada v. Godfather Travels & Tours Private Limited (2012) 5 SCC 661 considered the question of

conviction of the Directors in the absence of the Company in proceedings under Section 138 of the Negotiable Instruments Act, 1881 [For short, the

‘NI Act’] as also in the proceedings under Information Technology Act, 2000. This Court held that Section 141 of the NI Act dealing with

offences by companies contemplates 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 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. This Court, considering the said provision, held as under:

“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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We have referred to the aforesaid passages only to highlight that there has to be strict observance of the provisions regard being had to the

legislative intendment because it deals with penal provisions and a penalty is not to be imposed affecting the rights of persons, whether juristic entities

or individuals, unless they are arrayed as accused. It is to be kept in mind that the power of punishment is vested in the legislature and that is absolute

in Section 141 of the Act which clearly speaks of commission of offence by the company. The learned counsel for the respondents have vehemently

urged that the use of the term “as well as†in the section is of immense significance and, in its tentacle, it brings in the company as well as the

Director and/or other officers who are responsible for the acts of the company and, therefore, a prosecution against the Directors or other officers is

tenable even if the company is not arraigned as an accused. The words “as well asâ€​ have to be understood in the context.

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Applying the doctrine of strict construction, we are of the considered opinion that commission of offence by the company is an express condition

precedent to attract the vicarious liability of others. Thus, the words “as well as the company†appearing in the section make it absolutely

unmistakably clear that when the company can be prosecuted, then only the persons mentioned in the other categories could be vicariously liable for

the offence subject to the averments in the petition and proof thereof. One cannot be oblivious of the fact that the company is a juristic person and it

has its own respectability. If a finding is recorded against it, it would create a concavity in its reputation. There can be situations when the corporate

reputation is affected when a Director is indicted.

In view of our aforesaid analysis, we arrive at the irresistible conclusion that for maintaining the prosecution under Section 141 of the Act,

arraigning of a company as an accused is imperative. ……….â€​

Section 17 of the Act reads as under:

“17. Offences by companiesâ€"(1) Where an offence under this Act has been committed by a companyâ€

(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

(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) **** *****â€​

Clause (a) of Sub-Section (1) of Section 17 of the Act makes the person nominated to be in charge of and responsible to the company for the

conduct of business and the company shall be guilty of the offences under clause (b) of Sub-Section (1) of Section 17 of the Act. Therefore, there is

no material distinction between Section 141 of the NI Act and Section 17 of the Act which makes the Company as well as the Nominated Person to

be held guilty of the offences and/or liable to be proceeded and punished accordingly. Clauses (a) and (b) are not in the alternative but conjoint.

Therefore, in the absence of the Company, the Nominated Person cannot be convicted or vice versa. Since the Company was not convicted by the

trial court, we find that the finding of the High Court to revisit the judgment will be unfair to the appellant/Nominated Person who has been facing trial

for more than last 30 years. Therefore, the order of remand to the trial court to fill up the lacuna is not a fair option exercised by the High Court as the

failure of the trial court to convict the Company renders the entire conviction of the Nominated Person as unsustainable.

In view of the above, the appeals are allowed and the order passed by the High Court is set aside. Resultantly the complaint is dismissed.