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Judgment
V.M. Deshpande, J.—Rule. With the consent of the parties, Rule is made returnable forthwith. Heard Shri R.R. Mantri, learned counsel for the applicants, Shri V.D. Godbharle, learned Additional Public Prosecutor for respondent nos. 1 and 2 and Shri Dilip B. Rode, learned counsel for respondent No. 3.
At the out set, learned counsel for the applicants submitted that he is not pressing present application qua applicant No. 19-Rajendra Vamanrao Gaikwad.
The present application is filed before this court with a prayer that by invoking inherent powers of this court the proceedings bearing S.T.C.C. No. 364 of 2008, pending on the file of Judicial Magistrate, First Class, Shrigonda, District Ahmednagar be quashed and the applicants be discharged from the offences under Sections 7(i) r/w Section 2(ia)(a), 2(ia)(m) punishable under Sections 16 and 17 of the Prevention of Food Adulteration Act, 1954.
The factual position can be narrated as under:-
Food Inspector, Food and Drugs Administration, Maharashtra State, filed a complaint in the court of Judicial Magistrate, First Class, Shrigonda, District Ahmednagar against the present applicants and others and respondent No. 3. The said complaint was registered as S.T.C.C. No. 364 of 2008. According to the said complaint, the complainant is a Food Inspector appointed u/s 9 of the Prevention of Food Adulteration Act, 1954 (for short hereinafter referred to as, "the said Act") and the Rules made thereunder. He asserted in the complaint that he is authorized to institute the prosecution.
The complaint further discloses that, one Dhondiba Bapu Lagad is vendor and Chemist of M/s. Shrigonda Taluka Sahakari Dudh Utpadak Sangh Maryadit, situated at Kashti (Dhokrai Phata), Tq. Shrigonda, District Ahmednagar and is doing business of storing for sale and selling adulterated food article Cow Milk.
The complainant further alleges that on 31.7.2007 at about 13.15 hrs., the complainant, Food Inspector along with independent punch witnesses visited the premises of M/s. Shrigonda Taluka Sahakari Dudh Utpadak Sangh. At the time of visit, Dhondiba Bapu Lagad, who was arrayed as accused No. 1 in the complaint, was doing business of Manufacturing for sale, stocking for sale and distributing for sale Cow Milk. Upon disclosure of his identity and intention of drawing the sample of food articles for analysis to accused No. 1, the Food Inspector inspected the premises and then demanded and purchased 1500 Ml of Cow Milk from storage Tank No. 1 having quantity approximately 10,000/- liters. The complaint further discloses that, accused No. 1 gave 1500 Ml Cow Milk from Tank No. 1 in empty, dry and clean steel pot. The price of the said sample was paid in cash by the complainant to accused No. 1. He issued intimation notice in Form VI to accused No. 1 and also issued notice u/s 14-A of the said Act.
According to the complaint, on 1.8.2007 the sample was sent to the Public Analyst. The complaint further discloses that on 7.9.2007 the complainant received a report from the Public Analyst bearing No. 132, dated 7.9.2007. The report of the Public Analyst opined that the sample of Cow Milk does not conform to the standards of Cow Milk as per the Prevention of Food Adulteration Rules, 1955. The complaint further discloses that the complainant received necessary consent, dated 28.3.2008 to prosecute the accused persons from the Joint Commissioner, Nashik Division, Food and Drugs Administration, Maharashtra State, Nashik.
According to the complaint, Cow Milk is a food article within the meaning of Section 2(v) of the said Act. As per Section 7(i) of the said Act, no person shall himself or by any person on his behalf manufacture for sale or store, sell or distribute any adulterated food. The complaint further accuses that in view of Section 2(ia)(a) of the said Act the food article is adulterated. Paragraph 17 of the complaint reads as under:-
17) That, the complainant therefore charges that the accused No. 1 on 31.7.2007 at about 13.15 hrs Manufacturing for sale, stocked for sale and sold an adulterated article of food i.e. Cow Milk to Complainant Food Inspector, Nashik and thereby committed an offence u/s 7(i) r/w Section 2(ia)(a), 2(ia)(m) punishable under Sections 16 & 17 of the Prevention of Food Adulteration Act, 1954 and Rules made thereunder.
The applicants appeared before the learned Magistrate. Initially, an application for discharge was moved by the present applicants and others before the learned Magistrate. The said application is at Exh. 97. The said application was rejected by the learned Judicial Magistrate, First Class, Shrigonda on 30.9.2013.
Initially, the said order was challenged before this court by filing Revision u/s 397 of the Code of Criminal Procedure. The said Revision was registered as Criminal Revision No. 215 of 2013. During the pendency of the said Criminal Revision, the Revision applicants were permitted by this court to convert the said Revision into an application u/s 482 of the Code of Criminal Procedure. The prayer clause was also amended to the effect to incorporate the prayer to quash the entire complaint and prosecution in S.T.C.C. No. 364 of 2008.
Respondent No. 3 is a co-operative society (Milk) duly registered under the Maharashtra Cooperative Societies Act. It deals in collection of milk produced by its members, chilling the same in its chilling plant and by adhering with the standards prescribed under the said Act, sells it to the prospective customers in bulk. Respondent No. 3 had employed about 54 persons including 3 chemists.
SUBMISSIONS:-
The learned counsel for the applicants submitted that applicant nos. 1 to 18 are elected Directors of Respondent No. 3. According to him, they have no concern or have any control over the day-to-day affairs or the conduct of the business of respondent No. 3. They hail from various places. Respondent No. 3 has appointed Shri Dhondiba Bapu Lagad as chemist and he was in charge of the entire affairs of the chilling plant. Applicant No. 19 is the manager of the said society.
According to the learned counsel for the applicants, continuance of the complaint No. 364 of 2008 in the court of Judicial Magistrate, First Class, Shrigonda against the present applicants is nothing but abuse of process of law. According to him, the complaint lacks material allegation that the present applicants are in charge of and/or responsible for the conduct of the business of respondent No. 3 society. He submitted that in absence of these assertions of fact in the complaint, the present applicants cannot be prosecuted for the offences for which they are charged in the complaint, and therefore, the present complaint be quashed and set aside qua present applicants. He relied upon the following decisions:-
Pepsico India Holdings Pvt. Ltd. Vs. Food Inspector and Another, Adhiraj Amar Kannhaiyalal Sarin Director of Bunge India Private Limited and Others Vs. State of Maharashtra at the instance of Food Inspector Sandeep S. Deore, Food Inspector, Nagpur Division,
Com Products Co. (India) Ltd. And others V. State of Maharashtra and others [2005 (1) Bom.C.R. (Cri.) 419]
Keki Bomi Dadiseth and others V. State of Maharashtra [2005 ALL MR (Cri) 681]
Girdhari Lal Gupta Vs. D.H. Mehta and Another,
S.M.S. Pharmaceuticals Ltd. Vs. Neeta Bhalla and Another,
He submitted that in view of the law laid down by the Apex Court in Pepsico India Holdings Pvt. Ltd. and S.M.S. Pharmaceuticals Ltd., though the said case is under the provisions of Negotiable Instruments Act, it deals with offences committed by Company, the present application be allowed.
Per contra, learned Additional Public Prosecutor submitted that before initiating the prosecution against the applicants and others, complainant Food Inspector has followed mandatory provisions of the said Act. The sample was sent to the Public Analyst and after obtaining consent from the competent authority, the prosecution is launched. He, therefore, submitted that the application be dismissed and the applicants be required to face the trial.
CONSIDERATIONS:-
In order to decide the controversy, it would be useful to have a glance to Section 17 of the said Act. Section 17 of the said Act deals with the offences by the Company. Section 17 of the said Act 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.
(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 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.
(3) The person nominated under subsection (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.
(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 subsection (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.
Bare reading of the afore said provision clearly reveals that a person, who is nominated 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.
In the present case, admittedly respondent No. 3 has not nominated any person by giving order in writing, who would be responsible to the conduct of the business of the Company or a person responsible.
Since there is no person nominated, the present case is covered under sub-clause (ii) of clause (a) of sub-section (1) of Section 17 of the said Act. Sub-clause (ii) mandates that when 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. Therefore, the most essential ingredient of the complaint shall be the disclosure and assertion on the part of the complainant that the person whom the complainant wants to prosecute is a person in charge of and responsible to the day-to-day conduct of the business of the Company.
Hon''ble Apex Court in Pepsico India Holdings Pvt. Ltd. (cited supra) was dealing with the matter under the Prevention of Food Adulteration Act and the offences by the Company. Paragraph 39 of the said judgment deals with Section 17 of the said Act, which is reproduced as under:-
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.
Section 141 of the Negotiable Instruments Act also deals with the offences by Companies. Sub-section (1) of Section 141 of the Negotiable Instruments Act, 1881 reads thus:-
Offences by companies.-(1) If the person committing an offence u/s 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.
(2) 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. (cited supra) was referred to the Larger Bench by two Judge Bench of the Apex court and 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 u/s 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 u/s 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 u/s 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.
In the light of afore said dictum, the court has to examine and scrutinize the statement of accusation and the averments made in the complaint vis-a-vis the present applicants in respect of the fact that whether they are in charge or responsible to respondent No. 3 for its day-to-day management or whether they are responsible to respondent No. 3 for the conduct of its business.
It is an admitted fact that except paragraph 18 of the complaint, there is nothing against applicant nos. 1 to 18. Even the learned Additional Public Prosecutor was unable to point out anything from the complaint, by which it could be demonstrated that any of the applicant nos. 1 to 18 were responsible for the conduct of the business of respondent No. 3 and/or they were in charge of and responsible to the conduct of business of respondent No. 3. Paragraph 18 of the complaint reads as under:-
18) That, complainant further charges that, the accused No. (2) to (20) as a Director of the firm of M/s. Shrigonda Taluka Sahakari Dudh Utpadak Sangh Maryadit, situated at Kashti, (Dhokrai Phata), Tal. Shrigonda, District Ahmednagar and the (21) is the firm also responsible for said committed offence for stocked for sale and sold an adulterated food article i.e. Cow Milk and thereby committed an offence u/s 7(i) r/w Section 2(ia)(a), 2(ia)(m) punishable u/s 16 & 17 of the Prevention of Food Adulteration Act, 1954 and Rules made thereunder.
Bare reading of paragraph 18 of the complaint clearly shows that it lacks from the necessary averment in the complaint in order to fasten any liability on the applicants. A mere bald statement that they are the Directors of the Firm-respondent No. 3, is not sufficient to make them liable in absence of any specific allegation regarding their role in the management of respondent No. 3.
This Court, in Adhiraj''s case (cited supra), has also expressed that in absence of any particulars in the complaint as regards the complicity of any of the Directors in the crime, it cannot be held that all the Directors are responsible for commission of the crime.
Therefore, it is crystal clear that in absence of any specific allegation about the role of each of the applicants, namely applicant nos. 1 to 18 in the management of respondent No. 3, such complaint cannot stand to the scrutiny of law and the continuance of such complaint, in my view, will be abuse of process of law.
CONCLUSION:-
In view of the afore said discussion, I am of the view that the complaint bearing S.T.C.C. No. 364 of 2008, pending on the file of Judicial Magistrate, First Class, Shrigonda, District Ahmednagar needs to be quashed, in so far as present applicant nos. 1 to 18 are concerned. Hence I pass the following order.
ORDER
(i) The complaint bearing S.T.C.C. No. 364 of 2008, pending on the file of the Judicial Magistrate, First Class, Shrigonda, District Ahmednagar is hereby quashed and set aside.
(ii) The present application qua applicant No. 19-Rajendra Vamanrao Gaikwad is hereby dismissed.
(iii) The complaint S.T.C.C. No. 364 of 2008, pending on the file of the Judicial Magistrate, First Class, Shrigonda, District Ahmednagar shall continue against applicant No. 19-Rajendra Vamanrao Gaikwad, respondent No. 3 and other accused persons, except applicant nos. 1 to 18.
(iv) Rule made absolute in the above terms.
(v) Application is disposed of. No costs.