Rajinder Singh vs State of Punjab

B. Rai, J.

These are 17 petitions bearing Nos. 13094, 13096M, 12342M, 12344M, 12346M, 12348M, 12350M, 12352M, 12354M, 12356M, 12358M, 12360M, 12362M, 12364M, 12366M, 12368M and 12370M of 1998. All the petitions except petition No. 12344M of 1998 have been filed under Section 482 Cr.P.C. read with Article 227 of the Constitution of India for quashing the complaints made in each case against the officers/officials of M/s. Shivalik Fertilizer Limited, SCO 45758, Sector 35C, Chandigarh and M/s Munak Chemicals Limited SCO No. 12, Sector 26, Madhya Marg, Chandigarh under Section 7 of the Essential Commodities Act, 1955, read with clause 19(i)(a) of the Fertilizer Control JUDGMENT 1985 and all subsequent proceedings arising therefrom. It may be mentioned that Crl. M. No. 12344M of 1998 has been filed for quashing of FIR No. 62 dated 21.6.1994 registered at Police Station, Haryana, Distt. Hoshiarpur under Section 7 of the Essential Commodities Act, 1955 and clause 19(i)(a) of the Fertilizer Control JUDGMENT 1985.

In all these petitions common question of law and fact arise for consideration, therefore, all these petitions shall be disposed of by a common judgment. Facts are being taken from Crl. M. No. 13096M of 1998.

M/s Shivalik Fertilizer Limited has its Head Office at Chandigarh. It is a licensed manufacturer and deals in manufacturing and selling of Super Phosphate 16% having its manufacturing plant at village Railmajra District Ropar.

Fertilizer has been declared as essential commodity vide Govt. of India Notification SR 1048 dated 29th March, 1957. Malkiat Singh Field Officercum Incharge, Ajit Singh, Khushal Singh Field Assistants are officers of the MARKFED Branch, Machhiwara and Shri Rajinder Singh, Production Manager is the person responsible under clause 24 of the Fertilizer Control JUDGMENT 1985, of M/s Shivalik Fertilizers Ltd., Railmajra. Machhiwara Branch of the Punjab State Cooperative Supply and Marketing Federation Limited (for short MARKFED) is in sale of fertilizers and is holding Dealer Registration Certificate No. 23/325 for the sale of wholesale fertilizers. Shri Jarnail Singh, Agricultural Inspector, Machhiwara notified as Fertilizer Inspector, is empowered to have the jurisdiction in his area for the purpose of the said Control JUDGMENTHe is empowered to draw the samples of fertilizers. On 19.11.1990. Jarnail Singh Inspector along with Nirmal Singh Agricultural Sub Inspector, Machhiwara visited the MARKFED Branch Machhiwara. He took sample of single super phosphate 16% (Granular) "Basant Brand" manufactured by M/s Shivalik Fertilizers Ltd., Railmajra exercising his powers under clause 28(1)(b) of the Fertilizer Control JUDGMENT 1985. The sample was drawn strictly in accordance with the procedure prescribed in Schedule II of the said Control JUDGMENT 1985. Shri Malikat Singh Field Officer Incharge, Ajit Singh and Shri Khushal singh, Field Assistants, MARKFED Branch Machhiwara, who were incharge of the sale of fertilizers in the Branch were present at the time of taking of sample. Seizure memo in Form "J" was prepared in the presence of Malkiat Singh, Ajit and Khushal Singh. The sample was taken out of 43 ton 5 Qtls lot single super phosphate 16% which was in balance at that time. This sample was taken with the use of sampling probe and fertilizer was taken out from the selective bags at random and was thoroughly mixed and test sample was prepared. It was constituted into three equal portions of about 400 gms each. Each test sample portion was put into thick polythene gauge envelope and then putting each sample portion into dry empty cloth bag along with detailed description i.e. on form "J" duly signed by Malkiat Singh, Ajit Singh and Khusal Singh. These three test sample were made airtight then tied properly and identification marks Code No. 10 etc. were written on the sampling bags and these samples were sealed with the brass seal of Fertilizer Inspector bearing Mark (F1). The Branch officials had not put the seal as they did not possess the brass seal to affix on the samples. Two "K" forms were also filled in their presence. One out of three samples was handed over to the Branch Incharge of Machhiwara at the spot. Second sample was deposited with the Fertilizer Quality Control Laboratory, Ludhiana for analysis along with form "K" vide letter No. 693 dated 20.11.1990 to the Analytical Chemist. That sample was received by Shri Gurnam Singh Fertilizer Inspector, working in the Fertilizer Quality Control Lab, Ludhiana and the third sample was deposited in the office of Chief Agricultural Officer, Ludhiana with A.I. (E) Ludhiana being reference sample. The Analytical Chemist found the sample non standard vide his report AR No. 4074 dated 31.12.1990 received in the office of Chief Agricultural Officer on 3.1.1991. It is alleged that the accused violated the provisions of clause 19(i)(e) of the Fertilizer Control JUDGMENT 1985 by selling and stocking of this nonstandard fertilizer. This non standard fertilizer was manufactured and distributed by M/s Shivalik Fertilizer Limited, Railmajra and Shri Rajinder Singh, Production Manager of the Company who was appointed as the person responsible under clause 24 of the above said order by the company also violated clause 19(i)(e) of the Control JUDGMENT 1985 by manufacturing and distributing nonstandard fertilizer.

A show cause notice was served on Machhiwara Branch of MARKFED vide letter No. 6339 dated 8.1.1991 and a copy of the Analyst report was also sent along with this show cause notice. It was also served on the manufacturer vide letter No. 6332 dated 8.1.1991. Both the parties were also heard in person on 11.2.1991 and 20.2.1991 respectively. The sale of balance stock lying with the said branch was stopped on 14.11.1991 by the Agricultural Officer, Machhiwara. It was alleged that the accused violated the provisions of clause 19(i)(a) of the Fertilizer Control JUDGMENT 1985 issued under section 3 of the Essential Commodities Act, 1955 which is punishable under Section 7 of the said Act.

Despite opportunities having been granted to the respondents, no reply to the petition was filed. It was submitted that since pure question of law is involved, therefore, it would be suffice to address the arguments only. Arguments have been heard and record perused.

Admittedly the sample was taken from the stocks of the fertilizer available with MARKFED Branch Office, Machhiwara. On analysis by the Analytical Chemist, Quality Control, Ludhiana, it was found nonstandard but there is nothing to show that at the relevant time, the alleged contravention was committed, the petitioners were incharge and were responsible to the company for the conduct of the business of the company as well as the company. Therefore, the petitioner cannot be held to be guilty of the alleged contravention. There is also nothing to indicate that the alleged commission of contravention was in the knowledge of the petitioner or that he has not exercised due diligence to prevent such contravention. It was next argued that any Director, Manager, Secretary or other officer of the company can be said to be guilty of the offence only when the company itself is proved to have committed the offence. If any contravention of any provision of the Fertilizer Control JUDGMENT 1985 or any offence under the Essential Commodities Act is alleged to have been committed by the Company, any Director, Manager, Secretary or other officer of the Company cannot be held guilty of any contravention of the Fertilizer Control JUDGMENT or commission of the offence under the provisions of the Essential Commodities Act only if Company is held guilty. With vehemence, it was argued that in the instant case there is neither any allegation against the company manufacturing the fertilizer that it has contravened any provision of the Control JUDGMENT or has violated any provisions of the Essential Commodities Act nor the company itself has been arraigned as accused. Therefore, officer/Manager of the company cannot be held guilty of any offence. Therefore, filing of the complaint against the petitioner is nothing but an abuse of the process of law. As such the complaint and other proceedings arising thereof deserve to be quashed.

Clause 2(f) of the Fertilizer (Control) JUDGMENT 1985 defines dealer as under :

"dealer" means a person carrying on the business of selling fertilizers, whether wholesale or retail or industrial use and includes a manufacturer and a pool handling agency carrying on such business and the agents of such person, manufacturer or pool handling agency."

Clause 19 deals with the restriction on manufacture, sale and distribution of fertilizers. It provides that no person shall himself or by any other person on his behalf can manufacture for sale, sell, offer for sale, stock or exhibit for sale or distribute any fertilizer which is not of prescribed standard. To the same effect is restriction in respect of mixtures of fertilizer which is not of prescribed standard subject to such limits of permissible variation as may be specified from time to time by the Central Government or special mixture of fertilizers which does not conform to the particulars specified in the certificate of manufacture granted to him under the order in respect such special mixture. Apart from these restrictions, a manufacturer is prohibited from manufacturing for sale, sell, offer for sale, stock or exhibit for sale or distribute any fertilizer which is adulterated.

Section 10 of the Essential Commodities Act, 1955 (hereinafter referred to as the Act) deals with the offences by Companies and it reads as under :

"(1) If the person contravening an order made under Section 3 is a Company, every person, 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) Notwithstanding anything contained in subsection (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 anybody corporate and includes a firm or other association of individuals; and

(b) "Director" in relation to a firm means a partner in the firm."

A bare reading of the above said provisions of law would show that in order to fasten the liability on a person, it is for the complainant to prove that the offence has been committed by the company which includes a partnership and for that the company must be arraigned as accused and charged with the offence and the person, besides the company, who is sought to be made responsible for the commission of the offence. As envisaged by Section 10(1), he must be incharge and responsible for the company for the conduct of its business. The apex Court in State of Madras v. C.V. Parek, AIR 1971 Supreme Court 447, held in a case in which contravention of the order made under section 3 of the Act is done by an employee of the company itself, conviction cannot be fastened on the Manager or Managing Director of the Company as liability of persons incharge of the company can arise under Section 10 aforesaid when contravention is by the company itself.

It was argued by the learned State counsel that it has been specifically mentioned in the complaint itself that Rajinder Singh, Production Manager of the Company i.e. M/s Shivalik Fertilizer Limited, was appointed as responsible person of the company as required under Clause 24 of the Fertilizer (Control) JUDGMENT 1985 and in the matter of M/s Munak Chemicals Ltd., Focal Point, Bathinda, Punjab, Guriqbal Singh, Deputy Manager, Quality Control was appointed as a person responsible for the quality and sale of the fertilizer manufactured by the company. According to the learned counsel for the State, it cannot be said that the persons appointed by the company as responsible to the company are not guilty of the offence alleged.

The contention raised is misplaced and without substance. It is nowhere alleged in the complaint that Rajinder Singh Production Manager, Shivalik Fertilizer Limited or Guriqbal Singh, Deputy Manager, Quality Control of M/s Munak Chemicals Limited were incharge of the conduct of the business of the companies concerned and were responsible to the companies. Mere assertion that Rajinder Singh or Guriqbal Singh was appointed as a person responsible to the company does not carry any weight. In Girdhari Lal Gupta and another v. D.N. Mehta, Collector of Customs and another, 1971(3) SCR 748, the Supreme Court held that the words "incharge of" must mean in overall control of the daytoday business of the company or the firm". In State of Karnataka v. Partap Chand and another, 1981(1) FAC 374, the Supreme Court relied on its own decision in Girdhari Lal Gupta''s case (supra) and observed that a partner who was not in overall control of the daytoday business of the firm could not be proceeded against merely because he had a right to participate in the business of the partnership firm under the terms of the partnership deed. No doubt, in Girdhari Lal Gupta''s case (supra), the provisions of section 23(e) of the Foreign Exchange Regulation Act, 1947 and in Partap Chand''s case (supra) the provisions of section 34 of the Drugs and Cosmetic Act, 1940 were under consideration but when the provisions of these Acts are considered visavis provisions contained in Section 10 of the Act, it is clear that the same are pari materia with each other.

Provisions of Section 33 of the Insecticides Act, 1968, came up for consideration in R.C. Gupta v. State of Haryana, 1994(2) Recent CR 418. The learned Single Judge of this Court held as under :

"In the instant case in the complaint Annexure P1 it was nowhere mentioned that BHC 10% of which sample was taken was manufactured by M/s Pesto Chemicals India Limited nor it was anywhere alleged that the petitioner was incharge of and was responsible to the company for the conduct of the business of the company. The company was not arrayed as accused. So, the petitioner could not be made liable for contravention of any provisions of the Act. The liability of the petitioner would arise only if it is held that M/s Pesto Chemicals India Limited violated the provisions of Act and the petitioner was in charge of and responsible to the conduct of business of that company. without arraigning the company as an accused person there would hardly be any finding regarding the liability of the company and this flaw in the prosecution of the petitioner would prove fatal to the case of the complainant. Moreover, in the absence of any averment in the complaint as to how the petitioner was prima facie liable for the commission of any offence, the complaint against him cannot proceed."

In Sham Sunder Bassi v. The State of Punjab, 1991(3) RCR(Crl.) 199 : 1992 Volume 12 Punjab Legal Reports and Statues 505, also it was held that "Where the breach of order was committed by a Company and Company was not arrayed and prosecution is launched against the employee alone as liability of the employee would arise only if company was arrayed as accused." A reference may also be made with advantage to a decision of the Delhi High court in Vidya Wati and others v. State, 1988(2) RCR 471. It appears to be apposite to take note of the decision in Municipal Corporation of Delhi v. Kishan Lal, 1975(1) FAC 292 (DB) and Smt. Suman Kanodia v. Union of India and others, 1977(1) FAC 161. No doubt, these were the cases under the Prevention of Food Adulteration Act, 1954, the provisions of section 17(1) of the Prevention of Food Adulteration Act are also pari materia with section 10 of the Essential Commodities Act. This Court and other High Courts have taken consistent view regarding interpretation and applicability of section 10 of the Essential Commodities Act and that view has been approved by the apex Court. If may be noticed that the provisions of sections 138 and 141 of the Negotiable Instruments Act, 1982, are pari materia with the provisions of Section 10(1) of the Essential Commodities Act. In Criminal Appeal No. 484 of 1998 arising out of SLP (Crl.) No. 1439 of 1997 titled as Meena Sinha and another v. State of Maharashtra and others decided on 24.4.1998, the apex Court held that "on perusal of the complaint, we find that there is no averment therein to indicate that the two appellants before us were incharge of the Company and were responsible to it for the conduct of its business so as to bring them within the mischief of subsection (1) of Section 141 of the Act. In that view of the matter, we allow this appeal and quash the impugned proceedings as against the two appellants. There is no documentary evidence available on the record which may go to show that Rajinder Singh Production Manager and Guriqbal Singh Deputy Manager, were Incharge and responsible to their respective companies. Therefore, it cannot be said that they are responsible for the offences alleged.

In the case in hand and other connected cases, a perusal of the complaint would show that in none of the cases, the company manufacturer of the fertilizer, has been arraigned as accused. Therefore, there is no escape but to held that the complaint/FIR and all subsequent proceedings arising therefrom in all the cases cannot proceed, resultantly all the petitions are allowed and the complaints/FIR are quashed qua the petitioners.