Ramesh Vangal, Managing Director vs State of Punjab

V.K. Jhanji, J.

The present petition has been filed by one Ramesh Vangal, Managing Director of Pepsi Foods Limited, New Delhi, for quashing of complaint, Annexure P2, summoning order, Annexure P3 and the proceedings initiated thereon, against him, under Sections 7 and 16 of the Prevention of Food Adulteration Act (hereinafter referred to as the Act), pending before Chief Judicial Magistrate, Sangrur.

In brief, the facts are that on 28.11.1991, Food Inspector visited the factory premises of Pepsi Foods Limited, situated at village Channo, District Sangrur, and lifted a sample of ''Iodized salt'' lying in polythene packets which were supplied by M/s Indus Diet Specialities Pvt. Ltd., Mohali, Chandigarh. The sample was divided into three equal parts. One part of the samples was sent to the Public Analyst, who found that the water insoluble matter of the contents of the sample is 1.28% against the maximum prescribed standard of 1.0%. On the basis of the said report, the Food Inspector filed a Complaint in the court of Chief Judicial Magistrate, Sangrur, under Sections 7 and 16 of the Act, against one Kanish Malik, Production Manager of the company, who was arrayed as respondent No. 2, and against the petitioner who at the relevant time was the Managing Director of the company. Vide order dated 9.4.1992, the Chief Judicial Magistrate, Sangrur, summoned the Production Manager as well as the petitioner. Petitioner is seeking quashing of the complaint and the summoning order, on the ground that there is no allegation made in the complaint that the petitioner was the incharge of the daytoday business affairs of the company''s unit.

Notice of the petition was given to the respondents, who have filed written statement denying the averments made in the petition.

Ms. Vanita Sapra, Advocate, for the petitioner, in support of grounds for quashing has placed reliance upon judgments in Municipal Corporation of Delhi v. Ram Kishan Rohtagi and others, AIR 1983 SC 67. R. Banerjee and others v. H.D. Dubey and others, AIR 1992 SC 1168 and Girdhari Lal Gupta v. D.N. Mehta and another, AIR 1971 SC 2162.

Mr. N.S. Boparai, AAG Punjab, appearing for the State, has contended that it is not necessary to allege that the Managing Director was responsible for the conduct of the business of the company, because by the office he is holding, he would be deemed to have been responsible for conduct of business of the company.

After hearing learned counsel for the parties, I am of the view that the matter in issue stands squarely covered by judgment in Mayur Panabhai Shah''s, R. Banerjee''s and Girdhari Lal Gupta''s cases (supra), cited by the counsel. Section 17 of the Act provides for the procedure, when an offence has been committed by the company. For the purpose of decision of this petition, it would be sufficient to notice subsections (1) and (2) of Section 17 of the Act. The same read as under :

"17. 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 subsection (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 subsection 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."

Subsection (2) of Section 17 of the Act empowers a company to nominate any of its Directors or Managers 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 the Act. It further provides for giving notice by the company to the Local (Health) Authority in the prescribed form that it has nominated a Director or Manager as the person responsible for the conduct of business of the company. Once such person has been nominated and given his consent of his being so nominated, he can be held liable for an offence which may be committed by the company under the Act. Under clause (i) of sub section (1), a presumption is raised that the person who has been nominated under subsection (2) would be incharge/responsible for the conduct of business of the company.

Adverting to the facts of the present case, admittedly as provided under subsection (2), no nomination has been made or forthcoming, and in this situation, as provided under clause (ii) of subsection (2), all those who were incharge or responsible, are liable to be prosecuted. In order to hold such persons liable, it was necessary for the complainant to specifically allege in the complaint that the persons, who have been named in the complaint, at the time of taking sample, were responsible for conduct of business of the company. Counsel for the State has fairly conceded that it has not been so averred in the complaint. Thus, I am of the view that merely because a person has been shown as respondent in the complaint, by itself would not be enough to hold him responsible for the conduct of business of the company. In Rohtagi''s case (supra), the complaint was filed against the company, its Director and Manager. There was no clear averment that they were incharge or responsible for the conduct of business of the company. The presumption drawn by the complainant that they being the Directors of the company, were liable to be prosecuted, was found to be unwarranted. As a matter of fact, the case before the Supreme Court was on a much better footing, compared to the facts of the present case because in clause5 of the complaint, there was a clear averment that the Directors were in charge/responsible for the conduct of business of the company, whereas in the instant case, there is no such averment. In Girdhari Lal''s case (supra), while dealing with Section 23C(1) and (2) of the Foreign Exchange Regulation Act, 1947, it was held by the Supreme Court that "Section 23C(1) is a highly penal section as it makes a person who was incharge and responsible to the company for the conduct of its business, vicariously liable for an offence committed by the company. Therefore, in accordance with wellsettled principles, this section should be construed strictly." While construing the expression "personincharge" appearing in Section 23C(1), it was held that the personincharge must be in overall control of the daytoday business of the company. The Managing Director may be the overall incharge of the company because of nature of the office he is holding, but it cannot be said with certainty that he is responsible for daytoday business affairs of the company. If he was so, it was necessary for the complainant to allege. In R. Banergee''s case (supra), the principle as laid down in Rohtagi''s case (supra), was affirmed. No judgment to the contrary has been cited by Mr. Boparai, except reference to various provisions of the Act.

Consequently, this petition shall stand allowed and complaint, Annexure P2, summoning order, Annexure P3, and the proceeding initiated thereon, qua the petitioner are quashed, with no order as to costs.