Reckitt Benckiser (India) Pvt. Ltd., vs The State of Bihar

Heard learned counsel for the petitioners and learned

counsel for the State.

The two quashing applications filed against the

impugned order taking cognizance of the offence in Complaint Case

No. 20M of 2003 are being disposed of by the common judgment.

The petitioners , invoking inherent jurisdiction of the

Court, under Section 482 of the Code of Criminal Procedure, 1973,

seek quashing of the cognizance order dated 28.07.2003 passed by the

learned Sub Divisional Judicial Magistrate, Patna in Complaint Case

No. 20M of 2003 as well as setting aside the entire criminal

proceedings.

A brief fact giving rise to the case is that a complaint

was filed by the Civil Surgeon-cum-Chief Medical Officer, Patna in

the court of Sub Divisional Judicial Magistrate, Patna against the

Managing Director, all Directors, Chairman, all Administrative

Officers and Production Incharge of the company, namely, Reckitt

Benckiser (India) Pvt. Ltd. situated at Kolkatta, for committing

offence, under Section 16(1)(A) of the Prohibition of Food

Adulteration Act, 1954 (hereinafter referred to as the ''Act''). On

19.02.2003, the Food Inspector, Patna, in exercise of his powers,

under Section 10 of the Act, collected 03 cans of Barley Powder of

400 grams each from Shalimar Cold Stores, a C. & F. of the company

in Patna and sent to public analyst for its analysis and report. Its report

dated 12.03.2003 opines that label on the Barley Powder Can does not

bear "best before date", which is required under the Rules 32(1) of the

Prohibition of Food Adulteration Rules, 1955 (hereinafter referred to

as the ''Rule'') so the public analyst narrated that it amounts to

misbranding in terms of Section 2(ix)(j) &(k) of the Act. The Food

Inspector thereafter filed a petition before the Civil Surgeon-cum-

Chief Medical Officer, Patna, under Section 20(1) of the Act, seeking

written consent to prosecute the Managing Director, Directors,

Chairman, all Administrative Officers and Production Incharge of the

company for the offence consequently on getting approval by the

concerned authority the instant complaint was filed on 24.07.2003.

Mr. P.Chitambaram, learned Senior Counsel appearing

on behalf of the petitioners in Cr. Misc. No. 24952 of 2017, submits

that in the instant case sanction for prosecution, under Section 20(1)

of the Act, was granted mechanically by the Chief Med ical Officer,

Patna, as the company, namely, Reckitt Benckiser (India) Pvt. Ltd.

was not made accused in the case and sanction was not given to

prosecute a specific individual, rather left vague against Managing

Director, Directors, Chairman, all Administrative Officers and

Production Incharge; moreover, sanction was given for launching

prosecution relating to offence of adulteration in case of allged

offence of misbranding. However, it is not the case that collected

sample was found adulterated rather according to the public analyst,

the product was misbranded because of absence of label "best before

date" on the barley can. He submits that sanction has been given to

prosecute the petitioners, under Section 16(1)(A) of the Act, which is

an offence of adulteration in the food product, whereas for

misbranding appropriate section is 16(1(a) of the Act . He further

submits that incomplete address was given by the prosecution only

mentioning as "Reckitt Benckiser India Ltd., Kolkata-700071". The

learned Sub Divisional Judicial Magistrate, without applying the

judicious mind, has taken cognizance mechanically for the offence of

adulteration, under Section 16(1)(A) of the Act. Due to incomplete

address in the complaint, no process was served to the accused

persons and the trial court issued bailable warrant without service of

summons, further, the court overlooking the fact whether bailable

warrant was executed to the accused persons, issued non-bailable

warrant of arrest and on the same day, contrary to the express mandate

of Sections 82 and 83 of the Code of Criminal Procedure, also

initiated proceeding to declare the accused as proclaimed offenders on

18.03.2017, by issuing permanent ''Warrant of Arrest''. Since one of

the accused, in the complaint, is captioned as "All administrative

Officers" of the company, so Kolkata Police, on 12.05.2017, visited

Regional Office in Kolkata and served the permanent warrant on

Amrit Bangur, Regional Commercial Manager (East), the petitioner of

Cr. Misc. No. 36986 of 2017, who performs finance functions of the

company but has no administrative role, and after arresting him

produced before the Judicial Magistrate at Kolkata who granted bail

to appear before the trial court. The learned counsel further submits

that Amrit Bangur had joined the company only on 30.01.2017 and

the purported offence was committed in 2003 so at that very point of

time, petitioner Amrit Bangur was not related or concerned with

affairs of the company in any manner; moreover the company by that

time was unaware of issuance of any process of law by the trial court,

however knowing this fact, the company has filed this quashing

application before this Court. The company apprehends that like

Amrit Bangur, the present Managing Director, Directors, Chairman,

all Administrative Officers and Production Incharge may be arrested

though they were not concerned with the affairs of the company at

that point of time.

Learned counsel further submits that Section 17 of the

Act deals with the offences committed by the companies. In case of

offence committed by the company under the provisions of the Act, a

person, who has been nominated, under sub-section (2) of Section 17

of the Act to be in charge of and responsible to, the company for the

conduct of the business of the company and in case of absence of such

nomination every person, at the time of commission of offence, was in

charge or responsible for the conduct of the business of the company

and the company itself is considered guilty for committing the offence

and liable to be proceeded against and punished accordingly; however

in the present case, the company has not been made accused, so in

absence of the company, being arraigned as an accused, no other

officers of the company can be held criminally liable.

Learned counsel places reliance in the case of Aneeta

Hada vs. Godfather Travels and Tours Private Limited reported in

(2012) 5 SCC 661. Learned counsel reiterates that there can be no

vicarious liability to Managing Director, Directors, Chairman, all

Administrative Officers and Production Incharge unless the company

is made accused. Learned counsel further submits that in Aneeta

Hada (supra) a cheque issued by the one of the Directors of the

Company on behalf of the company got dishonoured, so the question

before the Apex Court was whether a complaint under Section 138 of

N.I.Act read with Section 141 thereof against a Director or authorized

signatory of a cheque but without joining the company as an accused

was maintainable. This matter was referred to a three Judge Bench

who answered in negative. Section 141 of the N.I.Act deals the

offences committed by the company and in para-58 of the judgment,

the Hon''ble Apex Court has held that commission of offence by the

company is an express condition precedent to attract the vicarious

liability of others. So when the company is prosecuted then only the

officers could be vicariously liable for the offence because the

company is a juristic person and it has its own respectability. The

Apex Court arrives at a conclusion that for maintaining the

prosecution under Section 141 of the N.I.Act, arraigning of a

company as an accused is imperative. Learned counsel further places

reliance to the case of S.M.S. Pharmaceuticals Ltd. vs. Neeta Bhalla

and Another reported in (2005) 8 SCC 89. He submits that in the said

judgment, the Apex Court has considered that at the time of taking

cognizance of offence, the Magistrate requires to look into the

averments made in the complaint that at the time of offence

committed whether the person accused was in charge of and

responsible to the company for the conduct of its business; this

averment is an essential requirement, so if the answer is in negative,

so merely being a Director of the company is not sufficient to make

him liable for prosecution under the N.I.Act. A Director in the

company cannot be deemed to be in charge of and responsible for the

conduct of its business. It is submitted that it is the Board of Directors,

who assigns particular functions to the Directors, as per the

memorandum and articles of association of the company, so without

ascertaining that which of the officers at that time was nominated

under sub-section (2) of Section 17 of the Act or in case of no such

nomination, who was in charge of and responsible to the company for

the conduct of its business, the accused persons have been arraigned

and the company was left out, so the company was not prosecuted.

Learned counsel also places reliance to the case of

Pepsico India Holdings Private Limited vs. Food Inspector and Anr .

reported in (2011) 1 SCC 176 and referring para 50 of the judgment,

submits that in a complaint against a company and its Directors, the

complainant is required to indicate as to whether the Directors

concerned were either in charge of or responsible to the company for

its day-to-day management or responsible to the company for the

conduct of its business. Only a bald statement that a person was a

Director of the company against which certain allegations have been

made is not sufficient to make him liable in the absence of any

specific allegations regarding his role in the management of the

company; in the present case also, no specific role is assigned to the

Managing Director, Directors, Chairman, all Administrative Officers

and Production Incharge of the company. So without ascertaining that

which of the officers was in charge of the conduct of the business of

the company, the court in mechanical manner issued the process that

too was issued on incomplete address; moreover without ascertaining

whether summons were served or not subsequently issued bailable

warrant, non-bailable warrant and declared absconder without any

service of any of the processes issued by the Court for their

appearance.

Learned counsel further submits that the Food Safety

and Standards Act, 2006 came into existence after repealing The

Prevention of Food Adulteration Act, 1954, however, in terms of

Section 97 (1) of the Food Safety and Standards Act, 2006, any

proceeding instituted prior to that date under the Act continues but the

Department had issued a circular on 02.08.2016 to all Commissioners

of Food and Safety including the State of Bihar directing them to

review all cases filed under the previous Act and if the offence is not

serious in nature and the penalties/punishments prescribed for such

offences are also not substantial then to withdraw such cases. In the

instant case, there is no allegation of any adulteration in the product,

only allegation is of misbranding as "best before date" was not printed

and the complaint was filed in 2003 with incomplete address,

summons and warrant not served for more than 14 years, so the

present case should have been withdrawn by the concerned authority.

Mr. Aman Lekhi, learned senior counsel appearing

on behalf of the petitioner Amrit Bangur in Cr. Misc. No. 36986 of

2017, adopting the argument advanced by Mr. P.Chitambaran, learned

senior counsel, submits that Amrit Bangur was not associated with the

company in the year 2003, at that time he was a child and joined the

company only on 30.01.2017, so in any case, he cannot be held liable

for the affairs of the company at the relevant point of time.

Mr. Satyavrat Verma, learned counsel appearing on

behalf of the State, concedes that unless the company is arraigned as

accused, vicarious liability cannot be fastened to other officers of the

company, however, he raised objection relating to locus standi of the

petitioner no. 1 in Cr. Misc. No. 24952 of 2017 for the reason that as

the company is not an accused, so no cause of action to file the

quashing application.

Having considered the rival submissions and on

perusal of record, the Court finds that Cans of Purity Indian Barley

were taken from the premises of Shalimar Cold Stores, a C & F Agent

of the company on 19.02.2003 and were sent to the public analyst for

its report and the report dated 12.03.2003 indicates that manufacturing

date is mentioned on the product 7/02, but the label does not bear

"best before date" which is required under Rule 32(i) of the Rules,

1955, so a case of misbranding and not a case of adulteration. The

offence for misbranding comes under Section 16(1)(a) of the

Prevention of Food Adulteration Act, 1954 but inadvertently,

oblivious of the correct provisions of law, cognizance was taken under

Section 16(1)(A) of the Act. The company has not been arraigned as

an accused in the complaint lodged by the Chief Medical Officer, only

its Managing Director, all Directors, Chairman, all Administrative

Officers and Production Incharge were made accused though it was an

offence committed by the company.

Section 17 of the Act deals with offence committed

by the company, which reads as such:

"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 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, 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 manger as the person responsible, alongwith the written consent of such director or manager for being so nominated. (3) 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 clause (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 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."

In view of said provision, a company may order in

writing or authorize any of its Directors or Managers to exercise all

such powers and take all such necessary steps expedient to prevent

commission of any offence under the Act by the company. A person

nominated under sub-section (2) of Section 17 of the Act becomes

responsible for the offence committed by the company along with

company itself or in case of no nomination, under sub-section (2) of

Section 17 of the Act, every person, who at the time the offence was

committed, was in charge of, and responsible to, the company for the

conduct of its business. Company is a juristic person, so making

company an accused becomes mandatory, only in that situation, other

officers responsible for the affairs of the company may be held

responsible. In case of offence committed by the company its officers

cannot be made vicariously liable for commission of offence on the

part of the company. Vicarious liability gets attracted in case of the

officers of the company only when condition precedent laid down in

Section 17(1) of the Act gets satisfied. Drawing the analogy from the

ratio decided in Aneeta Hada (supra) case , it becomes more clear.

Para 59 of the judgment is quoted hereinbelow:

"59. In view of our aforesaid analyse, 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. The other categories of offenders can only be brought in the drag-net on the touchstone of vicarious liability as the same has been stipulated in the provision itself. We say so on the basis of the ratio laid down in C.B.Parekh; (1970) 3 SCC 491: 1971 SCC (Cri) 97, which is a three-Judge Bench decision. Thus, the view expressed in Sheoratan Agarwal; (1984) 4 SCC 352: 1984 SCC (Cri) 620. does not correctly lay down the law and, accordingly, is hereby overruled. The decision in Anil Hada; (2000) 1 SCC 1: 2001SCC (Cri) 174 is overruled with the qualifier as stated in para-51. The decision in Modi Distillery; (1987) 3 SCC 684: 1987 SCC (Cri) 632 has to be treated to be restricted to its own facts as has been explained by us hereinabove".

In S.M.S.Pharmaceuticals Ltd. (supra), the Apex

court has made elaborate and vivid description on the position of the

vicarious criminal liability on a person connected with the company,

para-18 of the said judgment is referred to hereinbelow to elucidate

the concept:

"18. 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."

Only such officers along with the company can be

held liable for prosecution who was in charge of the affairs of the

company at the time when the offence was committed, but in the

present case, petitioners, namely, Rajesh Kumar Jha, a Regional

Legal Director and Amrit Bangur, Regional Commercial Manager of

the company, joined in the year 2017 admittedly joined much later

after the alleged occurrence so definitely they were not in the

company at that point of time and not concerned with the conduct of

the business of the company. So in any view of the matter, they

cannot be held liable for the alleged offence of misbranding in the

year 2003.

On the question of liability of the Directors of the

company with respect to offence alleged to have been committed by

the company, a clear case requires to be spelled out alleging and

naming the particular Director responsible to the company for the

conduct of its business. In the present case, no such name with such

averment is mentioned in the complaint. In the case of Pepsico India

Holdings Private Limited (supra), the Apex Court has held that mere

bald statement that a person was a Director of the Company is alleged

to have committed the offence is not sufficient unless a specific

allegation regarding his role in the management is made clear. In this

regard, para 50 and 52 of the said judgment is quoted hereinbelow:

"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. case (supra), which was reiterated subsequently in several judgments, some of which have been indicated hereinabove, and relying instead on the decision of Rangachari case; (2007) 5 SCC 108: (2007) 2 SCC (Cri) 460, 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 complainants 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 merely 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."

Having considered the matter in its totality and also having regard to the fact that Somesh Dahale had been nominated under sub-section (2) of Section 17 of the 1954 Act to be a person in charge of and responsible to the Company for the conduct of its business, we are of the view that the appeals have to be allowed".

In the present case, only the Managing Director, all

Directors, Chairman, all administrative Officers and Production

Incharge have been arraigned as accused naming them in the column

of the accused of the complaint in a typed format of complaint. There

is no specific allegation regarding individuals'' role in the management

of the company rather all Directors and others have been made

accused not even a particular managing Director or any Director by

name has been made accused with the specific allegation regarding

the specific role in the management of the company.

In view of the aforesaid discussions, as the company,

namely, Reckitt Benckiser (India) Pvt. Ltd, has not been arraigned an

accused as per Section 17(1) of the Act, so its all officers including

Managing Director, all Directors, Chairman, Production Incharge in

absence of specific name of any officers of the company with

allegation of being responsible for the conduct of business of the

company, cannot be held vicariously liable for the alleged offence,

moreover Rajesh Kumar Jha, petitioner of Cr. Misc. No. 24952 of

2017 and Amrit Bangur, petitioner of Cr. Misc. No. 36986 of 2017,

were not even employed in the company at the relevant point of time.

Meaning thereby at alleged period of occurrence, definitely they

cannot be held responsible for conduct of the company''s business

during those period. In the backdrop of such fact and legal

propositions, continuation of criminal proceeding against the accused

persons would be abuse of the process of the court as in absence of

the company being arraigned as accused, only its officers cannot be

prosecuted fastening vicarious criminal liability as the principal

offender is the company itself being a Juristic person.

In view of the aforesaid reasons, entire criminal

proceeding of Complaint Case No. 20M of 2003 pending in the court

of learned S.D.J.M., Patna inclusive of cognizance order dated

28.07.2003 is set aside.

The application stands allowed.