Sureshkumar Bhuwalka and Others vs State and Another

M. Jeyapaul, J.—This petition is filed seeking to quash the criminal proceedings in C.C. No. 75 of 2002, taken on file by the learned Judicial Magistrate No. II, Kancheepuram, as far as these petitioners are concerned.

The petitioners have been charge sheeted for the offences under Sections 39 and 44(1)(c) of the Tamil Nadu Electricity Act, 1910.

The core allegation in the complaint is that the first accused company called as M/s. Bhuwalka Steel Industries Ltd., its directors Sushilkumar Bhuwalka/A4 and Sharad Dalmia/A8 in whose name the service connection stands are responsible for the theft of electricity and causing loss thereby to the tune of Rs. 1,20,92,004.

A-1, A-4 and A-12 are not petitioners herein. As far as SureshKumar Bhuwalka is concerned he has been arrayed as second accused, as he is the managing director of the first accused company, M/s. Bhuwalka Steel Industries Ltd.

Memo has been filed by learned Counsel for the petitioners not pressing the prayer of the second accused for quashing the proceedings. As such, A3, A5 to A7 and A9 to All are before this Court challenging the action of the learned Judicial Magistrate No. II, Kancheepuram, in taking the case on file in C.C. No. 75 of 2002 as against those accused.

The second respondent/Tamil Nadu Electricity Board filed a counter stating that as huge loss has been occasioned by the theft of energy by M/s. Bhuwalka Steel Industries Ltd., all the directors of the company are liable to be prosecuted for the offences under Sections 39 and 44(1)(c) of the Indian Electricity Act, 1910.

The learned senior counsel appearing for the petitioners would submit that inasmuch as there is virtually no allegation either in the complaint or in the statement of the witnesses recorded u/s 161 of the Code of Criminal Procedure or in the charge sheet about the responsibility of these petitioners in carrying on the business of the company, M/s. Bhuwalka Steel Industries Ltd., the directors should be relieved from the criminal prosecution.

Learned Counsel for the first and second respondent would submit that unless there is connivance amongst the directors, a huge loss would not have occurred due to the theft of electricity. It is their further submission that the directors, who have shared the profit from the first accused company cannot shirk their responsibility in shouldering the criminal liability in the commission of theft of electric energy.

On a careful perusal of the first information report and the statements recorded by the investigating agency u/s 161 of the Code of Criminal Procedure, it is found that there is a specific allegation that M/s. Bhuwalka Steel Industries Ltd./A-1, Sushilkumar Bhuwalka, the occupier/director of the company and Sharad Dalmia/8th accused in this case were responsible for the theft of energy detected by the Electricity Board through its squad. As there is a specific allegation against the 8th accused/Sharad Dalmia that he was responsible for the theft of energy, this Court is not inclined to quash the criminal proceedings initiated against him. As far as Sureshkumar Bhuwalka/A-2 is concerned, he being the managing director of M/s. Bhuwalka Steel Industries Ltd., has to answer the charge as per the latest judgment of the hon''ble Supreme Court, which is going to be referred herein below. Further, a memo also has been filed not pressing the prayer of the second accused, who figures as first petitioner in this petition and therefore his prayer for quashing the proceedings stands rejected.

As far as the other directors of the company are concerned, viz., the A3, A5 to A7 and A9 to All there is virtually no allegation either in the first information report or in the statements recorded u/s 161 of the Code of Criminal Procedure. In the charge sheet, it is found that they have been arrayed as accused in a case of theft of energy as they have been the directors of M/s. Bhuwalka Steel Industries Ltd., as per the information furnished by the Commercial Tax Officer, Egmore. But there is virtually no allegation in the charge sheet also that the aforesaid directors, viz., A3, A5 to A7 and A9 to All were in charge of or responsible for the conduct of the business of the company.

It is quite relevant to refer to Section 49A of the Indian Electricity Act, 1910, which reads thus:

(1) If the person committing an offence under this Act 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 such person liable to any punishment, if he proves that the offence was committed without his knowledge or that he exercised all due diligence to prevent the commission of such offence.

(2) Notwithstanding anything contained in Sub-section (1), where an offence under this Act has been committed with the contest or connivance of, or is attributable to any neglect on the part of, any director or 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)''company7 means any body corporate and includes a firm or other association of individuals ; and

(b)''director'', in relation to a firm, means a partner in the firm.

The above deeming provision would state that every person, who is in

charge of or responsible to the company for the conduct of its business as well as the company shall be construed to be guilty of the offence.

While dealing with the aforesaid question, with regard to Section 141 of the Negotiable Instruments Act, 1881, which is in pari material, the hon''ble

Supreme Court in S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla [2005] 127 Comp Cas 563 : [2005] SCC (Crl.) 1975 has held as follows (page 578):

It is necessary, to specifically aver in a complaint u/s 141 that at the time the offence was committed, the person accused was in charge of, and responsible for the conduct of business of the company. This averment is an essential requirement of Section 141 and has to be made in a complaint. Without this averment being made in a complaint, the requirements of Section 141 cannot be said to be satisfied.

Neither in the statements recorded u/s 161 of the Code of Criminal Procedure nor in the charge sheet laid by the investigating agency, there is any specific reference that the directors referred to above were in charge of or responsible for the conduct of the business of the first accused company. When there is no such specific reference in the charge sheet, it will have to be construed, in the light of the aforesaid ratio, that the provisions of Section 49A of the Indian Electricity Act, 1910, are not complied with.

This Court in Salfee Golden Jubilee Rolling Mills v. State [1989] LW (Crl.) 227 has held that when there is absence of allegation in the complaint as to the part played by the accused/directors, the criminal proceedings initiated against them under Sections 39 and 44(1)(c) of the Indian Electricity Act have to be quashed. I am in full agreement with the view taken by S.A. Kader J. (as he then was).

Learned Counsel for the second respondent has cited a judgment reported in Satish Kumar Modi v. State of U.P. [1996] Crl. LJ 4260 wherein the Allahabad High Court has held that when there is a dispute with regard to the control and management of the factory affairs by the accused/directors, such a disputed question cannot be decided by the High Court in exercise of its inherent jurisdiction u/s 482 of the Code of Criminal Procedure. When there is no such allegation that the accused/ directors were in charge of or responsible for the affairs of the company, the question of directing such accused/directors to face the trial would definitely work hardship against them. Here in this case, the respondents have simply arrayed as accused/directors, just because they happened to be the directors and not because they were in control and in charge of the affairs of the company.

The Patna High Court in Hari Charan Singh Dugal v. State of Bihar [1989] 66 Comp Cas 449 : [1989] 1 Crimes 101 while dealing with the complaint under Minimum Wages Act, 1948, has held that the complaint need not point out the specific part played by each of the directors in the company as they are vicariously liable for the offence, in view of the provisions under the aforesaid Act.

The position has been now settled by the hon''ble Supreme Court in the aforesaid case reported in S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla [2005] 127 Comp Cas 563 : [2005] SCC (Crl.) 1975 that there shall be a specific averment that the directors were in charge of or responsible for the conduct of the business of the company at the time of commission of the offence alleged in the complaint. Therefore, the case laws cited by the prosecution are not applicable to the facts of the present case.

The fact remains that A3, A5 to A7 and A9 to All have been arrayed in the criminal proceedings as they have been found to be the directors of M/s. Bhuwalka Steel Industries Ltd., during the course of examination of the Commercial Tax Officer by the respondent police. As there is no specific allegation either in the complaint or in the statements recorded u/s 161 of the Code of Criminal Procedure or in the charge sheet to the effect that the aforesaid accused were in charge of or responsible for the conduct of the business of M/s. Bhuwalka Steel Industries Ltd., it is held that the requirements of Section 49A of the Indian Electricity Act, 1910 have not been complied with. It will be a misuse of process of law, if the aforesaid accused are directed to face the trial in view of complete lack of allegation against them.

In the result, so far as the first petitioner/second accused and the sixth petitioner/eighth accused are concerned, the petition stands dismissed. As regards the second petitioner/third accused, third petitioner/fifth accused, fourth petitioner/sixth accused, fifth petitioner/seventh accused, seventh petitioner/ninth accused, eighth petitioner/tenth accused and ninth petitioner/eleventh accused, the criminal proceedings in C.C. No. 75 of 2002 on the file of the learned Judicial Magistrate No. II, Kancheepuram stands quashed. Thus, the petition is partly allowed. Consequently, connected criminal miscellaneous petition is closed.