State (Govt. of NCT of
Delhi) Vs. D.A.M.Prabhu & ANR.  INSC 279 (11 February 2009)
IN THE SUPREME COURT
OF INDIA CRIMINAL APPELLATE JURISDICTION CRIMINAL APPEAL NO. 266 OF 2009
(Arising out of SLP (Crl.) No. 2119 of 2007) State (Govt. of NCT of Delhi)
..Appellant Versus D.A.M. Prabhu and Anr. ..
Dr. ARIJIT PASAYAT,
in this appeal is to the judgment of a learned Single Judge of the Delhi High
Court quashing the order passed by learned Special Judge under the Essential
Commodities Act, 1955 (in short the `Act'). 3. Background facts as noted by the
High Court are as follows:
On 23.01.1988, a
complaint was lodged by the Enforcement Inspector with the Station House
Officer of Police Station Moti Nagar, New Delhi, alleging that Swatanta Bharat
Mills had, by declaring and stamping wrong fibre compositions for the cloth,
contravened the provisions of the Textile Commissioner's notification dated
23.11.1981 and clause 17 of the Textile (Control) Order, 1986 rendering
themselves liable for penal action for violation of the order made under Section
3 of the Act punishable under Section 7 thereof. On 11.02.1988, an FIR was
registered on the basis of the said complaint. On 06.05.1988, the charge sheet
was filed in court, but there was only one accused, namely, A.K. Rohtagi, who
was shown in Column No.4 for the offence, inter-alia, under section 7 of the
said Act. On that date, the Court passed the following order:
filed today. It be checked and registered.
Accused person be
summoned for 09.06. 1988."
accused A.K. Rohtagi appeared and was released on bail. On 4.12.1990, a
supplementary challan was filed and the court passed the following order:- 2
"Supplementary challan filed today. It be checked and registered. Accused
be summoned for 18.12.1990 as main case is already fixed for 18.12.1990."
In the supplementary
charge sheet, the said A.K. Rohatgi was again shown in Column No.4. However, in
Column No.2, the respondents along with R.C Kesar and Lala Bansidhar were shown
in Column No.2. It appears that on 18.02.1991, respondent No.2 V.K. Malhotra
appeared in court and on 22.02.1991, the court passed the following order: -
"V.K Malhotra mentioned in column No.2 is not required for the time being.
He is being discharged.
Only the accused
persons mentioned in Column No.3/4 of the challan u/s 173 of Cr.P.C. was to be
summoned and not those mentioned in Column No.2 of that report."
On 24.04.1991, the
earlier charge-sheet and the supplementary charges sheet were consolidated and
the court observed that summons were issued to some of the accused and that the
predecessor court by order dated 22.02.1991 had mentioned that these persons
may not be summoned for the time being. Thereafter, the court directed that the
matter should come up for arguments on 04.06.1991 on the question whether the
persons named in Column No.2. be summoned as accused. In the order dated
11.2.1994, it is recorded as under:
"It appears that
in the supplementary challan, four accused were placed in Column No.2 and have
not been summoned so far probably on the presumption that they have not been
sent up for trial by the police. However, a perusal of the final report in the
supplementary challan would show that the police has specifically mentioned
that there was a violation of Clause 17 of the Textile Control Order, 1986 by
Swantantra Bharat Mills which is a company by virtue of Section 10 of the Act
and the Managing Director, General Manager, Executive Director (Textile) and
Supervisors, Folding Division are liable and should be summoned."
Accordingly, the court
came to the view that the respondents alongwith other two mentioned in Column
No.2, namely, R.C. Kesar and Lala Bansidhar be also summoned.
basic stand before the High Court was that the deeming provision of Section 10
of the Act cannot be applied to the facts of the case.
The High Court found
that Swatantra Bharat Mills was nothing but a unit of the body corporate known
as DCM Ltd. But it cannot be called to be an association of individuals. So
holding, the proceedings so far as the respondents are concerned were quashed.
counsel for the appellant-State submitted that true scope and ambit of
Explanation appended to Section 10 has not been kept in view.
counsel for the respondents on the other hand supported the judgment.
Additionally, it is submitted that the infraction as alleged is of a very minor
nature and, therefore, continuance of the proceedings shall not be appropriate.
appreciate rival submissions it would be necessary to take note of Section 10
of the Act. The said provision reads as follows:
"(1) If the
person contravening an order made under Section 3 is a company, every person
who, at the time the contravention was committed, was in charge of, and was
responsible to, the company, shall be deemed to be guilty of the contravention
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 contravention took place without his knowledge
or that he exercised all due diligence to prevent such contravention.
anything contained in sub-section (1), where an offence under this Act has been
committed by a company and it is proved that the offence has been 5 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
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 relation to a firm means a partner in the firm."
Dulichand Laxminarayan v. Commissioner of Income Tax, Nagpur (1956 SCR 154) it
was inter-alia observed that the expression `person' has not been defined and
applying the definition under the General Clauses Act, 1872 (in short the
`General Clauses Act') body of individuals can be covered under the expression
`person'. Sub-Section (42) of Section 3 of the General Clauses Act has been
statutorily incorporated by way of an Explanation under Section 10.
section appears to our mind to be plain enough. If the contravention of the
order made under Section 3 is by a company, the persons who may be held guilty
and punished are (1) the company itself, (2) every person who, at the time the
contravention was committed, was in charge of, and was responsible to, the
company for the conduct of the business of the company whom, for short, we
shall describe as the person- in-charge of the company, and (3) any director,
manager, secretary or other officer of the company with whose consent or
connivance or because of neglect attributable to whom the offence has been
committed, whom, for short, we shall describe as an officer of the company. Any
one or more or all of them may be prosecuted and punished. The company alone
may be prosecuted. The person-in-charge only may be prosecuted. The conniving
officer may individually be prosecuted. One, some or all may be prosecuted.
There is no statutory compulsion that the person-in-charge or an officer of the
company may not be prosecuted unless he be ranged alongside the company itself.
Section 10 indicates the persons who may be prosecuted where the contravention
is made by the company. It does not lay down any condition that the
person-in-charge or an officer of the company may not be separately prosecuted
if the company itself is not prosecuted.
Each or any of them
may be separately prosecuted or along with the company. Section 10 lists the
person who may be held guilty and punished when it is a company that
contravenes an order made under Section 3 of the Essential Commodities Act.
Naturally, before the person in-charge or an officer of the company is held
guilty in that capacity it must be established that there has been a
contravention of the order by the company.
above position was highlighted in Sheoratan Agarwal and Anr. V. State of Madhya
Pradesh (1984 (4) SCC 352) and State of Punjab v. Kasturi Lal and Ors. (2004
(12) SCC 195)
to that, the threshold interference does not appear to be in order. The stand
as taken by the respondents was essentially the defence which is to be
considered at the time of trial. The impugned judgment is unsupportable and is
appeal is allowed.
(Dr. ARIJIT PASAYAT)