NCT of Delhi Vs. Rajiv Khurana  INSC 571 (30 July 2010)
SUPREME COURT OF INDIA CRIMINAL APPELLATE JURISDICTION CRIMINAL APPEAL NO. 1380
OF 2010 Arising out of SLP (Crl.) No. 7739 of 2008 State of NCT of Delhi
Through Prosecuting Officer, Insecticides, Government of NCT, Delhi ..
Appellant Versus Rajiv Khurana .. Respondent
This appeal has been filed by the appellant State of National
Capital Territory of Delhi against the judgment of the High Court of Delhi
dated 2.1.2008 in Criminal Miscellaneous Case No. 2639 of 2006 whereby the High
Court has quashed the summons issued by the trial court.
The appellant submitted that the Company had specifically stated
in its letter dated 19.1.2000 that respondent 2 Rajiv Khurana was the Regional
Technical Director handling the quality control in the company. The relevant
portion of the said letter is reproduced as under:
shall be happy to cooperate with you in all such quality issues about our
Mortem product range.
quality control is handled by Mr. Rajeev Khurana, Regional Technical
It is submitted that section 33 of the Insecticides Act, 1968
by companies.-(1)Whenever an offence under this Act has been committed by a
company, every person who at the time of the offence was committed was in
charge of, or 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:
that nothing contained in this sub- section shall render any such person liable
to any punishment under this Act 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.
Notwithstanding 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 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 3
deemed to be guilty of that offence and shall be liable to be proceeded against
and punished accordingly.
- 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 form, means a partner in the
The appellant also submitted that the respondent was the person
responsible for the quality of the product which has not been found conformed
to the prescribed ISI specification.
appellant further submitted that the company communicated to the appellant that
the respondent was responsible for the quality of the product. In this view of
the matter, the High Court was not justified in allowing the petition filed by
the respondent under section 482 of the Code of Criminal Procedure.
According to the respondent, under section 33 of the Insecticides Act,
1968 the liability cannot be fastened on the
respondent. According to him, the offence, if any, was committed by the Company
M/s. Reckitt & Colman of India 4 Limited. The Company continues to face the
prosecution but according to the facts of this case the respondent cannot be
summoned by the court because he was not responsible or in charge of the
affairs of the company. It was also submitted by the respondent that it was the
bounden duty of the Magistrate to ensure that the process was issued only
against whom there were specific allegations in the complaint.
The respondent placed reliance on the judgment of this Court in
S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla & Another (2005) 8 SCC 89.
The respondent further submitted that the complaint filed by the
appellant before the trial court was sought to make the respondent vicariously
liable under section 33 of the Insecticides Act, 1968 for the
alleged offence under section 29 of the Act, whereas no role has been ascribed
to the respondent by the appellant towards the commission of the alleged
offence. It was also submitted that the appellant has also failed to establish
that the respondent was the Director or the Manager or the Secretary or any
other officer of the company in any way responsible or in charge of the affairs
of 5 the company, to be vicariously liable for the alleged offence stated to
have been committed by the company. The respondent submitted that in the
absence of such specific averments, the learned Magistrate was not justified in
issuing the summoning order against the respondent. It was also submitted that
the provision of vicarious liability is an exception to the normal rule of
criminal jurisprudence and no one is to be held criminally liable for an act of
another. Such exception is carved out by specific insertion in statues
extending criminal liability to others.
According to the respondent, section 33(1) has three tests namely
: (a) a person being in charge, (b) responsible for day to day affairs of the
company; and (c) at the time when the offence was committed.
The respondent further submitted that mere naming a person in the
title of a complaint even as a partner of a firm (although under the
Partnership Act, each partner is liable under section 25), does not satisfy the
test of the deeming provision contained in section 141(1) of the Negotiable
Instruments Act, 1881 which is para materia to section 33(1) 6 of the Insecticides Act,
1968 as held by this court in Monaben Ketanbhai Shah & Another v. State of
Gujarat & Others (2004) 7 SCC 15. In the said case, this court observed as
under:- ".....The primary responsibility is on the complainant to make
necessary averments in the complaint so as to make the accused vicariously
liable. For fastening the criminal liability, there is no presumption that
every partner knows about the transaction. The obligation of the appellants to
prove that at the time the offence was committed they were not in charge of and
were not responsible to the firm for the conduct of the business of the firm,
would arise only when first the complainant makes necessary averments in the
complaint and establishes that fact. The present case is of total absence of
requisite averments in the complaint."
respondent submitted that sub-section (2) of section 33 of the Insecticides
Act, 1968 makes "other officers" liable, but that is essential
liability not to the position and control of the company at the time of
commission of the offence as in sub-section (1), but to the specific act of
consent, connivance and negligence, which need to be met and in that sense
distinguishable from sub-section (1) of section 33 of the Insecticides Act,
In Municipal Corporation of Delhi v. Ram Kishan Rohtagi &
Others (1983) 1 SCC 1, the Food Inspector, Municipal Corporation filed a
complaint before the Metropolitan Magistrate against the respondents alleging
commission of offence under Sections 5/7, Prevention of Food Adulteration Act
as the sample of food article (Morton toffees) manufactured by the Company
(respondent 5) had been found by the Public Analyst to be not of the prescribed
Inspector alleged in the complaint that the accused- respondents were Manager
(respondent 1) and Directors (respondent 2 to 4) of the Company (respondent 5)
"and as such they were incharge of and responsible for the conduct of
business of accused 2 (the Company) at the time of sampling".
to the complaint the proceedings against the respondents were commenced. But
the High Court quashed the proceedings against all the respondents under
Section 482, Cr.P.C. on the ground that the complaint did not disclose any
In State of Haryana v. Brij Lal Mittal & Others (1998) 5 SCC
343, it was held that the vicarious liability of a person 8 for being
prosecuted for an offence committed under the Act by a company arises if at the
material time he was incharge of and was also responsible to the company for
the conduct of its business. Simply because a person is a director of the
company it does not necessarily mean that he fulfils both the above
requirements so as to make him liable. Conversely, without being a director a
person can be incharge of and responsible to the company for the conduct of its
complaint in question we, however, find that except a bald statement that the
respondents were directors of the manufacturers, there is no other allegation
to indicate, even prima facie, that they were incharge of the company and also
responsible to the company for the conduct of its business
K.P.G. Nair v. Jindal Menthol India Ltd. (2001) 10 SCC 218 was a
case of this court under the Negotiable Instruments Act, 1881 and it was found
that the allegations in the complaint did not either in express words or with
reference to the allegations contained therein make out a case that at the time
of commission of the offence the appellant was in charge of and was responsible
to the company for the conduct 9 of its business. It was held that the
requirements of Section 141 of the Negotiable Instruments Act, 1881 were not met and the complaint against the accused was
quashed. The same view has been taken in Katta Sujatha (Smt.) v. Fertilizers
& Chemicals Travancore Ltd. & Another (2002) 7 SCC 655.
The respondent placed reliance on the case of S.M.S. Pharmaceuticals
Ltd. (supra), wherein this Court has held as under:
In view of the above discussion, our answers to the questions posed in the
reference are as under:
(a) It is
necessary to specifically aver in a complaint under Section 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.
answer to the question posed in sub- para (b) has to be in the negative. Merely
being a director of a company is not sufficient to make the person liable under
Section 141 of the Act. A director in a company cannot be deemed to be in
charge of and responsible to the company for the conduct of its business. The
requirement of Section 141 is that the person sought to be made liable should
be in charge of and responsible for the conduct of the business of the company
at the relevant time. This has to be averred as a fact as 10 there is no deemed
liability of a director in such cases.
answer to Question (c) has to be in the affirmative. The question notes that
the managing director or joint managing director would be admittedly in charge
of the company and responsible to the company for the conduct of its business.
When that is so, holders of such positions in a company become liable under
Section 141 of the Act. By virtue of the office they hold as managing director or
joint managing director, these persons are in charge of and responsible for the
conduct of business of the company. Therefore, they get covered under Section
141. So far as the signatory of a cheque which is dishonoured is concerned, he
is clearly responsible for the incriminating act and will be covered under sub-
section (2) of Section 141."
In Sabitha Ramamurthy and Another v. R.B.S. Channabasavaradhya
(2006) 10 SCC 581 this court held there was absence of requisite averments in
the complaint not containing any statement that the appellants were in charge
of the business of the company at the material time. The statement of witness
also did not specifically allege that the appellants were in charge of the
business of the company. This Court held that requirement of section 141 of the
Negotiable Instruments Act was not complied with and the complaint was liable
to be quashed.
In K.K. Ahuja v. V.K. Vora and Another (2009) 10 SCC 48, this
court observed that the averment in a complaint that an accused is a director
and that he is in charge of and is responsible to the company for the conduct
of the business of the company, duly affirmed in the sworn statement, may be
sufficient for the purpose of issuing summons to him. But if the accused is not
one of the persons who falls under the category of 'persons who are responsible
to the company for the conduct of the business of the company', then merely by
stating that 'he was in charge of the business of the company' or by stating
that 'he was in charge of the day to day management of the company' or by
stating that he was in charge of, and was responsible to the company for the
conduct of the business of the company', he cannot be made vicariously liable
under Section 141(1) of the Act.
The ratio of all these cases is that the complainant is required
to state in the complaint how a Director who is sought to be made an accused,
was in charge of the business of the company or responsible for the conduct of
company's business. Every Director need not be and is not in charge of 12 the
business of the company. If that is the position with regard to a Director, it
is needless to emphasise that in the case of non-Director officers, there is
all the more necessary to state what were his duties and responsibilities in
the conduct of business of the company and how and in what manner he is
responsible or liable.
In K.K. Ahuja's case (supra) the court summarized the position
under section 141 of the Act as under:- (i) If the accused is the Managing Director
or a Joint Managing Director, it is not necessary to make an averment in the
complaint that he is in charge of, and is responsible to the company, for the
conduct of the business of the company. It is sufficient if an averment is made
that the accused was the Managing Director or Joint Managing Director at the
relevant time. This is because the prefix "Managing" to the word
"Director" makes it clear that they were in charge of and are
responsible to the company, for the conduct of the business of the company.
the case of a Director or an officer of the company who signed the cheque on
behalf of the company, there is no need to make a specific averment that he was
in charge of and was responsible to the company, for the conduct of the
business of the company or make any specific allegation about consent,
connivance or negligence.
fact that the dishonoured cheque was signed by him on behalf of the company,
would give rise to responsibility under sub-section (2) of Section 141.
13 (iii) In
the case of a Director, secretary or manager [as defined in Section 2(24) of
the Companies Act] or a person referred to in clauses (e) and (f) of Section 5
of the Companies Act, an averment in the complaint that he was in charge of,
and was responsible to the company, for the conduct of the business of the
company is necessary to bring the case under Section 141(1) of the Act. No
further averment would be necessary in the complaint, though some particulars
will be desirable. They can also be made liable under Section 141(2) by making
necessary averments relating to consent and connivance or negligence, in the
complaint, to bring the matter under that sub- section.
Other officers of a company cannot be made liable under sub-section (1) of
officers of a company can be made liable only under sub-section (2) of Section
141, by averring in the complaint their position and duties in the company and
their role in regard to the issue and dishonour of the cheque, disclosing
consent, connivance or negligence.
The court further observed that the trauma, harassment and
hardship of the criminal proceedings in such cases may be more serious than the
ultimate punishment, it is not proper to subject all and sundry to be impleaded
as accused in a complaint against a company, even when the requirements of
section 138 read with section 141 of the Act are not fulfilled.
The legal position which emerges from a series of judgments is
clear and consistent that it is imperative to 14 specifically aver in the
complaint that the accused was in charge of and was responsible for the conduct
of business of the company. Unless clear averments are specifically
incorporated in the complaint, the respondent cannot be compelled to face the
rigmarole of a criminal trial.
In view of clear legal position, we do not find any infirmity in
the impugned judgment. This appeal being devoid of any merit is accordingly
..................................J. (Dalveer Bhandari)
..................................J. (K. S. Radhakrishnan)