R. Banerjee
& Ors Vs. H.D. Dubey & Ors [1992] INSC 86 (13 March 1992)
Ahmadi,
A.M. (J) Ahmadi, A.M. (J) Ramaswamy, K.
CITATION:
1992 AIR 1168 1992 SCR (2) 221 1992 SCC (2) 552 JT 1992 (2) 436 1992 SCALE
(1)690
ACT:
Prevention
of Food Adulteration Act, 1954:
Section
17-Prosecution-Launching of-Against Directors/Managers of Public Limited
Companies-Nomination made under sub-section (2)-Validity of Nomination-
Prosecution only against the nominated person-Not against others-Impleading
others as co- accused-When arises- Applicability of sub-section (4).
HEAD NOTE:
The
Respondent Food Inspector visited the godown of a company and lifted samples of
orange drink manufactured by the company, as also Vanaspati ghee manufactured
by the said company as also by another company. He found that the label affixed
to the orange drink carried the date of manufacture as June, 1988. Since the
date of expiry was stated to be six months from the date of manufacture he
found that the products was mis-branded or adulterated as six months had
already expired on the date of inspection. He forwarded the samples so
collected to the public Analyst. The report of the Public Analyst was to the
effect that all the three samples were adulterated, as they did not conform to
the standard prescribed by law. The respondent then filed three separate
complaints against the respective companies, as well as Directors, Managers and
officers of the companies, for the commission of offences punishable under
Section 7/16 read with section 17 of the prevention of Food Adulteration Act,
1954. The appellants' contention that in view of the nomination made by the
companies, only the persons nominated to be incharge of and responsible for the
conduct of the business could be prosecuted and not the other Directors/Managers/Officers.
Having
been unsuccessful before the Trial Court as also before the High Court, the
appellants have preferred the present appeals by special leave.
Allowing
the appeals on the question whether it was permissible to 222 launch a
prosecution under section 17(1) of the Prevention of Food Adulteration Act,
1954 against the Directors and Managers of Public Limited Companies
notwithstanding the nomination made by the companies as required by section
17(2) of the Act, this Court,
HELD :
1. It is clear from the scheme of section 17 of the Prevention of Food
Adulteration Act, 1954 that where a company has committed an offence under the
Act, the person nominated under sub-section (2) to be in charge of, and
responsible to , the company for the conduct of its business shall be proceeded
against unless it is shown that the offence was committed with the
consent/connivance/negligence of any other Director, Manager, Secretary or
Officer of the Company in which case the said person can also be proceeded
against and punished for the commission of the said offence.
It is
only where no person has been nominated under sub- section (2) of section 17
that every person, who at the time of the commission of the offence was in
charge of and was responsible to the company for the conduct of its business
can be proceeded against and punished under the law. [227G, H; 228A,B]
2. In
the present cases, on a careful perusal of the complaints lodged by the Food
Inspector under the Act it is evident that intimation regarding the nomination
had been communicated to the Food Inspector before the complaints came to be
lodged. This is evident from the averments made in the respective complaints.
The nomination was, however, not acted upon by the complainant on the ground
that it was incomplete. It was, therefore, said that in the absence of a valid
nomination from the concerned company the Directors of the company were liable
to be proceeded against and punished on proof of the charge levelled against
them in the complaint. Thus there is no allegation in the complaint which would
bring the case within the mischief of section 17(4) of the Act. There is no
allegation in the complaint that the offence was committed with the
consent/connivance/negligence of the Directors, other than the nominated
person, who were impleaded as co-accused.
Therefore,
the allegations in the complaint do not make out a case under sub-section (4)
of section 17 of the Act. That being so, the inclusion of the co-accused other
than the company and the nominated person as the persons liable to be proceeded
against and punished cannot be justified. [230G, H; 231A-C] Municipal
Corporation of Delhi v. Ram kishan Rohtagi & Ors.,
[1983] 223 1 SCR 884, relied on.
3.
Since the validity of the nominations require investigation, the matters are
remanded to the trial court with a direction to inquire into the question
whether the nomination forms were received and acknowledged by the Local
(Health) Authority competent to receive and acknowledge the same. This question
will be considered as a preliminary question and the magistrate will record a
finding thereon.
If he
comes to the conclusion that the nomination forms had been acknowledged by the
competent Local (Health) Authority he shall drop the proceedings against the
directors of the Company, other than the company and the nominated persons.
If on
the other hand he comes to the conclusion that the prescribed forms had been
acknowledged by a person other than the competent Local (Health) Authority he
will proceed against all the persons who are shown as the accused in the
complaint i.e. all the Directors including the nominated person and the
company. [232H; 233A-C]
CRIMINAL
APPELLATE JURISDICTION : Criminal Appeal Nos. 167-169 of 1992.
From
the Judgment and Order dated 4.2.91 of the Madhya Pradesh High Court in Crl.
Revision Nos. 356, 357 and 358/89.
Ram Jethmalani,
Ravinder Narain, B.B. Lall, Ashok Sagar and S. Sukumaran for M/s IJBD & Co.
for the Appellants.
U.N. Bachawat,
Ms. Mirdula Gupta and Uma Nath Singh for the Respondents The Judgment of the
Court was delivered by AHMADI. J. Special leave granted.
The
short question which arises for determination in these appeals is whether it
was permissible to launch a prosecution under sub-section (1) of section 17 of
the Prevention of Food Adulteration Act, 1954 (hereinafter called the `the
Act') against the Directors and Managers of public limited companies, namely,
M/s. Lipton India Limited and M/s. Hindustan Lever Limited, for the commission
of the alleged offence punishable under the aforesaid provision notwithstanding
the nomination made by the said companies as required by sub-section (2) of
section 17 of the Act. In order 224 to appreciate contention raised on behalf
of the appellants it is necessary to notice a few provisions of the Act.
Section
7 of the Act inter alia provides that no person shall himself or by any person
on his behalf manufacture for sale, or store, sell or distribute any
adulterated food or any misbranded food or any article of food in contravention
of the provisions of the Act and the rules made thereunder.
Section
16 prescribes penalties for contravention of the provision of the Act. It lays
down that if any person whether by himself or by any person on his behalf,
manufactures for sale, or stores, sells or distributes any article of food
which is adulterated or misbranded or the sale of which is prohibited under any
provision of the Act or any rule made thereunder or by an order of the Food
(Health) Authority, he shall be punishable with imprisonment for a term which
shall not be less than six months but which may extend to three years, and with
fine which shall not be less than one thousand rupees. Then comes section 17,
the relevant part whereof may be reproduced:
"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 (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 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.
225
R.BANERJEE v. H.D. DUBEY [AHMADI, J.] (2) Any company may, by order in writing,
authorise any of its directors or managers (such managers) 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 along with
the written consent of such director or manager for being so nominated.
Explanation-
Where a company has different establishment or branches or different units in
any establishment or branch, different persons may be nominated under this
sub-section in relation to different establishment or branches or units and the
person nominated in relation to any establishment, branch or unit shall be
deemed to be the person responsible in respect of such establishment, branch or
unit." Sub-section (4) which begins with a non-obstante clause next
provides that 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 the offence and shall be liable to
be proceeded against and punished accordingly.
Section
23 of the Act empowers the Central Government to make rules. In exercise of the
said power the Central Government has framed rules known as the Prevention of
Food Adulteration Rules, 1955 (hereinafter called 'the Rules').
Rule
12-B with which we are concerned reads as under;
"Form
of nomination of Director of Manager and his consent, under Section 17-1 (1) A
company may inform the Local (Health) Authority of the concerned local area, by
notice in duplicate, in Form VIII containing the name and address of the Director
or Manager, who has been nominated by it under sub-section (2) of section 17 of
the Act to be in charge of, and 226 responsible to,the company for the conduct
of the business of the company or any establishment, branch or unit thereof :
Provided
that no such nomination shall be valid unless the Director or Manager who has
been so nominated, gives his consent in writing and has affixed his signature,
in Form VIII in duplicate in token of such consent.
(2)
The Local (Health) Authority shall sign and return one copy of the notice in
Form VIII to the company to signify the receipt of the nomination and retain
the second copy in his office for record." Form VIII is in three parts.
The first part is in the nature of notice that the company has by a resolution
passed at its meeting nominated its named Director/Manager to be in charge of,
and responsible to, the company for the conduct of the business of the said
company or establishment/branch/unit thereof. A certified copy of the
resolution has to be sent along with the form. This part must be signed by the
Managing Director/Secretary of the Company. The second part relates to the
acceptance of the nomination and must be signed by the nominated
Director/Manager. The third part has to be signed by the Local (Health)
Authority acknowledging the receipt of the nomination.
It is
clear from the plain reading of section 17 that where an offence under the Act
is alleged to have been committed by a company, where the company has nominated
any person to be in charge of, and responsible to, the company for the conduct
of its business that person will be liable to be proceeded against and punished
for the commission of the offence. Where, however, no person has been so
nominated, every person who at the time of the commission of the offence was in
charge of, and responsible to, the company for the conduct of its business
shall be proceeded against and punished for the said crime. Even in such cases
the proviso offers a defence, in that, the accused can prove his innocence by
showing that the offence was committed without his knowledge and
notwithstanding the exercise of due diligence to prevent it. The scheme of
sub-section (1) of section 17 is, therefore, clear that cases where a person
has been nominated under sub-section (2) of section 17, he alone can be
proceeded against and punished for the crime in question. It is only where on
such 227 person has been nominated that every person who at the time the
offence was committed was in charge of, and was responsible to, the company for
the conduct of its business can be proceeded against and punished. The proviso,
however, lays down an exception that any such person proceeded against shall
not be liable to be punished if he proves that the offence was committed
without his knowledge and that he had exercised all due diligence to prevent
the commission thereof. Sub-section (2) of section 17 empowers the company to authorise
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 empowers the company to give notice to
the Local (Health) Authority in the prescribed form that it has nominated a
Director or Manager as the person responsible to the company for the conduct of
its business. This has to be done with the written consent of the nominated
Director or Manager. Where a company has different establishment or branches or
units, different persons may be nominated in relation to the different
establishments/ branches/units and the person so nominated shall be deemed to
be the person responsible in respect of such establishment, branch or unit.
Sub-section (4) of section 17 overrides the preceding sub-section and posits
that where an offence has been committed by a company and it is proved that the
offence was 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, other than the one nominated, such Director, Manager Secretary or
other officer shall also be deemed guilty and be liable to be proceeded against
and punished for the same. This sub-section,therefore, makes it clear that
notwithstanding the nomination under sub-section (2) of section 17 and
notwithstanding clause (a)(i) of sub- section (1) of section 17, any Director,
Manager, Secretary or other officer of the company, other than the nominated
person, can be proceeded against and punished if it is shown that the offence
was committed with his consent or connivance or negligence. It is crystal clear
from the scheme of section 17 that where a company has committed an offence
under the Act, the person nominated under sub- section (2) to be in charge of,
and responsible to, the company for the conduct of its business shall be
proceeded against unless it is shown that the offence was committed with the
consent/connivance/negligence of any other Director, Manager, Secretary or
Officer of the company in which case the said 228 person can also be proceeded
against and punished for the commission of the said offence. It is only where
no person has been nominated under sub-section (2) of section 17 that every
person, who at the time of the commission of the offence was in charge of and
was responsible to the company for the conduct of its business can be proceeded
against and punished under the law.
In the
instant case it is the contention of both the companies, namely (i) M/s. Lipton
India Limited and (ii) M/s. Hindustan Lever Limited that they had made the
nomination as required by sub-section (2) of section 17 of the Act and,
therefore, only the nominated person could be proceeded against and punished
since there is no allegation in the complaints lodged by the Food Inspector to
bring the case within sub-section (4) of section 17 of the Act. If the said two
companies can show from the record of the case that a valid nomination was made
prior to the commission of the alleged offence and the allegations in the
complaints do not attract sub-section (4) of section 17, the appellants-
Director, Manager and other Officers would be justified in contending that they
cannot be proceeded against or punished for the offence alleged to have been
committed by their respective companies.
The
facts of the present case reveal that Mr. H.D. Dubey, Food Inspector, had
visited the godown of Lipton India Limited situate at Panagarh, Jabalpur and
had lifted samples of Tree Top Orange Drink in Tetrapacks and Dalda Vanaspati
Ghee manufactured by the said two companies as he suspected the said products
of the said two companies to be adulterated. During inspection the Food
Inspector found that the Tree Top Tetrapack carried the date of manufacture as
June 1988 as evidenced by the label affixed thereto and since the date of
expiry was stated to be six months from the date of manufacture, the product
was adulterated as six months had already elapsed on the date of inspection. It
was, therefore, felt that the product was misbranded or adulterated. Suffice it
to say that the samples collected by the Food Inspector from the said godown
were forwarded to the Public Analyst for examination and report as required by
law and the Public Analyst reported that samples of all the three products,
namely, Tree Top Tetrapacks and Vanaspati Ghee manufactured by M/s. Lipton
India Limited as well as by M/s. Hindustan Lever Limited were adulterated as
they did not conform to the standard prescribed by law. It was on the receipt
of this report that the Food Inspector filed three 229 separate complaints
against the company as well as its Directors, Managers and other officers for
the commission of offences punishable under section 7/16 read with section 17
of the Act.
The
appellants however, contend that since the company had made a nomination as
required by sub-section (2) of section 17 of the Act, only the person nominated
could be proceeded against and punished for the alleged offence along with the
company. So far as Lipton India Limited is concerned, it is said that it had
nominated one H. Dayani by company resolution dated 15th December, 1988 as the
person too be in charge of, and responsible to, the company for the conduct of
its business at its Nagpur branch and intimation thereof was sent as required
by Rule 12B with the consent of the said H. Dayani to the concerned Local
(Health) Authority and hence the said H. Dayani alone could be proceeded
against and punished, besides the company, for the commission of the offence in
question. A copy of the resolution passed by the Board of Directors of the
company at its meeting held on 15th December, 1988 was annexed to the intimation sent in the prescribed form under Rule
12B of the Rules. M/.s Hindustan Lever Limited contends that it too had
nominated one Dr. Nirmal Sen as the person in charge of, and responsible to,
the said company for the conduct of its business at the Shamnagar factory and
hence besides the company the said Dr. Nirmal Sen alone could be proceeded
against and punished. That company also had intimated the Local (Health) Authority
about the nomination of Dr. Nirmal Sen as the person in charge of, and
responsible to, the said company for the conduct of its business at its shamnagar
factory and this was duly verified by the Local (Health) Authority of Bhatpara
Municipality exercising administrative control over the area in which the said
factory was situate.
As
pointed out earlier if the two companies succeed in showing that they had made
valid nominations of H.Dayani and Dr. Nirmal Sen, respectively, and had duly
intimated the concerned Local (Health) Authority about the same before the
commission of the alleged offences, there can be no doubt that the case would
fall within the ambit of sub- clause (i) of clause (a) of sub-section (1) of
section 17 of the Act and not under sub-clause (ii) thereof. It would then be
necessary for the prosecuting agency to show from the averments made in the
complaint that the case falls within sub-section (4) of section 17 of the Act.
If the prosecuting agency fails to show that the offence was committed with the
consent or connivance of any particular Director, Manager, Secretary or other
officer of the company 230 or on account of the negligence of any one or more
of them, the case set up against the appellants cannot be allowed to proceed.
It may
at this stage be mentioned that H. Dayani has filed an affidavit stating that
at the material point of time he was the Branch Manager of the Nagpur Branch of
Lipton India Limited and the said branch had a godown at Panagarh, District Jabalpur,
where Dalda Vanaspati in different packings and Tree Top Tetrapack were stored,
By the Board's Resolution dated 15th December, 1988 he was nominated under
section 17 (2) of the Act to be the person in charge of, and responsible to,
the company for the conduct of its business at Nagpur Branch. He further states
that as per Rule 12B, a nomination in Form VIII was duly sent by the company to
the Local (Health) Authority at Jabalpur and he had signed the said form in
token of having accepted the nomination. This form, says the deponent, was duly
received by the Local (Health) Authority, Panagarh, Jabalpur on 21st February,
1989. Similarly, Dr. Nirmal Sen has filed an affidavit stating that he was the
Factory Manager of the Shamnagar Factory of Hindustan lever Limited at the
material time and his company had a godown at Panagarh, District Jabalpur,
where Dalda Vanaspati in different packings was stored. By the Board's
Resolution dated 22nd March, 1983 he was nominated under section 17(2) of the
Act to be in charge of, and responsible to, the company for the conduct of its
business at the Shamnagar factory and in that capacity he was entitled to
exercise all such powers and take all such steps as considered necessary or
expedient to prevent the commission of any offence under the Act. As required
by Rule 12B, a nomination in Form VIII was sent by his company to the Local
(Health) Authority, Bhatpara Municipality and he had signed the same in token
of having accepted the nomination made in his favour on 13th April, 1983. He states
that this form was duly received by the Local (Health) Authority on the same
day. The aforesaid sworn statements made by H. Dayani and Dr. Nirmal Sen were
produced on record to assure the Court that the nominated person of the said
two companies own their responsibilities under the Act pursuant to the
nomination.
On a
careful perusal of the complaints lodged by the Food Inspector under the Act it
is evident that intimation regarding the nomination in favour of H. Dayani and
Dr. Nirmal Sen had been communicated to the Food Inspector before the
complaints came to be lodged. This is evident from the averments made in the
respective complaints. The nomination 231 was, however, not acted upon by the
complainant on the ground that it was incomplete. It was , therefore, said in
the absence of a valid nomination from the concerned company the Directors of
the company were liable to be proceeded against and punished on proof of the
charge levelled against them in the complaint. It will thus be seen that there
is no allegation in the complaint which would bring the case within the
mischief of section 17 (4) of the Act. There is no allegation in the complaint
that the offence was committed with the consent/connivance/negligence of the
Directors, other than the nominated person, who were impleaded as co-assued. We
are, therefore, satisfied that the allegations in the complaint do not make out
a case under sub-section (4) of section 17 of the Act. That being so, the
inclusion of the co-accused other than the company and the nominated person as
the persons liable to be proceeded against and punished cannot be justified. As
held by this Court in Municipal Corporation of Delhi v. Ram Kishan Rohtagi
& Ors., [1983] 1 SCR 884 where the allegations set out in the complaint do
not constitute any offence, no process can be issued against the co-accused
other than the company and the nominated person and the High Court would be
justified in exercising its inherent jurisdiction under section 482 of the Code
of Criminal Procedure, 1973 to quash the order passed by the Magistrate taking
cognizance of the offence against such co-accused.
That
brings us to the question whether process could be issued against such
co-accused under sub-clause (ii) of clause (a) of sub-section (1) of section 17
of the Act.
This
would depend on the court's finding whether there was a valid nomination in favour
of H. Dayani and Dr. Nirmal Sen.
If
there was a valid nomination in existence at the date of the commission of the
offence there can be no doubt that the case would be governed by section
17(1)(a)(i) of the Act and section 17(1)(a)(ii) would not be attracted. The
nomination in favour of H. Dayani shows that it was received by the Local
(Health) Authority on 21st
February, 1989 and the
same was signed by the Health Officer, Municipal Corporation, Jabalpur on the same day and a copy thereof
was returned to the company sometime in March 1989. Although in the letter of
the Food Inspector dated 21st
March, 1989 it was
stated that the nomination form could not be accepted as it was not signed by
the Local (Health) Authority, no such averment was made in the complaints
subsequently filed. In the complaints all that is said is that the nominations
are not valid as they are incomplete. Now during the pendency of these appeals
the Health Officer has by his letter dated 232 3rd October, 1991 informed as under :
"However,
it is beyond my knowledge that who has cut Jabalpur and written Panagarh in place of Jabalpur when the nomination was handed over to the party the word Jabalpur was written on the document, Form
No. VIII." A perusal of the nomination form of H. Dayani shows that some
word has been scored out and Panagarh has been written by its side. However, if
it is the contention of the complainant that this change was subsequently made
after a copy of the nomination was handed over to the party, the original
document in the possession of the Health Officer could have been produced to
show that Panagarh was subsequently added for Jabalpur. Even the scored out word does not read like Jabalpur. No where in the complaint has it
been contended that the document has been tempered with subsequently. It is
clear from this communication that the nomination was sent in Form VIII and the
same duly received and acknowledged by the Health Officer, Municipal
Corporation, Jabalpur. It is, however, contended that
since of godown in which the offending goods were stored was situate at Phutatal
(Panagarh) of Jabalpur district,the Local (Health) Authority was not the Health
Officer of the Jabalpur Municipality but the Civil Surgeon or the Chief Medical
Officer of District Jabalpur. A notification issued by the State Government
dated 14th February, 1983 under clause (viii) of section 2 of the Act has been
relied upon.
It is,
therefore, necessary to inquire into the question whether the nomination of H. Dayani
was sent to, received and acknowledged by the competent Local (Health)
Authority.
The
nomination form pertaining to Hindustan Lever Limited is dated 30the March,
1983 in favour of Dr. Nirmal Sen, Factory Manager of the Shamnagar unit of the
company.
Dr. Nirmal
Sen has signed that form on 13th April, 1983.
It
appears to have been counter-signed by the Food Inspector, Bhatpara Muncipality.
It is, therefore, not clear if it has been signed by the competent Local
(Health) Authority of the area in which the godown from which the offending
goods were recovered was situated. This too is a matter which needs
investigation.
In the
result, the appeals are allowed. The order of the learned Magistrate as well as
the impugned order of the High Court are set aside. The Matters are remanded to
the learned trial magistrate with a direction 233 to inquire into the question
whether the nomination forms nominating H. Dayani and Dr. Nirmal Sen were
received and acknowledged by the Local (Health) Authority competent to receive
and acknowledge the same. This question will be considered as a preliminary
question and the learned magistrate will record a finding thereon . If he comes
to the conclusion that the nomination forms had been acknowledged by the
competent Local (Health) Authority he shall drop the proceedings against the
Directors of the company, other than the company and the nominated persons.
If on
the other hand he comes to the conclusion that the prescribed forms had been
acknowledged by a person other than the competent Local (Health) Authority he
will proceed against all the persons who are shown as the accused in the
complaint i.e. all the Directors including the nominated person and the
company. The appeals are allowed accordingly.
G.N.
Appeals allowed.
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