N Criminal Appeal Nos
452 453 of 1984
Appeals by Special leave from the Judgment and Order dated the 1st July 1983 of the Madhya Pradesh High Court in Criminal Revision No 105 of 1983 and Misc
Case No 366 of 1983
ST Desai MS Ganesh and SC Dagadiya for the appellants
Ravindra Bana and AK Sanghi for the respondents
The Judgement of the Court was delivered by CHINNAPPA REDDY J Special Leave granted
A complaint was laid by the State of Madhya Pradesh through the Inspector Food and Civil Supplies Dewas against the two petitioners Sheoratan Agarwal and Raghunandanlal Chaturvedi the Managing Director and the Production Manager of Ms 5 S Limited a public Limited Company with its registered office at Calcutta for alleged violations of clause 2 ci and 3 of the Madhya Pradesh Pulses Edible Oil Seeds and Edible Oil Dealers Licensing Order 1977 and clause 3 of the Madhya Pradesh Essential Commodities Price Exhibition and Price Control Order 1977 read with sections 3 and 7 of the Essential Commodities Act
The petitioners moved the High Court of Madhya Pradesh under sections 397 and 482 of the Code of Criminal Procedure to quash the Proceedings against them on the ground that they could not in law be prosecuted unless the Company itself was prosecuted
The High Court overruled the contention raised on behalf of the petitioners
Hence these two appeals by Special Leave under Article 136 of the Constitution
721 Shri ST Desai learned counsel for the petitioners urged the same contention before us relying for that purpose upon the language of section 10 of the Essential Commodities Act and the decision of this Court in State of Madras vs C V Parekh and another and the decision of some High Courts State of Gujarat vs Chandulal Jethalal Mirji Brothers Oil Mill vs State of Karnataka Santi Kumar Agarwala vs State
We do not think that the language of section 10 of the Essential Commodities Act justifies the submission made on behalf of the petitioners that if it is alleged that the person contravening the order made under the Essential Commodities Act is a Company the prosecution of the Directors the officers and servants of the Company or other persons is precluded unless the Company itself is prosecuted
We are afraid the submission made on behalf of the petitioners proceeds upon a misunderstanding of the decision of this Court in State of Madras vs CV Parekh
supra
So do the various other decisions of High Courts cited before us
Section 10 of the Essential Commodities Act is as follows 1 If the person contravening an order made under Sec
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
2 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 722 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 accordingly
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
 The 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 alongwith 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
That should be axiomatic and that is all that the Court laid down in State of Madras vs C V Parekh supra as a careful reading of that case will show and 723 not that the person in charge or an officer of the Company must be arraigned simultaneously along with the Company if he is to be found guilty and punished
The following observations made by the Court clearly bring out the view of the Court It was urged that the two respondents were in charge of and were responsible to the company for the conduct of the business of the Company and consequently they must be held responsible for the sale and for thus contravening the provisions of clause 5 of the Iron and Steel Control order
This argument cannot be accepted because it ignores the first condition for the applicability of section 10 to the effect that the person contravening the order must be a company itself
In the present case there is no finding either by the Magistrate OR by the High Court that the sale in convention of clause 5 of the Iron  Steel Control order was made by the Company
In fact the Company was not charged with the offence at all
The liability of the persons in charge of the Company only arises when the contravention is by the Company itself
Since in this case there is no evidence and no finding that the Company contravened Cl
5 of the Iron  Steel Control order the two respondents could not be held responsible
The actual contravention was by Kamdar and Villabhadas Thacker and any contravention by them would not fasten responsibility on the respondents
 The sentences underscored by us clearly show that what sought to be emphasised was that there should be a finding that the contravention was by the Company before the accused could be convicted and not that the Company itself should have been prosecuted along with the accused
We are therefore clearly of the view that the prosecutions are maintainable and that there is nothing in section 10 of the Essential Commodities Act which bars such prosecutions
The learned counsel also invited our attention to the decisions in Durgamata Oil Mill vs Calcutta Municipality DK Jain vs State and Chander Bhan vs The State
None of these cases has any application
They arose under the Prevention of Food Adulteration Act and it is unnecessary for us to consider them
The appeals are rejected
MLA Appeals dismissed


Summary:
The two appellants who were the Managing Director and the Production Manager of a public limited company were prosecuted by the respondent for alleged violations by their company of clauses 2 c i and 3 of the Madhya Pradesh Pulses Edible Oil Seeds and Edible Oil Dealers Licensing Order 1977 and clause 3 of the Madhya Pradesh Essential Commodities Price Exhibition and Price Control Order 1977 read with sections 3 and 7 of the Essential Commodities Act the Act for short
The appellants moved the High Court under sections 397 and 482 of the Code of Criminal Procedure to quash the proceedings against them on the ground that they could not in law be prosecuted unless the company itself was prosecuted
The High Court over ruled this contention and hence these appeals by special leave
Dismissing the appeals  HELD 1
Section 10 of the Act lists the persons who may be held guilty and punished when it is a company that contravenes an order made under Section 3 of the Act
They 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 that is the person in charge of the company and 3 any director manager secretary or other officers of the company with whose consent or connivance or because of neglect attributable to whom the offence has been committed that is an officer of the company
722C F 2
It is clear from the language of Section 10 that 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
Each or any of them may be separately prosecuted or along with the company if there is a contravention of an order made under Section 3 of the Act by the company
It does no lay down any condition that the person in charge or an officer of 720 the company may not be separately prosecuted if the company itself is not prosecuted
Therefore the prosecutions of the appellants are maintainable and that there is nothing in Section 10 of the Act which bars such prosecution 722 GH 723F State of Madras v CV Parekh and another AIR 1971 SC 447 State of Gujarat vs Chandulal Jethalal 1980 21 Gujarat Law Reporter 353 Mirji Brothers Oil Mill vs State of Karnataka and Santi Kumar Agarwala vs State ILR
1975 Cuttack 86 distinguished
Durgamata Oil Mill vs Calcutta Municipality 1978 Crl
LJ 222 DK Jain vs State AIR 1965 All
525 and Chander Bhan vs The State 1975 All India Prevention of Food Adulteration held inapplicable