[CASE NUMBER] (O&M) -1- IN THE HIGH COURT OF PUNJAB & HARYANA AT CHANDIGARH [CASE NUMBER] (O&M) Date of Decision : 06.12.2013 [ENTITY] and others Petitioners Versus [ENTITY] Respondent CORAM: HON'BLE MR. JUSTICE [ENTITY] 1. Whether Reporters of local papers may be allowed to see the judgment? 2. To be referred to the Reporters or not? 3. Whether the judgment should be reported in the Digest? Present: Mr. [ENTITY], Advocate for the petitioners. Ms. [ENTITY], AAG, Punjab. [ENTITY], J. (Oral)
Mr. [ENTITY], Joint Director Agriculture is present in person.
When this petition was listed on 14.03.2013, the State counsel sought adjournment to confirm from the record as to who could be held responsible for conduct of business of manufacturing concern. No such information has been supplied despite the case being adjourned since then.
A criminal compliant was instituted against the dealer and the manufacturer for offences under [SECTION], [SECTION], [SECTION], [SECTION] and [SECTION] of the [ACT]. A sample of Cartap Hydrochloride 4% GR was taken as per the procedure and the same was found to be mis-branded. In the complaint presented before the Magistrate.
Accused No. 1 and 2 are the dealers whereas accused No. 3 is the [CASE NUMBER] (O&M) -2- manufacturing concern. Accused No. 5 i.e. petitioner No. 4 was the Area Sales Manager; accused No. 6 i.e. petitioner No. 1 the [ENTITY] and accused No. 7 i.e. petitioner No. 2 the Managing Director.
Petitioner No. 3, however, was the senior officer quality control incharge and qua him the instant petition was dismissed by this Court on 24.10.2012. For rest of the petitioners it is not even remotely stated in the complaint (Annexure P-1) that these persons were also responsible for conduct of business of the manufacturing concern.
[SECTION] of the [ACT] says that:-
"[SECTION] . Offences 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:
Provided 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. (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 to any neglect, on the part of, any director, manager, secretary or other officer of the company, such [CASE NUMBER] (O&M) -3-
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 form, means a partner in the firm."
Learned petitioners' counsel has relied upon a judgment of Apex Court in State of NCT of Delhi vs. Rajive Khurana, 2010 AIR (SC) [SECTION]86 in support of his contention. It was held as under:-
"[SECTION]. 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 emphasize 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.
19. In [ENTITY]'s case (supra)1. the court summarized the position under [SECTION] 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
1. [ENTITY] vs. V.K. Vora, 2009(3) RCR (Criminal) 571; [PRECEDENT] [CASE NUMBER] (O&M) -4-
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.
(ii) In 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. The very fact that the dishonoured cheque was signed by him on behalf of the company, would give rise to responsibility under [SECTION].
(iii) In the case of a Director, secretary or manager [as defined in [SECTION] of the [ACT]] or a person referred to in [SECTION] of the [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] 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] by making necessary averments relating to consent and connivance or negligence, in the complaint, to bring the matter under that sub- section.
(iv) Other officers of a company cannot be made liable under [SECTION]. Other [CASE NUMBER] (O&M) -5- officers of a company can be made liable only under [SECTION], 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.
20. 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] read with [SECTION] of the Act are not fulfilled.
21. The legal position which emerges from a series of judgments is clear and consistent that it is imperative to 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 the above, the instant petition is deserved to be allowed and the summoning order qua petitioners No. 1, 2 and 4 is set aside and quashed.
December 06, 2013 ( [ENTITY] ) jk JUDGE