Ndm 1 appln.3362.02.sxw IN THE HIGH COURT OF JUDICATURE AT BOMBAY CRIMINAL APPELLATE JURISDICTION CRIMINAL APPLICATION NO. 3362 OF 2002 R.A. Savoor and ors. ... PETITIONERS Vs. The State of Maharashtra and anr. ... RESPONDENTS -------------- Mr. Subodh Desai, Advocate for Applicants. Mr. A.S. Shitole, APP for State. -------------- CORAM : V.R. KINGAONKAR, J. DATE : 23 rd September, 2009. ORAL JUDGMENT 1 By this application, the applicants seek to impugn the proceedings of a criminal case bearing SCC No. 1519 of 2001 pending on the file of learned Judicial Magistrate (First-Class), Vashi, C.B.D., Belapur, Navi Mumbai. 2 The criminal case arises out of the complaint filed by the respondent No.2. The facts are few. The applicants are directors of M/s. Ndm 2 appln.3362.02.sxw Castrol India Limited, a company incorporated under the Companies Act, 1956. M/s. Castrol India Limited entered into an agreement with M/s. Paramount Greases and Specialities Private Limited, whereby the work of packing of the products was assigned to the latter under certain terms. The Castrol India Limited was to prescribe the quality and standard of the packages. M/s. Paramount Greases and Specialities Private Limited agreed to undertake the processing work for the purposes of preparing packages. There is no dispute about the fact that on 28 th November, 2000, the Respondent No.2, who is Inspector of Legal Metrology visited the premises of M/s. Paramount Greases and Specialities Private Limited at their industrial unit. The respondent No.2 carried out inspection. He collected 32 sample packets of “Castrol Wheel Bearing Grease (HMP)” marked of containing 20 kg. The actual measurement of the contents was carried out on an electronic weight scale. It was noticed by the respondent No.2 that there was shortage of 167 grams of the Grease in each of the package. A memorandum was drawn then and there. The applicants alongwith other directors of the M/s. Castrol India Limited Ndm 3 appln.3362.02.sxw came to be prosecuted for committing violation of Section 33 of the Standards of Weights and Measures ( ENF ) Act, 1985 as well as for breach of Rules 24 and 25 of the Standards of Weights and Measures ( Package of Commodities) Rules, 1977 as punishable under Section 51 of the sad Act. 3 The applicants challenge legality and validity of the criminal proceedings on various grounds, including the ground that they are not shown to be persons in-charge of the affairs of the Company, and therefore, could not have been arrayed as accused in the criminal case. They would further submit that a separate prosecution was initiated against M/s. Paramount Greases and Specialities Private Limited by the respondent No.2 and that the same has been compounded. Therefore, now, again the applicants could not have been prosecuted for the very same act about which the respondent No.2 entered into the settlement by way of compounding of the offence with M/s paramount Greases and Specialties Pvt. Ltd. 4 Heard Mr. Subodh Desai learned counsel for the applicants Ndm 4 appln.3362.02.sxw and Mr. A.S. Shitole learned APP for the State. 5 At the threshold, let it be noted that in the reply affidavit of the respondent No.2, the fact that the agreement between M/s. Paramount Greases and Specialities Private Limited and M/s. Castrol India Limited was brought to his notice is clearly stated. The respondent No.2 admitted that the offence was compounded with M/s. Paramount Greases and Specialities Private Limited. The respondent No.2 asserted that notice was served on the Company, namely, M/s. Castrol India Limited for calling reply as regards prima facie contravention of the Rules and the Acts. However, the applicants did not produce any evidence regarding their responsibility and liability. It is worthy to be noted that M/s. Castrol India Limited has not been joined in the array of the accused, though allegedly notice was issued and served on it. There appears no reason given in the complaint as to why the said Company is not joined as an accused. What transpires from the reply affidavit is that the applicants are not served with any individual notices before commencement of the criminal prosecution. Needless to say that there Ndm 5 appln.3362.02.sxw was no reason for them to explain about their stance. 6 The averments made in the complaint would show that no particular allegations are made against the applicants. The allegations are thus, “The accused are the Directors M/s. Castrol India Ltd. whose head office is White House, 71 Walkashwar Road, Post Bos No. 16172, Mumbai 400 006”. The accused has therefore, committed a breach of Section 33 of the Standards of Weights and Measures (ENF) Act, 1985 read with Rules 24 and 25 of the Standards of Weights and Measures (Package Commodities) Rules, 1977 is therefore guilty of of the offence punishable under Section 51 of the 1985 Act.” 7 From the above contents of the complaint, it cannot be gathered as to what was the role of the applicants in the affairs of the business of M/s. Castrol India Limited. The complaint would show mere sweeping averments regarding status of the applicants qua the Company. Ndm 6 appln.3362.02.sxw 8 Section 62 (1) of the Standards of Weights and Measures (Enforcement) Act, 1985 reads as follows: “62. Offences by companes: (1) If the person committing an offence under this Act is a company, every person who, at the time of offence was committed, was in charge of, and 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 proceed against and punished accordingly.” 9 A plain reading of Section 62 (1) of the Standards of Weight and Measures (Enforcement) Act, 1985 would make it manifest that it is necessary to allege and prove that the person was in-charge of and was responsible to the Company for the conduct of the business of the Company. It is also clear that the Company is also made liable to answer the charge. The plain words of Section 62 imply that there must be clear averments that the person was in-charge of, and not only in-charge of, but also was responsible to the Company for the conduct of its business. Ndm 7 appln.3362.02.sxw The expression “and” as used in Sub-clause (i) of Section 62, would imply that for holding a person liable for the criminal act, his status qua the company must be such that he must be shown to be responsible for the conduct of business of the company and a person in-charge or rather having control over the affairs of the company. Unless there are clear averments to the effect that the applicants were in-charge of the business of the company and were having control over business of the company, it is difficult to hold that they were criminally liable to face the prosecution. 10 In case of Mr. Shekhar Bajaj and others vs. State of Maharashtra and others (Criminal Application No. 2583 of 2008) a Single Bench of this Court has taken view that phraseology as used in Section 62 of the Act, conveys day-to-day participation of the affairs of the company. In other words, the directors, who are not concerned with day-to-day business of the company may not be criminally liable for the prosecution. The reason is not far to seek. The dormant directors may not be aware of the malpractices, which are going on in the affairs of the Ndm 8 appln.3362.02.sxw company and hence there may be total absence of knowledge, lest-mens rea on their part. Considering the legal position, it is difficult to say that the applicants are liable to face the charge levelled against them. 11 The contention of the applicants further is that since the offence is compounded between Respondent No.2 and M/s. Paramount Greases and Specialities Private Limited, the present applicants need not be tried for the very same offence. The difficulty is that such a prosecution against the directions of M/s. Castrol India Limited cannot be strictly regarded as barred by virtue of Section 300 of the Criminal Procedure Code. The principle of double jeopardy may not be applicable in such a case. However, it is not necessary to dilate on such a issue when the applicants are entitled to the relief in view of the legal protection available for the reasons discussed herein above. 12 Considering the foregoing discussion, I have no hesitation in holding that the prosecution against the applicants is unsustainable in the Ndm 9 appln.3362.02.sxw eye of law. Consequently the application is allowed. The applicant Nos. 1 to 3 herein shall be deemed as discharged from the criminal prosecution as the same is quashed qua the applicants. [ V.R. KINGAONKAR, J ]