IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.T.RAVIKUMAR TUESDAY, THE 9TH JUNE 2009 / 19TH JYAISHTA 1931 Crl.MC.No. 3353 of 2006() ------------------------- ( ST.1421/2005 of JUDL. MAGISTRATE OF FIRST CLASS,CHANGANACHERRY ) .................... PETITIONER: 2ND ACCUSED -------------------------- KEDAR APTE, AREA SALES AND CUSTOMER MANAGER, M/S.HINDUSTAN LEVER LTD., 101, SANTHOME HIGH ROAD, CHENNAI-600 028. BY ADV. SRI.SUNNY MATHEW SMT.T.D. RAJALAKSHMI RESPONDENTS: COMPLAINANT -------------------------- 1. INSPECTOR, LEGAL METROLOGY, CHANGANACHERRY. 2. STATE OF KERALA, REP. BY PUBLIC PROSECUTOR, HIGH COURT OF KERALA, ERNAKULAM. BY PUBLIC PROSECUTOR SRI. PUZHAKKARA MUHAMMED THIS CRIMINAL MISC. CASE HAVING BEEN FINALLY HEARD ON 09/06/2009, THE COURT ON THE SAME DAY PASSED THE FOLLOWING: Order on Crl.M.Appl.No.5647/06 in Crl.M.C.No.3353/06 Dismissed sd/- 9.6.2009 (C.T.RAVIKUMAR,JUDGE) C.R C.T. RAVIKUMAR, J. -------------------------------------------- CRL. M.C. NO.3353 OF 2006 -------------------------------------------- Dated this the 9th day of June, 2009 ORDER The petitioner is the 2nd accused in S.T.No.1421/05 on the file of the Judicial First Class Magistrate Court, Changanacherry. He is sought to be prosecuted on the allegations that M/s. Hindustan Lever Limited had committed the offence of violation of Rule 12(6) of the Standards of Weights and Measures (Packaged commodities) Rules, 1977 (herein after referred for short 'Rules' only) and that he was its Sales & Customer Manager. The above Crl.M.C. has been filed with the prayer to quash Annexure-A2 complaint in S.T.1421/05 on the file of the Judicial First Class Magistrate Court, Changanacherry. The brief facts of the case are as follows:- 2. On 19.11.04, the Inspector of Legal Metrology, Changanacherry, the 1st respondent, inspected the premises of M/s. S.V.Pai and Brothers, Changanacherry and seized three packages containing Huggies-Nappi pads (with Leak Lock Tape) on the ground that it did not contain the mandatory declarations as envisaged under Rule 12(6) of the Rules and hence, violated the Rules and Section 39 of the Standards of Weights and Measures Act, for short 'the Act' only. Annexure- A1 show cause notice was then issued by the 1st respondent and thereafter Annexure- A2 complaint was filed. On Annexure- A2 complaint, the learned Magistrate took cognizance on 30.5.05 and Crl.M.C.3353/2006 2 thereafter issued summons to the petitioner and others. According to the petitioner, continuance of proceedings based on Annexure A2 complaint in S.T.No.1421/05 would be abuse of process of court and hence, to secure ends of justice, it is liable to be quashed. 3. I have heard the counsel for the petitioner and also the learned Public Prosecutor. 4. It was contended by the counsel for the petitioner that Annexure- A2 contained only a very vague averment regarding violation of Rule 12(6) of the Rules. Further, it was contended that the essential averment to hold him responsible for the offence allegedly committed by the company is conspicuously absent in it. A scanning of Annexure A2 is worthy in the wake of the said contentions. The averments therein in so far as they are relevant read thus: ...........“During the course of my surprised inspection at the premises of M/s. S.V.Pai and brother, Changanacherry on 19.11.04, it had been noticed that eight items of the packages as per Seizure Receipt No.37/8, 38/8 and 39/8 did not bear mandatory declarations as envisaged in the said Act and Rules”...... Item No.4 is Huggies Nappi pads- 3 packets, and item No.5 is Lion Desert King Seedless Dates- 3 packages. Crl.M.C.3353/2006 3 Distributor of item No.4 is M/s.V.D.Mathew & Sons, Vattappally, Changanacherry-686 101 and the manufacturer is M/s. Hindustan Lever Ltd., 101, Santhome High Road, Chennai-600 028. It's Area Sales and Customer Manager is Sri. Kedar Apte. “.....Reply received from M/s.V.D.Mathew & Sons was not satisfactory. The others did not submit any reply so far. It is, therefore, inevitable to proceed against the offenders. Hence the complaint”. 5. The counsel for the petitioner, after adverting to the averments in the complaint, contended that the allegations regarding the violation of the provisions of the Rules and the Act are too vague and, in fact, they did not specifically speak of the missing declaration and how and in what manner the declaration on the packages in question, attracts violation of Rule 12(6) of the Rules. In the absence of such specific averments and specific allegations against the petitioner there is no justification in making the petitioner as accused based on the principle of vicarious liability, it was further contended. That apart, there is no allegation in the complaint attributing business liability on the petitioner. These contentions were raised based on Section 74(1) of the Act. 6. Firstly, I may examine the merit of the contention that it contained no specific allegation to hold him responsible for the alleged offence committed by the company. For the said purpose it is profitable to extract Section 74(1) of the Act and the same reads thus:- Crl.M.C.3353/2006 4 Offences by companies and power of Court to publish name, place of business, etc. of companies convicted.-(1) If an offence under this Act is committed by a company, every person who, at the time 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 proceeded against and punished accordingly: Provided that nothing contained in this sub- section shall render any such person liable to punishment if he proves that the offences was committed without his knowledge or that he had exercised all due diligence to prevent the commission of such offence. It is obvious from Section 74(1) of the Act that every person who, at the time the offence was committed, was in-charge of and responsible to the company for the conduct of the business of the company alone can be held liable to be proceeded against based on the principle of vicarious liability when a company committed an offence under the Act. As noticed hereinbefore, 'it's Area Sales and Customer Manager is Sri. Kedar Apte', is the sole averment made in Annexure A2 complaint against the petitioner. It is in the said circumstances that the counsel for the petitioner contended that the allegation in Annexure A2 did not satisfy the requirements under Section 74 (1) of the Act in as much as it lacks specific averment to the effect that the petitioner was the person in charge of and was responsible to the company for the conduct of business of the company and therefore there is no decision at all to prosecute the petitioner. In support of his contention the counsel for the Crl.M.C.3353/2006 5 petitioner placed reliance on the decisions of the Hon'ble Apex Court in S.M.S.Pharmaceuticals Ltd. v. Neeta Bhalla reported in 2005(4)KLT 209 (SC), Saroj Kumar Poddar v. State (NCT of Delhi) & Anr. reported in 2007(3) SCC 693 and that of this Court in Vijayakumar and others v. M/s. Lab & General Exports Pvt. Ltd. reported in ILR 2008 (3) Kerala 449. S.M.S Pharmaceuticals Ltd. v. Neeta Bhalla (supra) was under the Negotiable Instruments Act, 1881. Section 141 therein, in so far as it is relevant reads thus:- (i) “ If the person committing an offence under Section 138 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, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly.” A scanning of the above quoted relevant part of S.141 of the Negotiable Instruments Act would reveal that the expressions used therein casting criminal liability on the principle of vicarious liability, are akin to the expressions used for that purpose under Section 74(1) of the Act. In the said decision the Hon'ble Apex Court held:- “ It is necessary to specifically aver in a complaint under Section 141that at the time of the offence was committed, the person accused was in charge of, and responsible for the conduct of Crl.M.C.3353/2006 6 business of the company. This averment is an essential requirement of S.141 and has to be made in a complaint. Without this averment being made in a complaint, the requirements of S.141 cannot be said to be satisfied.” Further it was held therein:- “.........Merely being a director of a company is not sufficient to make the person liable under Section 141 of the Act. A director of a company cannot be deemed to be in charge of and responsible to the company for the conduct of its business. The requirement of S.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 there is no deemed liability of a director in such cases.” 7. S.M.S. Pharmaceuticals Ltd.'s case (supra) and the decision of the Hon'ble Apex Court in Saroj Kumar Poddar v. State (NCT of Delhi) reported in (2007) 3 SCC 693 were followed by this Court in Vijayakumar and others v. M/s Lab & General Exports Pvt. Ltd. reported in ILR 2008 (3) Kerala 449. It was held:- “A careful consideration of all these decisions appears to make it clear that in the complaint specific assertions must be made to attract the play of Sec.141 of the N.I Act. It has to be pleaded as a fact that the indictees concerned are in charge of and responsible to the company for the conduct of its affairs. Once that allegation is specifically raised, it is for the complainant to adduce evidence in support of such assertion later. A ritualistic incantation of the words of the statute Crl.M.C.3353 of 2006 7 may not be expected or insisted. But it has got to be effectively conveyed as a matter of fact that the accused persons were in charge of and responsible to the company for the conduct of its affairs on the date of the offence. Such averments, if they are there, they can be attempted to be supported later at the stage of enquiry under Sec.200/202 of the Cr.P.C or at the later stages of the trial. It is trite in the law of pleadings that what is to be pleaded is the facts and not evidence to be adduced in support of such facts.” 8. Decisions under other statutes carrying similar provisions with cognate expressions also assume relevance in the context of the contentions of the counsel for the petitioner. In Tropical Agro System (P) Ltd. v. State of A.P reported in 1990 Cr.LJ 2739, the decision was under Section 33 of the Insecticides Act, 1968 and the decision in State of Gujarat v. Gopishankar S.Vaid Shah reported in 2000 (4) Cr.LJ 4320, was under the Prevention of Food and Adulteration Act, 1955. In both the cases absence of specific allegations against the indictees relating their business liability to attach criminal liability based on the principle of vicarious liability, led to the quashing of the proceedings against them. In the latter case, the factum of no- nomination as contemplated in law, was also taken as a ground for such quashment. 9. What is emerging from the discussions on similar provisions under other statutes carrying cognate expressions, in the light of the purpose of Section 74(1) of the Act, is that specific averments relating business liability to Crl.M.C.3353/2006 8 attach criminal liability based on the principle of vicarious liability, against the indictee to the effect that he was the person in-charge of and was responsible to the company for the business of the company is to be made in a complaint lest he cannot be prosecuted for commission of offence by a company under the Act. This has to be averred as a fact since there cannot be any deemed liability of any person in such cases merely based on his holding an office in the concerned company. In this case sufficiency or otherwise of the averments in Annexure-A2 complaint has to be considered bearing in mind the aforesaid position of law, the provisions under Section 74(1) of the Act in the light of the powers of a Magistrate under Sections 200 to 204 of the Code of Criminal Procedure. A conjoint reading of Ss.203 and 204 of the Code of Criminal Procedure would make it abundantly clear that the Magistrate has to apply his mind, to form an opinion regarding the existence or otherwise of a prima facie case to proceed further with the case, on the allegations incorporated in complaint/FIR. 10. In this case, a scanning of Annexure-A2 complaint, as noticed hereinbefore, would show that except the description of the petitioner as the Area Sales and Customer Manager of Hindustan Lever Ltd., there is absolutely nothing therein to hold the petitioner liable to face prosecution for the alleged violation of Rule 12(6) of the Rules by the company. There is no other specific allegations against the petitioner and I am not required to look into the question of vagueness in relation to the allegation against the company in the Crl.M.C.3353/2006 9 circumstances. The concerned company is also not joined as an accused in this case. The aforesaid description regarding the office held by the petitioner in the company falls much short of the requirement under Section 74(1) of the Act. The absence of specific averment against the petitioner that he was in charge of and was responsible to the company for the business of the company, during the relevant point of time, in the circumstances make the proceeding undeserving to be proceeded against the petitioner. The outcome of the discussions is essentially the conclusion that there is no justification in the action in taking cognizance against the petitioner and to issue process against him, on Annexure-A2 complaint. It be so, allowing continuance of proceedings against the petitioner based on Annexure-A2, in ST.No.1421/05 on the file of the Judicial First Class Magistrate Court, Changanacherry will result in abuse of process of Court and therefore, to secure interest of justice the proceeding against the petitioner is to be quashed. Accordingly, the proceedings against the petitioner based on Annexure-A2 complaint is hereby quashed and consequently no proceeding shall be continued as against the petitioner in ST.No.1421/05, on the file of the Judicial First Class Magistrate Court, Changanacherry. The above Crl.M.C is allowed accordingly. (C.T. RAVIKUMAR, JUDGE) spc