- 1 - IN IN IN THE HIGH COURT OF JUDICATURE AT BOMBAY THE HIGH COURT OF JUDICATURE AT BOMBAY THE HIGH COURT OF JUDICATURE AT BOMBAY CRIMINAL CRIMINAL CRIMINAL APPELLATE JURISDICTION APPELLATE JURISDICTION APPELLATE JURISDICTION CRIMINAL CRIMINAL CRIMINAL WRIT PETITION NO.1363 OF 2000 WRIT PETITION NO.1363 OF 2000 WRIT PETITION NO.1363 OF 2000 AND AND AND CRIMINAL CRIMINAL CRIMINAL WRIT PETITION NO.1364 OF 2000 WRIT PETITION NO.1364 OF 2000 WRIT PETITION NO.1364 OF 2000 Hindustan Lever Ltd. ...Petitioner (in both the petitions) vs. State of Maharashtra ...Respondent (in both the petitions) Mr.Amit Desai with Sanjog S. Parab i/b M/s.S.S.Parab & Associates for the petitioner in both the petitions Mr.J.P.Yagnik A.P.P. for State in both the petitions. CORAM: CORAM: CORAM: A.S.OKA,J. A.S.OKA,J. A.S.OKA,J. DATE DATE DATE : AUGUST 25,2008 : AUGUST 25,2008 : AUGUST 25,2008 ORAL JUDGMENT: ORAL JUDGMENT: ORAL JUDGMENT: 1. The submissions of the learned counsel appearing for the petitioner were heard on the last date. However, the judgment could not be dictated and today the petitions are kept for dictation of the judgment. 2. The facts of both the petitions are more or less similar and therefore, a reference is made to the facts of the case in Criminal Writ Petition No.1363 of 2000. The petitioner-company has been arraigned as an accused in a complaint filed by the Respondent under section 7(i) r/w 2 (ia) (a), 2(ia) (m), 2(ia) (k) and section 7(v) of the Prevention of Food Adulteration Act,1954 (hereinafter referred to as the said Act) read with rule 55 of the rules framed - 2 - under the said Act punishable under section 16(1) (a) (ii) r/w section 17 of the said Act. In the said complaint (criminal case no.169 of 1998) a company M/s.Brook Bond Lipton India Ltd. (hereinafter referred to as M/s.Brook Bond) was arraigned as accused no.5 along with four other accused persons. The fourth accused Shri S. Narayanan was described as a Branch Manager and nominee of M/s.Brook Bond. 3. An application was made on behalf of the petitioner-company on 23rd December 1999 before the trial court. The said application was made for placing certain factual details on record. In the said application, it was contended that with effect from 21st March 1997, M/s.Brook Bond pursuant to the scheme of amalgamation approved by this court and the Calcutta High Court was amalgamated with the petitioner-company. It was stated that in view of the said scheme of amalgamation, M/s.Brook Bond has ceased to exist. It was stated that on 28th December 1999, a police officer approached the petitioner-company for service of summons addressed to M/s.Brook Bond and four other accused. It was stated that by a letter dated 20th December 1999 sent by the petitioner to the Commissioner of Police it was pointed out that M/s.Brook Bond had ceased to exist with effect from 21st March 1997 and the fourth accused was not in the employment of the petitioner. By placing the aforesaid facts on record, the petitioner sought necessary directions from the court. - 3 - 4. On 9th June 2000, the complainant/respondent herein filed an application before the learned Magistrate pointing out that on 21st March 1997, M/s.Brook Bond has been amalgamated with the petitioner-company. Therefore, it was prayed that by making a necessary amendment to the complaint, summons be issued to the petitioner. On the same day, the learned Magistrate allowed the application. On the same day, the learned Magistrate rejected the aforesaid application made by the petitioner on 23rd December 1999. While rejecting the said application, by a separate order dated 9th June 2000, the learned Judge relied upon the scheme of amalgamation and in particular clause no.5 and 5/1 thereof and came to the conclusion that the entire liability of M/s.Brook Bond has been shouldered by the petitioner-company. On the basis of the order dated 9th June 2000 passed by the learned Magistrate on the application made by the complainant, a summons was issued to the petitioner of the complaint filed by the Respondent. The prayer in this writ petition invoking section 482 of the Code of Criminal Procedure,1973 is for quashing the order issuing process on various grounds set out in the petition. 5. In a normal course, this court would have relegated the petitioner to file a revision application before the appropriate Sessions Court in view of the law laid down by the - 4 - Apex Court in case of V.K.Jain and others vs. Pratap Padode and another [2005 (3) Mh.L.J. page 778]. However, I find that on 5th October 2000, rule was issued by this court and interim stay was granted. After lapse of period of 8 years, it will be unjust to the parties if they are relegated to another remedy. Moreover, the power of this court under section 482 of the said Code of 1973 is not affected by the remedy under section 397 of the said Code. Therefore, I have proceeded to hear the submissions on merits. 6. The submission of the learned counsel for the petitioner is that M/s.Brook Bond stood dissolved as a result of its amalgamation with the petitioner-company by an order passed by the Calcutta High Court and the said order of Calcutta High Court was lodged in the office of Registrar of Companies on 24th July 1997. He relied upon the decision of the Apex Court in case of Narendra Bahadur Tandon vs. Shankar Lal (A.I.R. 1980 S.C. page 575) and submitted that once the company was dissolved, it ceases to exist.He also placed reliance on the decision of this court in case of National Organic Chemicals and another Vs. State of Maharashtra and other (2004 (118) Company Cases 556) and submitted that once the competent court under the Companies Act,1956 declares that the amalgamation of the company shall be effective from a particular date, then from that date, corporate personality of the amalgamated company ceases to exist for all purposes and from that date, - 5 - the corporate personality of the amalgamated company is destroyed completely. He placed reliance on the decision of the Supreme Court of United States in case of Oklahama Natural Gas Co. Vs. State of Oklahama [273 US 257 (19271)]. He also relied upon the decision of Delhi High Court in the case of Nicholas Piramal India Ltd. Vs. S.S.Sundaranayagam in Criminal Misc. Application No.5392 of 2005 dated 23rd August 2007. His submission is that upon an amalgamation between the two companies, the transferor company dies a civil death and the entity which is evolved upon amalgamation cannot be prosecuted for the offence committed by the transferor company. Lastly, he relied upon the decision of Himachal Pradesh High Court in the case of Brook Bond Lipton (India) Ltd. Vs. State of Himachal Pradesh and another. He submitted that the learned Magistrate could not have substituted the petitioner in place of M/s.Brook Bond Lipton (India) Ltd. The learned A.P.P. supported the impugned order by pointing out that under the orders of this court and the Calcutta High Court, the petitioner had taken over all the liabilities of M/s.Brook Bond and therefore, the order of substitution was rightly passed by the learned Magistrate. 7. Before considering the legal submissions, it will be necessary to refer to the factual aspects of the case. Considering the limited controversy involved, it will not be necessary to refer the nature of the averments made in the - 6 - complaint. Nevertheless, it will be necessary to state that according to the complainant, on 7th February 1997 at about 12.30 p.m. the Food Inspector and a Panch Witness visited the premises of M/s.Golden Star Bakery of the first accused. It was found that the first accused was selling the food products like mixed fruit jam. The Food Inspector purchased from the said Bakery 5 packed and sealed bottles of mixed fruit jam having identical labels of M/s.Brook Bond packed in January 1997. The Food Inspector forwarded the samples to the public analyst. According to the complainant a report was submitted by the public analyst that mixed fruit jam found in the bottle was not conforming to the rules framed under the said Act of 1954 and the level of Sulphur dioxide was in excess of the standard prescribed. 8. The petitioner is relying upon the order dated 23rd August 1996 passed by this Court approving the scheme of amalgamation of M/s.Brook Bond with the Petitioner. A copy of the said scheme annexed to the petition shows that the appointed dated was fixed as 1st January 1996 or such other date as this Court and Calcutta High Court may direct. The effective date defined under the scheme is the later of the dates on which the certified copies of the orders of the High Court at Bombay and/or High Court of Calcutta vesting the assets, property, liabilities, rights, duties, obligations and the like of Transferor of company in the Transferee company are filed with - 7 - the Registrar of Companies, Maharashtra and/or Registrar of Companies West Bengal after obtaining consents, approvals, permissions, resolutions, agreements sanctions and orders necessary therefor. Clause (6.1) of the scheme provides that though the scheme was operative from the appointed date, the same shall become effective from the effective date. Reliance has been placed on order dated 9th December 1996 passed by the Calcutta High Court approving/sanctioning amalgamation of M/s.Brook Bond with the petitioner. The scheme sanctioned by Calcutta High Court provides for the same effective date and clause (6) thereof provides that the scheme although operative from the appointed date, shall be effective from the effective date. There is a further order passed by Calcutta High Court on 20th January 1997 which holds that M/s.Brook Bond was dissolved without winding up from the date of filing of the certified copy of the said order with the Registrar of Companies, West Bengal. It is the case of the petitioner as specifically set out in the synopsis of the petition that a copy of the order of Calcutta High Court was lodged with the Registrar of Companies, Calcutta on 24th July 1997. It must be stated here that there is no reply filed by the Respondent in this petition though the same is pending from the year 2000. Therefore, there is no dispute raised by the respondent as regards the aforesaid factual contentions raised by the petitioner. This has to be appreciated in the background of the fact that the samples on which prosecution is based show - 8 - that the same were packed in January 1997 by M/s.Brook Bond. 9. Reliance has been placed by the counsel for the petitioner on the decision of the Apex Court in case of Narendra (supra). The question before the Apex Court was whether a liquidator was entitled to execute an instrument on behalf of a company even after the same was dissolved. In the context of the question raised before the Apex Court it was held that once the company was dissolved, the liquidator cannot represent a non-existing company. It will be necessary to refer to the decision of this court in case of National Organic Chemicals Ltd. This was a case where the Division bench considered the effect of sanction of the court to amalgamation of two companies in the context of the liability under the Bombay Sales Tax Act,1959. The Division Bench of this court held thus : . A company gets corporate personality or becomes a legal entity as per the provisions contained in the Companies Act,1956. Similarly, a company loses its corporate personality or is deemed to be destroyed on amalgamation from a date declared by the competent authority under the Companies Act. There can be no dispute that the High Court is one of the competent authorities under the Companies Act to approve the scheme of amalgamation from any any any specified day as it deems fit. Therefore, once the specified day as it deems fit. Therefore, once the specified day as it deems fit. Therefore, once the - 9 - court court court order under the Companies Act declares that the order under the Companies Act declares that the order under the Companies Act declares that the amalgamation amalgamation amalgamation of the companies shall be effective from a of the companies shall be effective from a of the companies shall be effective from a particular particular particular date, then, from that date the corporate date, then, from that date the corporate date, then, from that date the corporate personality personality personality of the amalgamated companies ceases to exist of the amalgamated companies ceases to exist of the amalgamated companies ceases to exist for for for all purposes. From that day the corporate all purposes. From that day the corporate all purposes. From that day the corporate personality personality personality of the amalgamated company is destroyed of the amalgamated company is destroyed of the amalgamated company is destroyed completely. completely. completely." (Emphasis supplied) 10. Turning back to the factual aspects of the case, in the present case the effective date on which the scheme became effective will have to be taken as 24th July 1997 when a certified copy of the order of Calcutta High Court was lodged with the Registrar of Companies, Calcutta. The order dated 20th January 1997 passed by the Calcutta High Court provides that M/s.Brook Bond will stand dissolved without winding up from the date of filing of the certified copy of the said order with the Registrar of the Companies. In any case, even the application made by the Inspector-complainant on 9th June 2000 before the trial court records that M/s.Brook Bond has been amalgamated with the petitioner company with effect from 21st March 1997 i.e. after commission of the alleged offence. Thus, in view of this assertion made by the Food Inspector, M/s.Brook Bond continued to exist at least till 21st March 1997. In the present case, M/s.Brook Bond is the transferor company. The effect of the second order passed by Calcutta High Court is that the transferor company ceased to exist from - 10 - the date on which a copy of the said order was lodged with the Registrar of Companies, Calcutta. Thus, on the date of commission of offence M/s.Brook Bond was very much in existence and going by the scheme of amalgamation, the same became effective after the date on which the offence was committed. A company is registered under the Companies Act,1956 is a body corporate. In the facts of the case, considering the orders passed by this court and Calcutta High Court, M/s.Brook Bond ceased to exist after the alleged offence was committed. Reliance has been placed by the learned trial Judge on clause 5(i) of the scheme of amalgamation which reads thus : "5.1 If any suit, appeal or other proceedings of whatever nature (hereinafter called "The Proceedings") by or against the Transferor Company be pending, the same shall not abate, be discontinued or be in any way prejudicially affected by reason of the transfer of the undertaking of the Transferor Company or of anything contained in the Scheme, but the Proceedings may be continued, prosecuted and enforced by or against the Transferee Company in the same manner and to the same extent as it would or might have been continued, prosecuted and enforced by or against the Transferor Company as if the Scheme had not been made. On and from the ‘The Effective Date’, the Transferee Company shall - 11 - and may initiate any legal proceeding for and on behalf of the Transferor Company." 11. There is a similar clause in the scheme sanctioned by the Calcutta High Court. On plain reading of the said clauses, proceedings referred to therein will not include the criminal complaint where offence alleged therein has been committed when the transferor company was admittedly in existence. It cannot be said that the petitioner had taken over the criminal liability of the transferor company. The petitioner-company cannot be punished for an offence allegedly committed by the transferor company which has suffered a civil death and which has ceased to exist. 12. The effect of the order dated 9th June 2000 passed by the learned Magistrate is that the petitioner company has been substituted in place of the accused No.5 M/s.Brook Bond which ceased to exist at least from March 1997. Considering what is discussed above and the factual aspects of the case, it is obvious that there was no case made out for issuing summons against the petitioner which is the transferee company. The petitions must succeed. 13. Hence, I pass the following order : i) The order dated 9th June 2000 passed by the learned - 12 - Magistrate permitting substitution of the original accused No.5 and consequential order of issuing process against the petitioner is quashed and set aside. JUDGE JUDGE JUDGE