.(1). IN THE HIGH COURT OF JUDICATURE AT BOMBAY CRIMINAL APPELLATE JURISDICTION CRIMINAL APPLICATION NO.2583 OF 2008 Mr.Shekhar Bajaj & Ors. ..Applicants. Versus State of Maharashtra and others. ..Respondents. .... Mr.Shirish Gupte, Sr.Counsel a/w. Mr.Subodh Desai, Adv. for the applicants. Ms.A.A.Mane, APP, for the State. .... CORAM : SMT.V.K.TAHILRAMANI,J. CORAM : SMT.V.K.TAHILRAMANI,J. CORAM : SMT.V.K.TAHILRAMANI,J. DATE : 19TH DECEMBER, 2008. DATE : 19TH DECEMBER, 2008. DATE : 19TH DECEMBER, 2008. ORAL JUDGMENT : ORAL JUDGMENT : ORAL JUDGMENT : 1. Heard the learned Counsel for the Applicants - orig.accused Nos.1 to 9 and the learned APP for Respondent Nos.1 to 3. 2. The applicants are seeking quashing of C.C. No.116/SS/2007 which is pending before the learned Metropolitan Magistrate, 27th Court, Mulund, Mumbai. The said case is under Section 33 of the Standards of Weights and Measures (Enforcement) Act, 1985 read with Rule 33 thereunder. 3. The applicants are the Directors of M/s. Bajaj Electrical Ltd., a Public Limited Company .(2). which carries on business inter alia of manufacturing, importing and marketing of various consumer durables and home appliances such as oven, irons, water heaters, fans etc.. On 20th August, 2006, raid was conducted by the respondent No.3 i.e. Deputy Controller of Legal Metrology, Mumbai Region at M/s. Nirmal Supermarkets Pvt. Ltd., Mulund (West), Mumbai. It was noticed by respondent No.2 i.e. Inspector of Legal Metrology that packages of "Super Glide Steel Iron" did not confirm to the provisions of the Standard of Weights and Measures (Package Commodities) Rules, 1977 in as much as the name and complete address of the importer was not mentioned on the packages and that the said packages were marketed and distributed by the company i.e. Bajaj Electrical Ltd.. Hence in the complaint it is alleged that the accused (applicants) are the Directors of the company and, therefore, the accused have committed breach of Section 33 of the Act r.w. Rule 23(1) of Standards of Weights and Measures (Packaged Commodities) Rules, 1977 punishable under Section 51 of the Act. 4. Mr.Gupte submitted that nothing has been .(3). specifically alleged or averred in the said Complaint with regard to the alleged role of the applicants herein in commission of the alleged offence committed by accused No.10 Company. Mr.Gupte submitted that in the complaint except for a vague and bald statement alleging that "the act of Accused Company and its Directors have committed a breach of Section (33) of the Standards of Weights & Measures P.C. Rules, 1977 is, therefore, guilty of the offence punishable under Section 51 of the Standards of Weights and Measures (Enforcement) Act, 1985, there are no further averments relating to any of the applicants in the complaint. He submitted that the law is well settled that a director of a company cannot be prosecuted for an offence in the absence of a specific allegation in the complaint. Simply because a person is a Director of a company, it does not necessarily mean that he becomes liable for prosecution under a vicarious liability provision. Mr.Gupte placed reliance on a decision of the Hon’ble Supreme Court in the case of K.Srikanth Singh vs. North East K.Srikanth Singh vs. North East K.Srikanth Singh vs. North East Securities Ltd., and Anr. Securities Ltd., and Anr. Securities Ltd., and Anr. reported in 2007(9) 2007(9) 2007(9) SCALE = JT 2007 (9) SC 449 SCALE = JT 2007 (9) SC 449 SCALE = JT 2007 (9) SC 449 wherein while referring .(4). inter-alia to the decisions in the case of S.M.S. S.M.S. S.M.S. Pharmaceuticals Ltd. Pharmaceuticals Ltd. Pharmaceuticals Ltd. reported in JT 2007 (4) SC JT 2007 (4) SC JT 2007 (4) SC 230 230 230 and Sabitha Ramamurthy Sabitha Ramamurthy Sabitha Ramamurthy reported in (2006) 10 (2006) 10 (2006) 10 SCC 581 SCC 581 SCC 581 it was held that for showing vicarious liability of a Director of a Company, it was incumbent to plead that the accused was responsible to the Company for the conduct of the business of the Company in the complaint. 5. The above position is also reiterated in the case of N.Rangachari vs. Bharat Sanchar Nigam N.Rangachari vs. Bharat Sanchar Nigam N.Rangachari vs. Bharat Sanchar Nigam Ltd. Ltd. Ltd. reported in (2007) 5 SCC 108 (2007) 5 SCC 108 (2007) 5 SCC 108. Again in the case of Everest Advertising Pvt. Ltd. vs. Everest Advertising Pvt. Ltd. vs. Everest Advertising Pvt. Ltd. vs. State, Govt. of NCT of Delhi and Ors. State, Govt. of NCT of Delhi and Ors. State, Govt. of NCT of Delhi and Ors. reported in (2005) 5 SCC 54, (2005) 5 SCC 54, (2005) 5 SCC 54, this Court relying on S.M. S.M. S.M. Pharmaceuticals Pharmaceuticals Pharmaceuticals (supra) and Saroj Kumar Poddar vs. Saroj Kumar Poddar vs. Saroj Kumar Poddar vs. State (NCT of Delhi) and Anr. State (NCT of Delhi) and Anr. State (NCT of Delhi) and Anr. reported in (2007) (2007) (2007) 3 SCC 693 3 SCC 693 3 SCC 693 on the question of the liability of the company official held that : "The averments must state that the person who is vicariously liable for commission of the offence of the Company both was incharge of and was responsible for the conduct of the business of the Company. .(5). Requirements laid down therein must be read conjointly and not disjunctively. When a legal fiction is raised, the ingredients therefore must be satisfied." . Mr.Gupte submitted that to the same effect is the decision of this Court in the case of N.K.Wahi vs. Shekhar Singh and Ors. N.K.Wahi vs. Shekhar Singh and Ors. N.K.Wahi vs. Shekhar Singh and Ors. reported in AIR 2007 SC 1454 AIR 2007 SC 1454 AIR 2007 SC 1454. Mr.Gupte submitted that averments in the complaint would not give rise to an inference that the applicants were in charge of and were responsible for the conduct of the business of the company or were responsible for the day-to-day affairs of the Company. He submitted that in the absence of necessary averments in the complaint, the applicants cannot be made liable. 6. Thus, Mr.Gupte submitted that the learned Magistrate erred in law by failing to appreciate that the process cannot be issued as against the applicants in the absence of specific allegation or averment explaining the alleged role of the applicants in the commission of the offence. .(6). 7. Section 62 of the Standards of Weights and Measures (Enforcement) Act, 1985 reads as under : 62. Offences by companies-- 62. Offences by companies-- 62. Offences by companies-- (1) If the person committing an offence under this Act is a company every person who, at the time the 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 person liable to punishment if he proves that the offence was committed without his knowledge, or that he had exercised all due diligence to prevent the commission of such offence. (2) Notwithstanding anything contained in sub-section (1), where any 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 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 purposes of this section,-- (a) "company" means a 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." 8. Section 62 of the Standards of Weights and Measures (Enforcement) Act, 1985 is pari materia .(7). with Section 141 of the Negotiable Instruments Act, Section 34 of the Drugs and Cosmetics Act, 1940, Section 10 of the Essential Commodities Act and Section 17 of the Cable Television Networks (Regulation) Act, 1995. Section 141 of Negotiable Instruments Act reads as under : "141.Offences by companies. 141.Offences by companies. 141.Offences by companies.--(1) If the person committing an offence under section 138 is a company, every person who, at the time the 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 person liable to punishment if he proves that the offence was committed without his knowledge, or that he had exercised all due diligence to prevent the commission of such offence: [Provided further that where a person is nominated as a Director of a company by virtue of his holding any office or employment in the Central Government or State Government or a financial corporation owned or controlled by the Central Government or the State Government, as the case may be, he shall not be liable for prosecution under this Chapter.] (2) Notwithstanding anything contained in sub-section (1), where any 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, .(8). 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. 9. Section 17 of the Cable Television Networks (Regulation) Act, 1995 deals with offences by companies. It reads as under : "17.Offences by Companies 17.Offences by Companies 17.Offences by Companies.-- (1) Where an offence under this Act has been committed by a company, every person who, at the time the 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 any punishment, if he proves that the offence was committed without his knowledge or that he had exercised all due diligence to prevent the commission of such offence. (2) Notwithstanding anything contained in sub-section (1), where any offence under this Act has been committed by a company and it is proved that the offence has been .(9). committed with the consent or connivance of, or is attributable to any negligence 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 purposes 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." 10. Section 34 of Drugs and Cosmetics Act, 1940 reads as under : "34.Offences by companies.-- "34.Offences by companies.-- "34.Offences by companies.-- (1) Where an offence under this Act has been committed by a company, every person who at the time the 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 any punishment provided in 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 any 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 .(10). of, or is attributable 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 purposes of this section-- (a) "company" means a 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." 11. Mr.Gupte submitted that the relevant Section of the Act is identical to Section 141 of the Negotiable Instruments Act, Section 34 of the Drugs and Cosmetics Act, 1940 and Section 17 of the Cable Television Networks (Regulation) Act, 1995. 12. In the case of S.M.S. Pharmaceuticals Ltd. S.M.S. Pharmaceuticals Ltd. S.M.S. Pharmaceuticals Ltd. Vs. Neeta Bhalla and another Vs. Neeta Bhalla and another Vs. Neeta Bhalla and another, reported in (2005) (2005) (2005) 8 Supreme Court Cases 89 8 Supreme Court Cases 89 8 Supreme Court Cases 89, which is a decision by a Bench of three Hon’ble Judges of the Supreme Court, in a case u/s.141 of Negotiable Instruments Act, the following questions arose before the Bench on a reference being made to it by a two- Judge Bench of the Supreme Court. The questions .(11). which are relevant to the facts of the present matter are as under : "(a) Whether for purposes of Section 141 of the Negotiable Instruments Act, 1881, it is sufficient if the substance of the allegation read as a whole fulfil the requirements of the said section and it is not necessary to specifically state in the complaint that the person accused was in charge of, or responsible for, the conduct of the business of the company. (b) Whether a director of a company would be deemed to be in charge of, and responsible to, the company for conduct of the business of the company and, therefore, deemed to be guilty of the offence unless he proves to the contrary. (c) Even if it is held that specific averments are necessary, whether in the absence of such averments the signatory of the cheque and or the managing directors or joint managing director who admittedly would be in charge of the company and responsible to the company for conduct of its business could be proceeded against.". . In view of the questions which arose before it, the Supreme Court held as under : "18. To sum up, there is almost unanimous judicial opinion that necessary averments ought to be contained in a complaint before a person can be subjected to criminal process. A liability under Section 141 of the Act is sought to be fastened vicariously on a person connected with a company, the principal accused being the company itself. It is a departure from the rule in criminal law against vicarious liability. A clear case should be spelled out in the complaint against the person .(12). sought to be made liable. Section 141 of the Act contains the requirements for making a person liable under the said provision. That the respondent falls within the parameters of Section 141 has to be spelled out. A complaint has to be examined by the Magistrate in the first instance on the basis of averments contained therein. If the Magistrate is satisfied that there are averments which bring the case within Section 141, he would issue the process. We have seen that merely being described as a director in a company is not sufficient to satisfy the requirement of Section 141. Even a non-director can be liable under Section 141 of the Act. The averments in the complaint would also serve the purpose that the person sought to be made liable would know what is the case which is alleged against him. This will enable him to meet the case at the trial. 19. In view of the above discussion, our answers to the questions posed in the reference as under : (a) It is necessary to specifically aver in a complaint under Section 141 that at the time the offence was committed, the person accused was in charge of, and responsible for the conduct of business of the company. This averment is an essential requirement of Section 141 and has to be made in a complaint. Without this averment being made in a complaint, the requirements of Section 141 cannot be said to be satisfied. (b) The answer to the question posed in sub-para (b) has to be in the negative. Merely being a director of a company is not sufficient to make the person liable under Section 141 of the Act. A director in a company cannot be deemed to be in charge of and responsible to the company for the conduct of its business. The requirement of Section 141 is that the person sought to be made liable should be in charge of and responsible for the conduct of the business .(13). 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. (c) The answer to Question (c) has to be in the affirmative. The question notes that the managing director or joint managing director would be admittedly in charge of the company and responsible to the company for the conduct of its business. When that is so, holders of such positions in a company become liable under Section 141 of the Act. By virtue of the office they hold as managing director or joint managing director, these persons are in charge of and responsible for the conduct of business of the company. Therefore, they get covered under Section 141. So far as the signatory of a cheque which is dishonoured is concerned, he is clearly responsible for the incriminating act and will be covered under sub-section (2) of Section 141." 13. Thereafter the matter was referred to the Division Bench for decision in the case. In the case of S.M.S. Pharmaceuticals S.M.S. Pharmaceuticals S.M.S. Pharmaceuticals the High Court had held that no case had been made out for issuance of any summons against the accused as the allegations contained in the complaint, as against the accused therein were vague, indefinite and do not satisfy the requirements of law as contained in Section 141 of the Negotiable Instruments Act. The Division Bench of the Supreme Court observed that no error can be found in the impugned judgment and the appeal came to be dismissed. .(14). This decision is reported in JT 2007 (4) SC 230 JT 2007 (4) SC 230 JT 2007 (4) SC 230 14. In the case of State of Haryana vs. Brij State of Haryana vs. Brij State of Haryana vs. Brij Lal Mittal & Ors. Lal Mittal & Ors. Lal Mittal & Ors. reported in (1998) 5 Supreme (1998) 5 Supreme (1998) 5 Supreme Court Cases 343 Court Cases 343 Court Cases 343 the High Court quashed the prosecution launched against the directors of the company. The State preferred an appeal to the Supreme Court. The Supreme Court held that vicarious liability of a person for being prosecuted for an offence committed under the Drugs and Cosmetics Act, 1940, by a company arises if at the relevant time he was in charge of and was also responsible to the company for the conduct of its business. Simply because a person is director of the company it does not necessarily mean that he fulfils both the above requirements so as to make him liable. In the said case, except a bald statement in the complaint, that the respondents were directors of the company, there was nothing to indicate even prima facie that they were in charge of the company and also responsible to the company for the conduct of its business and, therefore, the Supreme Court dismissed the appeal filed by the State of Haryana. .(15). 15. In the case of Shri.Pannalal Sunderlal Shri.Pannalal Sunderlal Shri.Pannalal Sunderlal Choksi vs. the State of Maharashtra Choksi vs. the State of Maharashtra Choksi vs. the State of Maharashtra reported in 2000 ALL MR (Cri) 1668 = 2000 (4) Mh.L.J. 674 2000 ALL MR (Cri) 1668 = 2000 (4) Mh.L.J. 674 2000 ALL MR (Cri) 1668 = 2000 (4) Mh.L.J. 674 this High Court quashed the process issued against the accused holding that unless there is material to show that the accused had direct control over the manufacturing activity and the accused are also responsible for the conduct of the business of the said company, they cannot be proceeded with. Reliance was placed on the decision of the Supreme Court in the case of M/s.Pepsi Foods Ltd. M/s.Pepsi Foods Ltd. M/s.Pepsi Foods Ltd. vs. Special Judicial Magistrate vs. Special Judicial Magistrate vs. Special Judicial Magistrate reported in A.I.R. 1998 SC 128 A.I.R. 1998 SC 128 A.I.R. 1998 SC 128. The case of Shri Pannalal Shri Pannalal Shri Pannalal was under the Drugs & Cosmetics Act. I have already observed above that the provisions of the present Act and Drugs and Cosmetics Act are identical. 16. In a decision of this Court dated 19th December, 2008 in the case of Mr.Sameer Nair vs. State of Maharashtra (Criminal Writ Petition No.1827 of 2008), it is held that in the absence of necessary averments in the complaint a Director of the Company cannot be prosecuted. The said case was under Section 17 of the Cable Television .(16). Networks (Regulation) Act, 1995 In the said case also,in the complaint there were no averments that the accused who was a director of the company was incharge of the company and responsible to the company for the conduct of the business of the company. I have already observed earlier that the provisions of Section 17 of the Cable Television Networks (Regulation) Act, 1995 and the provisions of Section 62 of the said Act are identical. Thus, this decision would apply on all fours to the present matter. 17. In the present case the complainant has not at all stated in the complaint as to whether the applicants at the relevant time were in charge of and were also responsible to the company for the conduct of business of the company. Their status as directors of the respective company cannot be taken into account for the purpose of prosecution. If it is shown that they were in charge of and was also responsible to the company for the conduct of business of the company at the relevant time then the position would be different. 18. The phraseology used in Section 62 of the .(17). Act has a special significance. A commission of offence by company under the Act requires different treatment by virtue of Section 62 of the Act. The phraseology used in Section 62 of the Act conveys actual participation in day-to-day affairs of the company. 19. In the decisions cited above wherein the provision of law is identical to the one in the present case, it has been held that in the absence of necessary averments in the complaint a person cannot be prosecuted. In the present complaint also, the necessary averments are absent. In this view of the matter, the complaint deserves to be quashed. Hence, complaint being C.C. No.116/SS/2007 which is pending before the learned Metropolitan Magistrate, 27th Court, Mulund, Mumbai is quashed. 20. Criminal Application is disposed of