HINDUSTAN UNILEVER LIMITED versus THE STATE OF MADHYA PRADESH
[2020] 9 S.C.R. 455, Supreme Court of India, 2020
Outcome: Appeal(s) allowed (Granted)
Segment: Body
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HINDUSTAN UNILEVER LIMITED
v.
THE STATE OF MADHYA PRADESH
(Criminal Appeal No. 715 of 2020)
NOVEMBER 05, 2020
[L. NAGESWARA RAO, HEMANT GUPTA AND
AJAY RASTOGI, JJ.]
Prevention of Food Adulteration Act, 1954 – s.17 – Food
Safety and Standards Act, 2006 – s.97 – General Clauses Act, 1897
– s.6 – A complaint was filed by inspector of Food and Health on
the basis of a sample taken on 07.02.1989 in respect of Dalda
Vanaspati Khajoor Brand Ghee manufactured by the Company –
The said proceeding was decided by the Supreme Court in R. Banerjee
& Ors. v. H.D. Dubey & Ors., wherein the matter was remanded
back to the trial Magistrate to inquire into the question whether the
nomination forms nominating appellant and one another person
were received and acknowledged by the Local (Health) Authority –
In terms of the said directions, the trial Court passed an order
absolving the directors of the Company and prosecution was ordered
to continue against the appellant/nominated officer – Thereafter,
the trial Court in 2015, convicted the appellant under various
provisions of the 1954 Act – There was no order passed by the trial
Court to convict the Company of any offence – In an appeal, the
Additional Sessions Judge affirmed the conviction of the appellant
– However, the High Court in its order noticed that if the Company
is acquitted of the charges, the said benefit will also directly go to
the appellant – Thus, the conviction and sentence passed against
the appellant,
being a nominated person of the Company was set
aside and the matter was remitted back to the trial Court for passing
the fresh judgment – Before the Supreme Court, the appellant sought
benefit under the Food Safety and Standards Act, 2006 which came
after the Prevention of Food Adulteration Act, 1954 was repealed –
Held: In the 2006 Act, the repeal and saving clause contained in
s.97(1)(iii) and (iv) specifically provides that repeal of the Act shall
not affect any investigation or remedy in respect of any such penalty,
forfeiture or punishment and the punishment may be imposed, “as
[2020] 9 S.C.R. 455
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if the 2006 Act had not been passed” – Thus, in view of s.97 of the
2006 Act, as also u/s.6 of the General Clauses Act, 1897, the
proceedings would continue under the 1954 Act – No benefit can
be taken under the 2006 Act as the prosecution and punishment
under the 1954 Act is protected – As far as the course adopted by
the High Court to remand the matter to the trial Court is concerned,
there is no material distinction between s.141 of the Negotiable
Instruments Act, 1882 and s.17 of the 1954 Act which makes the
companies as well as the nominated person to be held guilty of the
offences and/or liable to be proceeded and punished accordingly –
Clauses (a) and (b) of s.17 are not in alternative but in conjoint –
Therefore, in the absence of the Company, the nominated person
cannot be convicted or vice-versa – Since the Company was not
convicted by the trial Court, the finding of the High Court to revisit
the judgment will be unfair to the appellant/nominated person who
has been facing trial for more than last 30 years – The failure of
the trial Court to convict the Company renders the entire conviction
of the nominated person as unsustainable – Thus, the order passed
by the High Court is set aside.
Allowing the appeals, the Court
HELD: 1. In terms of Section 6 of the General Clauses
Act, 1897, unless a different intention appears, the repeal of a
statute does not affect any investigation, legal proceeding or
remedy in
respect of any such right, privilege, obligation, liability,
penalty, forfeiture or punishment and any such investigation, legal
proceeding or remedy may be instituted, continued or enforced,
and any such penalty, forfeiture or punishment may be imposed
as if the Repealing Act or Regulation had not been passed. But
in the Food Safety and Standards Act, 2006, the repeal and saving
clause contained in Section 97 (1)(iii) and (iv) specifically provides
that repeal of the Act shall not affect any investigation or remedy
in respect of any such penalty, forfeiture or punishment and the
punishment may be imposed, “as if the 2006 Act had not been
passed”. [Para 15][465-E-G]
2. Thus, in view of Section 97 of the 2006 Act, as also under
Section 6 of the General Clauses Act, 1897, the proceedings
would continue under the Act. No benefit can be taken under the
2006 Act as the prosecution and punishment under the Act is
protected. [Para 17][466-C-D]
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3.  The question now narrows down as to whether the course
adopted by the High Court to remand the matter to the trial court
after more than 30 years to cure the defect which goes to the
root of the trial, though permissible in law, is justified. [Para
19][468-F]
4. Clause (a) of Sub-Section (1) of Section 17 of the
Prevention of Food Adulteration Act, 1954 makes the person
nominated to be in charge of and responsible to the company for
the conduct of business and the company shall be guilty of the
offences under clause (b) of Sub-Section (1) of Section 17 of the
Act. Therefore, there is no material distinction between Section
141 of the NI Act and Section 17 of the Act which makes the
Company as well as the Nominated Person to be held guilty of
the offences and/or liable to be proceeded and punished
accordingly. Clauses (a) and (b) are not in the alternative but
conjoint. Therefore, in the absence of the Company, the
Nominated Person cannot be convicted or vice versa.  Since the
Company was not convicted by the trial court, this Court finds
that the finding of the High Court to revisit the judgment will be
unfair to the appellant/Nominated Person who has been facing
trial for more than last 30 years. Therefore, the order of remand
to the trial court to fill up the lacuna is not a fair option exercised
by the High Court as the failure of the trial court to convict the
Company renders the entire conviction of the Nominated Person
as unsustainable. [Para
22][471-A-D]
State of Punjab v. Mohar Singh AIR 1955 SC 84 :
[1955] 1 SCR 893; Tiwari Kanhaiyalal & Ors. v.
Commissioner of Income Tax, Delhi (1975) 4 SCC 101
: [1975] 3 SCR 927; Aneeta Hada v. Godfather Travels
& Tours Private Limited (2012) 5 SCC 661 : [2012] 5
SCR 503 – relied on.
R. Banerjee & Ors. v. H.D. Dubey & Ors. (1992) 2
SCC 552 : [1992] 2 SCR 221; Nemi Chand v. State of
Rajasthan (2018) 17 SCC 448; T. Barai v. Henry Ah
Hoe & Anr. (1983) 1 SCC 177 : [1983] 1 SCR 905;
Trilok Chand v. State of Himachal Pradesh (2020) 10
SCC 763 – referred to.
HINDUSTAN UNILEVER LIMITED v. THE STATE OF
MADHYA PRADESH
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Case Law Reference
[1992] 2 SCR 221
referred to
Para 2
(2018) 17 SCC 448
referred to
Para 8
[1983] 1 SCR 905
referred to
Para 11
(2020) 10 SCC 763
referred to
Para 11
[1955] 1 SCR 893
relied on
Para 15
[1975] 3 SCR 927
relied on
Para 16
[2012] 5 SCR 503
relied on
Para 20
CRIMINAL APPELLATE JURISDICTION: Criminal Appeal No.
715 of 2020.
From the Judgment and Order dated 09.01.2020 of the High Court
of Madhya Pradesh at Jabalpur in Criminal Revision No. 37 of 2020.
With
Criminal Appeal No. 716 of 2020
Dr Abhishek Manu Singhvi, Siddharth Luthra, Sr. Advs, Ms. Priya
Puri, Vibhav Srivastava, Ranjay Dubey, Yati Sharma, Ms. Supriya Juneja,
Aditya Singla, Harsh Yadav, Ms. Ankita Tiwari, Arjun Garg, Abhijeet
Shrivastava, Ms. Shrutika Garg, Advs. for the appearing parties.
The Judgment of the Court was delivered by
HEMANT GUPTA, J.
1. The challenge in the present appeals is to an order passed by
the High Court of Madhya Pradesh, Jabalpur on 9.1.2020 whereby the
revision filed by Shri Nirmal Sen, appellant/Nominated Officer (Incharge)
of the Hindustan Unilever Limited1, was allowed, however the matter
was remitted back to the trial court to revisit the evidence adduced by
both the parties, so far it relates to the appellants, Nirmal Sen and the
Company. The operative part of the order reads thus:
“8. If the company-Hindustan Lever Limited is acquitted of the
charges, the said benefit will also directly go to the applicant. In
view whereof, this Court finds a glaring and patent defect in the
judgment of the trial Court as well as in the judgment of the
1 Hereinafter referred to as “Company”.
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appellate Court, thus, this Court, in these premises, finds it fit to
interfere in the judgment of the trial Court in exercise of the
revisional jurisdiction under Section 401(1) of Cr.P.C., hence, this
Court is inclined to set aside the conviction and sentence passed
against the applicant being a nominated person of the company
and remitted back the matter to the trial Court for passing fresh
judgment considering the company-Hindustan Lever Limited that
had already been arrayed as an accused along with the applicant.
9.  In view of aforesaid discussions, this revision is allowed.  The
impugned conviction and sentence passed against the applicant is
hereby set aside and the matter is remitted back to the trial Court
to revisit the evidence adduced by both the parties and also revisit
its judgment dated 16/06/2015, so far as it relates with the applicant
and company-Hindustan Lever Limited thereafter again pass a
separate judgment after providing opportunity of hearing to the
applicant as well as the company-Hindustan Lever Limited without
getting prejudice with the discussions made by the appellate Court
and this Court.”
2. Brief facts leading to the present appeals are that a complaint
was filed by Shri H.D. Dubey, Inspector, Food and Health, on the basis
of a sample taken on 7.2.1989 in respect of Dalda Vanaspati Khajoor
Brand Ghee manufactured by the Company, in terms of the provisions
of The Prevention of Food Adulteration Act, 19542. The sample of
Vanaspati Ghee was taken from the godown of Lipton India Limited
which was found to be adulterated as the melting point was found to be
41.8 degree centigrade which is higher than the normal range i.e. as
against 31-41 degree centigrade.  Initially, the complaint was filed against
the Directors of the Company as well as that of Lipton India Limited.
However, the said proceedings came to be decided by this Court in a
judgment reported as R. Banerjee & Ors. v. H.D. Dubey & Ors.3
wherein it was held as under:
“12. In the result, the appeals are allowed. The order of the learned
Magistrate as well as the impugned order of the High Court are
set aside. The matters are remanded to the learned trial Magistrate
with a direction to inquire into the question whether the nomination
forms nominating H. Dayani and Dr Nirmal Sen were received
2 For short, the ‘1954 Act’
3 (1992) 2 SCC 552
HINDUSTAN UNILEVER LIMITED v. THE STATE OF
MADHYA PRADESH [HEMANT GUPTA, J.]
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and acknowledged by the Local (Health) Authority competent to
receive and acknowledge the same. This question will be
considered as a preliminary question and the learned magistrate
will record a finding thereon. If he comes to the conclusion that
the nomination forms had been acknowledged by the competent
Local (Health) Authority he shall drop the proceedings against
the Directors of the company, other than the company and the
nominated persons. If on the other hand he comes to the conclusion
that the prescribed forms had been acknowledged by a person
other than the competent Local (Health) Authority he will proceed
against all the persons who are shown as the accused in the
complaint i.e. all the Directors including the nominated person
and the company. The appeals are allowed accordingly.”
3. In terms of the directions of this Court, it appears that the
learned trial court passed an order on 6.7.1993 absolving the Directors
of the Company and the prosecution was ordered to continue against
the appellant Nirmal Sen. The said order is not on record but it appears
that no proceedings were continued against the Company inasmuch as it
has four accused, namely, Lipton India Limited, Mohd. Saleem, Harish
Dayani and Nirmal Sen were arrayed as accused.
4. The Act was then repealed and the Food Safety and Standards
Act, 20064 came into force on 23.8.2006.
5. The learned trial court vide judgment dated 16.6.2015 convicted
the
appellant/Nominated Officer under various provisions of the 1954
Act. The learned trial court held as under:
“58. That on the basis of the above complete evidence analysis, it
is certified that on the day of the incident, the accused Dr. Nirmal
Sen was a nominee of Hindustan Limited Company and the goods
of the said company were given to the palm plantation oil vanaspati
from Godown Rathore Clearing and Forwarding Agency, Panagar,
Jabalpur, Mohd. Salim. Sale of Vanaspati by Hindustan Liver
Limited to the complainant food inspector H.D. Dubey went to
purchase there. At the time when the said product was sold, the
adulteration was came in light, and according to rule 32(f) of the
4 For short, the ‘2006 Act’
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Act, the details were not even duly marked, which comes under
the category of false impression in print of the packet or pouch.
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60. Therefore, the accused Dr. Nirmal Sen was found to be guilty
under Section 2(1G)(K) r/w Section 32(F)/7(i)/16(A)(i) and Section
2(ia)(m) r/w 7(i)/16(1)/(a)(i) of Food Adulteration Act, 1954 and
Food Adulteration and Prevention Act under Section 14 r/w Rule
2(A) r/w Section 7(v)/16(1C).”
6. A complete reading of the order passed by the trial court does
not lead to an inference that the Company was represented at any stage
during the course of trial. It is to be noted that in the aforementioned
judgment, there was no order passed by the learned trial court to convict
the appellant-Company of any offence. The appellant Nirmal Sen
contested the proceedings and was convicted by the trial court.
7. In an appeal against the said judgment, the learned Additional
Sessions Judge held that the prosecution was found to be maintainable
against Rathore Clearing and Forwarding Agency and the Company but
the same was not mentioned in the impugned judgment and order. The
Court held as under:
“31.  ….As per order dated 6.7.1993, the Hindustan Lever Limited
also has been held accused, but erroneously, it could not have
been mentioned in the impugned judgment and order.  As per law,
any company is a legal personality and it cannot be undergo
imprisonment sentence. The appellant Nirmal Sen being the
nominee for the
offence of the aforesaid company, has been
punished. In such situation, the appellant does not seem to be
entitled for get any benefit only on the mere technical grounds.”
8. The learned counsel for the appellant placed reliance on the
judgment of this Court reported as Nemi Chand v. State of Rajasthan5
before the learned Additional Sessions Judge, in support of the argument
that pursuant to the repeal of the Act, only punishment of fine has been
contemplated under the 2006 Act. Thus, since the provisions of the 2006
Act are beneficial to the accused, the accused is entitled to such benefits
provided by the 2006 Act. It was found that the decision in Nemi Chand
has been passed in exercise of the jurisdiction conferred on the
5 (2018) 17 SCC 448
HINDUSTAN UNILEVER LIMITED v. THE STATE OF
MADHYA PRADESH [HEMANT GUPTA, J.]
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constitutional courts, but the First Appellate Court does not have any
such specific constitutional power. The Court rejected the applicability
of the 2006 Act as the punishments imposed under the repealed Act
have been saved by Section 97 of the 2006 Act. The Court held as
under:
“39. There is no doubt in it that as a result of amendment made by
the post facto laws, if the sentence given for any offence is lessened
or rejected then the accused is entitled to get benefit of it under
Article 20 of the Constitution of India. But is also mentionable
that the accused has been prosecuted and sentenced under the
“Act” of 1954 in the matter under consideration and in place of it,
the Food Safety and Standard Act, 2006 has been implemented
since 24.08.2006. By section 97 (1) of this new Act, the Act of
1954 has been repealed but it also has been provided that action
could be kept continued under the repealed Act and any such
penalty, confiscation or punishment could be charged like it that
as if this Act be not passed.
40. Thus, with regard to the offence occurred before the date of
implementation of the new Act, the provisions of the “Act” of
1954 have applicability and it cannot be held the punishment has
been lessened by amending in the offence under Section 16 of the
old Act by the new Act. It seems from the records that the case
has remained pending for several years before the Ld. Trial Court
but several Stays submitted
by the accused persons are also
responsible for this delay and on this ground, they are not entitled
for any sympathy. Keeping in view to the gravity of the offence,
the sentence awarded to the appellant Nirmal Sen by the Ld.
Subordinate Court in the case seems in accordance with law and
of appropriate and no need to interfere in it does not seem.”
9. With the aforesaid discussion, the learned Additional Sessions
Judge affirmed the conviction of the appellant/Nominated Officer but
the conviction of the accused Harish Dayani and Mohd. Saleem was set
aside and they were acquitted.
10. The High Court in its order noticed that if the Company is
acquitted of the charges, the said benefit will also directly go to the
appellant/Nominated Officer.  A glaring and patent defect in the judgment
of the trial court as well as in the judgment of the appellate court was
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observed by the High Court. Thus, the conviction and sentence passed
against the appellant, being a nominated person of the Company, was
set aside and the matter was remitted back to the trial Court for passing
fresh judgment.
11. Before this Court, two-fold arguments were raised by the
learned counsels for the appellants. Dr. Abhishek Manu Singhvi, learned
senior counsel appearing on behalf of the appellant/Nominated Officer
argued that the appellant was charged for the violation of Section 2(ia)(m)
read with Section 7(i) of the Act. Such violation attracted a sentence of
not less than six months and up to 3 years and a fine of Rs.1,000/- under
Section 16(1)(a)(i), whereas under the 2006 Act, the punishment of such
adulteration which is related to only higher melting point is fine of Rs.5
lakhs and Rs.1 lakh under Sections 3(1)(zx) and 3(1)(i) respectively.
The reliance is placed upon judgments of this Court in T. Barai v. Henry
Ah Hoe & Anr.6, Nemi Chand and Trilok Chand v. State of Himachal
Pradesh7.
12. Mr. Siddharth Luthra, learned senior counsel for the appellant-
Company raised an argument that the Company was not convicted by
the trial court. Therefore, the High Court in revision could not have
passed an order of retrial, more so when the Company was not given
any notice of being heard. Since there was no order of conviction by the
trial court, as also no opportunity of hearing was given, such order is in
contravention of sub-section (2) of
Section 401 of the Code of Criminal
Procedure, 19738. Section 401 (2) of the Code reads thus:
“401(2). No order under this section shall be made to the prejudice
of the accused or other person unless he has had an opportunity
of being heard either personally or by pleader in his own defence.”
13. We do not find any merit in the arguments raised by Dr. Singhvi
with respect to the punishment provided under the 2006 Act. The judgment
of this Court in T. Barai is consequent to amendment in the Act when
Section 16A was inserted by the Parliament. Similarly, the judgment in
Nemi Chand was a judgment arising out of the amendment in the Act
only. The benefit of amendments in the Act, has been rightly granted to
the accused in an appeal arising out of the proceedings under the Act.
6 (1983) 1 SCC 177
7 Criminal Appeal No. 1831 of 2010 decided on 1.10.2019
8 For short, the ‘Code’
HINDUSTAN UNILEVER LIMITED v. THE STATE OF
MADHYA PRADESH [HEMANT GUPTA, J.]
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But in the present case, the Act has been repealed by Section 97 of the
2006 Act, however, the punishments imposed under the Act have been
protected. Section 97 of the 2006 Act, which came into force on 5.8.2011,
is as follows:
“97. Repeal and savings.—(1) With effect from such date* as
the Central Government may appoint in this behalf, the enactment
and orders specified in the Second Schedule shall stand repealed:
Provided that such repeal shall not affect:—
(i) the previous operations of the enactment and orders under
repeal or anything duly done or suffered thereunder; or
(ii)  any right, privilege, obligation or liability acquired, accrued or
incurred under any of the enactment or orders under repeal; or
(iii) any penalty, forfeiture or punishment incurred in respect
of any offences committed against the enactment and orders
under repeal; or
(iv) any investigation or remedy in respect of any such penalty,
forfeiture or punishment,
and any such investigation, legal proceedings or remedy may
be instituted, continued or enforced and any such penalty,
forfeiture or punishment may be imposed, as if this Act had
not been passed:
(2) If there is any other law for the time being in force in any
State, corresponding to this Act, the same shall upon the
commencement of this Act, stand repealed and in such case, the
provisions of Section 6 of the General Clauses Act, 1897 (10 of
1897) shall apply as if such provisions of the
State law had been
repealed.
(3) Notwithstanding the repeal of the aforesaid enactment and
orders, the licences issued under any such enactment or order,
which are in force on the date of commencement of this Act,
shall continue to be in force till the date of their expiry for all
purposes, as if they had been issued under the provisions of this
Act or the rules or regulations made thereunder.
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(4) Notwithstanding anything contained in any other law for the
time being in force, no court shall take cognizance of an offence
under the repealed Act or orders after the expiry of a period of
three years from the date of the commencement of this Act.”
(Emphasis Supplied)
14. Section 6 of the General Clauses Act, 1897 provides the effect
of repeal as under:
“Where this Act or any Central Act or Regulation made after the
commencement of this act repeals any enactment hitherto made
or hereafter to be made, then, unless a different intention appears,
the repeal shall not-
(e) affect any investigation, legal proceeding or remedy in respect
of any such right, privilege, obligation, liability, penalty, forfeiture
or punishment.......
and any such investigation, legal proceeding or remedy may be
instituted, continued or enforced, and any such penalty, forfeiture
or punishment may be imposed as if the Repealing Act or
Regulation had not been passed.”
15. In terms of Section 6 of the General Clauses Act, 1897, unless
different intention appears, the repeal of a statute does not affect any
investigation, legal proceeding or remedy in respect of any such right,
privilege, obligation, liability, penalty, forfeiture or punishment and any
such investigation, legal proceeding or remedy may be instituted, continued
or enforced, and any such penalty, forfeiture or punishment may be
imposed as if the Repealing Act or Regulation had not been passed. But
in the 2006 Act,
the repeal and saving clause contained in Section 97
(1)(iii) and (iv) specifically provides that repeal of the Act shall not affect
any investigation or remedy in respect of any such penalty, forfeiture or
punishment and the punishment may be imposed, “as if the 2006 Act
had not been passed”. The question as to whether penalty or prosecution
can continue or be initiated under the repealed provisions has been
examined by this Court in State of Punjab v. Mohar Singh9,wherein
this Court examined Section 6 of the General Clauses Act which is on
lines of Section 38(2) of the Interpretation Act of England. It was held
as under:
9 AIR 1955 SC 84
HINDUSTAN UNILEVER LIMITED v. THE STATE OF
MADHYA PRADESH [HEMANT GUPTA, J.]
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“6. Under the law of England, as it stood prior to the Interpretation
Act of 1889, the effect of repealing a statute was said to be to
obliterate it as completely from the records of Parliament as if it
had never been passed, except for the purpose of those actions,
which were commenced, prosecuted and concluded while it was
an existing law [Vide Craies on Statute Law, 5th edn, p. 323] . A
repeal therefore without any saving clause would destroy any
proceeding whether not yet begun or whether pending at the time
of the enactment of the Repealing Act and not already prosecuted
to a final judgment so as to create a vested right [ Vide Crawford
on Statutory Construction, p. 599-600w]. To obviate such results
a practice came into existence in England to insert a saving clause
in the repealing statute with a view to preserve rights and liabilities
already accrued or incurred under the repealed enactment. Later
on, to dispense with the necessity of having to insert a saving
clause on each occasion, Section 38(2) was inserted in the
Interpretation Act of 1889 which provides that a repeal, unless
the contrary intention appears, does not affect the previous
operation of the repealed enactment or anything duly done or
suffered under it and any investigation, legal proceeding or remedy
may be instituted, continued or enforced in respect of any right,
liability and penalty under the repealed Act as if the Repealing
Act had not
been passed. Section 6 of the General Clauses Act,
as is well known, is on the same lines as Section 38(2) of the
Interpretation Act of England.
9. The offence committed by the respondent consisted in filing a
false claim. The claim was filed in accordance with the provision
of Section 4 of the Ordinance and under Section 7 of the
Ordinance, any false information in regard to a claim was a
punishable offence. The High Court is certainly right in holding
that Section 11 of the Act does not make the claim filed under the
Ordinance a claim under the Act so as to attract the operation of
Section 7. Section 11 of the Act is in the following terms:
“The East Punjab Refugees (Registration of Land Claims)
Ordinance 7 of 1948 is hereby repealed and any rules made,
notifications issued, anything done, any action taken in exercise
of the powers conferred by or under the said Ordinance shall
be deemed to have been made, issued, done or taken in exercise
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of the powers conferred by, or under this Act as if this Act had
come into force on 3rd day of March, 1948”.
……………….The truth or falsity of the claim has to be
investigated in the usual way and if it is found that the
information given by the claimant is false, he can certainly be
punished in the manner laid down in Sections 7 and 8 of the
Act. If we are to hold that the penal provisions contained in
the Act cannot be attracted in case of a claim filed under the
Ordinance, the results will be anomalous and even if on the
strength of a false claim a refugee has succeeded in getting an
allotment in his favour, such allotment could not be cancelled
under Section 8 of the Act. We think that the provisions of
Sections 47 and 8 make it apparent that it was not the intention
of the Legislature that the rights and liabilities in respect of
claims filed under the Ordinance shall be extinguished on the
passing of the Act, and this is sufficient for holding that the
present case would attract the operation of Section 6 of the
General Clauses Act. It may be pointed out that Section 11 of
the Act is somewhat clumsily worded and it does not make
use of expressions which are generally used in saving clauses
appended to repealing statutes; but as has been said above the
point for our consideration is whether the Act evinces an
intention which is inconsistent with the continuance of rights
and liabilities accrued or incurred under the Ordinance and in
our opinion this
question has to be answered in the negative.”
16. In another judgment reported as Tiwari Kanhaiyalal & Ors.
v. Commissioner of Income Tax, Delhi10, the assessments were
completed under the Income Tax Act, 1922 after the Income Tax Act,
1961 came into force. There was search on the premises of the assessee.
The revised returns were filed after the Income Tax Act, 1961 came
into force. The penalty proceedings were initiated and it was levied under
the 1961 Act. Later, the complaints were filed alleging commission of
the offences under Section 277 of 1961 Act. Another set of complaints
were filed under the Income Tax Act, 1922. This Court held that the
complaints under the 1922 Act remains unaffected. It was held as under:
“7. It is advisable to discuss and dispose of a new point which
arose during the hearing of these appeals. Sub-section (1) of
10 (1975) 4 SCC 101
HINDUSTAN UNILEVER LIMITED v. THE STATE OF
MADHYA PRADESH [HEMANT GUPTA, J.]
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Section 297 of the 1961 Act repealed the 1922 Act including Section
52. In sub-section (2) no saving seems to have been provided for
the launching of the prosecution under the repealed Section 52 of
the 1922 Act. It does not seem correct to take recourse to clause
(h) of Section 297(2) to make the offences come under Section
277 of the 1961 Act as was endeavoured to be done by the
respondent in the first 12 complaint petitions. But then from no
clause under sub-section (2) a different intention appears in this
regard from what has been said in Section 6 of the General Clauses
Act. On the facts alleged the criminal liability incurred under
Section 52 of the 1922 Act remains unaffected under clause (c)
of Section 6 of the General Clauses Act….”
17. Thus, in view of Section 97 of the 2006 Act, as also under
Section 6 of the General Clauses Act, 1897, the proceedings would
continue under the Act. No benefit can be taken under the 2006 Act as
the prosecution and punishment under the Act is protected.
18. The judgment of this Court in Trilok Chand is the only
judgment which has given benefit of the 2006 Act and the sentence was
imposed by imposing a fine of Rs.5,000/-. The attention of the Court
was not drawn to Section 97 of the 2006 Act, which protects the
punishments given under the repealed Act.  Therefore, the order in Trilok
Chand is on its own facts.
19. However, we find merit in the argument of Mr. Luthra that
the
order of remand by the High Court to the trial court against the
Company cannot be sustained for the reason that such an order was
passed without giving an opportunity of hearing, as contemplated under
Section 401(2) of the Code. The question thus now narrows down as to
whether the course adopted by the High Court to remand the matter to
the trial court after more than 30 years to cure the defect which goes to
the root of the trial, though permissible in law, is justified.
20. A three-Judge Bench of this Court in Aneeta Hada v.
Godfather Travels & Tours Private Limited11 considered the question
of conviction of the Directors in the absence of the Company in
proceedings under Section 138 of the Negotiable Instruments Act, 188112
as also in the proceedings under Information Technology Act, 2000.  This
11 (2012) 5 SCC 661
12 For short, the ‘NI Act’
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Court held that Section 141 of the NI Act dealing with offences by
companies contemplates that 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. This Court, considering
the said provision, held as under:
“38. From the aforesaid pronouncements, the principle that can
be culled out is that it is the bounden duty of the court to ascertain
for what purpose the legal fiction has been created. It is also the
duty of the court to imagine the fiction with all real consequences
and instances unless prohibited from doing so. That apart, the use
of the term “deemed” has to be read in its context and further, the
fullest logical purpose and import are to be understood. It is because
in modern legislation, the term “deemed” has been used for
manifold purposes. The object of the legislature has to be kept in
mind.
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56. We have referred to the aforesaid passages only to highlight
that there has to be strict observance of the provisions regard
being had to the legislative intendment because it deals with penal
provisions and a penalty is not to be imposed affecting the rights
of persons, whether juristic entities or individuals, unless they are
arrayed as accused. It is to be kept in mind that the power of
punishment is
vested in the legislature and that is absolute in Section
141 of the Act which clearly speaks of commission of offence by
the company. The learned counsel for the respondents have
vehemently urged that the use of the term “as well as” in the
section is of immense significance and, in its tentacle, it brings in
the company as well as the Director and/or other officers who
are responsible for the acts of the company and, therefore, a
prosecution against the Directors or other officers is tenable even
if the company is not arraigned as an accused. The words “as
well as” have to be understood in the context.
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58. Applying the doctrine of strict construction, we are of the
considered opinion that commission of offence by the company is
HINDUSTAN UNILEVER LIMITED v. THE STATE OF
MADHYA PRADESH [HEMANT GUPTA, J.]
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an express condition precedent to attract the vicarious liability of
others. Thus, the words “as well as the company” appearing in
the section make it absolutely unmistakably clear that when the
company can be prosecuted, then only the persons mentioned in
the other categories could be vicariously liable for the offence
subject to the averments in the petition and proof thereof. One
cannot be oblivious of the fact that the company is a juristic person
and it has its own respectability. If a finding is recorded against it,
it would create a concavity in its reputation. There can be situations
when the corporate reputation is affected when a Director is
indicted.
59. In view of our aforesaid analysis, we arrive at the irresistible
conclusion that for maintaining the prosecution under Section 141
of the Act, arraigning of a company as an accused is imperative.
……….”
21. Section 17 of the Act reads as under:
“17. Offences by companies—(1) Where an offence under this
Act has been committed by a company—
(a) (i)  the person, if any, who has been nominated under sub-
section (2) to be in charge of, and responsible to, the company for
the conduct of the business of the company (hereinafter in this
section referred to as the person responsible), or
(ii) where no person has been so nominated, 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; and
(b) 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
and that he exercised all due diligence to prevent the commission
of such offence.
(2) ****
*****”
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22. Clause (a) of Sub-Section (1) of Section 17 of the Act makes
the person nominated to be in charge of and responsible to the company
for the conduct of business and the company shall be guilty of the offences
under clause (b) of Sub-Section (1) of Section 17 of the Act. Therefore,
there is no material distinction between Section 141 of the NI Act and
Section 17 of the Act which makes the Company as well as the Nominated
Person to be held guilty of the offences and/or liable to be proceeded
and punished accordingly. Clauses (a) and (b) are not in the alternative
but conjoint. Therefore, in the absence of the Company, the Nominated
Person cannot be convicted or vice versa.  Since the Company was not
convicted by the trial court, we find that the finding of the High Court to
revisit the judgment will be unfair to the appellant/Nominated Person
who has been facing trial for more than last 30 years. Therefore, the
order of remand to the trial court to fill up the lacuna is not a fair option
exercised by the High Court as the failure of the trial court to convict the
Company renders the entire conviction of the Nominated Person as
unsustainable.
23. In view of the above, the appeals are allowed and the order
passed by the High Court is set aside. Resultantly the complaint is
dismissed.
Ankit Gyan
Appeals allowed.
HINDUSTAN UNILEVER LIMITED v. THE STATE OF
MADHYA PRADESH [HEMANT GUPTA, J.]