Case: V. B. C. Exports Private Limited and Another Vs. Commander S. D. Baijal and Others

The facts relevant for disposal of the appeals are as under. In the month of July, 1984, the coastguardship Vikram intercepted and seized a number of foreign vessels (trawlers), which were operating on permits granted under section 5 of the Maritime Zones of India (Regulation of Fishing by Foreign Vessels) Act, 1981 (for short "the Act"), to fish in the maritime zones of India, on the allegation that they were fishing in a depth of less than 40 fathoms of water in contravention of the terms and conditions of the permits. For the alleged contravention the companies which owned the vessels and their managing directors as well as the companies which had chartered them and their managing directors were prosecuted before the Additional Chief Metropolitan Magistrate, Bombay, on complaints filed by S. D. Baijal (respondent No. 1 in all these appeals), the commander of Vikram. The prosecutions ended in conviction of the owners of the vessels and their managing directors and acquittal of the charterer-companies and their managing directors. Besides, in some of those cases the vessels were also ordered to betheir convictions and the orders of confiscation of the vessels the owners and their managing directors filed separate appeals; and respondent No. 1, in his turn, filed appeals challenging the acquittal of the charterer-companies and their managing directors. The High Court dismissed the appeals preferred at the instance of the owners of the vessels but allowed the appeals of respondent No. 1 and convicted and sentenced the charterer-companies and their managing directors. The above orders of conviction and sentence recorded by the High Court against the charterers and their managing directors are under challenge in these appeals.

Court's reasoning:
Coming now to the rules framed under the Act we find that rule 8(1), in its different clauses, lays down the terms and conditions to which a permit shall be subjected. Rule 8(1)(d), with which we are mainly concerned in these appeals, prohibits the charterer from fishing within a depth of 40 fathoms in the maritime zones of India. Rule 8(2) expressly states that the charterer shall be bound by all or any of the terms and conditions mentioned in sub-rule (1). Rule 16 speaks of the contravention of the terms and conditions of permits and rules and it provides that any contravention of the provisions of the rules shall be punishable with fine which may extend to Rs. 50, 000, without prejudice to the penalties which may be awarded under thea combined reading of the above provisions of the Act and the rules it is manifest that for the offence with which we are concerned in these appeals, the charterers have been specifically made liable to be convicted not only under rule 16 but also under section 12 of the Act. In view of the plain language of rule 8(1)(d), rule 8(2) and rule 16, section 5(6) of the Act, to which reference has been made by Mr. Adhyaru, has no manner of application whatsoever. Even if we proceed on the assumption that the charterers had no knowledge as to what was going on the high seas, knowledge must be attributable to them, for every foreign vessel (trawler) is supposed to be equipped with wireless equipment for communication in terms of its requirements and it is expected that the charterer will be in touch with the trawlers wherever they are and for that matter get assistance from the coastguard for any communication with the trawlers. If Mr. Adhyarus contention, that once it is proved that strict instructions had been given by the charterer to the master of the vessel not to commit any breach the former would be absolved of the liability for such breach, is to be accepted then, under no circumstances can a charterer be successfully prosecuted even if a case of flagrant violation of the terms and conditions of the permit like those of clause 8(1)(d), which expressly say that the charterer shall not fish within the prohibited zone and depth, is conclusively made out.It was next contended by Mr. Adhyaru that even if the charterer-companies were liable for the offence alleged, their managing directors could not be prosecuted. This contention is also devoid of any merit. Section 17(1) of the Act, which has been quoted earlier, clearly says that when the offence is committed by a company, persons responsible to the company for the day-to-day business will be also liable along with the company for the offence committed unless, of course, they can prove that the offence was committed without their knowledge or they exercised due diligence to prevent its commission. The evidence on record unmistakably proves that the managing directors herein were responsible to their respective companies for the conduct of their business and they (the managing directors) did not bring on record any material to avail of the proviso to the above sub-section and, for that matter, to exonerate themselves from the offences committed by their companies.