IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 22ND DAY OF OCTOBER, 2019 BEFORE THE HON’BLE MR. JUSTICE G. NARENDAR CRIMINAL PETITION No.2578/2014 Between:
Salil Singhal Managing Director Pesticides India A division of PI Industries Ltd. Post Box No.20 Udaisagar Road, Udaipur (Rajasthan) - 313 905 ... PETITIONER (By Shri.Shankaranarayana Bhat. K., Advocate) And:
1. State of Karnataka Through Chief Secretary Government of Karnataka Bengaluru 2. Assistant Director of Agriculture (Specialist) And Insecticide Inspector Office of the Joint Director Of Agriculture District Mandya (Karnataka) – 571 401 3. Shri S.N. Puttaswamy S/o. Ningaiah Satya Sri Agencies Mysore Road, Malavallli District Mandya (Karnataka) – 571 401 ... Respondents (By Shri Vijayakumar Majage, Addl. SPP for R1 and R2; R-3 served and unrepresented) This Criminal Petition is filed under Section 482 of Cr.P.C. praying to quash complaint in Spl. Case No.108/2001 on the file of the Special Judge, Mandya as well as the proceedings in C.C. No.719/2002 on the file of the Judicial Magistrate First Class, Malavalli, and etc., This Petition coming on for Hearing, this day, the Court made the following:
ORDER Heard learned Counsel for the petitioner and learned Additional SPP for respondent Nos.1 and 2.
2. Brief facts of the case are that, on 13.10.1999, the Assistant Director of Agriculture, took a sample of insecticide Diclorovas 76% E C (Divap) Batch No.99 E 221 from the business premises of respondent No.3; that three samples of 100 ml. each was drawn from the same batch and they were separately sealed. Subsequently, a notice under Section 22 of Insecticides Act, 1968 (for short ‘the Act’), was issued. Since respondent No.3 – owner of the shop premises, was not present in the shop, the sample was handed over to Sri. M.P.Nataraju, who an employee of respondent No.3 and was present in the shop. The second sample was forwarded to the Insecticide Quality Control Laboratory, Bengaluru for analysis and the third sample was retained by the complainant. The Laboratory at Bengaluru, on 16.3.2000, declared that the sample was misbranded and it was a punishable offence. A show cause notice was issued to petitioner and respondent No.3 and the same was effectively replied. Respondent No.3 shifted responsibility, with regard to quality of goods, on the company of the petitioner and the analysis and the report of the Bengaluru Laboratory was disputed. The petitioner made a request to send the said sample to Central Insecticides Laboratory, Faridabad, for reanalysis. The sample retained by the authority was forwarded to Central Insecticides Laboratory. But the fact remains that the report is made by the Regional Pesticide Testing Laboratory Chandigarh and it is dated 7.6.2000.
3. It is contended by learned Counsel for the petitioner that the sample having been taken to Central Insecticides Laboratory for re-analysis, the report ought to have been issued by the Central Insecticides Laboratory, Faridabad only and hence, the testing report issued by the Regional Pesticide Testing Laboratory Chandigarh, has legal infirmity and vitiated as mandated under the Act. He would further submit that in view of the law laid down by the Hon’ble Supreme Court in case of ANEETA HADA VS.M/S. GODFATHER TRAVELS AND TOURS reported in AIR 2012 SC 2795, the complaint is not maintainable and the same is unsustainable.
4. Per contra, learned Additional SPP would invite the attention of this Court to the proviso to Section 16 of the Act and submits that it is a matter of evidence. The report subsequently said to have been issued by Regional Pesticide Testing Laboratory Chandigarh, is seriously disputed by the learned Additional SPP.
5. The contention with regard to validity of the report of the Central Insecticides Laboratory is not gone into. In Aneeta Hada’s case (Supra), the Hon’ble Supreme Court as observed as Under:
“ 34. Presently, we shall deal with the ratio laid down in the case of C.V. Parekh (supra). In the said case, a three-Judge Bench was interpreting Section 10 of the 1955 Act. The respondents, C.V. Parekh and another, were active participants in the management of the company. The trial court had convicted them on the ground the goods were disposed of at a price higher than the control price by Vallabhadas Thacker with the aid of Kamdar and the same could not have taken place without the knowledge of the partners of the firm. The High Court set aside the order of conviction on the ground that there was no material on the basis of which a finding could be recorded that the respondents knew about the disposal by Kamdar and Vallabhadas Thacker. A contention was raised before this Court on behalf of the State of Madras that the conviction could be made on the basis of Section 10 of the 1955 Act. The three-Judge Bench repelled the contention by stating thus: -
‘ Learned counsel for the appellant, however, sought conviction of the two respondents on the basis of Section 10 of the Essential Commodities Act under which, if the person contravening an order made under Section 3 (which covers an order under the Iron and Steel Control Order, 1956), is a company, every person who, at the time the contravention 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 contravention and shall be liable to be proceeded against and punished accordingly. It was urged that the two respondents were in charge of, and were responsible to, the Company for the conduct of the business of the Company and, consequently, they must be held responsible for the sale and for thus contravening the provisions of clause (5) of the Iron and Steel Control Order.’ This argument cannot be accepted, because it ignores the first condition for the applicability of Section 10 to the effect that the person contravening the order must be a company itself. In the present case, there is no finding either by the Magistrate or by the High Court that the sale in contravention of clause (5) of the Iron and Steel Control Order was made by the Company. In fact, the Company was not charged with the offence at all. The liability of the persons in charge of the Company only arises when the contravention is by the Company itself. Since, in this case, there is no evidence and no finding that the Company contravened clause (5) of the Iron and Steel Control Order, the two respondents could not be held responsible. The actual contravention was by Kamdar and Vallabhadas Thacker and any contravention by them would not fasten responsibility on the respondents.” (emphasis supplied) The aforesaid paragraph clearly lays down that the first condition is that the company should be held to be liable; a charge has to be framed; a finding has to be recorded, and the liability of the persons in charge of the company only arises when the contravention is by the company itself. The said decision has been distinguished in the case of Sheoratan Agarwal and another (supra). The two-Judge Bench in the said case referred to Section 10 of the 1955 Act and opined that the company alone may be prosecuted or the person in charge only may be prosecuted since there is no statutory compulsion that the person in charge or an officer of the company may not be prosecuted unless he be ranged alongside the company itself. The two-Judge Bench further laid down that Section 10 of the 1955 Act indicates the persons who may be prosecuted where the contravention is made by the company but it does not lay down any condition that the person in-charge or an officer of the company may not be separately prosecuted if the company itself is not prosecuted. The two- Judge Bench referred to the paragraph from C.V. Parekh (supra), which we have reproduced hereinabove, and emphasised on certain sentences therein and came to hold as follows:
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‘ The sentences underscored by us clearly show that what was sought to be emphasised was that there should be a finding that the contravention was by the company before the accused could be convicted and not that the company itself should have been prosecuted along with the accused. We are therefore clearly of the view that the prosecutions are maintainable and that there is nothing in Section 10 of the Essential Commodities Act which bars such prosecutions.” For the sake of completeness, we think it apposite to refer to the sentences which have been underscored by the two-Judge Bench:-
‘because it ignores the first condition for the applicability of Section 10 to the effect that the person contravening the order must be a company itself. In the present case, there is no finding either by the Magistrate or by the High Court that the sale in contravention of clause (5) of the Iron and Steel Control Order was made by the Company and there is no evidence and no finding that the Company contravened clause (5) of the Iron and Steel Control Order, the two respondents could not be held responsible.’ 38. At this juncture, we may usefully refer to the decision in U.P. Pollution Control Board v. M/s. Modi Distillery and others[43]. In the said case, the company was not arraigned as an accused and, on that score, the High Court quashed the proceeding against the others. A two-Judge Bench of this Court observed as follows: -
‘Although as a pure proposition of law in the abstract the learned single Judge’s view that there can be no vicarious liability of the Chairman, Vice- Chairman, Managing Director and members of the Board of Directors under sub-s.(1) or (2) of S.47 of the Act unless there was a prosecution against Messers Modi Industries Limited, the Company owning the industrial unit, can be termed as correct, the objection raised by the petitioners before the High Court ought to have been viewed not in isolation but in the conspectus of facts and events and not in vacuum. We have already pointed out that the technical flaw in the complaint is attributable to the failure of the industrial unit to furnish the requisite information called for by the Board.’ Furthermore, the legal infirmity is of such a nature which could be easily cured. Another circumstance which brings out the narrow perspective of the learned single Judge is his failure to appreciate the fact that the averment in paragraph 2 has to be construed in the light of the averments contained in paragraphs 17, 18 and 19 which are to the effect that the Chairman, Vice-Chairman, Managing Director and members of the Board of Directors were also liable for the alleged offence committed by the Company.” Be it noted, the two-Judge Bench has correctly stated that there can be no vicarious liability unless there is a prosecution against the company owning the industrial unit but, regard being had to the factual matrix, namely, the technical fault on the part of the company to furnish the requisite information called for by the Board, directed for making a formal amendment by the applicant and substitute the name of the owning industrial unit. It is worth noting that in the said case, M/s. Modi distilleries was arrayed as a party instead of M/s Modi Industries Limited. Thus, it was a defective complaint which was curable but, a pregnant one, the law laid down as regards the primary liability of the company without which no vicarious liability can be imposed has been appositely stated.
42. 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. In Reserve Bank of India v. Peerless General Finance and Investment Co. Ltd. and others[44] it has been laid down that the entire statute must be first read as a whole, then section by section, clause by clause, phrase by phrase and word by word. The same principle has been reiterated in Deewan Singh and others v. Rajendra Prasad Ardevi and others[45] and Sarabjit Rick Singh v. Union of India[46]. Applying the doctrine of strict construction, we are of the considered opinion that commission of offence by the company is 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. ”
6. The report said to have been issued by the Central Insecticides Laboratory to the petitioner is not gone into by this Court in view of the fact that the case could be considered in the light of the law laid down in Aneeta Hada’s case (Supra). In view of the above, the complaint is not maintainable. Accordingly, Spl. Case No.108/2001 renumbered as CC No.719/2002 on the file of Judicial Magistrate First Class, Malavalli, insofar as the petitioner herein is concerned, is quashed. It is open for the State to proceed further on the complaint against the other accused, if permissible, under law.
Criminal petition is accordingly ordered.
Sd/-
JUDGE Cs/-