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SUPREME COURT OF INDIA
A.M. AHMADI AND K. RAMASWAMY, JJ.
Criminal Appeals Nos. 167-69 of 1992 (in S.L.P. Nos. 2469-71 of 1991), D/-13-3-1992.
R. Banerjee and others, Appellants
Versus
H. D. Dubey and others, Respondents
Advocates appeared :
Mr. Ram Jethmalani, Sr. Advocate, Mr. Ravinder Narain, Mr. B.B. Lall, Mr. Ashok Sagar and Mr. S. Sukumaran, Advocates with him, for Appellants; Mr. U. N. Bachawat, Sr. Advocate, Ms. Mridula Gupta and Mr. Uma Nath Singh, Advocates with him, for Respondents.
Held: On a careful perusal of the complaints lodged by the Food Inspector under the Act it is evident that intimation regarding the nomination in favour of H. Dayani and Dr. Nirmal Sen had been communicated to the Food Inspector before the complaints came to be lodged. This is evident from the averments made in the respective complaints. The nomination was, however, not acted upon by the complainant on the ground that it was incomplete. It was, therefore, said that in the absence of a valid nomination from the concerned company the Directors of the company were liable to be proceeded against and punished on proof of the charge leveled against them in the complaint. It will thus be seen that there is no allegation in the complaint which would bring the case within the mischief of section 17(4) of the Act. There is no allegation in the complaint that the offence was committed with the consent! connivance/negligence of the Directors, other than the nominated person, who were imp leaded as co-accused. We are, therefore, satisfied that the allegations in the complaint do not make out a case under sub-section (4) of section] 7 of the Act. That being so, the inclusion of the co-accused other than the company and the nominated person as the persons liable to be proceeded against and punished cannot be justified. (Para 8)
(ii) Prevention of Food Adulteration Act, 1954 - Section 17(2) - Offence against companies - Person nominated under section 17(2) as In charge and responsible for companys affairs - Validity of nomination in dispute - Case remanded to give a finding on validity of nomination.
Held, that brings us to the question whether process could be issued against such co-accused under sub-clause (ii) of clause (a) of sub-section (1) of section] 7 of the Act. This would depend on the Courts finding whether there was a valid nomination in favour of H. Dayani and Dr. Nirmal Sen. If there was a valid nomination in existence at the date of the commission of the offence there can be no doubt that the case would be governed by section 17(1)(a)(i) of the Act and section 17(1)(a)(ii) would not be attracted. (Para 9)
Held finally: 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 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 all owed accordingly. (Para 11)
JUDGMENT
AHMADI, J.:- Special leave granted.
2. The short question which arises for determination in these appeals is whether it was permissible to launch a prosecution under sub-section (1) of Section 17 of the Prevention of Food Adulteration Act, 1954 (hereinafter called the Act) against the Directors and Managers of public limited companies, namely, M/s. Lipton India Limited and M/ s. Hindustan Lever Limited, for the commission of the alleged offence punishable under the aforesaid provision notwithstanding the nomination made by the said companies as required by sub-sec. (2) of Section 17 of the Act. In order to appreciate the contention raised on behalf of the appellants it is necessary to notice a few provisions of the Act. Section 7 of the Act inter alia provides that no person shall himself or by any person on his behalf manufacture for sale, or store, sell or distribute any adulterated food or any misbranded food or any article of food in contravention of the provisions of the Act and the rules made thereunder. Section 16 prescribes penalties for contravention of various provisions of the Act. It lays down that if any person whether by himself or by any person on his behalf, manufactures for sale, or stores, sells or distributes any article of food which is adulterated or misbranded or the sale of which is prohibited under any provision of the Act or any rule made thereunder or by an order of the Food (Health) Authority, he shall be punishable with imprisonment for a term which shall not be less than six months but which may extend to three years, and with fine which shall not be less than one thousand rupees. Then comes Section 17, the relevant part whereof may be reproduced:
"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) Any company may, by order in writing, authorise any of its Directors or Managers (such Manager being employed mainly in a managerial or supervisory capacity) to exercise all such powers and take all such steps as may be necessary or expedient to prevent the commission by the company of any offence under this Act and may give notice to the Local (Health) Authority, in such form and in such manner as may be prescribed, that it has nominated such Director or Manager as the person responsible, along with the written consent of such Director or Manager for being so nominated.
Explanation - Where a company has different establishments, or branches or different units in any establishment or branch, different persons may be nominated under this sub-section in relation to different establishments or branches or units and the person nominated in relation to any establishment, branch or unit shall be deemed to be the person responsible in respect of such establishment, branch or unit."
Sub-section (4) which begins with a non obstante clause next provides that where an 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, (no
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