2010 Supreme(SC) 1100

2010 (8) Supreme 66
SUPREME COURT OF INDIA
Altamas Kabir, Cyriac Joseph and Deepak Verma, JJ.
Pepsico India Holdings Pvt. Ltd. — Appellant
versus
Food Inspector & Anr. — Respondents
Criminal Appeal No. 836 of 2010
with
Criminal Appeal Nos.837, 838-840, 841, 842, 843, 844 and 845 of 2010
Decided on : 18-11-2010

IMPORTANT POINT
In a complaint against a Company and its Directors, the Complainant has to indicate in the complaint itself as to whether the Directors concerned were either in charge of or responsible to the Company for its day-to-day management, or whether they were responsible to the Company for the conduct of its business.

Headnote:Prevention of Food Adulteration Act, 1954- Section 23(1-A)(hh) - Prosecution of appellants Pepsico India Holdings Pvt. Ltd., manufacturer of Sweetened Carbonated Water for the presence of Carbofuran in its product-Appeals against judgment passed by High Court dismissing several petitions filed by Appellants under Section 482 of the Code of Criminal Procedure, 1973, for quashing of several prosecutions commenced against them- Entire controversy arose out of fact that no specific tolerance limit had been prescribed for sweetened carbonated water under Rule 65 and it was, therefore, presumed that trace of any insecticide would amount to adulteration of final product- In fact, High Court, while considering the matter, misconstrued submissions made on behalf of Appellants that mere presence of insecticide residue did not render article of food as being adulterated- The presence of insecticides within the limits prescribed in the Table to Rule 65 could not, hence, be said to have caused adulteration of the article of food in question- High Court also misconstrued the provisions of Section 23(1-A)(ee) and (hh) in holding that same were basically enabling provisions and were not mandatory and could, in any event, be solved by Central Government by framing Rules thereunder, by which specified tests to be held in designated Laboratories could be spelt out- High Court also erred in holding that non-formulation of Rules under said provisions of the 1954 Act could not be said to be fatal for prosecution- High Court failed to consider the reasons given on behalf of Appellants for not sending Company’s sample to the Forensic Laboratory, to effect that, since neither any validated method of analysis had been prescribed under Section 23(1-A)(ee) and (hh) of the 1954 Act, nor had any Laboratory been particularly specified for such examination, such an exercise would have been futile- No useful purpose could have been served by sending second sample to Forensic Laboratory, unless a defined tolerance limit of the presence of pesticides was available in regard to Sweetened Carbonated Water-Impugned judgment and order of High Court set aside- Appeals allowed. (Paras 32 to 36)

        Offence by Company –Liability of Directors- High Court erred in giving its own interpretation to decision of Apex Court in S.M.S. Pharmaceuticals Ltd.’s case and relying instead on the decision of Rangachari’s case, facts of which were entirely different from the facts of instant case- It is now well established that in a complaint against a Company and its Directors, Complainant has to indicate in the complaint itself as to whether the Directors concerned were either in charge of or responsible to the Company for its day-to-day management, or whether they were responsible to the Company for the conduct of its business- A mere bald statement that a person was a Director of Company against which certain allegations had been made is not sufficient to make such Director liable in absence of any specific allegations regarding his role in the management of the Company (Para 39)

       Facts of the Case :

        Appellants Pepsico India Holdings Pvt. Ltd., manufacturer of Sweetened Carbonated Water were prosecuted herein in the instant case for the presence of Carbofuran in its product. Present Appeals have been filed against judgment passed by High Court dismissing several petitions filed by Appellants under Section 482 of the Code of Criminal Procedure, 1973, for quashing of several prosecutions commenced against them. Issue in consideration in present appeals are whether the presence of 0.001 mg of Carbofuran per litre found in the sweetened carbonated water, manufactured by Appellant-Company, could be said to be adulterated as per Rule 65 of 1955 Rules and under Section 2(ia)(h) of the 1954 Act,particularly in the absence of any validated standard of analysis provided for under the 1954 Act or 1955 Rules.

       Findings of the Court :

        Entire controversy arose out of fact that no specific tolerance limit had been prescribed for sweetened carbonated water under Rule 65 and it was, therefore, presumed that trace of any insecticide would amount to adulteration of final product. In fact, High Court, while considering the matter, misconstrued submissions made on behalf of Appellants that mere presence of insecticide residue did not render article of food as being adulterated. The presence of insecticides within the limits prescribed in the Table to Rule 65 could not, therefore, be said to have caused adulteration of the article of food in question. High Court also misconstrued the provisions of Section 23(1-A)(ee) and (hh) in holding that same were basically enabling provisions and were not mandatory and could, in any event, be solved by Central Government by framing Rules thereunder, by which specified tests to be held in designated Laboratories could be spelt out. Consequently, the High Court also erred in holding that non-formulation of Rules under said provisions of the 1954 Act could not be said to be fatal for prosecution. High Court failed to consider the reasons given on behalf of Appellants for not sending Company’s sample to the Forensic Laboratory, to effect that, since neither any validated method of analysis had been prescribed under Section 23(1-A)(ee) and (hh) of the 1954 Act, nor had any Laboratory been particularly specified for such examination, such an exercise would have been futile. No useful purpose could have been served by sending second sample to Forensic Laboratory, unless a defined tolerance limit of the presence of pesticides was available in regard to Sweetened Carbonated Water. Impugned judgment and order of High Court was set aside.Prosecution of Appellants in respect of various complaints was quashed. Appeals were Allowed.

       Result : Appeals Allowed