Directors cannot be deemed to be in charge of the affairs of a company simply because of their position as directors, as required by the legal provision.

P.K. Bhasin, J.

By way of this petition under Section 482 of the Code of Criminal Procedure, 1973 and Article 227 of the Constitution of India the petitioners seek quashing of the criminal complaint no.49/10 filed against them and some others under Sections 7/16 of the Prevention of Food Adulteration Act, 1954(“the Act of 1954” in short) as well as the order dated 2nd March, 2010 passed by the learned Additional Chief Metropolitan Magistrate, New Delhi whereby they were summoned as accused for these offences.

2. The two petitioners were sought to be prosecuted by the Food Adulteration Department on the averment that they were the directors of the Company by the name of M/s RJP Restaurants and Hotels Pvt. Ltd. (hereinafter to be referred as “the Company”), which was made the main accused in the complaint for the commission of the offences mentioned above, and as such they were in-charge of the affairs of the Company and so also liable to be punished for those offences. From this averment made in the complaint it is clear that the petitioners were sought to be made liable for the offences allegedly committed by the Company only because of their being its Directors and not because they were actually in charge of the affairs of the Company.

3. Learned Additional Public Prosecutor had while accepting the legal position that directors of a Company can be made vicariously liable for any offence committed by the Company only if they were at the time of commission of the offence in charge of the affairs of the Company submitted that since the petitioners were the directors of their Company and as such were deemed to be in charge of the affairs and management of the Company and it would be for them to show during the trial that they were not participating in the management and affairs of their Company and someone else was doing that and, therefore, they could be rightly prosecuted with the aid of Section 17 of the Act of 1954 and no fault could be found with the impugned order of the learned Magistrate summoning them as accused for the commission of the offences by the Company under the Act of 1954. It was also submitted that though there was a third lady director also of the Company but she was not made an accused by the complainant since she was found to be sick and confined to bed.

4. In my view this petition deserves to be allowed in view of the judgment of the Hon’ble Supreme Court in the case of “ S.M.S. Pharmaceuticals Ltd. Vs Neeta Bhalla & anr.”, (2005) 8 Supreme Court Cases 89 wherein, while considering the provisions of Section 141 of the Negotiable Instruments Act,1881 which are similar to Section 17 of the Act of 1954, it was held that a director cannot be deemed to be in charge of the affairs of a Company simply because of his being a director and unless it is pleaded in the complaint that the particular director sought to be prosecuted was in fact in charge of the affairs of the Company, which had allegedly committed some offence, he could not be prosecuted merely on the averment in the complaint that he was a director and as such in charge of the affairs of the company, as is the only averment against the two petitioners herein in the complaint. Learned APP did not bring to my notice any subsequent judgement of the Supreme Court taking a view contrary to the view taken in S. M. S. Pharmaceuticals case(supra).

5. This petition is, therefore allowed and the criminal complaint no.49/2010 qua the two petitioners as also the impugned order summoning them as accused are quashed.