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2026 Supreme(Online)(Kar) 20047

IN THE HIGH COURT OF KARNATAKA AT BENGALURU

NC: 2026:KHC:16959

CRL.P No. 13957 of 2023

DATED THIS THE 25TH DAY OF MARCH, 2026

BEFORE THE HON'BLE MR. JUSTICE M.NAGAPRASANNA

CRIMINAL PETITION NO. 13957 OF 2023

BETWEEN:
SRI SOMASHEKAR L.,
S/O A.N.LINGAIAH,
AGED ABOUT 46 YEARS,
R/AT NO. 22, ‘UNNATI’,
HONEY GARDEN,
OFF KANAKPURA MAIN ROAD,
MALLASANDRA,
BENGALURU – 560 062.
…PETITIONER
(BY SRI SANGAMESH R.B., ADVOCATE)

AND:
1. STATE OF KARNATAKA
THROUGH ITS PRINCIPAL SECRETARY
DEPARTMENT OF AGRICULTURE,
M.S.BUILDING,
BENGALURU - 01
REPRESENTED BY ITS SPP
HIGH COURT BUILDING
BENGALURU – 560 001.
2. DY. DIRECTOR OF AGRICULTURE
OFFICE OF THE DY. DIRECTOR,
D-303, ZILLA PANCHAYAT BHAVAN,
RAMNAGARA DISTRICT – 562 159
RAMNAGARA.
…RESPONDENTS
(BY SRI CHANNAPPA ERAPPA, HCGP FOR R-1;
R2 SERVED AND UNREPRESENTED)

Advocates:
For the Appellants/Petitioners: Sangamesh R.B.
For the Respondents: Channappa Erappa

Under Section 10 of the Essential Commodities Act, 1955, a director or officer of a company cannot be vicariously held liable for the company's contravention unless the company itself is arraigned as an accused in the proceedings.

Headnote:(A) Essential Commodities Act, 1955 - Section 10 - Offences by companies - Vicarious liability - Prosecution of a Director without arraigning the Company as an accused - Petitioner, a former director of a company, challenged criminal proceedings initiated after his resignation - Court observed that under Section 10 of the Act, where a contravention is by a company, vicarious liability and prosecution of its officers is conditional upon the company being arraigned as an accused - Following the principle laid down in Aneeta Hada regarding Section 141 of the Negotiable Instruments Act, the court held that it is imperative to array the company as an accused to maintain prosecution against its officers/directors. (Paras 6, 7, 8 and 9)

Facts of the case:
The petitioner, a former director, was added as the sole accused in a private complaint under the Essential Commodities Act and Fertilizer (Control) Order following the seizure of stock at the company's premises. The petitioner had resigned as a director in 2019, long before the seizure in 2023. The company was not made a party to the criminal proceedings.

Findings of Court:
The court found that the prosecution was maintainable only if the company itself was an accused in the proceedings. Since the company was not joined as an accused, the proceedings against the petitioner were held to be an abuse of the process of law.

Issues: Whether a director can be prosecuted for offences by the company under the Essential Commodities Act, 1955, without the company being arraigned as an accused.

Ratio Decidendi: Criminal liability for corporate acts under Section 10 of the Essential Commodities Act requires the company to be a party to the proceedings as a condition precedent for prosecuting its directors or officers vicariously.

Result: Petition allowed; proceedings quashed.

THIS CRL.P IS FILED U/S 482 OF CR.P.C., PRAYING TO

1) QUASH THE PROCEEDINGS IN PRIVATE COMPLAINT PCR NO.30/2023 DATED 23.02.2023, ALLEGING OFFENCES P/U/S 7, 8, 19(a) AND 19(b) OF “FCO 1985” AND U/S 3, 7 AND 8 OF ESSENTIAL COMMODITIES ACT, 1955, AND WHICH WAS LATER REGISTERED AS C.C.NO.377/2023, DATED 25.03.2023 ON THE FILE OF LEARNED PRINCIPAL CIVIL JUDGE AND JMFC, KANAKAPURA (ANNEXURE-A);

2) SET ASIDE THE ORDER OF TAKING COGNIZANCE BY LEARNED PRINCIPAL CIVIL JUDGE AND JMFC, KANAKAPURA DATED 28.02.2023 AGAINST THE PETITIONER ON THE ALLEGED OFFENCES P/U/S 7, 8, 19(a) AND 19(b) OF “FCO 1985” AND U/S 3, 7 AND 8 OF “ESSENTIAL COMMODITIES ACT, 1955”, AND WHICH WAS LATER REGISTERED AS C.C.NO.377/2023, DATED 25.03.2023 ON THE FILE OF LEARNED PRINCIPAL CIVIL JUDGE AND JMFC, KANAKAPURA (ANNEXURE-B).

THIS PETITION, COMING ON FOR ADMISSION, THIS DAY, ORDER WAS MADE THEREIN AS UNDER:

CORAM: HON'BLE MR. JUSTICE M.NAGAPRASANNA

ORAL ORDER

The petitioner is before this Court seeking the following prayers:

i) Pass an order so as to quash the proceedings in private complaint PCR No:30/2023 dated 23.02.2023, alleging offences under section 7, 8, 19(a) & 19 (b) of "FCO 1985" and under section 3, 7& 8 of Essential Commodities Act-1955, and which was later registered as CC No:377/23, dated 25.03.2023 on the file of learned Principal Civil Judge & JMFC, Kanakapura(Annexure-A).

ii) Pass an order so as to set aside the order of taking cognizance by learned Principal Civil Judge & JMFC, Kanakapura dated 28.02.2023 against the petitioner on the alleged offences punishable under Section 7, 8, 19(a) 19 (b) of "FCO 1985" and under Section 3, 7, 8 of "EC Act, 1955" and which was later registered as CC No: 377/23, dated 25.03.2023 on the file of learned Principal Civil Judge & JMFC, Kanakapura (Annexure-B).

iii) Issue such other direction as this Hon'ble court may deems fit, under the facts and circumstances of the case, in the interest of justice and equity.”

2. Facts, in brief, germane are as follows:

The petitioner is the Director of a Company by the name Disha Chemicals India Pvt. Ltd. (‘Company’ for short). The Company is into the business of 100% water-soluble fertilizers. A license is obtained by the Company from the Department of Agriculture on 20-09-2017 to run the said business. The petitioner is said to have resigned as a Director on 24-04-2019. The subject seizure of the fertilizer happens on 09-11-2023, long after the petitioner's resignation as a Director from the Company. The proceedings are now instituted of a confiscated stock stating that it has caused loss to the State Exchequer, by filing a complaint for the offences punishable under Clauses 7, 8, 19(a) and 19 (b) of the Fertilizer (Control) Order, 1985 (‘Control Order’ for short) read with Sections 3, 7 and 8 of the Essential Commodities Act, 1955 (‘Act’ for short), arraigning the petitioner as the sole accused. A case is registered in C.C.No.377 of 2023 before the concerned Court. The petitioner is now knocking at the doors of this Court, challenging these proceedings, by filing the subject petition.

3. Heard Sri Sangamesh R B, learned counsel appearing for the petitioner and Sri Channappa Erappa, learned High Court Government Pleader appearing for the respondent No.1.

4. The learned counsel for the petitioner would reiterate the grounds set out in the petition and would contend that the procurement, distribution and seizure of the stock have all happened one year after the petitioner resigned as Director of the Company and the Company had suffered losses during COVID-19. The leftover stock was shifted to a different godown on 20-09-2020 after the expiry of the licence, where the seizure of the stock has happened. The complaint was also filed without arraigning the Company as an accused. Under Section 10 of the Act the petitioner cannot be held vicariously liable of the contraventions of the Act or the Control Order, without arraigning the Company as an accused. Therefore, the petitione

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2026 Supreme(Online)(Kar) 20047

Under Section 10 of the Essential Commodities Act, 1955, a director or officer of a company cannot be vicariously held liable for the company's contravention unless the company itself is arraigned as an accused in the proceedings.

Cases Referred (1)