18 August 1970
Supreme Court


Case number: Appeal (crl.) 211 of 1969






DATE OF JUDGMENT: 18/08/1970


CITATION:  1971 AIR   28            1971 SCR  (3) 748  1970 SCC  (2) 530

ACT: Foreign  Exchange Regulation Act 7 of  1947-Indian  currency sought  to be sent out of India in contravention of s.  8(2) of Act-Officer making search of accused’s premises does  not necessarily  need to be corroborated-Account slips found  in search  and tallying with account books are  good  evidence- Firm held guilty of contravention of Act-Partner incharge of business of firm is guilty under s. 23C(1) of Act unless  he can prove that the contravention of the Act by the firm took place  without his knowledge and he had exercised  diligence to  prevent  the  contravention-Review,  justification  for- Reduction  of  sentence  in  case  of  vicarious  liability, considerations for.

HEADNOTE: An   air  parcel  declared  by  the  consigner  to   contain rasogollas and other edibles was found to contain Rs. 51,000 worth of Indian currency notes. The parcel was booked to  be sent  from Calcutta to Hong Kong.  The consignor’s  name  as given.  on  the  parcel  was  found  to  be  false  and   on investigation the suspicion of the customs authorities  fell on  the appellants two of whom were partners in a firm,  the third being an employee of the firm.  The office of the firm was  searched.   Certain incriminating  documents  including account slips and cash books of the firm were seized.  In  a complaint  filed  by  the  Assistant  Collector  of  Customs against  the appellants and their firm it was  alleged  that sending  out money in Indian currency was prohibited  by  s. 8(2)  of the Foreign Exchange Regulation 7 of 1947  and  any attempt  to do the same was punishable under s. 23B  of  the Act.  The trial court acquitted the appellants but the  High Court in appeal convicted them under s. 23(1A).  By  special leave  appeals  were  filed in  this  Court.   Judgment  was delivered  on August 18, 1970.  Thereafter  review  petition No. 37 of 1970, was filed.  A further judgment in respect of the contention raised therein as to the interpretation of s. 23C(i) was delivered on February 18, 1971. HELD : (i) The proposition that if an investigating  officer conducts a search his evidence cannot be relied on unless it is  corroborated  is  a  novel  one  with  no  principle  or authority  to  support it.  It all depends on the  facts  of



each case.  In the present case there was the  corroborative evidence  of P.W. 8 who signed the search document and  also the  entries  themselves  in the  account  books  and  their tallying with the slips. [755 G] (ii) There was no substance in the argument that the account slips  could  not be taken into consideration  because  they were not evidence.  These were part of the things discovered during  search and if the entries therein were carried  into the account books there was no reason why they could not  be looked at [755 H] (iii)     In  the context of s. 23C(1) a person  ’in-charge’ must  mean that the person should be in over all control  of the  day  to  day  business of the  company  or  firm.   The inference  follows  from  the  wording  of  s.  23C(2).   It mentions  director who may be a. party to the  policy  being followed by                     749 a  company and yet not be in charge of the business  of  the company.   Further  it mentions manager who  usually  is  in charge  of the business not in over all  charge.   Similarly the other officers may be in charge of only some part of the business. [758 G-759 A] State v. S. P. Bhadani, A.I.R. 1959 Pat. 9, R. K. Khandelwal v. State [1964] 62 A.L.J. 625 and Public Prosecutor v. R. K. Karuppian, A.I.R. 1958 Mad. 183, referred to. In the present case the appellant G had himself stated  that he  alone looked after the affairs of the firm.  This  meant that  he  was in-charge within the meaning  of  the  section though there may be a manager working under him [760 C-D] When  a partner in charge of a business proceeds  abroad  it does  not mean that he ceased to be in charge, unless  there is  evidence  that he gave up charge in  favour  of  another person.  Therefore it must be held that the appellant was in charge of the business of the firm within the meaning of s.   23C(1). [760 E-F]. In  view  of  the  fact that G was abroad  at  the  time  of contravention  it was possible that the  contravention  took place  without his knowledge or lack of diligence.   He  was being  vicariously punished.  In such a case a. sentence  of imprisonment may not be imposed but a sentence of fine  only would meet the ends of justice. [760 G] (iv) As regards appellant P the prosecution had been  unable to  prove by any reliable evidence that he took  any  active part  in the conduct of the business of the firm.   He  must therefore be given the benefit of doubt and acquitted.  [757 A] (v)  The  case  was fit for review because at  the  time  of arguments   the  attention  of  the  court  was  not   drawn specifically to sub-s. 23C(2) and the light it throws on the interpretation of sub-s.(1). [761 A]

JUDGMENT: CRIMINAL, APPELLATE JURISDICTION: Criminal Appeal Nos. 211 & 212 of 1969 and Review Petition No. 37 of 1970. Appeals by Special leave from the judgment of the Calcutta 7 High Court dated August 18, 1969 in Criminal Appeal No.  183 of 1961. C.   K. Daphtary and S. K. Dholakia, for the petitioner. V.   A. Seyid Muhammad and S. P. Nayar for the respondents. The  Judgment of the Court on August 18, 1970 was  delivered by Sikri,  J.  These appeals, by special  leave,  are  directed against  the judgment of the High Court at Calcutta  whereby



the  High Court (A.  K. Das and K. K. Mitra, JJ.) set  aside the order of acuittal and convicted the appellants before us under s. 23(1A) of the Foreign Exchange Regulation Act  (VII of  1947)-hereinafter refered to as the Act.  The  appellant Girdharilal  Gupta, and the appellant Puranmall  Jain,  were sentenced  to rigorous imprisonment for six months each  and to pay 750 a  fine  of  Rs.  2,000/-  each,  in  default,  to  rigorous imprisonment’  for  a further period of three  months  each. The  appellant, Bhagwandeo Tewari was sentenced to  rigorous imprisonment  for  three  months and to pay a  fine  of  Rs. 1,000/-,  in  default,  to  rigorous  imprisonment  for  two months.   The  firm  was  sentenced to pay  a  fine  of  Rs. 2,000/-.   It  does not appear that any  special  leave  was obtained on behalf of the firm. In order to appreciate the contentions made before us it  is ncessary to state the relevant facts.  On October 25,  1958, Customs Preventive Officer B. Roy examined a parcel  (wooden case) which purported to contain Rasogolla, Achar, papar and dried  vegetable,  booked for Hongkong, to be taken  by  the Swiss  Air of which the Indian Airlines Corporation was  the ,cargo handling agent.  The articles had been declared to be worth  Rs. 20/- but the freight which had been paid came  to Rs.  127.73  nP. This excited the suspicion of  the  Customs Preventive  Officer, B. Roy, and on opening the  parcel  and breaking  down the case, five hundred ten currency notes  of the  denomination  of  hundred  rupees  each,  valuing   Rs. 51,0001-,  were  found.   The  name  of  the  consignor  was Ramghawan  Singh at Karnani Mansion, Park Street,  Calcutta, but  on  enquiry no trace could be found of  this  Ramghawan Singh  at  Karnani  Mansion.   In  the  course  of   further investigation  suspicion  fell ,on  M/s.   Agarwala  Trading Corporation  of which the appellants Girdharilal  Gupta  and Fumanmall   Jain  were  the  partners  and   the   appellant Bhagwandeo Tewri was an employee.  On January 22, 1959,  the office  of  the  firm at 191, Mahatma Gandhi  Road  and  the alleged  residence  of the partners at 11-B  Jatindra  Mohan Avenue  was searched.  The appellant, Bhagwandeo Tewari,  on being  identified  by the Traffic Assistant  of  the  Indian Airlines Corporation, Ambar Nath Sen, P.W. 4, and one loader of  Thai  Airways,  S.  K. Battu,  P.W.  26,  was  arrested. Certain incriminating documents, including account slips and cash books of the firm were seized. On  June 3, 1959, a complaint was lodged at the instance  of the Assistant Collector of Customs, Calcutta.  After stating the  above  facts  it was alleged,  in  the  complaint  that sending out money in Indian currency was prohibited under s. 8(2)  of  the  Act  and  any attempt  to  do  the  same  was punishable under s. 23B of the, Act. At  the trial a number of witnesses were examined.  B.  Roy, Customs Preventive Officer, gave evidence regarding the dis- covery of Rs. 51,0001- in Indian currency notes, apart  from Rasogollas,  pickles, etc. on October 25, 1958.   No  cross- examination was directed to show that this did not happen on October 25, 1958. 751 S.   A.  D. Moira, Traffic Assistant of the Indian  Airlines Corporation,  P.W.  2,  who checks freight  and  does  other transshipment  work  in  course of his  duties  at  Dum  Dum airport, deposed that he received the relevant documents  on October 25, 1958, from Calcutta office.  H.-, said that  the documents  were in the handwriting of N. Sen of the  Freight Section  of the Calcutta Office.  Armed with the  letter  of authority,  he  took the parcel to the Customs  Officer  and



P.W.  1, B. Roy, asked him to open the parcel  and  currency notes of the value of Rs. 51,000/-, along, with other things were discovered. R.   R.  Mukherjee, Traffic Officer of the  Indian  Airlines Corporation,  P.W. 3, is another witness to the recovery  of the  currency  notes.   P.W. 4, Ambare  Nath  Sen,  was  the Traffic  Assistant in the Indian Airlines  Corporation,  who had typed out the consignment note in respect of this parcel after seeing the shipping bill (Ext. 1).  He identified  the appellant, Bhagwandeo Tewari, as the, person who had  handed over  the shipping bill to him and the letter of  authority, Ext. 11 He said that he-.calculated the freight and received the freight, from this appellant.  He further said that this appellant  signed  the  consignment notes in  Hindi  in  his presence  and  he  remembered  having  seen  this  appellant writing  a  postcard  on the adjoining table  while  he  was preparing the consignment notes.  He further stated that his immediate  superior  officer,  P. K.  Chatterjee,  was  also present  at  the  time this consignment  was  being  booked. Apparently  this is not the first time that  hiss  appellant had  gone to the Indian Airlines Corporation because P.W.  4 says  that  seven  days  ahead of  October  24,  1958,  this appellant  had called on him with another shipment  although that consignment was booked by P. K. Chatterji. Some  days  after October 25, 1958, this witness  P.W.  4was taken  by the Customs Officer to some place to find the  man who  is  alleged to have booked the Parcel.   Two  or  three months thereafter he was again taken by the Customs Officers to another place in Burrabazar area, which was the place  of Agarwal Trading Corporation, and he said that he Pointed out the  appellant, Bhagwandeo Tiwari, as the one who had  taken the  Parcel  to  him on October 24,  1958.   He  was  cross- examined  in  order  to  show that  he  could  not  remember customers.  He admitted that it was not always possible  for him to remember all the men who came in contact with him  in the course of his work, but ’he said that he had told C.  R. Basu  who  wag investigating the case that  the  person  who brought  the parcel was an oldish man and lean one, and  had also  described his nose.  He further admitted that  at  the place he identified appellant Bhagwandeo Tiwari, he was  the only oldish man there.  He 4-Ll 100SupCI/71 752 said  that  he  did not think that he  committed  a  mistake unless the man he identified had a double in the shape- of a twin brother and the like.  He further admitted that he  had been  trying  to  recollect the appearance  of  the  man  to reconstruct in his mind the outline of his appearance as far as he could. The  evidence of P.W. 4 impresses us and there is no  reason why we should not place reliance on his evidence. P.   K.  Chatterjee, P.W. 5, speaks of the earlier visit  of the appellant Bhagwandeo Tiwari as the person who called  on him with the shipping bill on October 17, 1958. C.   R.   Basu,   P.W.  6,  Officer  of  the   Customs   who investigated  the case, said that after making enquiries  he applied  for  the  issue of search  warrant  to  search  the premises No. 191, Mahatama Gandhi Road.  He also applied for a  search warrant to search the premises of the partners  of the firm at 11-B, Jatindra Mohan Avenue.  He did not himself search 11-B, Jatindra Mohan Avenue, but went to execute  the search  warrant  at 191, Mahatma Gandhi Road, where  on  the identification of P.W.4 he arrested the appellant Bhagwandeo Tiwari.  He then conducted the search of the premises in the presence  of  the  witnesses and took  into  possession  one



Rokar,  one  khata  bahi, one  nakal  bahi,  the  attendance register and three account slips which he marked 8, 9 and 10 (Ext. 9 and 9/1 and 9/2 respectively).  We may reproduce his evidence  regarding  the discovery of  these  account  slips because a great deal of argument has been addressed to us on the recovery of these slips.  He stated               "The  three slips, about which I  have  spoken               just now, are in the same condition to-day  as               I found them on the day when they were seized.               The  witnesses to the search I  conducted  are               Radhesyam  Gupta  and Lalit Kumar  Chandu  Lal               Parekh.   Here  is  the search  list  over  my               signature and the signature of the  witnesses.               (Ext. 10)."               In his cross-examined he stated                "You  are right that Exhibits 9, 9/1 and  9/2               are  included in Serial No. 38 of  the  search               list.  Ext. 10". The  search list does not mention the slips  separately  but only mentions loose sheets in ’a sealed parcel.  It has been urged  that there is no evidence to show when the  seal  was opened.   It  is  suggested  that  these  slips  have   been fabricated  and  planted.  No such question was put  to  the witnesses and we are 753 unable  ’to presume that the investigating officer would  go about  fabricating  account slips in order to  rope  in  the appellants. The  prosecution produced two witnesses who had  signed  the recovery  list.  The evidence of Radheshyam Gupta,  P.W.  7, must  be discarded because although he was  examined  before the  Chief Presidency Magistrate he was not  made  available for    cross-examination.    The   learned   counsel,    Mr. Bhattacharya,  suggested  that  if  this  witness  had  been produced for cross-examination he would have deposed against the   prosecution.    We  are  unable  to  draw   any   such presumption.  The other witness was Lalit C. L. Parekh, P.W. 8. He had signed the search list but on cross-examination he stated  that "Basu had taken slips of paper from  the  ’Agal Bagal’  of  the guddy, by which I mean from  underneath  the Takia on the bed".  He further said that "bits of paper Basu found  from  a wooden case as well." He  further  stated  as follows               "You are right that Basu placed all these bits               of papers at one and the same place.  How many               pieces ?  I cannot say.  I did not count.   By               guess  I  can say that the number of  bits  of               paper would run to 50 or 60. 1 signed all  the               pieces of paper which were found so. " The  learned counsel fastens on the last line and says  that these slips do not bear the signature of Lalit C. L. Parekh, and  therefore it is clear that these have  been  fabricated later.   We  are  unable to sustain  this  contention.   The witness  had  signed  a number of  documents  including  the search list and he pay well have thought that he had  signed every piece of paper which was seized.  No such question was put to the investigating officer. P.W.  11, N. R. Paul, who was the assistant attached to  the Appraising  Department of the Calcutta Customs  deposed  re- garding  the preparation of the shipping bill.   It  appears that the shipping bill bore the words "Thai Airways Co." and these words were scored out and "Swiss Air" written in hand. He  could not say who corrected the entry but nothing  turns on this because it may be that the original idea was to send the parcel by Thai Airways but later on for some reasons  it



was  not possible to send that parcel through this  airways. The  prosecution  led evidence to show that as a  matter  of fact appellant Bhagwandeo Tiwari had approached some body in Thai  Airways  but we need not dwell on, this  part  of  the case. 754 The  prosecution  also produced Shridhar  Chatterjee,  hand- writing  expert, who examined the signature reading as  "Ram Chandra"  writing  in  Hindi and in pencil in  the  two  way bills, Ext. 3 and 4, and the specimen writing, He was of the opinion  that  the writer of the specimen  writing  was  the writer  of  the  signature "Ram Chandra"  appearing  in  the airway  bill.   We  may mention that  Bhagwandeo  Tiwari  is alleged  to have signed as "Ram Chandra".  The  expert  also gave the opinion that. the type-written papers, Exts. 11 and IX had been typed on the same machine. Exhibit 9/2, ’one of the seized account slips, is a very im- portant  document.  The official translation is  printed  in the records and reads: "Translation of EXT.9/2  dated 24-10-58..............                  2/8/-4 cases-Godown A/C 1 - ................       /8/-     3 "opened below and                                             goods brought. In Cash (Paper Torn) cases    bound      (Pettis)(?)................/4/-    Case I’ (Illegible)                                              /2/- Illegible (Paper tom) Cases (Pettis)(Illegi      ble) 2 R.B.                      -/151- for coming and                                          going to I.A.C. Rs.223/8/.                                    4/51-                      127/73-HongkongShanghai (torn &                            illegible)" The  High Court had to translate it again and the last  line was translated into "Hongkong Lagaya" in, place of "Hongkong Shanghai". In  the account books of M/s.  Agarwala Trading  Corporation (Exts.  21  and 21/1) under the entries  dated  October  24, 1958,   on  which  date  the  booking  is  alleged  by   the prosecution to have been done, on entry appears as follows: "Rs. 415/- Through Bhagwan Deo /8/- Colli (Janka) 115/-Rickshaw fare 2/ 14/-Cart Charge Rs. 1/8/- Through Ghanshyam & Pandey /4/- Bus fair 1/4/- Bus fair 1/4-Bus Tarm" It will be noticed that the same items appear in Ext.  9(2). The  breakup  in Ex. 9(2) is slightly different but  in  the account book 755 the four annas and two annas entries have been added to  Rs. 2/8/to make Rs. 2/14/- as cart charge. Again the entries in Ext. 9/1 are as follows "/1/- But hire for going home. 1/4/- Caine from home to Thai (?) Taxi /12/- Riksha-hire from Thai /1/- Coolie -/4/- Thai Office Colie ______________________ 2/6/- Rs. 147/10/- In Cash" The corresponding entry in the account books are as follows "Rs. 2/6/- (Bus fare /1/Taxi fare Rs. 1/4/- Rickshaw Rs. /12/-



Cooli 151-" It is true that the entry of Rs. 127/73 which exists in Ext. 9/2  has  not been carried over into the account  books  but perhaps that would have been even too much for an accountant to do.  He never dreamt that these entries, of Rs. 4/5/- and Rs.  2/6/- in the account books would be seized upon by  the prosecution to complete the case against the appellants. Be that as it may, the entries in the account books demolish the  case  of defence that these slips were  fabricated  and that they had nothing to do with the firm.  Ex. 9/2, on  the other  hand,  clearly shows that somebody had  gone  to  the I.A.C.  office  and paid /15/-for going and  coming  to  the I.A.C. office and paid the incidental charges. Mr.   Bhattacharya,   who  followed  Mr.  Chagla   for   the appellants,  contends  that  a serious question  of  law  is involved,  the  question  being  that  if  an  investigating officer  conducts a search his evidence cannot be relied  on unless it is corroborated.  It is a novel proposition and he has  not  been able to cite any authority  or  principle  in support  of it.  It all depends on the facts in each,  case. At any rate here we have the corroborative evidence of  P.W. 8,  who  signed  the search document and  also  the  entries themselves in the account books and their tallying with  the slips. It  was  urged on behalf of the defence counsel  that  these slips  could not be taken into consideration at all  because they are not evidence.  We are unable to appreciate why they are  not evidence.  These are part of the things  discovered during search and 756 if  the entries therein are carried into the  account  books there is no reason why these things could not be looked at. The  learned counsel has taken us through the  judgments  of the Chief Presidency Magistrate  and the High Court.  We are in  agreement  with the conclusions arrived at by  the  High Court.  We have ourselves gone into the evidence as the High Court had reversed the order of acquittal and in one or  two places made minor mistakes. Mr.  Chagla, while arguing on behalf of the  partners,  said that  there  was  evidence  that one,  partner  was  not  in Calcutta  on  the 24th or 25th October, 1958,as  he  was  in Japan.   But even if we take this fact  into  consideration, which  fact  was  not brought to the  notice  of  the  Chief Presidency  Magistrate or the High Court, it does  not  help him  at all.  Entries were made in the account books and  it was the firm’s money which was spent and he being an  active partner  is clearly liable under s. 23C(1) of the Act  which reads :               "23C(1)    If   the   person   committing    a               contravention 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;               Provided  that nothing contained in this  sub-               section shall render any such person liable to               punishment    if    he   proves    that    the               contravention took place without his knowledge               or that he exercised all due diligence to pre-               vent such contravention." This  sub-section  deems the appellant  Girdhari  Lal  Gupta guilty.    The  question  is  :  Has  he  proved  that   the



contravention  took  place  without  his  knowledge  and  he exercised due diligence to prevent such contravention ? What he said in his statement under s. 342, Cr-P.C., was that  he alone looks after the affairs of the firm.  There is also no evidence  to show that the contravention took place  without his knowledge or that he exercised due diligence to  prevent such  contravention.  The entries were there in his  account books  and  the only thing that, he had to say  about  these entries  in  his account books is that they pertain  to  the routine  work of the firm.  Under the circumstances  we  are unable to exonerate him of the charge. As far as the  other partner, Puramnall Jain, is  concerned’ he stated that he   does  not look after the affairs of  the firm and further                             757 that  he stays all along at Sriganganagar in  Rajasthan  and does not stay in Calcutta.  The prosecution has not led  any reliable  evidence to prove that he took any active part  in the  conduct  of  the  business  of  the  firm.   In   these circumstances  we  are inclined to give him the  benefit  of doubt and acquit him. In the result the appeal of Puranmall Jain is allowed and he is  acquitted  of  the charge.  Ms  bail  bond  shall  stand cancelled.   The  appeals  of Girdhari  Lal  and  Bhagwandeo Tewari are dismissed. [After the above judgment was delivered Review Petition  No. 37 of 1970 was filed.  The judgment of the Court thereon was delivered on February 18, 1971 by] Sikri, C.J. We disposed of Criminal Appeals Nos. 211 and 212 of  1959 by our judgment dated August 18, 1970, whereby  the appeals of Girdharilal Gupta, and Bhagwandeo Tewari against. their convictions were dismissed.  Girdharilal Gupta put  in this review petition stating that the counsel had omitted to bring  to  our  notice the provisions of s.  23C(2)  of  the Foreign  Exchange Regulation Act, 1947-hereinafter  referred to  as the Act-which has a vital bearing on the  case.   The judgment in Criminal Appeal No. 211 of 1959 has,  therefore, been  re-opened.  We may mention that Bhagwandeo Tiwari  has not  filed a review petition against his conviction,  upheld by this Court. Mr. Daphtary contends that on the facts, as found by us, the appellant,  Girdhari  Lal Gupta, does not  come  within  the purview  of  s. 23C(1) or s. 23C(2) of  the  Act.   Sections 23C(1) and 23C(2) read as follows               "23C.   (1)   If  the  person   committing   a               contravention 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 :               Provided   that  nothing  contained  in   this               subsection shall render any such person liable               to   punishment   if  he   proves   that   the               contravention   took   place,   without    his                             knowledge   or  that  he  exercised all   due               diligence to prevent such contravention.               23C. (2) Notwithstanding anything contained in               sub-section  (1), where a contravention  under               this  Act has been committed by a company  and               it is proved that the contravention has  taken               place with the consent or connivance of, or is



             attributable to any neglect on the               758               part  of, any director, manager, secretary  or               other  officer of the company, such  director,               manager, secretary or other officer shall also               be  deemed  to be guilty of that  offence  and               shall  be liable to be proceeded  against  and               punished accordingly.               Explanation.-For   the   purposes   of    this               section,-               (a)   " company" means any body corporate  and               includes  a  firm  or  other  association   of               individuals; and               (b)   "director", in relation to a firm, means               a partner in the firm. Mr. Daphtary contends that there is no evidence to show that the  appellant was in charge of the conduct of the  business of  the firm at the relevant time and therefore,  s.  23C(1) does  not apply.  He further says that as the appellant  was abroad, the contravention took place without his  knowledge. We may mention, however, that the defence that he was abroad at the relevant time was not taken in the courts below.   At the  time of the last hearing learned counsel  produced  the passport  of the appellant before us from which  it  appears that  he  was abroad at that time and came back a  few  days after the alleged contravention. Mr. Daphtary further contends that s. 23C(2.) also does  not apply  because there is no evidence that  the  contravention took  place  with  the  consent or  connivance  of,  or  was attributable  to any neglect on the part of, the  appellant. He referred to us a number of authorities of the High Courts in  India which have interpreted similar provisions  and  we shall refer to them later. It seems to us quite clear that s. 23C(1) is a highly  penal section  as  it  makes  a  person  who  was  in-charge   and responsible  to the company for the conduct of its  business vicariously liable, for an offence committed by the company. Therefore,  in accordance with well-settled principles  this section should be construed strictly. What  then  does  the expression  "a  person  in-charge  and responsible  for  the conduct of the affairs  of  a  company mean’ ? It will be noticed that the word ’company"  includes a firm or other association and the same test must apply  to a director in-charge and a partner of a firm in-charge of  a business.  It seems to us that in the context a person  ’in- charge’  must  mean that the person should be  in  over  all control  of the day to day business of the company or  firm. This  inference follows from the wording of s.  23C(2).   It mentions  director, who may be a party to the  policy  being followed  by  a  company and yet not  be  in-charge  of  the business of the company.  Further it mentions manager, who 75 9 usually  is in charge of the business but not  in  over-all- charge.   Similarly the other officers may be in  charge  of only some part of business. In  State  v.  S.  P. Bhadani(1),  Kanhaiya  Singh,  J.,  in construing  a similar provision of the  Employees  Provident Fund  Act  (1952).   Section 14A-held that  the  first  sub- section would be confined only to officers in the  immediate charge of the management of the company.  Later he  observed that  "it is, therefore, manifest that all the  officers  of the  company not in direct charge of the management  of  the business  are  immune from the liability  for  the  offence, unless  they have contributed to its commission by  consent, connivance or neglect."



In  R.  K.  Khandelwal  v. State (2 D.  S.  Mathur,  J.,  in construing s. 27 of the Drugs Act, 1940, a provision similar to the one we are concerned with, observed :               "There  can in directors who merely  lay  down               the policy and are not concerned with the  day               to day working of the Company.   Consequently,               the  mere  fact that the accused person  is  a               partner or director of the Company, shall  not               make  him criminally liable for  the  offences               committed  by  the Company  unless  the  other               ingredients  are  established which  make  him               criminally liable." In  The Public Prosecutor v. R.  Karuppian(3),  Somasundaram J.,  while dealing with a case arising under the  Prevention of Food Adulteration Act, 1954 (s. 17(1)) observed that  the Secretary of the Co-operative Milk Society, on the facts  of the case, could not be held to be a person in charge of  the Society.  On the facts of that case the business of  selling milk was done by the clerk of the Society and the  Secretary was  only an honorary Secretary and was not coming  to.  the Society daily. The only evidence led by the prosecution on this part of the case was of one Sohan Lal Gupta who is a broker.  He  stated in examination-in-chief :               "Who exactly the proprietors of the said  firm               are,  I cannot say.  But I can say  this  much               that whenever I had been there I was  referred               to  Girdharilal  Gupta  (accused  No.  2)  and               Puranmal Jain (accused No. 3) as the Maliks of               the  firm.   I see accused No.  2  Girdharilal               Gupta in court (identified him).  I know  that               Bhagwandeo  Tewari  (accused  No.  4)  is  the               Cashier of that firm.  I see him here in court               (identifies accused No. 4). (1) A.I.R. [1959] Pat.9.          (2) [1964] 62 A.L.J. 625. (3)  A.I.R. [1958] Mad. 183. 760 .lm15 I know of another employee of the firm the manager,  Jagdish Prasad.  I know another employee of the firm the accountant, Shyamlal." The appellant in ’his statement under S. 342, Cr.P.C. stated thus "You  ask  me,  Sir, if I have to  say  anything  about  the evidence led in this case to the effect that I happen, to be a partner of accused No. 1 firm.  To that, Sir, my answer is that I am.  " The evidence to that end is correct.  I  shall only add that I alone look after the affairs of _this firm." Mr.  Daphtary says that on this evidence it cannot  be  held that  the  appellant  was in-charge of the  conduct  of  the business.   We are unable to agree with him on  this  point. The appellant has himself stated that he alone, looked after the  affairs of the firm.  This means that the is in  charge of  the  business  of the firm within  the  meaning  of  the section though there may be a Manager working under him. The question then arises whether the appellant was in charge of  the conduct of the business of the firm at the time  the contravention was committed.  He was not physically present, in Calcutta at the time of the commission of the offence and the prosecution evidence shows that one Jagdish Prasad.  was the  manager  of  the firm.  It is true  that  the  onus  of proving  that the appellant was in charge of the conduct  of the  business of the company at the time  the  contravention took  place lies on the Prosecution, but when a  partner  in charge  of a business proceeds abroad it does not mean  that



he  ceases  to be charge, unless there is evidence  that  he gave  up charge in favour of another person’  Therefore,  we must  hold that the appellant was in charge of the  business of the firm within the meaning of sec. 23C(1). But while imposing sentence a Court might take notice of the fact  that  a person is being vicariously  punished  for  an offence  and  if  he  shows that it  is  possible  that  the contravention of the Act took place without his knowledge or neglect  a sentence of imprisonment may not be imposed.   In this case he was abroad at the time of contravention and  it is  possible that the contravention took place  without  his knowledge  or because of lack of diligence.  It seems to  us that  on  the facts of this case a sentence of fine  of  Rs. 2,000/- will meet the ends of justice. The learned counsel for the respondent State urges that this is  not a case fit for review because it is only a  case  of mistaken  judgment.   But we are unable to agree  with  this submission 761 because  at the time of the arguments our attention was  not drawn.,  specifically  to  sub-s. 23C(2) and  the  light  it throws on the interpretation of sub-s. (1). In the result the review petition is partly allowed and  the judgment  of this Court in Criminal Appeal No. 211  of  1969 modified  to  the extent that the sentence  of  six  months’ rigorous. imprisonment imposed on Girdharilal is set  aside. The sentence-, of fine of Rs. 2,000/- shall, however, stand. G.C.                               Ordered accordingly. 762