REPORTABLE IN THE SUPREME COURT OF INDIA CRIMINAL APPELLATE JURISDICTION CRIMINAL APPEAL NO. 836 OF 2010

 PEPSICO INDIA HOLDINGS PVT. LTD.       … APPELLANT  

Vs. FOOD INSPECTOR & ANR. … RESPONDENTS

WITH  CRIMINAL APPEAL NOS.837, 838-840, 841, 842,

   843, 844 AND 845 OF 2010

J U D G M E N T

ALTAMAS KABIR, J.

1. All  these  appeals  are  directed  against  the  

judgment  dated  19th February,  2009,  passed  by  a  

learned  Single  Judge  of  the  Kerala  High  Court  

dismissing  the  several  petitions  filed  by  the  

Appellants  under  Section  482  of  the  Code  of

Criminal  Procedure,  1973,  for  quashing  of  the  

several prosecutions commenced against them.  The  

Appellants  in  Criminal  Appeal  No.836  of  2010,  

Pepsico  India  Holdings  Pvt.  Ltd.,  is  the  

manufacturer of Sweetened Carbonated Water and is  

being prosecuted for the presence of Carbofuran in  

its  product.   These  appeals  throw  up  certain  

questions relating to the maintainability of the  

criminal  prosecutions  launched  against  the  

Appellants, namely :  

(1) In the absence of any prescribed and validated  

method of analysis under Section 23(1-A)(hh) of  

the Prevention of Food Adulteration Act, 1954,  

hereinafter  referred  to  as  “the  1954  Act”,  

could a prosecution have been launched against  

the Appellants based on a report submitted by  

the  Public  Analyst  using  the  method  of  the  

Directorate  General  of  Health  Services  

(D.G.H.S.) ?

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(2) Could a prosecution have been launched against  

the Appellants in the absence of any validated  

method of analysis to ascertain the percentage  

of pesticide residue present in a Carbonated  

beverage,  which  renders  the  report  of  the  

Public Analyst unreliable, particularly when it  

does not indicate that such percentage of the  

pesticide residue is injurious to health and,  

therefore,  adulterated  within  the  meaning  of  

Section 2(ia)(h) of the aforesaid Act?

(3) What is the effect of non-specification of the  

level of tolerance in respect of the presence  

of  pesticide  residue  in  Sweetened  Carbonated  

Water in the Table appended to Rule 65(2) of  

the  Prevention  of  Food  Adulteration  Rules,  

1955,  hereinafter  referred  to  as  “the  1955  

Rules”? and  

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(4) What is the liability of the Directors of a  

company  which  is  said  to  have  committed  

defaults within the meaning of Section 17 of  

the 1954 Act, in the light of the decision of  

this Court in  S.M.S. Pharmaceuticals Ltd. Vs.  

Neeta Bhalla & Anr. [2005 (8) SCC 89], when  

they were neither in charge of nor responsible  

for the conduct of the business of the Company?  

2. On 25th October, 2006, the Food Inspector of  

Mobile Vigilance, Kozhikode, inspected the premises  

of Star Marketing, Ashoka Puram, Door No.5/1589,  

under Kozhikode Municipal Corporation and purchased  

three two-litre bottles of Pepsi on payment of the  

price.  The  said  bottles  were  sealed  and  

subsequently, on 26th October, 2006, one part of the  

sample  was  forwarded  to  the  Public  Analyst,  

Kozhikode.  On  28th November,  2006,  the  Public  

Analyst  submitted  his  report  stating  that  upon  

analysis  of  the  sample  of  Pepsi  Sweetened  

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Carbonated Water, using the Directorate General of  

Health Services (DGHS) method, pesticide residue-

Carbofuran, to the extent of 0.001 mg per litre was  

detected therein.  The said sample was, therefore,  

adulterated within the meaning of Rule 65 of the  

1955 Rules and Section 2(ia)(h) of the 1954 Act.

3. Based upon the report of the Public Analyst,  

the  Chief  Judicial  Magistrate,  Kozhikode,  took  

cognizance  of  the  offence  and  issued  process  

against the Appellants.  

4. The  Appellants  moved  the  Kerala  High  Court  

under  Section  482  Cr.P.C.  for  quashing  of  the  

aforesaid order of the Chief Judicial Magistrate,  

Kozhikode.  The learned Single Judge by his order  

dated  19th February,  2009,  dismissed  the  said  

application  and  directed  the  prosecution  to  

continue with the case.  Aggrieved by the order of  

the  learned  Single  Judge,  the  Appellant-Company,  

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M/s.  Pepsico  India  Holdings  Pvt.  Ltd.,  and  its  

Directors have filed these appeals challenging the  

cognizance  taken  by  the  learned  Magistrate  on  

various grounds.

5. Mr.  Iqbal  Chagla,  learned  Senior  Advocate,  

appearing  for  the  Appellants  questioned  the  

cognizance taken against the Appellants and urged  

that in the absence of any prescribed method of  

analysis under Section 23(1-A)(hh) of the 1954 Act  

by the Central Government, the Public Analyst had  

not been following any uniform method of analysis,  

but resorted to whatever method was convenient.  It  

was submitted that the said approach was entirely  

wrong and the result of the analysis could not be  

accepted  as  valid.  Furthermore,  there  being  no  

validated  method  of  analysis  to  ascertain  the  

percentage  of  pesticide  residue  present  in  a  

carbonated  beverage,  the  report  of  the  Public  

Analyst  could  not  be  relied  upon  for  launching  

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prosecutions  against  the  Appellants  under  the  

provisions of the 1954 Act, especially when such  

report did not even indicate that the presence of  

the  amount  of  pesticide  residue  detected  is  

injurious to health and that the sample of Pepsi  

submitted for analysis would, therefore,  have to  

be considered as adulterated under Section 2(ia)(h)  

of the 1954 Act.           

6. It was strenuously urged that even if it be  

assumed that the Public Analyst had detected the  

presence of pesticide residue, his opinion that the  

presence of the pesticide residue at such levels  

rendered  the  articles  injurious  to  health  under  

Section  2(ia)(h)  of  the  1954  Act,  cannot  be  

accepted in the absence of a validated method of  

analysis.   Mr.  Chagla  submitted  that  whether  an  

article of food is adulterated or not has to be  

determined under the Rules framed by the Central  

Government under Section 23 of the 1954 Act.  Under  

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Section 23(1A) the Central Government is empowered  

to  make  rules,  inter  alia,  for  defining  the  

standards  of  quality  and  fixing  the  tolerance  

limits of pesticide permissible in any article of  

food.  The Rule-making authority, in consultation  

with  the  Central  Committee  and  the  Central  

Government has defined the standards of quality and  

has  also  fixed  the  limits  of  pesticide  residue  

permissible for various articles of food, including  

carbonated water, within which entry the product of  

the  Appellants  is  also  included.  It  is  also  

universally accepted that even the water which is  

used  for  manufacturing  carbonated  water,  has  to  

comply  with  the  standards  of  packaged  drinking  

water.  Rule 65 is found in Part XIV of the 1955  

Rules  under  the  heading  “Insecticides  and  

Pesticides”.  Rule 65(2) makes it mandatory that  

the level of insecticide presence, mentioned in the  

Table in respect of various articles of food, shall  

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not exceed the tolerance limit prescribed against  

that article of food.  At the relevant point of  

time,  when  disputes  arose,  “Carbonated  Water  or  

Sweetened  Carbonated  Water”  was  not  included  in  

Rule  65  and,  hence,  no  tolerance  limit  was  

prescribed  for  carbonated  water  threreunder.  

Furthermore, it was urged by Mr. Chagla that Rule  

65 essentially applies to raw agricultural products  

moving  in  commerce,  which  will  be  evident  from  

Explanation  (b)(ii)  at  the  end  of  the  Table  

appended to Rule 65(2).  Accordingly, as far as  

finished products are concerned, prior to June 17,  

2009, no tolerance limits were prescribed under the  

Act and/or Rules, except for a few milk products.  

7. Mr.  Chagla  submitted  that  the  standard  

prescribed  for  “Mineral  Water”  was  that  the  

pesticide  residue  should  be  below  detectable  

limits.  However, for the first time, with effect  

from 1st April, 2004, a standard was included which  

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mandated  that  the  total  pesticide  residue  in  

“packaged drinking water” was not to exceed 0.0005  

mg/litre.  No such standard was, however, laid down  

in respect of ”Carbonated Water”, but with effect  

from  15th October,  2004,  the  water  used  in  the  

manufacture of carbonated beverage was required to  

conform to the standards prescribed for packaged  

drinking water.  While the carbonated water could  

contain  sugar,  water,  liquid  glucose,  honey,  

natural flavours, fruit and vegetable extracts, the  

water  to  be  used  would  have  to  conform  to  the  

standards prescribed for packaged drinking water,  

but no separate standard of pesticide residue was  

prescribed.   

8. Mr. Chagla submitted that the water used by the  

manufacturer in the process of manufacturing its  

carbonated  drink,  conforms  to  the  standards  

prescribed for packaged drinking water and no one  

has  contended  to  the  contrary,  nor  is  the  

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Appellants  being  prosecuted  for  violating  such  

standard.  He contended that the complaint is based  

exclusively on the Public Analyst’s report, which,  

in fact, stood vitiated for various reasons.  It  

was urged that to the extent the report indicates  

that the product manufactured by the Appellants is  

adulterated as per Rule 65 and A.01.01, the same  

was misconceived since neither Rule 65 nor A.01.01,  

at the relevant point had prescribed a tolerance  

limit for carbonated water.  It was contended that  

the  High  Court  has,  in  fact,  recorded  that  the  

prosecution proceeded on the sole allegation that  

the samples of carbonated beverages purchased by  

the Food Inspectors are adulterated under Section  

2(ia)(h)  of  the  Act.   Based  on  the  said  

submissions,  the  High  Court  confined  the  

allegations  only  to  violation  of  the  aforesaid  

provision of the Act and the same is also reflected  

in the impugned judgment of the High Court.   

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9. As will appear from the report of the Public  

Analyst filed in connection with Criminal Appeal  

No.836 of 2010, a pesticide residue of Carbofuran  

amounting  to  0.001  mg/litre  was  detected  in  the  

sample of sweetened carbonated water manufactured  

by the Appellant, by employing the “DGHS Method”.

10. Mr.  Chagla  contended  that  in  2007,  in  an  

affidavit filed before the Kerala High Court, it  

had been indicated by the Union of India that the  

standards  for  pesticide  residue  for  sweetened  

carbonated water have not been prescribed in any  

country of the world and that a manual of analysis  

for  testing  of  pesticide  residue  was  under  

preparation of the Ministry of Health and Family  

Welfare.  The same sentiments regarding the absence  

of validated methods for detection of pesticides  

were also discussed by the Central Committee for  

Food Standards on 16th April, 2007, and the Minutes  

of the meeting recorded that validated methods for  

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detection of pesticides were not available.  Apart  

from the above, Mr. Chagla also submitted that the  

opinion of the Public Analyst that the carbonated  

water contained an ingredient which was injurious  

to health, was not supported by any standard and  

the  finding  was  based  merely  on  account  of  the  

presence of Carbofuran therein.  In fact, the Court  

also observed that the mere presence of insecticide  

residue could not  ipso facto justify a conclusion  

that the article had become injurious to health.  

What the Public Analyst indicated was that since  

Rule 65 and A.01.01 did not prescribe any tolerance  

limit for pesticide residue in carbonated water, it  

pre-supposes that the carbonated water would have  

to  be  totally  free  from  pesticide.  Mr.  Chagla  

submitted  that  having  observed  that  the  mere  

presence  of  insecticide  residue  could  not  ipso  

facto justify the conclusion that the manufactured  

articles were injurious to health, the High Court  

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ought  not  to  have  relied  on  the  report  of  the  

Public Analyst to arrive at a prima facie finding  

that the sample of sweetened carbonated water was  

adulterated.

11. Mr. Chagla pointed out that when the tolerance  

limit of Carbofuran in infant milk has been set at  

0.05 mg/litre, the presence of 0.001 mg/litre of  

Carbofuran in the carbonated water manufactured by  

the Appellants, could certainly not have been more  

injurious to public health than infant milk.

12. In  support  of  his  submissions,  Mr.  Chagla  

referred to the decision of this Court in Hindustan  

Lever Limited Vs. Food Inspector & Anr. [(2004) 13  

SCC 83], wherein, this Court was considering the  

judgment  of  the  Kerala  High  Court  rejecting  

petitions  filed  by  the  Appellants  therein  for  

quashing  the  proceedings  pending  before  the  

Judicial  Magistrate,  First  Class,  Alwaye.   The  

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proceedings  had  been  initiated  on  the  complaint  

filed  by  the  Food  Inspector,  Edapally  Circle,  

Ernakulam  District,  under  Sections  2(ia)(a)  and  

(m), 7(1) and 16(1)(a)(i) and Section 17(1) of the  

Prevention of Food Adulteration Act, 1954 read with  

Rule  5  of  the  Prevention  of  Food  Adulteration  

Rules, 1955, which were ultimately quashed,  inter  

alia, on the ground that no prosecution would be  

maintainable where no standard is prescribed under  

the Rules.  It was urged that the report not having  

disclosed  any  material  to  support  the  opinion,  

stood clearly vitiated and ought not to have been  

relied upon.

13. On the question of maintaining an appeal under  

Section 13(2) of the P.F.A. Act, 1954, Mr. Chagla  

contended  that  the  courts  below  had  erred  in  

holding that the Appellant ought to have challenged  

the report by filing an appeal to the Central Food  

Laboratory and not having done so, was not entitled  

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to such relief.  Learned counsel submitted that the  

Court did not appreciate the futility of preferring  

an  appeal  under  Section  13(2)  of  the  1954  Act,  

since admittedly, no validated method of analysis  

exists  for  detecting  the  presence  of  pesticide  

residue in carbonated water. Learned counsel also  

submitted  that  since  the  report  of  the  Public  

Analyst  does  not  disclose  any  violation  of  the  

provisions of the 1954 Act, there was no reason for  

the  Appellants  to  approach  the  Central  Food  

Laboratory under Section 13(2) of the 1954 Act.   

14. On  the  question  of  the  liability  of  the  

Directors of the Appellant-Company on account of  

the alleged violation of the provisions of the 1954  

Act, Mr. Chagla submitted that except for a bald  

statement that Accused No.3 to Accused No.9 were  

the Directors of the Company and that Shri Rajeev  

Bakshi was the Chairman and Managing Director of  

the Company, nothing else had been stated in the  

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complaint  as  to  how  they  were  liable  for  the  

offences  complained  of.   Mr.  Chagla  referred  to  

Sub-Sections (1) and (2) of Section 17 of the 1954  

Act, which deals with the offences committed by a  

Company and provides as follows :

“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 (hereafter 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:

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 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.”

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15. It  was  firstly  submitted  that  one  Somesh  

Dahale, Manager, Quality Control, of the Company,  

had been nominated under Sub-section (2) of Section  

17 to be in-charge and responsible for the conduct  

of the business of the Company and was, therefore,  

the person responsible within the meaning of Sub-

section (1).   

16. In addition to the above, Mr. Chagla submitted  

that  since  no  allegation  had  been  made  in  the  

complaint against the Directors of the Company as  

to  whether  they  were  either  in  charge  or  

responsible  to  the  Company  for  its  day-to-day  

management, the liability of the offence alleged to  

have been committed by the Company, could not be  

extended  to  them.   Reference  was  made  to  the  

decision of this Court in  S.M.S. Pharmaceuticals  

Ltd.’s  case  (supra),  wherein  the  question  of  

vicarious liability in criminal jurisprudence had  

been considered and it was held that a Director  

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cannot ipso facto be deemed to be in charge of and  

responsible to the Company for the conduct of its  

business.  Such fact has to be specifically averred  

in the complaint.  Mr. Chagla submitted that the  

High Court did not also appreciate the fact that  

the decision in S.M.S. Pharmaceuticals Ltd.’s case  

(supra) was based on the judgment of this Court in  

Municipal Corpn. of Delhi Vs.  Ram Kishan Rohtagi  

[(1983)  1  SCC  1]  which  was  a  decision  in  the  

context of the 1954 Act.

17. Mr. Chagla submitted that it had perhaps been  

presumed  that  the  Appellant-Company  had  not  

nominated  an  officer  under  Section  17(2)  of  the  

1954  Act  and  consequently  the  entire  Board  of  

Directors were responsible for the offence.   

18. Mr. Chagla lastly submitted that as far as Mr.  

Rajeev  Bakshi,  Chairman  of  the  Company,  is  

concerned, he too cannot be made liable merely on  

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account of the fact that he was the Chairman of the  

Company.  It was submitted that the said view had  

been expressed by this Court in Everest Advertising  

(P) Ltd. Vs.  State, Govt. of NCT of Delhi & Ors.  

[(2007)  5  SCC  54],  which  followed  the  earlier  

judgment of this Court in  S.M.S. Pharmaceuticals  

Ltd.’s case (supra).

19. Mr. Chagla submitted that, the allegations made  

against  the  Company,  its  Directors  and  its  

employees  were  not  maintainable  under  the  

provisions of the Prevention of Food Adulteration  

Act, 1954, not only on the ground of absence of any  

standard of validated method for the detection of  

pesticide residue in carbonated water but also on  

account  of  the  fact  that  even  the  quantity  of  

pesticide residue detected by the Public Analyst in  

the product of the Appellant-Company on the basis  

of the DGHS method, was within the tolerance limits  

as was prescribed under the amended provisions of  

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Rule  65  of  the  1955  Rules,  with  effect  from  

17.6.2009.  Mr. Chagla submitted that after such  

amendment sweetened carbonated water was included  

in  the  Table  appended  to  Rule  65(2)  under  the  

heading of “Chlorpyrifos” at Serial No.23, wherein  

the tolerance limits of the presence of insecticide  

residue  in  carbonated  water  was  shown  as  0.001  

mg/litre.  Mr.  Chagla  submitted  that  the  several  

prosecutions commenced against the Appellants and  

its Directors and employees for alleged violation  

of the provisions of Section 16(1)(a)(i) read with  

Section 2(ia)(a), 2(ia)(h), 7(1) of the 1954 Act  

and Rule 65 of the 1955 Rules, were, therefore,  

liable to be quashed.         

20. Ms.  Indu  Malhotra,  learned  Senior  Advocate,  

appearing for Pepsico India Holdings Pvt. Ltd. in  

Criminal  Appeal  No.842  of  2010  (arising  out  of  

SLP(Crl.)No.5818/2009), while adopting Mr. Chagla’s  

submissions  re-emphasised  the  decision  of  this  

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Court  in  Everest  Advertising  (P)  Ltd.’s  case  

(supra) with regard to the question of vicarious  

liability of the Directors of a Company in regard  

to offences which may have been committed without  

their knowledge or consent.  Ms. Malhotra submitted  

that  it  was  well-established  through  judicial  

precedent  that  while  the  Managing  Director  or  

Deputy  Managing  Director  of  a  Company  would  be  

deemed  to  be  aware  of  actual  transactions  in  a  

given situation, the Chairman of a large company or  

a Director of a Company may not be so aware, as in  

the instant case.   

21. In this regard, Ms. Malhotra also referred to  

the provisions of the Insecticide Act, 1968, which  

by virtue of the Explanation to Rule 65 has been  

made applicable to the said Rule regarding usage of  

the expression “insecticide”, and, in particular,  

Section 33 thereof, which relates to offences so  

committed by a company.  Section 33 provides that  

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in  regard  to  offences  by  companies  a  person  

connected with the Company’s affairs could not be  

made  liable  if  he  proved  that  the  offence  was  

committed  without  his  knowledge  or  that  he  

exercised  all  due  diligence  to  prevent  such  

offence.   Ms.  Malhotra  submitted  that  from  the  

facts as revealed in the instant case, no liability  

could be foisted on the Directors of the Company  

when Somesh Dahale had been nominated under Sub-

Section (2) of Section 17 of the 1954 Act to be the  

person in-charge of and responsible to the Company  

for the conduct of its business.   

22. Mr.  K.N.  Bhat,  learned  Senior  Advocate,  who  

appeared for the State of Kerala in these appeals,  

firstly contended that Section 23 of the 1954 Act  

empowers the Central Government to make rules to  

inter alia define the laboratories where samples of  

articles of food may be analyzed by Public Analysts  

under the Act and also to define the method of  

24

analysis under Sub-section (1-A)(ee)(hh).  It was  

submitted that such a power was discretionary and  

it was for the Central Government to act on the  

basis thereof.  Accordingly, the Prevention of Food  

Adulteration Rules, 1955, were framed under Section  

23 to give effect to the provisions of the 1954  

Act.  Mr.  Bhat  submitted  that  Rule  65  of  the  

aforesaid  Rules  specifically  provide  for  

restriction on the use of insecticide and a Table  

was appended to Sub-section (2) which indicates the  

names of the insecticides, the articles of food and  

the  tolerance  limit  of  the  existence  of  such  

insecticides  in  such  food  items.   Mr.  Bhat  

submitted that while in the Table, which had been  

initially  appended  to  Sub-Rule  (2)  of  Rule  65,  

carbonated water had not been included, the said  

item  was  included  in  the  said  Table  under  Item  

No.23 dealing with Chlorpyrifos by G.S.R. 427(E)  

dated 17.6.2009.  It was submitted that it was the  

25

intention  of  the  Legislature  that  sweetened  

carbonated water should not have any insecticide  

residue  in  it  at  all,  but  a  specific  tolerance  

limit was included in order to provide a margin on  

account  of  the  use  of  various  agents  in  the  

manufacture  of  sweetened  carbonated  water.   Mr.  

Bhat urged that the submissions made on behalf of  

the Appellants in this regard that in the absence  

of any Rules framed under Section 23(1-A)(ee) and  

(hh), the methods of analysis resorted to by the  

Public  Analyst,  could  not  be  relied  upon,  was  

considered  at  length  by  the  High  Court.  

Considering  the  provisions  of  Section  23(1-A)  

(ee)(hh) of the 1954 Act, the High Court held that  

in the event the argument advanced on behalf of the  

Appellants was to be accepted, it would lead to an  

anomalous situation.  On the other hand, the High  

Court  was  of  the  view  that  the  said  provisions  

would  be  applicable  in  respect  of  certain  tests  

26

which could not be conducted and permitted to be  

conducted in every laboratory.  The non-formulation  

of Rules under Section 23(1-A)(ee)(hh) for analysis  

of carbonated beverages, could not, therefore, be  

construed as being fatal to the prosecution.   

23. Mr. Bhat then submitted that Rule 4 of the 1955  

Rules, provides for analysis of food samples and  

under  Sub-rule  (9)  provides  that  the  “Manual  of  

Method of Analysis” brought out by the Ministry of  

Health and Family Welfare, is to be adopted for  

analysing the samples of food articles.  However,  

in case no parameter is available in the manuals  

for the methods of analysis, the other methods of  

analysis  indicated  therein  are  to  be  adopted.  

Accordingly,  in  the  absence  of  any  standard  

prescribed under the existing Rules, it was open to  

the Public Analyst to resort to the DGHS method for  

analysing the sample which had been forwarded and  

the adoption of such a method was valid and had  

27

been rightly relied upon by the courts below.  In  

support of his submissions, Mr. Bhat referred to  

the decision of this Court in  Prem Ballab & Anr.  

Vs. State (Delhi Admn.) [(1977) 1 SCC 173], wherein  

this Court was called upon, inter alia, to examine  

the question as to whether an article of food could  

be  found  to  be  adulterated  under  more  than  one  

clauses of Section 2(i) of the 1954 Act in the  

context of colouring matter being used in articles  

of food. This Court held that when no colouring  

matter is permitted to be used in respect of an  

article of food, and what is prescribed in respect  

of the said article is “nil colouring matter”, it  

would be a case of adulteration within the meaning  

of Section 2(j) of the 1954 Act, if the article  

contains any colouring matter.   

24. Mr.  Bhat  submitted  that  the  question  as  to  

whether  the  insecticide  residue  found  in  the  

product of the Appellants amounted to adulteration  

28

or not, is a question which would depend to a large  

extent on the evidence to be adduced during trial  

having regard to the report of the Public Analyst  

that 0.001 mg per litre of insecticide residue had  

been  detected  in  the  sweetened  carbonated  water  

manufactured  by  the  Appellant-Company.   Learned  

counsel submitted that a prima facie case had been  

made out on behalf of the prosecution against the  

Appellants to go to trial and the same did not  

merit interference in this case under Article 136  

of the Constitution.

25. On the question of vicarious liability of the  

Directors  of  the  Company,  in  relation  to  the  

evidence  alleged  to  have  been  committed  by  the  

Company, Mr. Bhat submitted that although it had  

been held in Ram Kishan Rohtagi’s case (supra) that  

the complaint being vague as regards the Directors  

and no offence having been revealed against them,  

the High Court had not only quashed the proceedings  

29

against the Directors, it had also considered the  

question of vicarious liability, but had found that  

such liability did not extend to the Directors of  

the  Company,  who  were  not  responsible  to  the  

Company for its day-to-day business.   

26. Mr. Bhat also relied upon another decision of  

this Court in  Municipal Corporation of Delhi Vs.  

Purshotam dass Jhunjunwala & Ors. [(1983) 1 SCC 9],  

in  which  the  Chairman,  Managing  Director  and  

Director of the Mill were found to be in-charge of  

and responsible for the conduct of its business at  

the time of commission of offence and, accordingly,  

their  prayer  for  quashing  the  complaint  was  

rejected.   

27. Mr. Jaideep Gupta, learned Senior Advocate, who  

appeared  for  State  of  Kerala  in  Criminal  Appeal  

No.837 of 2010, adopted Mr. Bhat’s submissions.  

30

28. In reply to Mr. Bhat’s submissions, Mr. Chagla  

while  reiterating  his  earlier  submissions,  

contended that the submissions with regard to Rule  

65 of the 1955 Rules had been given up by the State  

of  Kerala  before  the  High  Court,  though  such  

submission was disputed by Mr. Bhat.  He also added  

that  Rule  65  deals  with  raw  products  and  not  

finished products and the decision in Prem Ballab &  

Anr.’s  case  (supra)  dealt  with  the  addition  of  

colour to a food article which has no relevance as  

far as the facts of these Appeals are concerned,  

since it is not the case of the prosecution that  

any  insecticide  had  been  directly  introduced  in  

sweetened  carbonated  water  manufactured  by  the  

Company.

29. From  the  submissions  made  on  behalf  of  the  

respective parties, it is apparent that the width  

of the dispute to be settled in these Appeals is  

not very wide.  We are only required to consider as  

31

to whether the presence of 0.001 mg of Carbofuran  

per litre found in the sweetened carbonated water,  

manufactured by the Appellant-Company, can be said  

to be adulterated as per Rule 65 of the 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.

30. The Public Analyst found the sample of Pepsi to  

be  covered  by  the  definition  of  non-alcoholic  

beverages  defined  in  Appendix-B,  as  prescribed  

under Rule 5 of the 1955 Rules.  Item A.01 deals  

with  non-alcoholic  beverages  and  Item  A.01.01  

defines carbonated water to mean water conforming  

to the standards prescribed for Packaged Drinking  

Water  under  the  Prevention  of  Food  Adulteration  

Rules, 1955, impregnated with carbon dioxide under  

pressure  which  may  contain  any  of  the  agents  

mentioned  thereunder  singly  or  in  combination.  

32

Having found the sample of Pepsi to fall within the  

definition of non-alcoholic beverages, the Public  

Analyst by using the DGHS method found traces of  

0.001 mg of Carbofuran per litre in the said sample  

of Pepsi and in the absence of any given standard,  

was of the opinion that the same was adulterated in  

terms of Rule 65 of the 1955 Rules and Section  

2(ia)(h)  of  the  1954  Act.   Although,  carbonated  

water  was  not  included  in  the  original  Table  

appended to Rule 65 of the 1955 Rules, as stated  

hereinbefore, it was introduced in Item 23 of the  

Table under the heading “Chlorpyrifos” with effect  

from 17th June, 2009, and the tolerance limit of the  

presence of insecticide residue was prescribed as  

0.001 mg/litre, which, in fact, was the amount of  

insecticide residue found by the Public Analyst in  

the sample of Pepsi submitted for such analysis.

31. Ordinarily,  since  the  level  of  insecticide  

residue  was  within  the  limits  of  tolerance  

33

prescribed for carbonated water with effect from  

17th June,  2009,  the  same  would  not  attract  the  

provisions of Section 2(m) of the 1954 Act or the  

consequences thereof, but the finding of the Public  

Analyst was rendered in the year 2006, at a time  

when sweetened carbonated water was not included in  

the  Table  appended  to  Rule  65(2).   After  the  

tolerance limit was prescribed, the sample of Pepsi  

could not be said to be adulterated being within  

the prescribed tolerance limit.   

32. The entire controversy arises out of the 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  

the final product.  In fact, the High Court, while  

considering the matter, seems to have misconstrued  

the submissions made on behalf of the Appellants  

that the mere presence of insecticide residue does  

34

not  render  the  article  of  food  as  being  

adulterated.  The presence of insecticides within  

the  limits  prescribed  in  the  Table  to  Rule  65  

cannot,  therefore,  be  said  to  have  caused  

adulteration of the article of food in question.  

In  fact,  in  paragraph  21  of  its  judgment,  the  

learned  Single  Judge  of  the  High  Court  observed  

that  he  was  inclined  to  agree  with  the  learned  

counsel for the Petitioners that the mere presence  

of insecticide residue could not ipso facto justify  

the conclusion that the article of food has become  

injurious to health.      

  33. The High Court summarised its view into several  

grounds of challenge. Grounds 1 and 2 relate to  

the non-framing of Rules under Section 23(1-A)  

(ee) and (hh) of the 1954 Act.  Grounds 3, 4  

and 5 deal with the challenge thrown on behalf  

of the Appellants to the submissions that the  

report of the Public Analyst was not final and  

35

that the same could be challenged under Section  

13(2) of the said Act.  Ground 6 deals with the  

criminal  liability  of  the  Directors  of  the  

Company on account of the allegations against  

the Company.

34. As far as Grounds 1 and 2 are concerned, the  

High Court was not convinced with the submission  

made  on  behalf  of  the  appellants  that  in  the  

absence of any prescribed and validated method of  

analysis under Section 23(1-A)(ee) and (hh) of the  

1954 Act, the report of the Public Analyst, who had  

used the DGHS method, could not be relied upon,  

especially when even the Laboratories, where the  

test for detection of insecticides and pesticides  

in an article of food could be undertaken, had not  

been specified.  The observation of the Division  

Bench of the High Court that if the submissions  

made on behalf of the Appellants herein were to be  

accepted, the mechanism of the Act and the Rules  

36

framed thereunder would come to a grinding halt, is  

not acceptable to us, since the same could lead to  

a pick and choose method to suit the prosecution.  

However, in any event, the percentage of Carbofuran  

detected in the sample of Pepsico which was sent  

for  examination  to  the  Forensic  Laboratory  is  

within  the  tolerance  limits  prescribed  for  

Sweetened  Carbonated  Water  with  effect  from  17th  

June, 2009.

35. The High Court also misconstrued the provisions  

of Section 23(1-A)(ee) and (hh) in holding that the  

same were basically enabling provisions and were  

not mandatory and could, in any event, be solved by  

the 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  the  non-

formulation of Rules under the aforesaid provisions  

37

of the 1954 Act could not be said to be fatal for  

the prosecution.  

36. As far as Grounds 3, 4 and 5 are concerned, the  

High Court failed to consider the reasons given on  

behalf  of  the  Appellants  for  not  sending  the  

Company’s sample to the Forensic Laboratory, to the  

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. In our view, no useful purpose could have  

been served by sending the second sample to the  

Forensic  Laboratory,  unless  a  defined  tolerance  

limit  of  the  presence  of  the  pesticides  was  

available in regard to Sweetened Carbonated Water.  

It may be noted that the High Court had itself  

observed that mere presence of insecticide residue  

to any extent could not justify an allegation that  

38

the article of food was adulterated, but contrary  

to such observation, the High Court went on to hold  

that the Sweetened Carbonated Water manufactured by  

the Appellants was adulterated within the meaning  

of Section 2(ia)(h) of the 1954 Act.

37. On the question of liability of the Directors  

of the Company with respect to an offence alleged  

to have been committed by the Company, the High  

Court went beyond the ratio of the decision of this  

Court in S.M.S. Pharmaceuticals Ltd.’s case (supra)  

upon holding that the principles set out in the  

said  decision  could  not  be  understood  in  any  

mechanical  or  rigid  manner.   Instead,  the  High  

Court based its judgment on the decision of this  

Court  in  N.  Rangachari Vs.  Bharat  Sanchar  Nigam  

Ltd. [(2007) 5 SCC 108], which was a case where the  

complaint  clearly  and  categorically  alleged  that  

the  named  Directors  were  in  charge  of  and  

responsible to the Company for the conduct of its  

39

business.  It is in such circumstances that the  

prayer  for  quashing  of  the  proceedings  was  

rejected.    

38. Both the questions regarding the failure of the  

Central  Government  to  frame  Rules  to  define  the  

Laboratories,  where  samples  of  food  could  be  

analysed by the Public Analyst, or to define the  

validated methods of analysis and the liability of  

the Directors, who are the Appellants before us,  

are of great importance for the purpose of bringing  

home a charge against the accused for violation of  

the provisions of Rule 65 of the 1955 Rules and  

Section 2(ia)(h) of the 1954 Act and for holding  

that the Sweetened Carbonated Water manufactured by  

the Appellants was adulterated in terms of the said  

Rules.   Since the range indicated as to the limits  

of  tolerance  of  the  presence  of  pesticides  in  

different  articles  of  food,  including  Sweetened  

Carbonated Water, which was included in the Table  

40

appended to Rule 65(2) with effect from 17th  June,  

2009, provides very little or practically no margin  

for error, the selection of Laboratories and the  

prescription  of  tolerance  limits  for  different  

articles of food acquires great significance.   The  

High Court does not appear to have considered the  

implications  of  the  failure  of  the  Central  

Government  to  frame  Rules  for  the  aforesaid  

purpose.  Even the view taken by the High Court  

with  regard  to  Grounds  3,  4  and  5  is  not  very  

satisfactory,  as  the  mere  presence  of  pesticide  

residue does not  ipso facto render the article of  

food  adulterated.   Tolerance  limits  have  been  

prescribed in the Table for this very purpose and  

the  subsequent  inclusion  of  Sweetened  Carbonated  

Water seems to indicate so and leans more in favour  

of the Appellants.  The High Court also appears to  

have  overlooked  the  fact  that  the  percentage  of  

pesticides  found  by  the  Public  Analyst  in  the  

41

Sweetened  Carbonated  Water  manufactured  by  the  

Appellants  was  within  the  tolerance  limits  

subsequently prescribed in respect of such product.

39.   As mentioned hereinbefore, the High Court  

erred  in  giving  its  own  interpretation  to  the  

decision of this Court in  S.M.S. Pharmaceuticals  

Ltd.’s  case  (supra),  which  was  reiterated  

subsequently in several judgments, some of which  

have  been  indicated  hereinabove,  and  relying  

instead  on  the  decision  of  Rangachari’s  case  

(supra), the facts of which were entirely different  

from  the  facts  of  this  case.   It  is  now  well  

established that 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.  A mere bald statement  

42

that a person was a Director of the Company against  

which  certain  allegations  had  been  made  is  not  

sufficient  to  make  such  Director  liable  in  the  

absence of any specific allegations regarding his  

role in the management of the Company.   

40. It has to be kept in mind that although an  

argument  was  advanced  with  regard  to  the  

restrictions  imposed  on  the  use  of  insecticides  

under Rule 65 of the 1955 Rules, it is apparent  

from the order of the learned Single Judge that  

such a ground was given up by the respondents and  

the arguments were confined only with regard to the  

alleged violation of Section 2(ia)(h) of the 1954  

Act.  

41. Having considered the matter in its totality  

and  also  having  regard  to  the  fact  that  Somesh  

Dahale had been nominated under Sub-section (2) of  

Section 17 of the 1954 Act to be a person in charge  

43

of and responsible to the Company for the conduct  

of  its  business,  we  are  of  the  view  that  the  

Appeals have to be allowed.   

42. We,  accordingly,  allow  the  appeals  and  set  

aside the judgment and order of the learned Single  

Judge impugned in these proceedings and quash the  

prosecution  of  the  Appellants  in  respect  of  the  

various complaints challenged before the High Court  

in its inherent jurisdiction.  

…………………………………………J. ALTAMAS KABIR)

…………………………………………J.   (CYRIAC JOSEPH)

…………………………………………J. (DEEPAK VERMA)

New Delhi Dated:18.11.2010

44