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PETITIONER: SHEORATAN AGARWAL & ANOTHER

       Vs.

RESPONDENT: STATE OF MADHYA PRADESH

DATE OF JUDGMENT12/09/1984

BENCH: REDDY, O. CHINNAPPA (J) BENCH: REDDY, O. CHINNAPPA (J) MADON, D.P.

CITATION:  1984 AIR 1824            1985 SCR  (1) 719  1984 SCC  (4) 352        1984 SCALE  (2)362

ACT:      Essential    Commodities    Act,    1955-Section    10- Interpretation of-Company  contravening an  order made under s.3-Whether the  person  in-charge  or  an  officer  of  the company at  the relevant period can be prosecuted separately without prosecuting the company.

HEADNOTE:      The two  appellants, who were the Managing Director and the Production-Manager  of a  public limited  company,  were prosecuted by the respondent for alleged violations by their company of  clauses 2  (c) (i)  and 3  of the Madhya Pradesh Pulses, Edible  Oil Seeds  and Edible  Oil Dealers Licensing Order, 1977  and clause  3 of  the Madhya  Pradesh Essential Commodities (Price Exhibition and Price Control) Order, 1977 read with  sections 3 and 7 of the Essential Commodities Act (the Act,  for short).  The appellants  moved the High Court under sections 397 and 482 of the Code of Criminal Procedure to quash  the proceedings  against them  on the  ground that they could  not, in  law, be  prosecuted unless  the company itself  was  prosecuted.  The  High  Court  over-ruled  this contention and hence these appeals by special leave.           Dismissing the appeals, ^      HELD: 1.  Section 10  of the  Act lists the persons who may be  held guilty  and punished  when it is a company that contravenes an  order made  under Section 3 of the Act. They are: (1)  the company  itself (2)  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,  that is,  the person-in-charge of the company,  and (3)  any director,  manager, secretary  or other  officers   of  the  company  with  whose  consent  or connivance or  because of  neglect attributable  to whom the offence has  been committed,  that is,  an  officer  of  the company. [722C-F]      2. It  is clear  from the  language of  Section 10 that there is  no statutory  compulsion that the person-in-charge or an officer of the company may not be prosecuted unless he be ranged  alongside the company itself. Each or any of them may be  separately prosecuted  or along  with the company if there is a contravention of an order made under Section 3 of

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the Act  by the  company. It  does no lay down any condition that the person-in-charge or an officer of 720 the company  may not be separately prosecuted if the company itself is  not prosecuted. Therefore the prosecutions of the appellants are  maintainable and  that there  is nothing  in Section 10 of the Act which bars such prosecution                                              [722 G,H, 723F]      State of  Madras v  C.V. Parekh  and another,  AIR 1971 S.C. 447,  State of Gujarat v. Chandulal Jethalal, (1980) 21 Gujarat Law  Reporter 353,  Mirji Brothers Oil Mill v. State of Karnataka,  1980 (2)  Karnataka Law  Journal 35 and Santi Kumar   Agarwala   v.   State,   ILR.   1975   Cuttack   86, distinguished.      Durgamata Oil  Mill v. Calcutta Municipality, 1978 Crl. L.J. 222,  D.K. Jain v. State, AIR 1965 All. 525 and Chander Bhan v.  The  State,  1975  All  India  Prevention  of  Food Adulteration, held inapplicable.

JUDGMENT:      CRIMINAL APPELLATE  JURISDICTION: Criminal  Appeal Nos. 452-453 of 1984.      Appeals by  Special leave  from the  Judgment and Order dated the 1st July, 1983 of the Madhya Pradesh High Court in Criminal Revision  No. 105  of 1983  and Misc. Crl. Case No. 366 of 1983.      S.T. Desai,  M.S. Ganesh  and S.C.  Dagadiya,  for  the appellants.      Ravindra Bana and A.K. Sanghi for the respondents.      The Judgement of the Court was delivered by      CHINNAPPA REDDY, J. Special Leave granted.      A complaint  was laid  by the  State of  Madhya Pradesh through  the  Inspector,  Food  and  Civil  Supplies,  Dewas against  the   two   petitioners   Sheoratan   Agarwal   and Raghunandanlal Chaturvedi,  the Managing  Director  and  the Production Manager  of M/s  5-S Limited,  a  public  Limited Company with  its registered office at Calcutta, for alleged violations of  clause 2  (c)(i) and  3 of the Madhya Pradesh Pulses, Edible  Oil Seeds  and Edible  Oil Dealers Licensing Order, 1977  and clause  3 of  the Madhya  Pradesh Essential Commodities (Price Exhibition and Price Control) Order, 1977 read with sections 3 and 7 of the Essential Commodities Act. The petitioners moved the High Court of Madhya Pradesh under sections 397  and 482  of the  Code of Criminal Procedure to quash the  Proceedings against  them on the ground that they could not,  in law,  be prosecuted unless the Company itself was prosecuted.  The High  Court  overruled  the  contention raised on behalf of the petitioners. Hence these two appeals by Special Leave under Article 136 of the Constitution. 721      Shri S.T.  Desai, learned  counsel for the petitioners, urged the  same  contention  before  us,  relying  for  that purpose  upon  the  language  of  s.  10  of  the  Essential Commodities Act,  and the decision of this Court in State of Madras v.  C. V. Parekh and another and the decision of some High Courts:  State of  Gujarat v. Chandulal Jethalal, Mirji Brothers  Oil  Mill  v.  State  of  Karnataka,  Santi  Kumar Agarwala v. State.      We do  not think  that the  language of  s. 10  of  the Essential Commodities  Act justifies  the submission made on behalf of  the petitioners  that if  it is  alleged that the person contravening  the  order  made  under  the  Essential Commodities  Act  is  a  Company,  the  prosecution  of  the

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Directors, the  officers, and  servants of  the  Company  or other persons  is precluded  unless the  Company  itself  is prosecuted. We  are afraid  the submission made on behalf of the petitioners  proceeds upon  a  misunderstanding  of  the decision of  this Court  in State  of Madras v. C.V. Parekh. (supra). So  do the  various other  decisions of High Courts cited before us.      Section 10  of the  Essential  Commodities  Act  is  as follows:           "(1) If  the person  contravening  an  order  made      under Sec.  3 is  a company,  every person  who, at the      time the contravention was committed, was in charge of,      and was responsible to, 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  any      punishment if  he proves  that the  contravention  took      place without  his knowledge  or that  he exercised all      due diligence to prevent such contravention.           (2) Notwithstanding  anything  contained  in  sub-      section (1),  where an  offence under this Act has been      committed by  a company  and  it  is  proved  that  the      offence  has   been  committed   with  the  consent  or      connivance of, or is attributable 722      to any  neglect on  the 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 purpose 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." The Section  appears to  our mind to be plain enough. If the contravention of  the order  made under  Section 3  is by  a Company, the persons who may be held guilty and punished are (1) the Company itself (2) 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 whom  for short  we shall  describe  as  the person-in-charge of  the  Company,  and  (3)  any  director, manager, secretary  or other  officer of  the  Company  with whose  consent   or  connivance   or  because   of   neglect attributable to  whom the  offence has  been committed, whom for short  we shall  describe as  an officer of the Company. Any one  or more  or all  of  them  may  be  prosecuted  and punished. The  Company alone  may be prosecuted. The person- in-charge only  may be prosecuted. The conniving officer may individually  be   prosecuted.  One,  some  or  all  may  be prosecuted.  There  is  no  statutory  compulsion  that  the person-in-charge or  an officer  of the  Company may  not be prosecuted unless he be ranged alongside the Company itself. Section 10 indicates the persons who may be prosecuted where the contravention  is made  by the  Company. It does not lay down any  condition that  the person-in-charge or an officer of the  Company may  not be  separately  prosecuted  if  the Company itself is not prosecuted. Each or any of them may be separately prosecuted  or alongwith  the Company. Section 10 lists the person who may be held guilty and punished when it is a  Company that contravenes an order made under Section 3 of the  Essential Commodities  Act.  Naturally,  before  the

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person in-charge or an officer of the Company is held guilty in that  capacity it must be established that there has been a contravention  of the order by the Company. That should be axiomatic and  that is all that the Court laid down in State of Madras  v. C.  V. Parekh  (supra) as a careful reading of that case will show and 723 not that  the person-in-charge  or an officer of the Company must be  arraigned simultaneously  along with the Company if he is  to  be  found  guilty  and  punished.  The  following observations made by the Court clearly bring out the view of the Court:-      "It was  urged that  the two respondents were in charge      of, and  were  responsible  to,  the  company  for  the      conduct  of   the  business   of   the   Company   and,      consequently, they  must be  held responsible  for  the      sale and for thus contravening the provisions of clause      5 of  the Iron and Steel (Control) order. This argument      cannot  be  accepted,  because  it  ignores  the  first      condition for  the applicability of S. 10 to the effect      that the  person  contravening  the  order  must  be  a      company itself.  In  the  present  case,  there  is  no      finding either  by the  Magistrate OR by the High Court      that the  sale in  convention of clause 5 of the Iron &      Steel (Control) order was made by the Company. In fact,      the Company  was not  charged with  the offence at all.      The liability  of the  persons in charge of the Company      only arises  when the  contravention is  by the Company      itself. Since,  in this  case, there is no evidence and      no finding  that the  Company contravened  Cl. 5 of the      Iron & Steel (Control), order the two respondents could      not be  held responsible.  The actual contravention was      by Kamdar and Villabhadas Thacker and any contravention      by  them   would  not   fasten  responsibility  on  the      respondents."      The sentences  underscored by us clearly show that what sought to  be emphasised  was that there should be a finding that the contravention was by the Company before the accused could be  convicted and  not that  the Company itself should have  been   prosecuted  along  with  the  accused.  We  are therefore clearly  of the  view that  the  prosecutions  are maintainable and  that there is nothing in section 10 of the Essential Commodities Act which bars such prosecutions.      The learned  counsel also  invited our attention to the decisions in  Durgamata Oil  Mill v.  Calcutta Municipality, D.K. Jain  v. State  and Chander  Bhan v. The State. None of these cases  has  any  application.  They  arose  under  the Prevention of  Food Adulteration  Act and  it is unnecessary for us to consider them. The appeals are rejected. M.L.A.    Appeals dismissed. 724