REPORTABLE

IN THE SUPREME COURT OF INDIA

CRIMINAL APPELLATE JURISDICTION

CRIMINAL APPEAL NO.  1380      OF 2010 Arising out of SLP (Crl.) No. 7739 of 2008

State of NCT of Delhi  Through Prosecuting Officer,  Insecticides, Government of NCT,  Delhi         .. Appellant

Versus

Rajiv Khurana     .. Respondent

J U D G M E N T

DALVEER BHANDARI, J.

1. Leave granted.

2. This  appeal  has  been  filed  by  the  appellant  State  of  

National Capital Territory of Delhi against the judgment of the  

High Court of Delhi dated 2.1.2008 in Criminal Miscellaneous  

Case No. 2639 of 2006 whereby the High Court has quashed  

the summons issued by the trial court.

3. The  appellant  submitted  that  the  Company  had  

specifically stated in its letter dated 19.1.2000 that respondent

Rajiv Khurana was the Regional Technical Director handling  

the quality control in the company.   The relevant portion of  

the said letter is reproduced as under:

“We shall be happy to cooperate with you in all such  quality  issues  about  our  Mortem  product  range.  Our  quality  control  is  handled  by  Mr.  Rajeev  Khurana, Regional Technical Director.”

4. It  is  submitted that section 33 of  the  Insecticides Act,  

1968 provides that:

“33.Offences  by  companies.-(1)Whenever  an  offence  under  this  Act  has  been  committed  by  a  company,  every  person  who  at  the  time  of  the  offence  was  committed  was  in  charge  of,  or  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 offence 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  under  this  Act  if  he  proves  that  the  offence  was  committed  without  his  knowledge  or  that  he  exercised all  due diligence  to  prevent  the  commission of such offence.        (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 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  

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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 form, means  a partner in the firm.”

5. The appellant  also  submitted  that  the  respondent  was  

the person responsible for the quality of the product which has  

not been found conformed to the prescribed ISI specification.  

The  appellant  further  submitted  that  the  company  

communicated  to  the  appellant  that  the  respondent  was  

responsible for the quality of the product.  In this view of the  

matter,  the  High  Court  was  not  justified  in  allowing  the  

petition filed by the respondent under section 482 of the Code  

of Criminal Procedure.

6. According  to  the  respondent,  under  section  33  of  the  

Insecticides Act, 1968 the liability cannot be fastened on the  

respondent.   According  to  him,  the  offence,  if  any,  was  

committed by the Company M/s. Reckitt & Colman of India  

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Limited.  The Company continues to face the prosecution but  

according to the facts of this case the respondent cannot be  

summoned by the court because he was not responsible or in  

charge of the affairs of the company.  It was also submitted by  

the respondent that it was the bounden duty of the Magistrate  

to  ensure  that  the  process  was  issued  only  against  whom  

there were specific allegations in the complaint.  

7. The respondent placed reliance on the judgment of this  

Court in  S.M.S. Pharmaceuticals Ltd. v.  Neeta Bhalla &  

Another (2005) 8 SCC 89.  

8. The  respondent  further  submitted  that  the  complaint  

filed by the appellant before the trial court was sought to make  

the  respondent  vicariously  liable  under  section  33  of  the  

Insecticides Act, 1968 for the alleged offence under section 29  

of  the  Act,  whereas  no  role  has  been  ascribed  to  the  

respondent by the appellant  towards the commission of  the  

alleged offence.   It was also submitted that the appellant has  

also failed to establish that the respondent was the Director or  

the  Manager  or  the  Secretary  or  any  other  officer  of  the  

company in any way responsible or in charge of the affairs of  

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the company, to be vicariously  liable  for  the alleged offence  

stated  to  have  been  committed  by  the  company.  The  

respondent  submitted  that  in  the  absence  of  such  specific  

averments, the learned Magistrate was not justified in issuing  

the  summoning  order  against  the  respondent.  It  was  also  

submitted  that  the  provision  of  vicarious  liability  is  an  

exception to the normal rule of criminal jurisprudence and no  

one is to be held criminally liable for an act of another.  Such  

exception  is  carved  out  by  specific  insertion  in  statues  

extending criminal liability to others.   

9. According to the respondent, section 33(1) has three tests  

namely : (a) a person being in charge, (b) responsible for day to  

day  affairs  of  the  company;  and  (c)  at  the  time  when  the  

offence was committed.   

10. The respondent  further  submitted that mere naming a  

person in the title of a complaint even as a partner of a firm  

(although under  the  Partnership  Act,  each partner  is  liable  

under  section  25),  does  not  satisfy  the  test  of  the  deeming  

provision  contained  in  section  141(1)  of  the  Negotiable  

Instruments Act, 1881 which is  para materia to section 33(1)  

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of the Insecticides Act, 1968 as held by this court in Monaben  

Ketanbhai Shah & Another v.  State of Gujarat & Others  

(2004) 7 SCC 15.   In the said case,  this court observed as  

under:-

“…..The  primary  responsibility  is  on  the  complainant  to  make  necessary  averments  in  the  complaint  so  as  to  make  the  accused  vicariously  liable.  For fastening the criminal  liability,  there is  no presumption that every partner knows about the  transaction.  The  obligation  of  the  appellants  to  prove that at the time the offence was committed  they were not in charge of and were not responsible  to the firm for the conduct of the business of the  firm, would arise only when first  the complainant  makes  necessary averments in  the  complaint  and  establishes  that  fact.  The present  case  is  of  total  absence of requisite averments in the complaint.”

11. The respondent submitted that sub-section (2) of section  

33 of the Insecticides Act, 1968 makes “other officers” liable,  

but that is essential liability not to the position and control of  

the company at the time of commission of the offence as in  

sub-section (1), but to the specific act of consent, connivance  

and  negligence,  which  need  to  be  met  and  in  that  sense  

distinguishable  from  sub-section  (1)  of  section  33  of  the  

Insecticides Act, 1968.    

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12. In  Municipal  Corporation  of  Delhi v.  Ram  Kishan  

Rohtagi  &  Others  (1983)  1  SCC  1,  the  Food  Inspector,  

Municipal  Corporation  filed  a  complaint  before  the  

Metropolitan  Magistrate  against  the  respondents  alleging  

commission of offence under Sections 5/7, Prevention of Food  

Adulteration Act as the sample of food article (Morton toffees)  

manufactured by the Company (respondent 5) had been found  

by the Public  Analyst to be not of  the prescribed standard.  

The  Inspector  alleged  in  the  complaint  that  the  accused-

respondents  were  Manager  (respondent  1)  and  Directors  

(respondent 2 to 4) of  the Company (respondent 5)  “and as  

such they were incharge of and responsible for the conduct of  

business of accused 2 (the Company) at the time of sampling”.  

Pursuant  to  the  complaint  the  proceedings  against  the  

respondents were commenced.  But the High Court quashed  

the  proceedings  against  all  the  respondents  under  Section  

482, Cr.P.C. on the ground that the complaint did not disclose  

any offence.  

13. In State of Haryana v. Brij Lal Mittal & Others (1998)  

5 SCC 343, it was held that the vicarious liability of a person  

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for being prosecuted for an offence committed under the Act  

by a company arises if at the material time he was incharge of  

and was also responsible to the company for the conduct of its  

business.  Simply  because  a  person  is  a  director  of  the  

company it does not necessarily mean that he fulfils both the  

above  requirements  so  as  to  make  him  liable.  Conversely,  

without  being  a  director  a  person  can  be  incharge  of  and  

responsible to the company for the conduct of its business.  

From the complaint in question we, however, find that except  

a bald statement that the respondents were directors of the  

manufacturers, there is no other allegation to indicate, even  

prima facie, that they were incharge of the company and also  

responsible to the company for the conduct of its business

14. K.P.G.  Nair v.  Jindal  Menthol  India  Ltd. (2001)  10  

SCC  218  was  a  case  of  this  court  under  the  Negotiable  

Instruments Act, 1881 and it was found that the allegations in  

the complaint did not either in express words or with reference  

to the allegations contained therein make out a case that at  

the  time of  commission of  the  offence the appellant  was in  

charge of and was responsible to the company for the conduct  

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of its business. It was held that the requirements of Section  

141 of the Negotiable Instruments Act, 1881 were not met and  

the  complaint  against  the  accused was quashed.  The  same  

view has been taken in Katta Sujatha (Smt.) v. Fertilizers &  

Chemicals Travancore Ltd. & Another  (2002) 7 SCC 655.

15. The  respondent  placed  reliance  on  the  case  of  S.M.S.  

Pharmaceuticals Ltd. (supra),  wherein this Court has held  

as under:

“19. In  view  of  the  above  discussion,  our  answers to the questions posed in the reference are  as under:

(a)  It  is  necessary  to  specifically  aver  in  a  complaint under Section 141 that at the time the  offence was committed, the person accused was in  charge  of,  and  responsible  for  the  conduct  of  business  of  the  company.  This  averment  is  an  essential requirement of Section 141 and has to be  made in a complaint. Without this averment being  made in a complaint,  the requirements of Section  141 cannot be said to be satisfied.

(b) The answer to the question posed in sub- para (b)  has to be in the negative. Merely being a  director of a company is not sufficient to make the  person  liable  under  Section  141  of  the  Act.  A  director in a company cannot be deemed to be in  charge of and responsible to the company for the  conduct of its business. The requirement of Section  141  is  that  the  person sought  to  be  made  liable  should  be  in  charge  of  and  responsible  for  the  conduct  of  the  business  of  the  company  at  the  relevant time. This has to be averred as a fact as  

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there  is  no  deemed liability  of  a  director  in  such  cases.

(c) The answer to Question (c) has to be in the  affirmative.  The question notes that the managing  director  or  joint  managing  director  would  be  admittedly  in  charge  of  the  company  and  responsible to the company for the conduct of its  business. When that is so, holders of such positions  in a company become liable under Section 141 of  the  Act.  By  virtue  of  the  office  they  hold  as  managing director or joint managing director, these  persons  are  in  charge  of  and  responsible  for  the  conduct of business of the company. Therefore, they  get  covered  under  Section  141.  So  far  as  the  signatory  of  a  cheque  which  is  dishonoured  is  concerned,  he  is  clearly  responsible  for  the  incriminating  act  and will  be  covered under  sub- section (2) of Section 141.”

16. In  Sabitha  Ramamurthy  and  Another v.  R.B.S.  

Channabasavaradhya (2006)  10  SCC 581  this  court  held  

there was absence of requisite averments in the complaint not  

containing any statement that the appellants were in charge of  

the  business  of  the  company  at  the  material  time.   The  

statement of witness also did not specifically allege that the  

appellants were in charge of the business of the company. This  

Court held that requirement of section 141 of the Negotiable  

Instruments Act was not complied with and the complaint was  

liable to be quashed.

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17. In K.K. Ahuja v. V.K. Vora and Another (2009) 10 SCC  

48, this court observed that the averment in a complaint that  

an accused is a director and that he is in charge of and is  

responsible to the company for the conduct of the business of  

the company, duly affirmed in the sworn statement, may be  

sufficient for the purpose of issuing summons to him. But if  

the  accused is  not  one  of  the  persons who falls  under  the  

category of 'persons who are responsible to the company for  

the conduct of the business of the company', then merely by  

stating that 'he was in charge of the business of the company'  

or  by  stating  that  'he  was  in  charge  of  the  day  to  day  

management  of  the  company'  or  by  stating  that  he  was  in  

charge of, and was responsible to the company for the conduct  

of  the  business  of  the  company',  he  cannot  be  made  

vicariously liable under Section 141(1) of the Act.

18. The ratio  of  all  these cases is  that  the  complainant  is  

required  to  state  in  the  complaint  how  a  Director  who  is  

sought to be made an accused, was in charge of the business  

of the company or responsible for the conduct of company’s  

business.  Every Director need not be and is not in charge of  

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the business of the company. If that is the position with regard  

to a Director, it is needless to emphasise that in the case of  

non-Director officers, there is all the more necessary to state  

what  were his  duties  and responsibilities  in  the  conduct of  

business of the company and how and in what manner he is  

responsible or liable.

19. In K.K. Ahuja’s case (supra) the court summarized the  

position under section 141 of the Act as under:-

(i) If the accused is the Managing Director or a  Joint Managing Director, it is not necessary to make  an averment in the complaint that he is in charge  of,  and  is  responsible  to  the  company,  for  the  conduct  of  the  business  of  the  company.  It  is  sufficient if an averment is made that the accused  was  the  Managing  Director  or  Joint  Managing  Director  at  the relevant time.  This is  because the  prefix  “Managing”  to the word “Director”  makes it  clear that they were in charge of and are responsible  to the company, for the conduct of the business of  the company.

(ii) In the case of a Director or an officer of the  company who signed the cheque on behalf  of  the  company,  there  is  no  need  to  make  a  specific  averment  that  he  was  in  charge  of  and  was  responsible to the company, for the conduct of the  business  of  the  company  or  make  any  specific  allegation about consent, connivance or negligence.  The  very  fact  that  the  dishonoured  cheque  was  signed by him on behalf of the company, would give  rise  to  responsibility  under  sub-section  (2)  of  Section 141.

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(iii)  In  the  case  of  a  Director,  secretary  or  manager  [as  defined  in  Section  2(24)  of  the  Companies Act] or a person referred to in clauses (e)  and  (f)  of  Section  5  of  the  Companies  Act,  an  averment in the complaint that he was in charge of,  and  was  responsible  to  the  company,  for  the  conduct  of  the  business  of  the  company  is  necessary to bring the case under Section 141(1) of  the Act. No further averment would be necessary in  the  complaint,  though  some  particulars  will  be  desirable.  They  can  also  be  made  liable  under  Section  141(2)  by  making  necessary  averments  relating to consent and connivance or negligence, in  the complaint, to bring the matter under that sub- section.

(iv)  Other  officers  of  a  company  cannot  be  made liable  under  sub-section (1)  of  Section  141.  Other officers of a company can be made liable only  under sub-section (2) of Section 141, by averring in  the  complaint  their  position  and  duties  in  the  company and their role in regard to the issue and  dishonour  of  the  cheque,  disclosing  consent,  connivance or negligence.

20. The court further observed that the trauma, harassment  

and hardship of the criminal proceedings in such cases may  

be more serious than the ultimate punishment, it is not proper  

to subject  all  and sundry to be impleaded as accused in a  

complaint against a company, even when the requirements of  

section 138 read with section 141 of the Act are not fulfilled.

21. The  legal  position  which  emerges  from  a  series  of  

judgments  is  clear  and  consistent  that  it  is  imperative  to  

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specifically  aver  in  the  complaint  that  the  accused  was  in  

charge of and was responsible for the conduct of business of  

the  company.  Unless  clear  averments  are  specifically  

incorporated  in  the  complaint,  the  respondent  cannot  be  

compelled to face the rigmarole of a criminal trial.  

 22. In  view  of  clear  legal  position,  we  do  not  find  any  

infirmity in the impugned judgment.  This appeal being devoid  

of any merit is accordingly dismissed.

.……………………………J.                                                       (Dalveer Bhandari)

…………………………….J.                                                     (K. S. Radhakrishnan)

New Delhi; July 30, 2010

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