REPORTABLE

               IN THE SUPREME COURT OF INDIA CRIMINAL  APPELLATE JURISDICTION

CRIMINAL  APPEAL NO. 1962  OF 2008 (Arising out of S.L.P. (Crl) No.3878/2004)

    Tamil Nadu Electricity Board ...Appellant

Versus      M/s Rasipuram Textile(P) Ltd. ...Respondents   

            & Ors.

O  R  D  E  R

Leave granted.

1. One Executive Engineer of the Tamil Nadu State Electricity Board made a

surprise  inspection  of  the  premises  of  first  respondent  -Rasipuram  Textile  Mills.

Allegedly, theft of electrical energy was detected.  

2. A criminal prosecution was lodged not only against the company but also

against its Managing Director and other Directors purported to under Section 39(1)

and 44(1)(c) of the Indian Electricity Act, 1910.

3. Learned  trial  Judge,  recorded  a  judgment  of  conviction  against  the

accused.  So far as  the  Directors  of  the  Company are concerned,  the  learned trial

Judge  convicted  despite  noticing   the  provisions  contained  in  Section  49A of  the

Indian Electricity Act, 1910, observing:

"From  the  above,  it  is  clear  that,  all  the  persons  responsible  for  the administration of a company are liable for the offence committed by the Company. If anybody disowns the liability and claims it has happened without his knowledge or despite the sincere efforts the offence has been committed, then it is for the concerned accused  to  prove  the  same.  On  this  basis,  the  Managing  Director  and  the  other Directors A2 to A 10 were also included being the responsible

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persons of A! Mill. A 11 was included as Electrical Supervisor and A 12 as Spinning Master and A 13 as Electrical Helper were included by P.W.8 Thiru Jayachandran in the final report".

4. Indisputably,  the Managing Director of the company - R. Nainamalai as

also another Director of the company R. Palanivel Goundar expired during  pendency

of the said proceedings.

5. Learned  Additional  District  and  Sessions  Judge,while  setting  aside

judgment of the trial Court,categorically, held as under:

"  13.  That  the  petitioner  2  to  8  only  Directors  of  the  Mill  and  the prosecution has not alleged that the petitioner is in charge of and was responsible to the accused No.1 Mill for the conduct of the business of the Mill and the records of Investigation also did not show that the petitioner was or had been participating in the  day  to  day  affairs  of  the  Mill  and  the  mere  fact  that  the  petitioner  was  the Director of the accused No.1 Mill would not be sufficient to fasten criminal liability on him and the he relies on the decision of this Court in P. Jeyanthi V. State, rep. by Sub- Inspector of Police(Crimes), Maduravoyal Police Station,Chingleput District 1990 law Weekly Criminal 398. Under Section 49A of the Act, the onus is on the prosecution to establish that every person, who at the time of the offence was committed, was in charge of and was responsible to the company for the conduct of the business of the Company, before liability could be fastened. Once the initial onus of the prosecution is discharged, then the burden shifts to the other person to prove that the offence was committed  without  his  knowledge  or  that  he  had  exercised  due  diligence  for prevention of commission of the offence.

14. The service connection 89 stands in the name of the Managing Director Ninamalai. In the final report it has been stated that 2 to 8 accused are directors of the No.1 Mill. The facts stated earlier clearly show that as far as accused is concerned, there is no even a whisper nor any shred of evidence nor anything to show that there was any act committed by the accused, from which a reasonable inference can be drawn that they should also be vicariously liable.

15. In the absence of any allegation or material in the records to disclose that  the  petitioners  were  participating  in  the  day  to  day  affairs  of  the  Mill  the prosecution cannot be allowed to continue in so far as the petitioners are concerned."

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6. A revision application filed by the appellant herein thereagainst before the

High Court has been dismissed by reason of the impugned judgment.

7. Learned counsel appearing on behalf of the appellant would contend that

in terms of Section 49A of the Indian Electricity Act, 1910, the burden of proof was on

the accused to show that despite the fact that they were the Directors of the company,

they had no knowledge about the commission of  the offence.  The learned counsel

would, furthermore, contend that they had made no effort far less any sincere effort

to show that they were not aware of the commission of the offence by another person.

8. It was,  furthermore, urged keeping in view the fact that eight witnesses

had  been  examined  and  several  documents  have  been  brought  on  record  for  the

purpose  of  proving the prosecution case,  it  was obligatory on part  of  the learned

Additional Sessions Judge as also the High Court to consider the merit of the matter

for the purpose of finding out as to whether the private respondents  and/or any of

them was incharge and/or responsible for the conduct of the business of the company

or not.

9. Learned  counsel  appearing  on  behalf  of  the  respondents,  however,

supported the impugned judgment.

10. Indian Electricity Act, 1910 was enacted to amend the  law relating to the

supply and use of electrical energy. Section 39 of the Act provides for  penalty if an

offence of

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theft of energy is committed. Section 44 provides for penalty for interference with

meters or licensee's works and for improper use of energy.  

11. The said provisions read thus:

" 39. Theft of energy:- Whoever dishonestly abstracts, consumes or uses any energy shall be punishable with imprisonment for a term which may extend to three years or with fine which shall not be less than one thousand rupees, or with both: and if it is proved that any artificial means or means not authorised by the licensee exist for the abstraction consumption or use of energy by the consumer, it shall be presumed, until the contrary is proved, that any abstraction, consumption or use of energy has been dishonestly caused by such consumer.

44.  Penalty  for  interference  with  meters  or  licensee's  works  and  for improper use of energy:- Whoever-

(a) connects any meter referred to in Section 26, sub-section (1), of  any meter,  indicator  or  apparatus  referred to  in  Section  26,  sub-section  (7),  with  any

electric supply-line through which energy is supplied by a licensee, or disconnects the same from any such electric supply-line[***]; or

(aa) unauthorisedly re-connects any meter referred to in sub-section (1) of section  26,  or  any  meter,  indicator  or  apparatus  referred to in  sub-section  (7)  of Section 26, with any electric supply line or other works,  being the property of the licensee, through which energy may be supplied, when the said electric supply line or other works has or have been cut or disconnected under sub-section (1) of section 24; or

(b) lays, or causes to be laid, or connects up any works for the purpose of communicating with any other works belonging to a licensee, (***); or

(c) maliciously injures any meter referred to in section 26,sub-section(1) or any meter, indicator or apparatus referred to in section 26,sub-section (7) or wilfully or fraudulently alters the index of any such meter, indicator or apparatus, or prevents any such meter, indicator or apparatus from duly registering; or

(d) improperly uses the energy of a licensee.

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[shall  be punishable with imprisonment for a term which may extend to three years, or with fine which may extend to five thousand rupees, or with both], and , in the case of a continuing offence, with a daily fine which may extend to [fifty] rupees and[ if it is proved that any artificial means exists] for making such connection as is referred to in clause(a) (or such re-connection as is referred to in clause(aa)] or such communication as is referred to in clause(b) or for causing such alteration or prevention as is referred to in clause (c) or for facilitating such improper use as is referred to in clause (d) (and that) the meter, indicator or apparatus is  under the custody or control of the consumer, whether it is his property  or  not  [  it  shall  be  presumed,  until  the  contrary  is  proved]  [that  such connection, reconnection, communication], alteration, prevention or improper use, as the case may be, has been knowingly and willfully caused by such consumer."

12. Section 49A which was inserted by Act 32 of 1959 provides for offence by

companies. It reads as under:

"49A Offence by companies- (1) If the person committing an offence under this Act is a company, 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 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, 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 with the consent or connivance of, or is attributable to any neglect on the part of, any director or 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.

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13. In terms of the aforesaid provision, therefore, it was obligatory on the part

of the complainant not only to make requisite averments in the complaint petition but

also  to  prove  that  any  of  the  Directors  who  had  been  prosecuted  for  alleged

commission  of  the  aforementioned  offence  was  incharge  of  and  was  otherwise

responsible for the conduct or the affairs of the Company.

14. We have noticed hereinbefore that how the learned trial Judge has dealt

with the entire aspect. Learned trial Judge has  misconstrued and misinterpreted the

provisions of Section 49A of the Act.

15. In terms of  Sub-section (1) of  Section 49A, it  is  for the complainant  to

prove that the Director of the Company at the time when the theft was committed was

in charge of and/or was responsible for the conduct of its business. Only in the event

such an averment is made and sufficient and cogent evidence is brought on record to

prove the said allegations, the proviso appended to Section 49 A would be attracted;

meaning thereby only in the event it is proved that a Director or a Group of Directors

of the Company were in charge of and/or were responsible for the conduct of the

business  of  the  company,  the  burden  would  shift  on  the  accused  to  establish  the

ingredients contained in the proviso appended to Section 49A of the Act.

16 Learned  Additional  Sessions  Judge  as  well  as  the  High  Court,  in  our

opinion, therefore, were right in holding that

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in the absence of any averment made in the complaint petition as also in the absence

of any evidence brought on record by the complainant to satisfy  the  requirements of

Section 49A of the Act, the respondents could not have been convicted.

17 This aspect of the matter has been considered by a series of decisions of

this Court including S.M.S. Pharmaceuticals Ltd. Vs. Neeta Bhalla & Anr. - (2005) 8

SCC 89. Following the said decision this Court in K.Srikanth Singh Vs. North East

Securities Ltd. and Anr. -(2007) 12 SCC

788 in a case arising under Section 138 of  the Negotiable Instrument Act, held as

under:

" 4. It is not in dispute that for showing a vicarious liability of a Director of a company upon the complaint it is incumbent to plead that the accused was responsible to the company for the conduct of the business of the company. No such allegation having been made in the complaint petition, in our opinion, the High Court was not correct in passing the impugned judgment. The allegation contained in the  complaint  petition  was  that  all  the  accused  Directors,  participated  in  the negotiations for obtaining financial help for Accused 1, which in our opinion, would not give rise to an inference that the appellant was responsible for day-today affairs of the company....."

See:   Saroj Kumar Poddar Vs.State(NCT of Delhi)-          (2007)3 SCC 693                        Average Advertising Pvt. Ltd. Vs. State, Govt. of  N.C.T. & Ors. - (2007) 5 SCC 54

18. For  the  reasons  aforementioned,  there  is  no  merit  in  this  appeal.  It  is

dismissed accordingly.

......................J.       [S.B. SINHA]

.....................J                                       [ CYRIAC JOSEPH ]

New Delhi, November 25, 2008.

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