Bharat Puri And Ors vs The State Of Maharashtra And Anr
2017 Latest Caselaw 5457 Bom

hcs
                                             1                                appln5503.2004

                   IN THE HIGH COURT OF JUDICATURE AT BOMBAY
                             CRIMINAL APPELLATE JURISDICTION


                        CRIMINAL APPLICATION NO.5503 OF 2004


      Bharat Puri & Others                   .. Applicants.
             Vs.
      The State of Maharashtra & Anr.        .. Respondents.


                                                 WITH
                        CRIMINAL APPLICATION NO.5505 OF 2004


      Bharat Puri & Others                   .. Applicants.
             Vs.
      The State of Maharashtra & Anr.        .. Respondents.


      Mr.Kirti Parekh with Ms.Henna Daulat i/b Prem J. Ranga for the Applicants.
      Ms.P.N. Dabholkar APP for the State.
      Mr.G.H. Keluskar for Respondent No.2


                                             CORAM : A. K. MENON, J.


                                     RESERVED ON : 6TH JULY, 2017
                               PRONOUNCED ON : 3RD AUGUST, 2017


      JUDGMENT :

1. These two criminal applications under Section 482 of the Code of

Criminal Procedure can be conveniently disposed of by this common order. The facts

leading to the present applications are extracted from Application no. 5503 of 2004

and are set out as under : Applicant No.7 is Cadbury India Limited. They have also

been impleaded as applicant Nos.8 and 9 in these applications because the original

complaint names them separately with different addresses at which the applicant

no.7 carries on business. Applicant No.1 was the Managing Director of Applicant

2 appln5503.2004

no.7 at the material time. Applicant Nos.2 to 6 were Executive Directors of Applicant

no.7. Respondent No.2 Pimpri Chinchwad Municipal Corporation filed a criminal

complaint against the applicant no.1 - Mr. Cedric Vaz, nominee of applicant no.7

under the Prevention of Food and Adulteration Act, 1954 (the "Act"), directors of the

Applicant no. 7 and one M/s. Indrayani Bazar a retail and grocery store selling

various articles including chocolates and the office bearers of the said Indrayani

Bazar.

2. It is contended that on or about 10th August, 2003 one Mr.Patil

purchased a Cadbury milk chocolate and upon opening it he found a live insect

inside. The said Patil filed a complaint under the Act at Yamuna Nagar police station

and the police Sub-Inspector communicated this fact to the Medical Health Officer of

Respondent no.2 corporation. The Health Officer ordered samples to be taken from

the said shop which were accused i.e. Indrayani Bazar - original accused no.12.

3. On 10th August, 2003 the complainant Patil along with the Food

Inspector visited Yamuna Nagar and a panch, one Mangilal Choudhari, when the

Chairman of Indrayani Bazar, Sanjay Thembre was present. The Food Inspector

explained the purpose of his visit and purchased a number of samples of Cadbury

milk chocolates weighing 13 gms and 25 gms manufactured at - applicant no.7's

factory at Induri District. A panchnama was prepared and the complainant with the

Food Inspector visited Yamuna Nagar police station, who examined 5 gms chocolates

but did not any insect at that time. The samples were then sent to the State Health

Laboratory and Local Health Officer with detailed information. The public analyst

reported presence of live grub and concluded that chocolate does not conform to

3 appln5503.2004

standards of milk chocolate as per the Act. The chocolate was found to be unfit for

human consumption. The Factory Inspector forwarded the samples with all relevant

correspondence to the Joint Commissioner of Food and Medical Administration, State

of Maharashtra to file a complaint against all concerned.

4. On 16th December, 2003, the Joint Commissioner, Food and Medical

Administration, State of Maharashtra gave sanction to file a complaint and around

18th December, 2003. A complaint came to be filed against Indrayani Bazar, its

Chairman and the person nominated by the company under Section 17 read with Rule

12-B of the Prevention of Food and Adulteration Rules, 1954 (for brevity "Rules"). A

consumer complaint was also filed by the said Hindurao Patil. Respondent No.2 also

addressed a letter dated 23rd December, 2003 informing them that the complaint

had been filed before the Judicial Magistrate at Akurdi. The Magistrate issued process

and it is this issuance of process that has been challenged by the applicants invoking

the inherent powers of this Court under Section 482 of the Code of Criminal

Procedure and seeking process to be quashed.

5. Mr. Parekh, learned counsel appearing on behalf of the applicants in

both these matters submitted that the applicants are being incorrectly prosecuted. In

fact accused nos.22 and 23 were the same company but shown as carrying on

business at different addresses. Applicant No.21 one Mr. Cedric Vaz was the "nominee"

of applicant no.7 company and was responsible for the affairs of the company by

virtue of his nomination under Rule 12-B of the Rules and under the Act.

Respondent No.2 has also prosecuted the said Vaz. As far as prosecution against the

present applicants are concerned, Mr. Parekh submitted that by an order dated 24th

4 appln5503.2004

June, 2004 further proceedings in the trial Court were stayed upon Rule being

issued.

6. Mr. Parekh further submitted that there is no substance in the

complaint against the applicants inasmuch as no prima facie case was made out

against the present applicants for issuance of process. Quite apart from the fact that

applicant no.7 company cannot be prosecuted thrice for the same complaint and for

the alleged incident, there is no allegation of any overt act alleged against the

applicants except the mention of their names in the cause title. There is no evidence as

required under Section 17 of the Act by which the concept of vicarious liability

could be invoked and fastened on the Directors especially since, as provided in Rule

12-B of the said rules, Mr. Vaz had been nominated by the company under the Act

to be responsible for the affairs of the company.

7. According to Mr. Parekh the complaint has been filed to pressurize

and harass accused nos.14 to 19 who are the Managing Director and other Executive

Directors because it is not the case of respondent corporation that the aforesaid

persons or applicants were responsible for conducting business of the company. It

was further submitted that the complaint against Mr. Vaz could proceed and there

was no occasion for the complainant to proceed against present applicants especially

since the company had nominated the said Mr. Vaz.

8. In application No.5505 of 2004 the complaint was filed by the same

person based on the same set of facts but a separate complaint was filed on account

of the seizure of a 35 gms pack of the same chocolate.

5 appln5503.2004

9. In support of his contention Mr. Parekh has relied upon the following

judgments :

(i) Pepsico India Holdings Pvt. Ltd. vs. Food Inspector & Anr. (2011) 1 SCC 176

(ii) Kapil Wadhawan & Anr. vs. State of Maharashtra Criminal Application No.707 of

2011 dt. 27th July 2011

(iii) Adhiraj Amar Kannhaiyalal Sarin & Ors. vs. State of Maharashtra 2011(1)Mh.L.J.

(iv) Keki Bomi Dadiseth & Ors. vs. State of Maharashtra 2002(3)Mh.L.J. 246

(v) Corpn. Products Co. & Ors. vs. S.B. Shinde & Anr. Criminal Writ Petition No.807 of

1998 dt. 29th June, 2001

10. Mr. Parekh submitted that the complaint cannot be proceeded with in

view of the specific provision that when a Manager is named under Rule 12-B, in

absence of relevant facts alleging liability of individual Director and in absence of

the complaint indicating as to whether the Directors had any role to play and whether

they or any of them were in charge of day-to-day management and conduct of the

business, it would not be appropriate that the Directors should be prosecuted. In the

circumstances he submitted that the complaint against accused nos.1 to 6 could not be

proceeded with. Mr. Parekh further submitted that the aforesaid Vaz has already

been nominated and hence there was no occasion to permit the prosecution of other

Directors against whom there was no specific complaint.

11. Mr. Parekh further submitted that in case of Kapil Wadhawan and Anr

(supra) a Single Judge of this Court had allowed the criminal application for the

6 appln5503.2004

same reason when the complaint reveal that the applicant as Director of the

company was responsible for day-to-day affairs of the company and no specific role

was attributed to the applicant. Similarly, in the case of Adhiraj Sen (supra) another

Single Judge of this Court had also held in favour of the applicant to the effect that

there was no role attributable to the Directors and only the Director(s) against

whom such a role is attributable will be responsible. Mr. Parekh also relied upon a

decision of the Keki Bomi Dadiseth (supra) and submitted that the prosecution of the

Directors of the company for alleged violation of the provisions of the Act could not

be sustained when there was no specific allegation or complaint which would

demonstrate the consent or connivance by the Directors with regard to commission of

offence.

12. In yet another decision of this Court Corn Products Co. (India) Ltd.

(supra) the Court likewise held that the complaint itself did not contain a whisper of

allegation and there was valid nomination held under Section 17 read with Rule12-

B and in absence of such specific allegations against the Directors it would not be

open for the authorities to prosecute the Directors especially when there was a

nomination under the Rules. He therefore submitted that the present application is

liable to be allowed and the complaint against the applicants be quashed.

13. Mr. Keluskar, learned counsel appearing on behalf of the respondent -

corporation opposed the application on the basis that the interpretation of the Act and

the Rules the applicant is not correct. He submitted that the attempt of the applicants

was to take shelter under the provision for nomination of an officer under Rule 12-B

read with Section 17 and that nomination alone will not relieve the applicants of their

7 appln5503.2004

liability. He submitted that nomination is factory/plant specific. It was not a general

nomination on behalf of the company and that in the case of any entity if there are

different factories/plants, the nomination is only in respect of a particular plant. He

further submitted that in the instant case the offending product was manufactured at

the Induri plant and the nomination of Mr. Vaz was only in respect of factory at

village Induri. Mr. Keluskar referred to Exhibit-E to the t application which is the

nomination Form No.VIII under Rule 12-B of the said Rules. The said nomination

form refers to the resolution passed in the said meeting held by the company and it

made Mr. Vaz responsible for the factory at Induri. Therefore, according to Mr.

Keluskar the complaint as filed against other accused is certainly maintainable.

14. According to Mr. Keluskar the offence has occurred at Indrayani Bazar,

Sambhaji Nagar, Chinchwad and the complaint was filed at Chinchwad. According to

Mr. Keluskar the complaint has been filed on the basis of bill produced by the vendor

and accused nos.1 to 13 were jointly responsible for production, distribution and sale

of the milk chocolate in which insect was found and which was not appropriate for

human consumption. According to him accused nos.14 to 20 viz, the Managing

Director and Executive Directors (the applicant Nos.1 to 7) are liable for punishment

under Section 16 and 17, Section 7(1) read with Section 2(ia)(a) 2(ia)(f) of the Act

and related Rules. He submitted that accused nos.21 who is the said nominee Cedric

Vaz and the accused no.22 and 23 viz the company are also liable for punishment

under Section 7(1) read with Section 2(ia)(a) and 2(ia)(f) and Section 16 and 17, 7(1)

read with Section 2(ia)(a) and 2(ia)(f).

15.            Mr. Keluskar submitted that the accused are all responsible           for the





                                         8                                appln5503.2004

offences and that the applications have no merit and deserves to be dismissed. In

support of his submission he relied upon the case of Azim Premji and Ors. vs.

State of Maharashtra 2002 (1) Mh.L.J. 668 wherein it was held that a

separate license is required in respect of each area and nomination of management

of Directors under Section 17(2) of the Act has to be filed with the Local authority

having jurisdiction where the manufacture, storage, selling or distribution for sale

is being carried out. He submitted that in the instant case the health authority has

to examine whether nomination is in order and transfer of primary liability to

nominee would be effective only when there is strict compliance and complete

adherence to the provisions relating to nomination including filing of nomination

with valid jurisdiction with the health authority. Mr. Keluskar therefore submitted that

the applications are liable to be rejected.

16. I have heard counsel for the parties at length and before dealing with

rival contentions it is necessary to consider the contents of the complaint, at Exhibit-B

and its fair translation at Exhibit-D-1. Both counsel agree that the translation at

Exhibit-D-1 is an accurate translation of Exhibit-D of the complaint originally which

is in vernacular. The complaint alleges that accused nos.1 to 12 are liable for violation

of Section 7(1) read with Section 2 (ia)(a) and Section 2(ia)(f). The aforesaid

provisions are reproduced for ease :

"2 [(i-a)] "adulterated" an article of food shall be deemed to be adulterated---

(a) If the article sold by a vendor is not of the nature, substance or quality,

demanded by the purchaser and is to his prejudice, or is not of the nature,

substance or quality, which it purports or is, represented to be;

9 appln5503.2004

(b) If the article contains any other substance which affect, or if the article is so

processed as to affect injuriously the nature, substance or quality thereof;

(c) If any inferior or cheaper substance has been substituted wholly or in part

for the article so as to affect injuriously the nature substance or quality thereof;

(d) If any constituent of the article has been wholly or in part abstracted so as to

affect injuriously the nature, substance or quality thereof.

(e) If the article has been prepared, packed or kept under in sanitary conditions

whereby it has become contaminated or injurious to health;

(f) If the article consists wholly or in part of any filthy, putrid, rotten,

decomposed or diseased animal or vegetable substance or is insect-infested or is

otherwise unfit for human consumption;

17. Accused nos.1 to 3 are the Chairman, Vice Chairman and Secretary of

Indrayani Bazar, Vice Chairman and Secretary. Accused no.4 to 12 are the Directors

of the said Indrayani Bazar. Indrayani Bazar and its Directors are not party to the

present application. Accused no.13 is proprietor of Gupta Marketing which is

distributor of the products of the company. He is accused of offence liable for

punishment under Section 16, 7(1) read with Section 2(ia) and 2(ia)(f). Accused

nos.14 to 20 are present applicants who are accused of violating Section 16, 17, 7(1)

2(ia) and 2(ia)(f) of the Act. Accused no.21 is nominee of the company and accused

no.22 is company. Both are accused of violation of Section 7(1) read with 1955 Rules

read with Section 2(ia)(a) and 2(ia)(f). The company once again shown as accused

no.23 for violation of same sections and rules.

10 appln5503.2004

18. I am of the view that there is no justification in joining accused nos.22

and 23 repeatedly simply because there are different offices and factories from

where the company operates. According to the complaint, the offence had occurred

within jurisdiction of the Court at Akurdi. In these applications we are only

concerned with the complaint against the present applicants. The relevant pleadings

in the complaint as regards present applicants proceeds on the basis that accused

nos.1 to 13 have committed offences by producing, distributing and selling of the

chocolates. This is factually inaccurate since none of the applicant nos.1 to 13 are

involved in the production of chocolates. To that extent the averment in the

complaint is clearly erroneous. As far as present applicants are concerned there is

not a single averment that by virtue of their having been Directors, they were engaged

into the day-to-day affairs of the company. The complaint has dealt with various

aspects of seizure of the product, manner of search, opening of chocolates in

presence of the panchas, number of pieces sold and the amount paid for purchase

of the chocolates in presence of panchas. It is also observed that stock of which

samples were seized had not crossed expiry dates. The samples were then stored in

model bottles and were labelled. The complaint records that on the basis of bills

produced by the complainant, vendor information about the shop was collected

and thereafter the Medical Health Officer had instituted the complaint and after

receiving sanction from the Joint Commissioner, Food and Drug Administration the

complaint was filed. There is no allegation in the complaint that the present

applicants were engaged in the day-to-day affairs of the manufacture or

distribution or storage of the product. There is nothing to connect the present

applicants with these activities and on a regular basis. The decision in Pepsico

(supra) deals with sweetened carbonated water (Pepsi) which allegedly contained

11 appln5503.2004

residue of the pesticide carbofuran. It was alleged that the product was adulterated

by violating standards prescribed by Directorate General of Health Services and the

public analyst had so opined. The applicants' approached the High Court for

quashing of criminal complaint. In the complaint filed against company the

Directors were impleaded. The High Court refused to quash the complaint. In the

course of submissions before the High Court it was contended that the Directors

would be liable vicariously and reference was made to the decision of the Supreme

Court in S.M.S. Pharmaceuticals Ltd. vs. Neeta Bhalla (2005) 8 SCC 89 ,

wherein the question of vicarious liability was considered and it was held that a

Director cannot be ipso facto be charged for responsibility of the company and for

conduct of its business unless such fact was averred by the company. SMS

Pharmaceuticals (supra) had made reference to the judgment of MCD vs. Ram

Kishan Rohtagi (1983) 1 SCC 1 wherein it was held that vicarious liability did

not extend to the Directors of the company who were not responsible to the company

for its day-to-day business.

19. In paragraph 50 of the judgment in Pepsico the Supreme Court

observed that in a complaint against the company and its Directors, the complainant

has to indicate in the complaint itself whether the Directors are in charge or

responsible to the company for day-to-day management or whether they were

responsible to the company for conduct of its business. A mere bald statement that a

person was a Director of the company against which certain allegations had been

made was not sufficient to make such Director liable unless there were specific

allegations regarding his role in the management of the company.

12 appln5503.2004

20. Furthermore, in paragraph 52 the Supreme Court considered the fact

that the person had been nominated under Section 17(2) to be a person in charge of

and responsible to the company for conduct of its business. Accordingly, the order

impugned was set aside. In the case at hand is on similar lines inasmuch as Mr.Cedric

Vaz has been nominated under Section 17(2) and Form VIII had been filed which

clearly indicates that Mr. Vaz, Chief Manager Operations of Cadbury India Ltd. has

been nominated to be in charge of and responsible to the said factory at Induri,

Maharashtra. The complainant in the present case had specifically named the said

nominee in the complaint. The complainant - respondent no.2 has expressly

mentioned him by name. The company has also been named as accused no.22

(applicant no.8 herein). In the circumstances the contention of Mr. Keluskar that the

judgment of this Court in Azim Premji (supra) and the observation therein that

transfer of primary liability to the nominee would be effective when there is

compliance, adherence and filing of the nomination within jurisdiction of the Local

Health Officer does not in any manner help the respondent since in the instant case it

is after inquiry into the facts that the complainant has chosen to file the complaint

against the nominee Vaz by impleading him as accused no.21.

21. There is a specific averment is made in paragraph no.14(4) accused

no.21 is liable for violation of Section 7(i) read with Section 2(ia)(a) and 2(ia)(f).

Thus, the averment made consciously is that the said nominee is responsible for

business of the company and as contemplated in the decision of the Supreme Court in

Pepsico (supra). The decision in Pepsico (supra) has been followed by our Court in

Kapil Wadhwan (supra) and Keki Bomi. Dadisheth (supra) which in turn has been

followed in Adhiraj Sarin (supra). In Keki Bomi Dadisheth this Court observed that

13 appln5503.2004

under scheme of Section 17 there are three categories in which the accused can be

found guilty. The persons nominated by the company can be held responsible for

the company in conduct of business and any Director of the company can also be held

responsible if it is proved that the offence had been committed which would

demonstrate any aspect of consent or connivance in regard to commission of offence

by the Directors or if even remotely the offence was attributable to any neglect on the

part of such Director. In the instant case the complaint does not demonstrate nexus

between the Director and the offence. There is nothing to show consent or connivance

in regard to commission of offence which is attributable to the applicants. In the

absence of such allegations in the complaint and in the facts of the present case it is

not possible hold even prima facie that the allegation in the complaint are made out

case against Director.

22. In Corn Products (supra) this Court quashed the process against the

petitioner nos.2 to 9, who were Directors of the company since the complaint did not

mention any offence being committed with consent or connivance by the Directors.

In the case at hand the Respondents have maintained that the named nominee is

responsible for the affairs of the company in relation to the Act at the material time. In

the circumstances I am of the opinion that the contention of Mr. Keluskar, learned

counsel for respondent no.2 corporation that notwithstanding impleadment of Cedric

Vaz as nominee of the company and specific recognition of his being nominee of

the Induri plant does not hold good to make him liable if at all. The contention of

respondent no.2 to that it could prosecute all Directors of the company is in my view

unsustainable. If the company and its Directors are to be prosecuted without specific

material against them, it would run against the scheme of Section 17 read with

14 appln5503.2004

Rule 12(b). The specific provisions are made to make the nominee accountable since it

is company which has chosen to make him accountable and responsible for the

business of the company. It is not possible to accept the contention of Mr. Keluskar

that the product in question was not manufactured at Induri plant and therefore,

nomination of Mr.Cedric Vaz is no longer relevant and that notwithstanding the

fact that the complaint had been filed against him, it was now open to the

complainant to proceed against all Directors.

23. The argument adopted by Mr. Keluskar, learned counsel appearing on

behalf of respondent no.2 and based on the decision of Azim Premji (supra) does not

entail that all the Directors can now be held responsible and prosecuted in the facts

at hand. The complainant has chosen to implead the nominee and specific reference

has been made against the nominee. The nomination of a said General Manager

under Rule 12(b) is accepted by the respondent - corporation. The plea that the

product in question was not manufactured at Induri plant but elsewhere and that

Mr.Cedric Vaz has not been nominated for the other plant is obviously an after

thought. In any case these are aspects that involve the merits of the case and cannot be

gone into in these applications. In such case the Respondent would have accused such

other nominee. According to Mr. Keluskar the offending product was found at

Indrayani Bazar which is located in Sambhaji Nagar, Chinchwad, whereas Mr. Vaz

has been nominated at Induri plant. This by itself does not allow the Respondent a

carte blanche to prosecute all the Directors of the company. In the circumstances

the application 5503 of 2004 must succeed.

24.           In application No.5505 of 2004          the complaint is identical. The





                                        15                                  appln5503.2004

allegations are also identical so are the accused persons. The nominee is also same

person. The slight variation is in respect of the weight of the packets of chocolate

seized. In one case the packet weighed 13 grams and in the other 25 grams. In the

result all other facts being identical Application No.5505 of 2004 must also succeed.

25. In the circumstances I pass the following order :

(i) The proceedings in case No.9 of 2003 from the learned Judicial

Magistrate, First Class I, Court at Akurdi, at Akurdi are quashed

and set aside as against the applicants.

(ii) The proceedings in case No.10 of 2003 from the learned

Judicial Magistrate, First Class I, Court at Akurdi, at Akurdi are

quashed and set aside against the applicants.

(iii) The complaints against the accused no.21 nominee shall

proceed in accordance with law uninfluenced by observations

herein.

(iii) Rule made absolute in the above terms.

(A.K. MENON, J.)