Sonal Food Products And Ors. vs State Through Food Inspector ...
2006 Latest Caselaw 2074 Del

JUDGMENT

Badar Durrez Ahmed, J.

1. These two petitions are taken up together as they raise a common question which needs to be decided by this Court. The petitioners are the same in both the matters. The product, in question, is also the same, namely, Gutkha.

2. The question that arises for consideration is whether a franchiser would be liable under the Prevention of Food Adulteration Act, 1954 (hereinafter referred as "the said Act") for an adulterated food product manufactured by his franchisee/license user/permitted user?

3. The facts of Crl. M.C. 100/2005 alone are being considered as representation of the other petition. In the complaint filed under Section 16 of the said Act, it is stated that on 15.1.2000 at about 4 p.m., the Food Inspector Dharamvir Singh purchased a sample of Gutkha (Rajdarbar), a food article for analysis from Shri Sanjay Jain at M/s Tarun Trading Company where the said food article was found stored for sale and where the said Sanjay Jain was found conducting the business of sale of the said article. The sample consisting of 6x54 pouches of Rajdarbar Gutkha were taken. The sample sent to the Public Analyst and was found to be adulterated, being non-conforming to the standards as laid down under the said Act and Rules. The report of the Public Analyst indicates that the sample contained magnesium carbonate in violation of Rule 62 of the Prevention of Food Adulteration Rules, 1955. It was also indicated that there was a violation of Rule 32 (e) and (f).

4. The complaint further reveals that the said Sanjay Jain was the proprietor of Tarun Trading Company and that he had purchased the sample commodity from M/s Krishna Packers which, in turn, was the proprietorship concern of Manoj Sharma. The complaint further reveals that the said M/s Krishna Packers was the permitted user of the Trade Mark/Brand Name "RAJDARBAR" owned by M/s Sonal Food Products (present petitioner) on the basis of a written agreement between the parties. It is also revealed that M/s Sonal Food Products is a partnership concern in which Shri Devi Das Garg and Shri Santosh Garg were the partners, both of whom are petitioners Nos. 2 and 3 herein. The complaint contains the further allegations that the accused persons, mentioned above, had violated the provisions of Section 2(ia), (a), (b), and (m) of the said Act and had also violated the provisions of Rule 62, 32 (e) and (f) of the said Rules. It was, therefore, alleged that the accused were liable for being punished under Sections 16(1)(a) of the said Act read with Section 7 thereof.

5. In the context of these allegations, the Learned Counsel for the petitioners submitted that the petitioners had no role to play in the manufacture of the articles. Their only role is with respect to the fact that they were the franchisers of the Trade Mark/Brand Name "RAJDARBAR" and by an agreement dated 1.1.1999, which was annexed along with the complaint, the said M/s Sonal Food Products had permitted the franchisee (Manoj Kumar Sharma, proprietor Krishna Packers) to use the Trade Mark and copy rights in registered artistic works in respect of Pan Masala containing Tobacco and/or Pan Masala Sada, on their own account provided such goods were manufactured and/or marketed in accordance with strict quality control. Clause (3) of the said Agreement dated 1.1.1999 reads as under:

3. That the franchisee as permitted user shall manufacture and market the Pan Masala (Gutkha) and Pan Masala Sada so as to preserve the goodwill and popularity of the products, quality control and shall be liable for any action from MCD Delhi Govt. P.F.A. Or any other agency. In the event of contravention of any law, the franchisee as permitted user above shall be responsible for civil and criminal consequences.

Thus, according to the Learned Counsel for the petitioners, the manufacturing was entirely done by the franchisee, Shri Manoj Kumar Sharma, Proprietor of Krishna Packers and the petitioners had no role to play in the manufacture of the product, in question. They merely permitted the use of the Trade Mark/Brand Name "RAJDARBAR" and other copyrights in the associated artistic works of which they were proprietors. Therefore, according to the Learned Counsel for the petitioners, no case whatsoever was made out against the petitioners and, accordingly, they sought quashing of all proceedings pursuant to the complaint insofar as the petitioners were concerned. The Learned Counsel for the petitioners submitted that pursuant to the complaint, the learned Metropolitan Magistrate had passed the summoning order. Being aggrieved by the summoning order, the petitioners had filed an application for recall of the same before the learned Metropolitan Magistrate himself. However, in view of the Supreme Court decision in the case of Adalat Prasad v. Roop Lal Jindal , the said application for recall of the summoning order was withdrawn. It is, thereafter, that the present petitions were filed seeking quashing of the proceedings which included the summoning order.

5. The Learned Counsel for the State submitted that the petitioners were connected with the manufacturing of the product, in question. According to her, the very fact that Clause 1 of the agreement between the franchisers and franchisee stipulated that the goods should be manufactured and marketed in accordance with strict quality control meant that the franchiser had control over the manufacture of the product. She further submitted that there was another agreement of 1997 between the same parties which indicated that the franchiser was required to issue directions with regard to the quality of the product to be manufactured. She also submitted that even the royalty payable was not on the basis of the value of the product but on the basis of the quantity of product as would be indicated in Clause 9 of the agreement dated 1.1.1999 which reads as under:

9. That the franchisee as the permitted user shall pay to the franchiser proprietor a royalty of Rs 15/- (Rupees fifteen only.) per carton Brand name Rajdarbar, Rahat, Rustam and Royalty Rs 25/- (Rupees Twenty Five Only) per carton brand name Rajtilak of whole sale package of Pan Masala (Gutkha) or sada manufactured/marketed by the permitted user, which shall be calculated and paid by the permitted user to the proprietor of the first part at the close of each month but not after than 7th of the ensuing month. The accounts of the manufacture, storage, sale/marketing of the said goods shall be maintained truthfully and accurately by the permitted user and shall supplied to the franchiser (Proprietor) of the first part at the close of three months Along with the payment of any amount.

She then referred to Section 16(1)(a) of the said Act where there is a reference to not only the person who manufactures himself but also to any other person who manufactures on his behalf.

6. The Learned Counsel for the petitioners has relied upon the decision of the Supreme Court in the case of M/s Pepsi Foods Ltd. v. Special Judicial Magistrate and Ors. , wherein the Supreme Court had dealt with a similar issue. In that case, a bottle of beverage under the brand "Lehar Pepsi" was found to be adulterated. The owner of the brand name "Lehar Pepsi", being Pepsi Food Limited, was also sought to be implicated. The actual manufacture of the product contained in the bottle was done by Residency Foods and Beverages Limited. The Supreme Court had, in that case, made very pertinent observations with regard to the scope and powers of a Magistrate at the time of summoning. It would be appropriate to set out the same herein:

28. Summoning of an accused in a criminal case is a serious matter. Criminal law cannot be set into motion as a matter of course. It is not that the complainant has to bring only two witnesses to support his allegations in the complaint to have the criminal law set into motion. The order of the magistrate summoning the accused must reflect that he has applied his mind to the facts of the case and the law applicable thereto. He has to examine the nature of allegations made in the complaint and the evidence both oral and documentary in support thereof and would that be sufficient for the complainant to succeed in bringing charge home to the accused. It is not that the Magistrate is a silent spectator at the time of recording of preliminary evidence before summoning of the accused. Magistrate has to carefully scrutinise the evidence brought on record and may even himself put questions to the complainant and his witnesses to elicit answers to find out the truthfulness of the allegations or otherwise and then examine if any offence is prima facie committed by all or any of the accused.

Thereafter, in paragraph 29 of the same decision, the Supreme Court considered the facts of the case in the following manner:

If we now refer to the facts of the case before us it is clear to us that not only the allegation against the appellants make out any case for an offence under Section 7 of the Act and also that there is no basis for the complainant to make such allegation. The allegations in the complaint merely show that the appellants have given their brand name to "Residency Foods and Beverages Ltd." for bottling the beverage "Lehar Pepsi". The complaint does not show what is the role of the appellants in the manufacture of the beverage which is said to be adulterated. The only allegation is that the appellants are the manufacturer of bottle. There is no averment as to how the complainant could say so and also if the appellants manufactured the alleged bottle or its contents. His sole information is from A.K. Jain who is imp leaded as accused No. 3. The preliminary evidence on which the 1st respondent relied in issuing summon to the appellants also does not show as to how it could be said that the appellants are manufacturers of either the bottle or the beverage or both.

A reading of the above extract clearly indicates that the person, who is the owner of the brand name, need not be the manufacturer of the food article sold under the brand name and in case there is no link between the owner of the brand name and the manufacture of the food article, then merely because the brand name has been permitted to be used by the manufacturer, the owner of the brand name cannot be implicated.

7. In the present case also, I find that there is not a whisper in the complaint that the petitioners were responsible for the manufacture of the food article (Guthka) in question. The clear case is that the petitioners were the franchisers and they had permitted the use of their brand name/trade mark by the franchisee, who was the manufacturer. The submission of the Learned Counsel for the State that because there was a clause in the agreement that quality control should be maintained would mean that the petitioner (franchiser) would be the manufacturer, does not appeal to me. The franchiser is interested in ensuring that his brand name and trade mark do not lose their reputation in the market and, therefore, he imposed a condition, that the product manufactured by the franchisee should conform to standards of quality. As indicated above, the franchiser had been careful enough to include Clause 3 of the agreement on 1.1.1999 wherein it is clearly indicated that the liability with regard to the manufacture would be entirely on the franchisee. This, in itself, makes it clear that the franchiser has nothing to do with the manufacture of the article in question. In these circumstances, following the decision of the Supreme Court in the case of Pepsi Food (supra), I direct that the complaint as well as the proceedings pursuant thereto including the summoning order shall stand quashed insofar as the petitioners are concerned.

8. These petitions stand allowed.