Ravinder Garg vs The Govt. Of Nct Of Delhi
2009 Latest Caselaw 422 Del

                "REPORTABLE"
*     HIGH COURT OF DELHI AT NEW DELHI

+                   Crl.M.C. 3066/2007 & Crl. M.A.
                    No. 11005/07

                          Date of decision: February 06, 2009

#     RAVINDER GARG                           ...... Petitioner
!                   Through : Mr. Rohit Madan, Adv.


                             Versus


$     THE GOVT. OF NCT OF DELHI      ..... Respondent
^             Through : Mr. Lovkesh Sawhney, APP


%
      CORAM:
      HON'BLE MS. JUSTICE ARUNA SURESH

     (1) Whether reporters of local paper may be
         allowed to see the judgment?

     (2) To be referred to the reporter or not?             Yes

     (3) Whether the judgment should be reported
         in the Digest ?                                    Yes

                          JUDGMENT

ARUNA SURESH, J.

1. Present petition has been filed by petitioner,

Ravinder Garg seeking quashing of the summoning

order dated 10.5.2006 passed by the learned

Metropolitan Magistrate in case „Government of

NCT of Delhi v. Sh. Naveen Kumar‟ under Section

7/16 of the Prevention of Food Adulteration Act

(hereinafter referred to as PFA Act).

2. On 27.7.2005 Food Inspector, Department of

Prevention of Food Adulteration purchased sample

of ghee of brand "Mahaan" for analysis from one

Sh. Naveen Kumar of M/s. Apna Bazar, Gurgaon

Road, Roshan Pura who was engaged in the

business of selling ghee of said brand. The sample

consisted of 3x1 litre sealed tetra packs bearing

the label "Mahaan", bearing the identical label

declaration. This sample was taken under the

supervision/ direction of the then SDM/LHA in its

original sealed condition. The sample was divided

into three equal parts by the Food Inspector on the

spot and sample counterpart was separately

packed, fastened and sealed. The Food Inspector

conducted due formalities like giving notice to

Naveen Kumar and preparing panchnama. One

part of the sample was sent to Public Analyst, Delhi

who, after duly conducting the analysis submitted

its report on 18.8.2005. According to the report,

ghee was found to be conforming to the standards

but was misbranded as it gave misleading

information regarding „Best Before Date‟ on the

label.

3. Naveen Kumar had allegedly purchased ghee from

M/s Manish Traders, Gaushala Road, Najafgarh,

Delhi. M/s Manish Traders had purchased the said

ghee from M/s Mahaan Proteins Ltd. having its

corporate office at Janpath, New Delhi. The said

company M/s. Mahaan Proteins Ltd. had not

nominated any person under the PFA Act for its

Delhi corporate office and as such all the four

directors were made accused persons by the

complainant department as incharge of and

responsible for day to day business of the company

in Delhi. Since all the accused persons were found

having violated the provisions of Section 2(ix)(g) &

(k) of PFA Act and Rule 32(f) and Rule 37 of PFA

Rules punishable under Section 16(1)(a) read with

Section 7 of PFA Act, the complaint was filed in the

Court of the concerned MM. Vide his order dated

10.5.2006, trial court took cognizance of the

offences as he found sufficient evidence on the

record to proceed against the accused persons

including the petitioner for having committed

offences under Section 7/16 of the PFA Act.

Accordingly he summoned the accused persons.

Aggrieved by the said order of the learned MM,

present petition has been filed.

4. Mr. Rohit Madan, learned counsel for the

petitioner, has submitted that petitioner was

appointed as an alternate Director in place of Dr.

Santosh Kumar Garg, Director of M/s. Mahaan

Proteins Limited in accordance with Section 313 of

the Companies Act on 16.4.2004. His appointment

as alternate director was duly approved by the

Board of Directors of the company in its meeting

held on 12.5.2004. It is further submitted by the

learned counsel for the petitioner that the company

had provided information to the Food Inspector

regarding Directors of the Company, name of the

nominee under the PFA Act and Sales Tax

Registration, however, the company incorrectly

gave information mentioning only four directors

including the petitioner as being Executive

Director of the company whereas, there were 11

directors on the Board of the company at the

relevant time and the company had provided

information as to the nomination of Sh. Harsh

Kumar Jain, Chemist of Mahaan Proteins Limited,

as being incharge of and responsible for the

conduct of the business in terms of PFA Act, Form

VIII. Therefore, according to the learned counsel

for the petitioner, no offence has been committed

by the petitioner under Sections 7/16 of the PFA

Act as petitioner was neither incharge of nor was

responsible for the day-to-day affairs of the

company at manufacturing unit of the company at

Kosikalan, Distt. Mathura, U.P.

5. Learned counsel for the petitioner has also

challenged maintainability of the complaint against

the petitioner on the grounds that as per Section

17(4) of the PFA Act a complaint could be filed

where the offence has been committed by the

company, any Director, Manager and Officer of the

company and the offence has been committed with

the consent, connivance or is attributable to such

Director, Manager or Officer of the company. As

an alternate director of the company during the

absence of the director, the petitioner could only

hold office till such time as was permissible to the

original director to hold office and therefore,

proceedings against the petitioner could not have

been initiated by virtue of Section 17(2) of PFA Act

and the summoning order being bad in law

deserves to be quashed.

6. Learned counsel for the petitioner has submitted

that company had nominated Harsh Kumar Jain for

its manufacturing unit at Village Barhana Kosikalan

Distt. Mathura, U.P. and therefore, as such was the

person in charge of and responsible for the conduct

of day-to-day business at the manufacturing unit as

well as of the corporate office at Janpath, Delhi.

7. Learned counsel for the petitioner has relied upon

the following judgments:

1. R. Banerjee v. H.D. Dubey - 1992 Crl. L.J. 1523.

2. Municipal Corporation of Delhi v. Ram

Kishan Rastogi - 1983 Crl. L.J. 159.

8. Mr. Lovkesh Sawhney, learned counsel for the

respondent department while refuting these

submissions has submitted that Mr. Harsh Kumar

Jain was nominated only for the manufacturing unit

at Mathura, U.P. and not for the corporate office of

the company at Delhi and therefore, the said

nomination made by the company was not for the

corporate office at Delhi, hence the complaint was

rightly filed against all the directors of the

company.

9. Learned counsel for the complainant/respondent

has further submitted that averments contained in

the petition as well as submissions made by

learned counsel for the petitioner are question of

fact, which are to be proved in evidence by the

petitioner and also that, the company had not

appointed any director as its nominee under PFA

Act and Rules for its corporate office at Janpath,

Delhi as a person incharge of and responsible for

the day-to-day business of the company. It is

prayed that under the circumstances the petition

deserves dismissal.

10. Since Section 17 of the PFA Act is relevant for the

purposes of effective disposal of this case as it

speaks of offences by companies. For the sake of

convenience it is reproduced as below:

"17. Offences by companies.-- (1) Where an offence under this Act has been committed by a company--

(a) (i) the person, if any, who has been nominated under sub-

section (2) to be in charge of, and responsible to, the company for the conduct of the business of the company (hereinafter in this section referred to as the person responsible), or

(ii) where no person has been so nominated, 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; and

(b) 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 provided in this Act if he proves that the offence was committed without his knowledge and that he exercised all due diligence to

prevent the commission of such offence.

(2) Any company may, by order in writing, authorise any of its directors or managers (such manager being employed mainly in a managerial or supervisory capacity) to exercise all such powers and take all such steps as may be necessary or expedient to prevent the commission by the company of any offence under this Act and may give notice to the Local (Health) Authority, in such form and in such manner as may be prescribed, that it has nominated such director or manager as the person responsible, alongwith the written consent of such director or manager for being so nominated.

                   Explanation.--Where          a
             company         has       different

establishments or branches or different units in any establishment or branch, different persons may be nominated under this sub-

section in relation to different establishments or branches or units and the person nominated in relation to any establishment, branch or unit shall be deemed to be the person responsible in respect of such establishment, branch or unit.

(3) The person nominated under sub-section (2) shall, until--

(i) further notice cancelling such nomination is received from the company by the Local

(Health) Authority; or

(ii) he ceases to be a director or, as the case may be, manager of the company; or

(iii) he makes a request in writing to the Local (Health) Authority, under intimation to the company, to cancel the nomination [which request shall be complied with by the Local (Health) Authority], whichever is the earliest, continue to be the person responsible:

Provided that where such person ceases to be a director or, as the case may be, manager of the company, he shall intimate the fact of such cesser to the Local (Health) Authority: Provided further that where such person makes a request under clause (iii), the Local (Health) Authority shall not cancel such nomination with effect from a date earlier than the date on which the request is made.

(4) Notwithstanding anything contained in the foregoing sub- sections, 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 [not being a person nominated under sub-section (2)] 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;

(b) "director", in relation to a firm, means a partner in the firm; and

(c) "manager", in relation to a company engaged in hotel industry, includes the person in charge of the catering department of any hotel managed or run by it."

11. From bare reading of Section 17 of PFA Act, it is

clear that where an offence is alleged to have been

committed by the company and where the company

has nominated any person to be incharge of and

responsible for the conduct of the business of the

company, that person would be liable to be

proceeded against and punished for the

commission of the offence. Where, however, no

such person has been nominated, every person who

at the time of the commission of the offence was in

charge of and responsible to the company for the

conduct of its business would be proceeded against

and punished for the said crime. Though in such

cases, proviso to Section 17 provides protection to

an accused if he could prove that the offence was

committed without his knowledge and

notwithstanding the exercise of due diligence to

prevent it.

12. Section 17 of the PFA Act has been interpreted in

R. Banerjee and others v. H.D. Dubey and

others - 1992 Crl. L.J. 1523 by the Supreme

Court in the following manner:

"4. It is clear from the plain reading of Section 17 that where an offence under the Act is alleged to have been committed by a company, where the company has nominated any person to be in charge of, and responsible to, the company for the conduct of its business that person will be liable to be proceeded against and punished for the commission of the offence. Where, however, no person has been so nominated, every person who at the time of the commission of the offence was in charge of, and responsible to, the company for the conduct of its business shall be proceeded against and punished for the said crime. Even in such cases the proviso offers a defence, in that, the accused can prove his innocence by showing that the offence was committed without

his knowledge and notwithstanding the exercise of the due diligence to prevent it. The scheme of sub-section (1) of Section 17 is, therefore, clear that the cases where a person has been nominated under sub- sec. (2) of Section 17, he alone can be proceeded against and punished for the crime in question. It is only where no such person has been nominated that every person who at the time the offence was committed was in charge of, and was responsible to, the company for the conduct of its business can be proceeded against and punished. The proviso, however, lays down an exception that any such person proceeded against shall not be liable to be punished if he proves that the offence was committed without his knowledge and that he had exercised all due diligence to prevent the commission thereof. Sub-section (2) of Section 17 empowers the company to authorize any of its Directors or Managers to exercise all such powers and take all such steps as may be necessary or expedient to prevent the commission by the company of any offence under the Act. It further empowers the company to give notice to the Local (Health) Authority in the prescribed form that it has nominated a Director or Manager as the person responsible to the company for

the conduct of its business.

This has to be done with the written consent of the nominated Director or Manager. Where a company has different establishments or branches or units, different persons may be nominated in relation to the different establishments/ branches/units and the person so nominated shall be deemed to be the person responsible in respect of such establishment, branch or unit. Sub-section (4) of Section 17 overrides the preceding sub-sections and posits that where an offence has been committed by a company and it is proved that the offence was 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, other than the one nominated, such Director, Manager, Secretary or other officer shall be deemed guilty and be liable to be proceeded against and punished for the same. This sub-section, therefore, makes it clear that notwithstanding the nomination under sub-section(2) of Section 17 and notwithstanding Cl. (a)(i) of sub-section (1) of Section 17, any Director, Manager, Secretary or other officer of the company, other than the nominated person, can be proceeded against and punished if it is shown that the offence was committed with his consent or connivance or negligence. It

is crystal clear from the scheme of Section 17 that where a company has committed an offence under the Act, the person nominated under sub- section (2) to be in charge of, and responsible to, the company for the conduct of its business shall be proceeded against unless it is shown that the offence was committed with the consent/connivance/negligence of any other Director, Manager, Secretary or Officer of the company in which case the said person can also be proceeded against and punished for the commission of the said offence. It is only where no person has been nominated under sub- section (2) of Sec. 17 that every person, who at the time of the commission of the offence was in charge of and was responsible to the company for the conduct of its business can be proceeded against and punished under the law.

13. Form VIII relates to nomination of persons by a

company. The nomination, as made in Form VIII

dated 9.10.2002 in the present case reads as

follows:

"Notice is hereby given that Mr. Harsh Kumar Jain s/o Sh. Dori Lal Jain, Chemist of Mahaan Proteins Limited (the company) by a Resolution passed at their meeting held on

3rd September 2002 at New Delhi to be incharge of, and responsible to, the said Company for the conduct of the business of the said company or its Unit thereof and authorized to exercise all such powers and take all such powers and take all such steps as may be necessary or expedient to prevent the commission by the said company of any offence under the Prevention of Food Adulteration Act, 1954. A certified true copy of the resolution is enclosed."

14. This nomination was accepted by Harsh Kumar Jain

and acknowledged by Local Health Authority,

Mathura on 23.12.2002. Whether this nomination

could be interpreted to mean, nomination of a

director for its corporate office at Delhi, is a mixed

question of law and fact which can only be

ascertained by the trial court after the evidence of

the parties is recorded. Similarly, it is for the

petitioner to prove in evidence that he was

appointed as an alternate director in the company

and that being an alternate director was not

incharge of and responsible to the said company

for the conduct of its business at its unit at Delhi,

in case no nomination was made by the company

for its corporate office at Delhi.

15. Proviso to this Section makes it clear that it is for

such person, who is accused of having committed

an offence under PFA Act being the person who

was incharge of and responsible for the conduct of

its business, to prove that the offence was

committed without his knowledge and he had

exercised his diligence to prevent the commission

of such offence. Therefore, the petitioner is at

liberty to raise all the defences available to him

under Section 17(2) of PFA Act at the trial stage

and not in the present petition. The Magistrate had

summoned the petitioner along with other accused

persons vide impugned order dated 10.05.2006 on

the basis of evidence, material and documents

placed before him by the respondent department

after assessing the prima facie case of the

complainant.

16. Whether summons could be issued against the

petitioner under sub-clause 2(i)(a) of Section 17 of

the PFA Act would depend upon the court‟s finding

if there was a valid nomination in favour of Harsh

Kumar Jain at the time of commission of the

offence. It is only when the court comes to a

conclusion that there was valid nomination in

existence on the date of commission of the offence,

the case would be governed by Section 17(1)(a)(i)

of PFA Act and Section 17(1)(a)(ii) of PFA Act

would not be attracted.

17. The Court in exercise of its power under Section

482 Cr.P.C. can quash the proceedings against an

accused in its initial stages only if on the face of

the complaint and the documents accompanying

the same, no offence is constituted. In other

words, taking into consideration the allegations in

the complaint as they are, without any addition or

substraction to it, if no offence is made out then

this Court is justified in quashing the proceedings

in exercise of its power under Section 482 Cr.P.C.

However, the Court cannot look into the defences

of an accused at the initial stage to come to a

conclusion if prima facie any offence was made out

against the accused as per the averments

contained in the complaint and the documents

accompanying the same. The defence has to be

proved by an accused during the trial of the case.

18. Learned counsel for the petitioner has emphasised

that to attract provisions of Section 17(1)(a)(ii) of

PFA Act vicarious liability can be imposed upon the

petitioner only if he was incharge of and was also

responsible to the company for conduct of its

business whereas petitioner being alternate

director was neither responsible to the company

for the conduct of its business nor was incharge of

the same. As per the averments of the petitioner

himself the petitioner was shown as executive

director of the company, may be alternate director

at the relevant time.

19. As per section 313 of the Companies Act, Board of

Directors of a company can appoint an alternate

director to act for a director (original director)

during the absence of the original director. In this

case since Dr. Santosh Kumar Garg, director of the

company, had written to the company secretary on

16.4.2004 nominating the petitioner as an alternate

director in the company in his absence as he was

settled in USA and was not able to regularly attend

the board meetings of the company, the company

appointed the petitioner as alternate director in its

meeting dated 12.5.2004. He has been shown as

executive director in the list of directors of the

company furnished to the respondent department.

20. Therefore, prima facie being an executive director,

petitioner cannot be allowed to agitate at this stage

that he was not incharge of and responsible to the

company for conduct of its business. It is for him

to prove in evidence that even when he was

executive director, he was not incharge of and

responsible to the company for conduct of its

business.

21. The documents placed before this Court by the

petitioner in the petition were not on the court

record before the trial court when the trial court

took cognizance of the offence under Sections 7/16

of PFA Act and summoned the petitioner and other

accused persons vide its order dated 10.5.2006.

These documents have to be considered by the trial

court at the relevant stage. Petitioner cannot be

allowed to place on record the documents which

are his defence in petition under Section 482

Cr.P.C. seeking quashing of the impugned order.

22. Hence, I find no infirmity or illegality in the

impugned order dated 10.5.2006 of the learned

Metropolitan Magistrate, the petition being without

any merits is hereby dismissed.

(ARUNA SURESH) JUDGE February 06, 2009 jk