Chandrakanth Morde vs State Of Kerala
2024 Latest Caselaw 30601 Ker

Kerala High Court

Chandrakanth Morde vs State Of Kerala on 30 October, 2024

Author: P.V. Kunhikrishnan

Bench: P.V.Kunhikrishnan

CRL.MC NO. 2185 OF 2017               1




                                                    2024:KER:80585
               IN THE HIGH COURT OF KERALA AT ERNAKULAM

                                  PRESENT

            THE HONOURABLE MR. JUSTICE P.V.KUNHIKRISHNAN

 WEDNESDAY, THE 30TH DAY OF OCTOBER 2024 / 8TH KARTHIKA, 1946

                          CRL.MC NO. 2185 OF 2017

      AGAINST THE ORDER/JUDGMENT DATED IN CC NO.1560 OF 2015
OF ADDITIONAL CHIEF JUDICIAL MAGISTRATE ,THALASSERY
PETITIONER/S:
          CHANDRAKANTH MORDE
          MANAGING DIRECTOR, MORDE FOODS PVT. LTD, 55/1
          VICTORIA BUILDING, DR. AMBEDKAR ROAD,BYCULA,
          MUMBAI - 400027.


              BY ADVS. DADASAHEB KHARMATE, SRI.RAHUL D KHARMATE,
              SRI.ASHIK K.MOHAMMED ALI
              SMT.BINCY JOSE
              SMT.SAJNA T.UMMER, SRI.MUHAMMED RIFA P.M.


RESPONDENT/S:
          STATE OF KERALA
          REPRESENTED BY THE FOOD SAFETY OFFICER,
          KUNTHUPARAMBA CIRCLE,KANNUR DISTRICT (REPRESENTED
          BY THE PUBLIC PROSECUTOR, HIGH COURT OF KERALA,
          ERNAKULAM).


              BY ADV GRASHIOUS KURIAKOSE,ADDL.DIRECTOR GENERAL
              OF PROSECUTION


       THIS CRIMINAL MISC. CASE HAVING COME UP FOR ADMISSION
ON 25.10.2024, THE COURT ON 30.10.2024 PASSED THE FOLLOWING:
 CRL.MC NO. 2185 OF 2017                   2




                                                           2024:KER:80585


               P.V. KUNHIKRISHNAN, J.
            -----------------------------------
                Crl.M.C No.2185 of 2017
            -----------------------------------
        Dated this the 30th day of October, 2024

                                    ORDER

The petitioner is the 3rd accused in C.C.

No.1560/2015 on the files of the Additional Chief Judicial

Magistrate, Thalassery. It is a complaint filed by the Food

Safety officer, Kuthumparamba, against the petitioner and

three others, alleging offences punishable under Section 3(1)

(zx), 3(1)(zz) and 3(1)(zf)(A)(i) of Food Safety and

Standards Act 2006 (for short 'Act 2006').

2. On 15.12.2014 at about 12:45 pm, Food

Safety Officer visited the premises of M/s Bake Syndicate,

Panoor, PPI-557, D & E and drew the sample from 1 st accused

of four sealed identical packets of Milk Compound (Morde)

bearing label declaration as Proprietary Food, Lot No.12,

2024:KER:80585 packed on 10.05.2014, (A) Best Before 18 months package

Net Wt.500 gram. Nutrition Information, FSSAI license

no.10012022000152 for industrial/institutional use as raw

materials, manufactured and packaged by MORDE FOODS

PVT. LTD. Manchar 410 503, Pune district, Maharashtra under

provisions of Act 2006 following the procedure laid down

under Food Safety and Standard Rules 2011 (for short rule

2011). It is stated that one portion of the said sample along

with Form VI was forwarded to the Food Analyst, Regional

Analytical Laboratory, Calicut by the Food Safety Officer.

Food Analyst, Regional Analytical Laboratory, Calicut after

analyzing the sample delivered Form-B report to the

Designated Officer Kannur. The Designated Officer, Kannur,

in turn forwarded the said report of Food Analyst to the

complainant. The Designated Officer, Kannur, sent the said

report to the accused under Section 46 (4) of the Act 2006.

The accused filed an appeal and the same was allowed.

Accordingly, the second part of the sample was sent to the

2024:KER:80585 Referral Laboratory Kolkata and the result of the Director,

Referral laboratory Form A was received by the Designated

Officer. In the said report, the Director, Referral Laboratory

certified that the sample of Milk Compound was substandard,

unsafe and misbranded as per the provisions of the Act 2006.

The Designated Officer, sent a request to the Commissioner

Food Safety for sanction to prosecute the accused and the

sanction was accorded.

4. Subsequently, the complaint was filed before

the Additional Chief Judicial Magistrate, Thalassery, as

evident by Annexure A1. Annexure A2 is the sanction order

accorded by the Commissioner of Food Safety.

5. In pursuance to the receipt of summons, the

petitioner appeared before the trial court and was enlarged

on bail. The petitioner who is the 3rd accused filed a petition

for discharging under sub-section (2) of Section 245 of the

Code of Criminal Procedure (for short 'Cr.P.C.) before the trial

court on the ground that the allegation made in the title

2024:KER:80585 clause and in the complaint to the effect that 3 rd accused is

the Managing Director of 4th accused Company is not correct.

Annexure A3 is the discharging application filed by the

petitioner/3rd accused.

6. During the time of hearing of Annexure A3

petition, it is submitted that the trial court called upon the

complainant to find out any documents which would show

that the 3rd accused was the Managing Director of 4th accused

company. However, complainant could not produce any

document from the annexures appended to the complaint or

from entire documents produced along with the complaint. It

is submitted that, subsequently, the matter was adjourned to

enable the complainant to bring some evidence to

substantiate the averment made in the complaint to the

effect that 3rd accused was the Managing Director of 4th

accused, despite the fact that it was not permissible to take

on record any inadmissible evidence is the submission. On

17.08.2016, it is submitted that without the knowledge of the

2024:KER:80585 accused and without supplying the copies to the accused,

complainant filed two documents before the trial court, the

first document is a copy of the order dated 09.01.2015

purported to be written to the Designated Officer, Kannur on

behalf of 4th accused, signed by 3rd accused in the capacity of

Director of 4th accused with the request for re-analysis of a

fourth sample of milk compound and the second document

produced is the extract of profile of Chandrakant Morde, 3rd

accused, downloaded from an unauthenticated social

networking website known as 'LinkedIn'. The trial court

permitted the production of both the documents and marked

those documents as C1 and C2. Annexure A4 is C1 and

Annexure A5 is C2. According to the petitioner, he came to

know about the production of these documents in November

2016. Hence, it is submitted that the view to assist the court

in the process of decision making, an attempt was made on

16.12.2016 to file an extract of authenticated information

available on the website of the Ministry of Corporate Affairs,

2024:KER:80585 Government of India which maintains updated master data

about all the details of every incorporated company/LLP. It is

the case of the petitioner that the trial court returned the said

documents containing Company's master data. The same is

produced as Annexure A6, which according to the petitioner is

the copy of the details downloaded from authenticated

website of the Ministry of Corporate Affairs, Government of

India (www.mca.gov.in).

7. According to the petitioner, this document

shows that 3rd accused has been continuously designated as

Director of 4th accused company, since its inception and never

the petitioner was Managing Director of the 4 th accused

Company. Hence, it is submitted that the trial court erred in

not adverting to the vague and ambiguous facts averred in

the complaint that "the complainant came to know that 3 rd

accused was Managing Director of 4th accused".

8. According to the petitioner, without

considering the contentions of the petitioner, the learned

2024:KER:80585 Magistrate dismissed the discharge petition as evident by

Annexure A7.

9. According to the petitioner, the allegations

averred by the Food Safety Officer in the complaint is based

on mere presumptions and assumptions and in the absence

of any authenticated documents available on record

concluded that the petitioner is a Managing Director.

10. The petitioner produced Annexure 8,

Annexure 9, Annexure 10 and Annexure 11 to prove that the

petitioner is not the Managing Director of the company.

Therefore, it is submitted that even if the entire allegations in

Annexure A1 complaint are accepted, no offence is made out

against the petitioner.

11. Heard Adv.Dadasaheb T. Kharmate, learned

counsel for the petitioner and Sri.Grashious Kuriakose,

Addl.Director General of Prosecution.

12. The counsel for the petitioner submitted that

in the complaint, no document is produced by the Food

2024:KER:80585 Safety Officer to show that the petitioner is the Managing

Director of the company except a single sentence to the

effect that "the complainant came to know that A3 is the

Managing Director of A4 firm...." According to the petitioner,

in the light of the documents produced by the petitioner in

this Criminal Miscellaneous case, it is clear that the petitioner,

who is arrayed as 3rd accused, never acted as the Managing

Director of the company. It is also submitted that there is no

averment in the complaint to the effect that the petitioner at

the time when 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. The counsel

for the petitioner relied on several decisions of the Apex Court

to show that such an averment is necessary in the complaint

to prosecute a director of the company. The counsel for the

petitioner also submitted that the documents relied on by the

learned Magistrate while dismissing the discharge petition,

were produced by the prosecution behind the back of the

2024:KER:80585 accused. It is also submitted that those documents are not

admissible in evidence. It is also submitted that even if those

documents are accepted, it will not show that the petitioner

was the Managing Director of the company. The counsel for

the petitioner also submitted that, the order passed by the

learned Magistrate in the discharge petition, as evident by

Annexure A7 is without adverting the contentions raised by

the petitioner and also without considering the authorities

placed by the petitioner. It is also submitted by the counsel

for the petitioner that, Annexures A6, A8 to A11 would show

that the petitioner never acted as the Managing Director of

the company. Therefore, it is submitted that the prosecution

against the petitioner, who is the 3 rd accused is to be

quashed.

13. The Additional Director General of Prosecution

(for short 'ADGP'), Adv. Grashious Kuriakose submitted that

the Act 2006 is enacted with an intention to see that the

citizens are getting unadulterated food. ADGP also

2024:KER:80585 submitted that, the application under Section 482

Cr.P.C. to quash the complaints filed under Act, 2006 should

be considered very seriously. ADGP submitted that from the

information of the Food Safety Officer, the petitioner is the

Managing Director of the company. The ADGP submitted that,

when an application was filed for sending the sample to the

referral laboratory, the petitioner represented the company.

It is also submitted that in the vakalath also, the petitioner

filed the vakalath as the Managing Director of the company.

It is further submitted that in the application submitted for

exemption from personal appearance before the trial court,

the petitioner admitted that he is the Managing Director of

the company. In the light of the above facts, it is clear that

the petitioner was acting as the Managing Director of the

company and this Court may not quash the proceedings

against the petitioner. The ADGP also submitted that the

petitioner refused to disclose the person, who is in charge of

the day to day affairs of the company. When the petitioner

2024:KER:80585 refuses to disclose the same, the contention of the petitioner

is to be raised before the trial court at the appropriate stage.

14. This Court considered the contentions of the

petitioner and the ADGP. The short point raised by the

petitioner, who is the 3rd accused in the company is that he is

not the person in charge of and was responsible to the

company for the conduct of the business of the company and

therefore, the petitioner cannot be prosecuted, in the light of

Section 66 of the Act, 2006. It will be better to extract

Section 66 of the Act, 2006:

Section 66 :- "Offences by companies (1) Where an offence under this Act which has been committed by 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 where a company has different establishments or branches or different units in any establishment or branch, the concerned Head or the person in-charge of such establishment, branch, unit nominated by the company as

2024:KER:80585 responsible for food safety shall be liable for contravention in respect of such establishment, branch or unit: Provided further 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 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 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 firm, means a partner in the firm."

15. Section 66 is pari materia with Section 141 of

the Negotiable Instruments Act. The Apex Court in S.M.S.

Pharmaceuticals Ltd. v. Neeta Bhalla [2005 KHC 1468]

considered the question in detail. The Apex Court observed

2024:KER:80585 that the basic ingredients of the Section should be averred

specifically in the complaint to show that a person is in

charge of and responsible for a Company, Firm, etc.. The

following points were framed for decision by the Apex Court

in S.M.S. Pharmaceuticals' case (supra):

"1. x x x x x x

(a) whether for purposes of S.141 of the Negotiable Instruments Act, 1881, it is sufficient if the substance of the allegation read as a whole fulfill the requirements of the said section and it is not necessary to specifically state in the complaint that the persons accused was in charge of, or responsible for, the conduct of the business of the company.

(b) whether a director of a company would be deemed to be in charge of, and responsible to, the company for conduct of the business of the company and, therefore, deemed to be guilty of the offence unless he proves to the contrary.

(c) even if it is held that specific averments are necessary, whether in the absence of such averments the signatory of the cheque and or the Managing Directors or Joint Managing Director who admittedly would be in charge of the company and responsible to the company for conduct of its business could be proceeded against."

2024:KER:80585

16. The above points were decided by the Apex

Court in S.M.S. Pharmaceuticals' case in the following

manner:

"10. x x x x x x x

(a) It is necessary to specifically aver in a complaint under S.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 S.141 and has to be made in a complaint. Without this averment being made in a complaint, the requirements of S.141 cannot be said to be satisfied.

(b) The answer to question posed in sub para (b) has to be in negative. Merely being a director of a company is not sufficient to make the person liable under S.141 of the Act.

A director in a company cannot be deemed to be in charge of and responsible to the company for conduct of its business. The requirement of S.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 there is no deemed liability of a director in such cases.

(c) The answer to question (c) has to be in 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 conduct of its

2024:KER:80585 business. When that is so, holders of such positions in a company become liable under S.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 S.141. So far as signatory of a cheque which is dishonoured is concerned, he is clearly responsible for the incriminating act and will be covered under sub-s.(2) of S.141."

17. From the above, it is clear that, it is

necessary to specifically aver in the complaint that at the

time the offence was committed, the person accused was in

charge of and responsible for the conduct of the business of

the Company. This averment is an essential requirement that

has to be made in a complaint. Without this averment being

made in a complaint, the requirement under Section 66 of the

Act, 2006 cannot be said to be satisfied.

18. It is also clear that, merely being a Director

of a Company, is not sufficient to make a person liable under

the Act, 2006. A Director in a Company cannot be deemed to

be in charge of and responsible to the Company for the

2024:KER:80585 conduct of its business. In the light of the above decision,

the requirement of Section 66 of the Act, 2006 is that the

person sought to be made liable should be in charge and

responsible for the conduct of the business of the Company at

the relevant time and this has to be averred as a fact as

there is no deemed liability of a Director in such case. But, in

the light of the above decision of the Apex Court, the

Managing Director or Joint Managing Director would be

admittedly in charge of the Company and responsible to the

Company for conduct of its business. When that is so,

holders of such position in a Company became liable under

Section 66 of the Act, 2006 in the light of the decision of the

Apex Court.

19. In the light of the Apex Court decision, 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 got covered under Section 66 of the Act,

2024:KER:80585 2006, if they are the Managing Director of the Company.

20. Annexure A5 is an extract of the profile of

Chandrakant Morde downloaded from an unauthenticated

social networking website. Annexure A5 is downloaded from

LinkedIn, which is a social networking website. I am of the

considered opinion that, such a document cannot be accepted

as an authoritative document to show that the petitioner is

the Managing Director of the 4th accused company. The

learned Magistrate in Annexure A7 order relied on the

vakalath filed by the petitioner before the trial court. This

Court obtained a copy of the same. A perusal of the same

would not show that the petitioner signed the vakalath in the

capacity of Managing Director of the 4 th accused company.

But, in the cause title of the vakalath, the petitioner is

mentioned as Managing Director. But, the cause title

mentioned in vakalath is the cause title in the complaint filed

by the complainant. The petitioner cannot change his name

different from the cause title in the complaint by filing

2024:KER:80585 vakalath. Therefore, the entry in the vakalath cannot be

taken as a ground to treat the petitioner as the Managing

Director of the company. Moreover, this is against the

dictum laid down by the Apex Court in S.M.S.

Pharmaceuticals's case (supra), in which, it is stated that

the averment to that effect should be there in the complaint

itself. The learned Magistrate also observed that, in the

petition submitted by the petitioner before the Court for

permanent exemption under Section 205 r/w 317 Cr.P.C, it is

stated that the petitioner is the Managing Director. This

Court summoned the same also. The statement of facts in the

petition would not show that the petitioner himself admitted

that he is the Managing Director of the company. Moreover,

the averment in such a petition cannot be accepted to

conclude that the petitioner is the Managing Director of the

company. A perusal of the above exemption petition would

show that the petitioner signed the petition as Mr.

Chandrakant Morde (accused no.3). In such circumstances, I

2024:KER:80585 am of the considered opinion that, there is nothing in that

petition also to show that the petitioner is the Managing

Director of the company.

21. The petitioner produced certain documents to

show that he is not the Managing Director of the company.

The first document produced is Annexure A6 which is the true

copy of the details downloaded from the website of the

Ministry of Corporate Affairs, in which the petitioner is shown

only as the Director of the company and there is nothing to

show that he is shown as Managing Director. Similarly,

Annexure A8, which is the Form No. 32 particulars of the

appointment of Directors and Managers before the authority

concerned. In that document also, the petitioner is only

shown as the Director of the company. Again the petitioner

produced Annexure A9 which is Form No.DIR-12. The

Companies Act 1956 had been reformed and the new

Companies Act 2013 came into effect. Under the rules of new

enactment, Form No.DIR-12 is prescribed for filing online the

2024:KER:80585 particulars of appointments of Directors and the Key

Managerial Personnel and changes among them is the

submission. Annexure A10 would not show that the

petitioner is the Managing Director of the company.

Annexure A11 is also produced by the petitioner, which is the

certificate of the statutory company Secretary certifying the

names, date of appointment and designation of the Directors.

In that document also, it would not show that the petitioner is

the Managing Director of the company.

22. In the light of the above discussion, I am of

the considered opinion that the complainant failed to prove

that the petitioner is the Managing Director of the company.

Moreover, in Annexure A1 complaint, there is no specific

averment to the effect that the petitioner/accused was in

charge of and responsible for the conduct of the business of

the company which is mandatory averment necessary in the

light of the dictum laid down by the S.M.S.

Pharmaceuticals's case (supra). Several other decisions

2024:KER:80585 are also relied by the learned counsel for the petitioner to

support the above decision. I am not considering those

decisions in detail. All those decisions only reiterate the

position in S.M.S. Pharmaceuticals's case (supra) in this

case. In Anita Malhotra v. Apparel Export Promotion

Council and Another [(2012) 1 SCC 520] the Apex Court

observed that, if on the face of the document which is beyond

suspicion or doubt, placed by the accused and if it is

considered that the accusation against her cannot stand, the

High Court can interfere under Section 482 Cr.P.C. It will be

better to extract paragraph 20 of the above judgment:

"20. As rightly stated so, though it is not proper for the High Court to consider the defence of the accused or conduct a roving enquiry in respect of merits of the accusation, but if on the face of the document which is beyond suspicion or doubt, placed by the accused and if it is considered that the accusation against her cannot stand, in such a matter, in order to prevent injustice or abuse of process, it is incumbent on the High Court to look into those document/documents which have a bearing on the matter even at the initial stage and grant relief to the person concerned by exercising jurisdiction under Section 482 of the Code".

2024:KER:80585

23. In the light of the above dictum, I am of the

considered opinion that, there is nothing wrong in relying the

documents produced by the petitioner which are all

authenticated documents to prove that the petitioner is not

the Managing Director of the company. In the light of the

above dictum, I am of the considered opinion that the

prosecution against the petitioner is unsustainable.

Therefore, this Criminal Miscellaneous Case is

allowed. All further proceedings against the petitioner alone

in C.C.No.1560/2015 on the file of the Additional Chief

Judicial Magistrate, Thalassery are quashed.

SD/-

P.V.KUNHIKRISHNAN JUDGE

SSG/SKS/nvj/Sbna

2024:KER:80585

PETITIONER ANNEXURES

Annexure A12 TRUE COPY OF THE PROCEEDINGS IN CC NO. 1560 OF 2015 OF THE COURT OF THE ADDITIONAL CHIEF JUDICIAL MAGISTRATE, THALASSERY

ANNEXURE A2 TRUE COPY OF THE SANCTION ORDER ACCORDED BY COMMISSIONER OF FOOD SAFETY, KERALA.

ANNEXURE A3 TRUE COPY OF THE APPLICATION FOR DISCHARGE PREFERRED BY THE PETITIONER IN CC NO. 1560 OF 2015.

ANNEXURE A4 TRUE COPY OF THE ABOVE REFERRED EXHIBIT C1 PROCURED FROM THE RECORD OF THE CASE FILE.

ANNEXURE A5 TRUE COPY OF ABOVE REFERRED EXHIBIT C2 PROCURED FROM THE RECORD OF THE CASE FILE.

ANNEXURE A6 TRUE COPY OF THE DETAILS DOWNLOADED FROM AUTHENTICATE WEBSITE OF MINISTRY OF CORPORATE AFFAIRS, GOVERNMENT OF INDIA(WWW.MCA.GOV.IN).

ANNEXURE A1 CERTIFIED COPY OF THE COMPLAINT IN CC NO.

1560 OF 2015 FILED IN THE COURT OF THE LEARNED ADDITIONAL CHIEF JUDICIAL MAGISTRATE, THALASSERY.

ANNEXURE A8 TRUE COPY OF FORM 32 PROCURED FROM THE OFFICE OF REGISTRAR OF COMPANIES, MAHARASHTRA FILED AT THE TIME OF INCORPORATION OF A4 ON 23-01-2006 SIGNED BY A3 IN HIS CAPACITY AS DIRECTOR.

ANNEXURE A9 TRUE COPY OF THE FORM DATED 29-12-2014 PROCURED FROM THE OFFICE OF REGISTRAR OF COMPANIES, MAHARASHTRA ABOUT THE APPOINTMENT OF FOUR NEW ADDITIONAL DIRECTORS.

ANNEXURE A10 TRUE COPY OF THE FORM DIR-12 DATED 30-12- 2015 PROCURED FROM THE OFFICE OF REGISTRAR OF COMPANIES, MAHARASHTRA ABOUT THE

2024:KER:80585 APPOINTMENT OF FOUR ADDITIONAL DIRECTORS AS DIRECTORS.

ANNEXURE A11 TRUE COPY OF THE CERTIFICATE OF STATUTORY COMPANY SECRETARY DATED 28TH FEBRUARY, 2017 CERTIFYING NAMES, DATE OF APPOINTMENT AND DESIGNATION OF THE DIRECTORS AVAILABLE AS OF TODAY ON THE RECORD OF REGISTRAR OF COMPANIES, MUMBAI BY WAY OF COMPANY MASTER DATA.

ANNEXURE A7 TRUE COPY OF THE ORDER OF DISMISSAL OF DISCHARGE PETITION IN CC NO. 1560 OF 2015.