Criminal Application (Apl) No.437 of 2013

28th October, 2014.

Petitioner Counsel: Shri SUNIL MANOHAR, Shri A.A. NAIK
Respondent Counsel: Shri M.J. KHAN

Cases Cited:
National Small Industries Corporation Limited Vs. Harmeet Singh Paintal and another, 2010 ALL MR (Cri) 921 (S.C.) =(2010) 3 SCC 330 [Para 5]
GHCL Employees Stock Option Trust Vs. Kranti Sinha, (2013) 4 SCC 505 [Para 6]

JUDGMENT

JUDGMENT :- This application under Section 482 of the Criminal Procedure Code is filed by the applicants, who are accused in Summary Criminal Case No.109 of 2013 pending on the file of learned Judicial Magistrate First Class, Mohadi. Accused No.1 is a Company known as M/s TVS Motor Company Limited. The applicants are facing trial for the offence punishable under Section 36(1) of the Legal Metrology Act, 2009.

2. The contention of the applicants is that they cannot be made vicariously liable for the alleged offence only because they are members of the Board of Directors of the Company. It is submitted by learned Senior Counsel Shri Sunil Manohar that there are no allegations of any nature against either of the applicants and it is contended that the prosecution against them is nothing but sort of abuse of process.

3. Learned Senior Counsel Shri Sunil Manohar has submitted that in fact the 'chain kit' on which mandatory declaration "inclusive of all taxes" is not mentioned has not been manufactured by applicant No.1. It was a spurious article sold in market manufactured by some other manufacturer. Learned Senior Counsel Shri Sunil Manohar has further submitted that in any event, that issue will have to be raised during the course of trial and for the time being the applicants are seeking relief in the nature of quashing of proceedings against applicant Nos.2 to 9 only on the ground that there are no allegations of any nature against them as to how they were responsible for the alleged lapse.

4. At this stage, it may be noted here that no relief is pressed for applicant No.1 i.e. Company. Admittedly, applicant No.2 is Chairman and Managing Director of the Company. Learned Additional Public Prosecutor Shri M.J. Khan for the nonapplicant has submitted that applicant No.2 by virtue of his position in the Company was incharge of daytoday affairs of the Company and was responsible for conduct of business of the Company.

5. Attention of learned Senior Counsel Shri Sunil Manohar was drawn to the judgment of the Hon'ble Supreme Court in the case of National Small Industries Corporation Limited .vs. Harmeet Singh Paintal and another reported at (2010) 3 SCC 330 : [2010 ALL MR (Cri) 921 (S.C.)], where the Hon'ble Supreme Court while dealing with the issue of vicarious liability has held as under:-

"39. From the above discussion, the following principles emerge :

i) --------

ii) --------

iii) --------

iv) --------

v) If the accused is a Managing Director or a Joint Managing Director then it is not necessary to make specific averment in the complaint and by virtue of their position they are liable to be proceeded with.

vi) --------

vii) --------

6. Learned Senior Counsel Shri Sunil Manohar, however, has relied upon the judgment of Hon'ble Supreme Court in the case of GHCL Employees Stock Option Trust .vs. Kranti Sinha reported at (2013)4 SCC 505 and has submitted that there is a slight change in the view of the Hon'ble Supreme Court with regard to vicarious liability of the Managing Director and Joint Managing Director. In the said case, the Company along with its Directors including Managing Director were prosecuted for the offences punishable under Sections 120B, 415 and 409 r/w Section 34 of the Indian Penal Code. A process was issued by the learned Metropolitan Magistrate against all the accused including the Managing Director. The Managing Director and Directors filed a petition before the High Court of Delhi challenging the issuance of summons against the Company, the Managing Director of the Company, Company Secretary and Directors of the Company. The High Court of Delhi quashed the process issued against the Managing Director, Company Secretary and Directors of the Company and upheld the order of process issued against the Company. The matter was carried to the Supreme Court by the complainant. The Supreme Court while disposing of the appeal had made following observations in paragraph 19 of the said judgment.

"19. In the order issuing summons, the learned Magistrate has not recorded his satisfaction about the prima facie case as against Respondents 2 to 7 and the role played by them in the capacity of Managing Director, Company Secretary or Directors which is sine qua non for initiating criminal action against them. Recently, in Thermax Ltd. v. K.M. Johny while dealing with a similar case, this Court held as under : (SCC p.429, paras 38 and 39)

"38. Though Respondent No.1 has roped all the appellants in a criminal case without their specific role or participation in the alleged offence with the sole purpose of setting his dispute with the appellant Company by initiating the criminal prosecution, it is pointed out that Appellants 2 to 8 are the ex-Chairperson, ex-Directors and senior managerial personnel of Appellant 1 Company, who do not have any personal role in the allegations and claims of Respondent 1. There is also no specific allegation with regard to their role.

39. Apart from the fact that the complaint lacks necessary ingredients of Sections 405, 406, 420 read with Section 34 IPC, it is to be noted that the concept of 'vicarious liability' is unknown to criminal law. As observed earlier, there is no specific allegation made against any person but the members of the Board and senior executives are joined as the persons looking after the management and business of the appellant Company."

The Supreme Court after having observed as stated hereinabove came to the conclusion that the issuance of summons against the Managing Director, Company Secretary and the Directors amounted to abuse of process of law. The order of the High Court was, therefore, upheld and the appeals were dismissed.

7. Learned Senior Counsel Shri Sunil Manohar has submitted that in view of the judgment of the Hon'ble Supreme Court, which is squarely applicable to the facts of the present case, the process issued against applicant Nos.2 to 9 may be quashed. I have gone through the complaint. The complainant has not bothered to state as to what role was played by applicant Nos.2 to 9 in the alleged offence. He has shown all the applicants under the head of 'Board of Directors'. In view of the judgment of the Supreme Court cited supra, it is abundantly clear that mentioning of names of Directors or Members of Board of Directors by itself will not be sufficient to prosecute them with the help of Section 49(1)(a)(ii) of the Legal Metrology Act, 2009. In the present case, admittedly, the Company has not nominated or authorised any person under Subsection (2) of Section 49 of the Legal Metrology Act, 2009. It may be noted that even if none of the Directors is appointed under Subsection (2) of Section 49 of the Act, the fact remains that the person can be made liable or responsible under Section 49(1)(a)(ii) of the Act only when it is shown that he at the time the offence was committed was incharge of, and was responsible to, the company for the conduct of the business of the company. All the Directors cannot be made accused only because a person/Director has not been appointed or nominated under subSection (2) of Section 49 of the Legal Metrology Act, 2009.

8. The complaint filed by the nonapplicant through Inspector of Legal Metrology, Tumsar Division, District Bhandara does not in any manner indicate as to how either of applicants Nos. 2 to 9 was incharge of and was responsible to the company for the conduct of the business of the Company. Therefore, the judgment cited Supra is squarely applicable to the facts of the present case. In my opinion, the prosecution launched against applicant Nos. 2 to 9 cannot be sustained.

9. At this stage, the learned Senior Counsel Shri Sunil Manohar has stated that applicant No.1 M/s TVS Company Limited will appoint any of the Directors to represent the Company before the trial Court. It follows that the said authorised person will be entitled to appoint a Lawyer on behalf of applicant No.1. It need not be stated here that either of applicant Nos.2 to 9 can be made accused under Section 319 of the Criminal Procedure Code at the later stage if any evidence is adduced to show their involvement.

10. The prosecution pending on the file of learned Judicial Magistrate First Class, Mohadi vide Summary Criminal Case No.109 of 2013 for the offence punishable under Section 36(1) of the Legal Metrology Act, 2009 against applicant Nos.2 to 9 stands quashed. Case to proceed against applicant No.1 in accordance with law. Applicant No.1 shall be represented by the representative appointed by the Company.

The application stands disposed of accordingly.

Ordered accordingly.