TMI Blog2010 (11) TMI 1047X X X X Extracts X X X X X X X X Extracts X X X X ..... case. Aggrieved by the order, the Appellant-Company, and its Directors have filed these appeals challenging the cognizance taken by the learned Magistrate. HELD THAT:- the percentage of Carbofuran detected in the sample of Pepsico which was sent for examination to the Forensic Laboratory is within the tolerance limits prescribed for Sweetened Carbonated Water with effect from 17th June, 2009.It may be noted that the High Court had itself observed that mere presence of insecticide residue to any extent could not justify an allegation that the article of food was adulterated, but contrary to such observation, the High Court went on to hold that the Sweetened Carbonated Water manufactured by the Appellants was adulterated within the meaning of Section 2(ia)(h) of the 1954 Act. It has to be kept in mind that although an argument was advanced with regard to the restrictions imposed on the use of insecticides under Rule 65 of the 1955 Rules, it is apparent from the order of the learned Single Judge that such a ground was given up by the respondents and the arguments were confined only with regard to the alleged violation of Section 2(ia)(h) of the 1954 Act. We, accordingly, allo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) SCC 89], when they were neither in charge of nor responsible for the conduct of the business of the Company? 2. On 25th October, 2006, the Food Inspector of Mobile Vigilance, Kozhikode, inspected the premises of Star Marketing, Ashoka Puram, Door No.5/1589, under Kozhikode Municipal Corporation and purchased three two-litre bottles of Pepsi on payment of the price. The said bottles were sealed and subsequently, on 26th October, 2006, one part of the sample was forwarded to the Public Analyst, Kozhikode. On 28th November, 2006, the Public Analyst submitted his report stating that upon analysis of the sample of Pepsi Sweetened Carbonated Water, using the Directorate General of Health Services (DGHS) method, pesticide residue- Carbofuran, to the extent of 0.001 mg per litre was detected therein. The said sample was, therefore, adulterated within the meaning of Rule 65 of the 1955 Rules and Section 2(ia)(h) of the 1954 Act. 3. Based upon the report of the Public Analyst, the Chief Judicial Magistrate, Kozhikode, took cognizance of the offence and issued process against the Appellants. 4. The Appellants moved the Kerala High Court under Section 482 Cr.P.C. for quashing of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d has also fixed the limits of pesticide residue permissible for various articles of food, including carbonated water, within which entry the product of the Appellants is also included. It is also universally accepted that even the water which is used for manufacturing carbonated water, has to comply with the standards of packaged drinking water. Rule 65 is found in Part XIV of the 1955 Rules under the heading Insecticides and Pesticides . Rule 65(2) makes it mandatory that the level of insecticide presence, mentioned in the Table in respect of various articles of food, shall not exceed the tolerance limit prescribed against that article of food. At the relevant point of time, when disputes arose, Carbonated Water or Sweetened Carbonated Water was not included in Rule 65 and, hence, no tolerance limit was prescribed for carbonated water threreunder. Furthermore, it was urged by Mr. Chagla that Rule 65 essentially applies to raw agricultural products moving in commerce, which will be evident from Explanation (b)(ii) at the end of the Table appended to Rule 65(2). Accordingly, as far as finished products are concerned, prior to June 17, 2009, no tolerance limits were prescribed un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10. Mr. Chagla contended that in 2007, in an affidavit filed before the Kerala High Court, it had been indicated by the Union of India that the standards for pesticide residue for sweetened carbonated water have not been prescribed in any country of the world and that a manual of analysis for testing of pesticide residue was under preparation of the Ministry of Health and Family Welfare. The same sentiments regarding the absence of validated methods for detection of pesticides were also discussed by the Central Committee for Food Standards on 16th April, 2007, and the Minutes of the meeting recorded that validated methods for detection of pesticides were not available. Apart from the above, Mr. Chagla also submitted that the opinion of the Public Analyst that the carbonated water contained an ingredient which was injurious to health, was not supported by any standard and the finding was based merely on account of the presence of Carbofuran therein. In fact, the Court also observed that the mere presence of insecticide residue could not ipso facto justify a conclusion that the article had become injurious to health. What the Public Analyst indicated was that since Rule 65 and A.01 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Learned counsel also submitted that since the report of the Public Analyst does not disclose any violation of the provisions of the 1954 Act, there was no reason for the Appellants to approach the Central Food Laboratory under Section 13(2) of the 1954 Act. 14. On the question of the liability of the Directors of the Appellant-Company on account of the alleged violation of the provisions of the 1954 Act, Mr. Chagla submitted that except for a bald statement that Accused No.3 to Accused No.9 were the Directors of the Company and that Shri Rajeev Bakshi was the Chairman and Managing Director of the Company, nothing else had been stated in the complaint as to how they were liable for the offences complained of. Mr. Chagla referred to Sub-Sections (1) and (2) of Section 17 of the 1954 Act, which deals with the offences committed by a Company and provides as follows : 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 (hereafter in this section referred to as the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case (supra), wherein the question of vicarious liability in criminal jurisprudence had been considered and it was held that a Director cannot ipso facto be deemed to be in charge of and responsible to the Company for the conduct of its business. Such fact has to be specifically averred in the complaint. Mr. Chagla submitted that the High Court did not also appreciate the fact that the decision in S.M.S. Pharmaceuticals Ltd.'s case (supra) was based on the judgment of this Court in Municipal Corpn. of Delhi Vs. Ram Kishan Rohtagi [(1983) 1 SCC 1] which was a decision in the context of the 1954 Act. 17. Mr. Chagla submitted that it had perhaps been presumed that the Appellant-Company had not nominated an officer under Section 17(2) of the 1954 Act and consequently the entire Board of Directors were responsible for the offence. 18. Mr. Chagla lastly submitted that as far as Mr. Rajeev Bakshi, Chairman of the Company, is concerned, he too cannot be made liable merely on account of the fact that he was the Chairman of the Company. It was submitted that the said view had been expressed by this Court in Everest Advertising (P) Ltd. Vs. State, Govt. of NCT of Delhi Ors. [(200 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de , and, in particular, Section 33 thereof, which relates to offences so committed by a company. Section 33 provides that in regard to offences by companies a person connected with the Company's affairs could not be made liable if he proved that the offence was committed without his knowledge or that he exercised all due diligence to prevent such offence. Ms. Malhotra submitted that from the facts as revealed in the instant case, no liability could be foisted on the Directors of the Company when Somesh Dahale had been nominated under Sub- Section (2) of Section 17 of the 1954 Act to be the person in-charge of and responsible to the Company for the conduct of its business. 22. Mr. K.N. Bhat, learned Senior Advocate, who appeared for the State of Kerala in these appeals, firstly contended that Section 23 of the 1954 Act empowers the Central Government to make rules to inter alia define the laboratories where samples of articles of food may be analyzed by Public Analysts under the Act and also to define the method of analysis under Sub-section (1-A)(ee)(hh). It was submitted that such a power was discretionary and it was for the Central Government to act on the basis thereof. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prescribed under the existing Rules, it was open to the Public Analyst to resort to the DGHS method for analysing the sample which had been forwarded and the adoption of such a method was valid and had been rightly relied upon by the courts below. In support of his submissions, Mr. Bhat referred to the decision of this Court in Prem Ballab Anr. Vs. State (Delhi Admn.) [(1977) 1 SCC 173], wherein this Court was called upon, inter alia, to examine the question as to whether an article of food could be found to be adulterated under more than one clauses of Section 2(i) of the 1954 Act in the context of colouring matter being used in articles of food. This Court held that when no colouring matter is permitted to be used in respect of an article of food, and what is prescribed in respect of the said article is nil colouring matter , it would be a case of adulteration within the meaning of Section 2(j) of the 1954 Act, if the article contains any colouring matter. 24. Mr. Bhat submitted that the question as to whether the insecticide residue found in the product of the Appellants amounted to adulteration or not, is a question which would depend to a large extent on the evidence to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... parties, it is apparent that the width of the dispute to be settled in these Appeals is not very wide. We are only required to consider as to whether the presence of 0.001 mg of Carbofuran per litre found in the sweetened carbonated water, manufactured by the Appellant-Company, can be said to be adulterated as per Rule 65 of the 1955 Rules and under Section 2(ia)(h) of the 1954 Act, particularly in the absence of any validated standard of analysis provided for under the 1954 Act or 1955 Rules. 30. The Public Analyst found the sample of Pepsi to be covered by the definition of non-alcoholic beverages defined in Appendix-B, as prescribed under Rule 5 of the 1955 Rules. Item A.01 deals with non-alcoholic beverages and Item A.01.01 defines carbonated water to mean water conforming to the standards prescribed for Packaged Drinking Water under the Prevention of Food Adulteration Rules, 1955, impregnated with carbon dioxide under pressure which may contain any of the agents mentioned thereunder singly or in combination. Having found the sample of Pepsi to fall within the definition of non-alcoholic beverages, the Public Analyst by using the DGHS method found traces of 0.001 mg of Carb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h) of the 1954 Act. Grounds 3, 4 and 5 deal with the challenge thrown on behalf of the Appellants to the submissions that the report of the Public Analyst was not final and that the same could be challenged under Section 13(2) of the said Act. Ground 6 deals with the criminal liability of the Directors of the Company on account of the allegations against the Company. 34. As far as Grounds 1 and 2 are concerned, the High Court was not convinced with the submission made on behalf of the appellants that in the absence of any prescribed and validated method of analysis under Section 23(1-A)(ee) and (hh) of the 1954 Act, the report of the Public Analyst, who had used the DGHS method, could not be relied upon, especially when even the Laboratories, where the test for detection of insecticides and pesticides in an article of food could be undertaken, had not been specified. The observation of the Division Bench of the High Court that if the submissions made on behalf of the Appellants herein were to be accepted, the mechanism of the Act and the Rules framed thereunder would come to a grinding halt, is not acceptable to us, since the same could lead to a pick and choose method to suit t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a case where the complaint clearly and categorically alleged that the named Directors were in charge of and responsible to the Company for the conduct of its business. It is in such circumstances that the prayer for quashing of the proceedings was rejected. 38. Both the questions regarding the failure of the Central Government to frame Rules to define the Laboratories, where samples of food could be analysed by the Public Analyst, or to define the validated methods of analysis and the liability of the Directors, who are the Appellants before us, are of great importance for the purpose of bringing home a charge against the accused for violation of the provisions of Rule 65 of the 1955 Rules and Section 2(ia)(h) of the 1954 Act and for holding that the Sweetened Carbonated Water manufactured by the Appellants was adulterated in terms of the said Rules. Since the range indicated as to the limits of tolerance of the presence of pesticides in different articles of food, including Sweetened Carbonated Water, which was included in the Table appended to Rule 65(2) with effect from 17th June, 2009, provides very little or practically no margin for error, the selection of Laboratories an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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