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2010 (11) TMI 1047 - SUPREME COURT

2010 (11) TMI 1047 - SUPREME COURT - 2010 (13) SCR 993, 2011 (1) SCC 176, 2010 (12) JT 531, 2010 (12) SCALE 136 - CRIMINAL APPEAL NO. 836 OF 2010 WITH CRIMINAL APPEAL NOS.837, 838-840, 841, 842, 843, 844 AND 845 OF 2010 - Dated:- 18-11-2010 - ALTAMAS KABIR, JOSEPH, CYRIAC AND VERMA, DEEPAK, JJ. JU D G M E N T ALTAMAS KABIR, J. 1. All these appeals are directed against the judgment dated 19th February, 2009, passed by a learned Single Judge of the Kerala High Court dismissing the several petition .....

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1) In the absence of any prescribed and validated method of analysis under Section 23(1-A)(hh) of the Prevention of Food Adulteration Act, 1954, hereinafter referred to as "the 1954 Act", could a prosecution have been launched against the Appellants based on a report submitted by the Public Analyst using the method of the Directorate General of Health Services (D.G.H.S.) ? (2) Could a prosecution have been launched against the Appellants in the absence of any validated method of analys .....

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le appended to Rule 65(2) of the Prevention of Food Adulteration Rules, 1955, hereinafter referred to as "the 1955 Rules"? and (4) What is the liability of the Directors of a company which is said to have committed defaults within the meaning of Section 17 of the 1954 Act, in the light of the decision of this Court in S.M.S. Pharmaceuticals Ltd. Vs. Neeta Bhalla & Anr. [2005 (8) SCC 89], when they were neither in charge of nor responsible for the conduct of the business of the Comp .....

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he 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 .....

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ned Magistrate on various grounds. 5. Mr. Iqbal Chagla, learned Senior Advocate, appearing for the Appellants questioned the cognizance taken against the Appellants and urged that in the absence of any prescribed method of analysis under Section 23(1-A)(hh) of the 1954 Act by the Central Government, the Public Analyst had not been following any uniform method of analysis, but resorted to whatever method was convenient. It was submitted that the said approach was entirely wrong and the result of .....

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tted for analysis would, therefore, have to be considered as adulterated under Section 2(ia)(h) of the 1954 Act. 6. It was strenuously urged that even if it be assumed that the Public Analyst had detected the presence of pesticide residue, his opinion that the presence of the pesticide residue at such levels rendered the articles injurious to health under Section 2(ia)(h) of the 1954 Act, cannot be accepted in the absence of a validated method of analysis. Mr. Chagla submitted that whether an ar .....

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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 presen .....

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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 under the Act and/or Rules, except for a few milk products. 7. Mr. Chagla submitted that the standard prescribed for "Mineral Water" was that the pesticide residue should be below detectable limits. However, for the first time, with effect from 1st April, 2004, a standard was included which m .....

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cts, the water to be used would have to conform to the standards prescribed for packaged drinking water, but no separate standard of pesticide residue was prescribed. 8. Mr. Chagla submitted that the water used by the manufacturer in the process of manufacturing its carbonated drink, conforms to the standards prescribed for packaged drinking water and no one has contended to the contrary, nor is the Appellants being prosecuted for violating such standard. He contended that the complaint is based .....

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t the samples of carbonated beverages purchased by the Food Inspectors are adulterated under Section 2(ia)(h) of the Act. Based on the said submissions, the High Court confined the allegations only to violation of the aforesaid provision of the Act and the same is also reflected in the impugned judgment of the High Court. 9. As will appear from the report of the Public Analyst filed in connection with Criminal Appeal No.836 of 2010, a pesticide residue of Carbofuran amounting to 0.001 mg/litre w .....

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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 .....

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Mr. Chagla submitted that having observed that the mere presence of insecticide residue could not ipso facto justify the conclusion that the manufactured articles were injurious to health, the High Court ought not to have relied on the report of the Public Analyst to arrive at a prima facie finding that the sample of sweetened carbonated water was adulterated. 11. Mr. Chagla pointed out that when the tolerance limit of Carbofuran in infant milk has been set at 0.05 mg/litre, the presence of 0.00 .....

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icial Magistrate, First Class, Alwaye. The proceedings had been initiated on the complaint filed by the Food Inspector, Edapally Circle, Ernakulam District, under Sections 2(ia)(a) and (m), 7(1) and 16(1)(a)(i) and Section 17(1) of the Prevention of Food Adulteration Act, 1954 read with Rule 5 of the Prevention of Food Adulteration Rules, 1955, which were ultimately quashed, inter alia, on the ground that no prosecution would be maintainable where no standard is prescribed under the Rules. It wa .....

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rt did not appreciate the futility of preferring an appeal under Section 13(2) of the 1954 Act, since admittedly, no validated method of analysis exists for detecting the presence of pesticide residue in carbonated water. 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 .....

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7 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 person responsible), or (ii) where no person has been so nominated, every person wh .....

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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 .....

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spect of such establishment, branch or unit." 15. It was firstly submitted that one Somesh Dahale, Manager, Quality Control, of the Company, had been nominated under Sub-section (2) of Section 17 to be in-charge and responsible for the conduct of the business of the Company and was, therefore, the person responsible within the meaning of Sub- section (1). 16. In addition to the above, Mr. Chagla submitted that since no allegation had been made in the complaint against the Directors of the C .....

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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 ha .....

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) 5 SCC 54], which followed the earlier judgment of this Court in S.M.S. Pharmaceuticals Ltd.'s case (supra). 19. Mr. Chagla submitted that, the allegations made against the Company, its Directors and its employees were not maintainable under the provisions of the Prevention of Food Adulteration Act, 1954, not only on the ground of absence of any standard of validated method for the detection of pesticide residue in carbonated water but also on account of the fact that even the quantity of p .....

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ide residue in carbonated water was shown as 0.001 mg/litre. Mr. Chagla submitted that the several prosecutions commenced against the Appellants and its Directors and employees for alleged violation of the provisions of Section 16(1)(a)(i) read with Section 2(ia)(a), 2(ia)(h), 7(1) of the 1954 Act and Rule 65 of the 1955 Rules, were, therefore, liable to be quashed. 20. Ms. Indu Malhotra, learned Senior Advocate, appearing for Pepsico India Holdings Pvt. Ltd. in Criminal Appeal No.842 of 2010 (a .....

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d be deemed to be aware of actual transactions in a given situation, the Chairman of a large company or a Director of a Company may not be so aware, as in the instant case. 21. In this regard, Ms. Malhotra also referred to the provisions of the Insecticide Act, 1968, which by virtue of the Explanation to Rule 65 has been made applicable to the said Rule regarding usage of the expression "insecticide", and, in particular, Section 33 thereof, which relates to offences so committed by a c .....

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t 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 submit .....

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t of the existence of such insecticides in such food items. Mr. Bhat submitted that while in the Table, which had been initially appended to Sub-Rule (2) of Rule 65, carbonated water had not been included, the said item was included in the said Table under Item No.23 dealing with Chlorpyrifos by G.S.R. 427(E) dated 17.6.2009. It was submitted that it was the intention of the Legislature that sweetened carbonated water should not have any insecticide residue in it at all, but a specific tolerance .....

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the High Court held that in the event the argument advanced on behalf of the Appellants was to be accepted, it would lead to an anomalous situation. On the other hand, the High Court was of the view that the said provisions would be applicable in respect of certain tests which could not be conducted and permitted to be conducted in every laboratory. The non-formulation of Rules under Section 23(1-A)(ee)(hh) for analysis of carbonated beverages, could not, therefore, be construed as being fatal t .....

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f any standard 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 .....

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ter. 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 be adduced during trial having regard to the report of the Public Analyst that 0.001 mg per litre of insecticide residue had been detected in the sweetened carbonated water manufactured by the Appellant-Company. Learned counsel submitted that a prima facie case had been mad .....

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gainst them, the High Court had not only quashed the proceedings against the Directors, it had also considered the question of vicarious liability, but had found that such liability did not extend to the Directors of the Company, who were not responsible to the Company for its day-to-day business. 26. Mr. Bhat also relied upon another decision of this Court in Municipal Corporation of Delhi Vs. Purshotam dass Jhunjunwala & Ors. [(1983) 1 SCC 9], in which the Chairman, Managing Director and D .....

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to Rule 65 of the 1955 Rules had been given up by the State of Kerala before the High Court, though such submission was disputed by Mr. Bhat. He also added that Rule 65 deals with raw products and not finished products and the decision in Prem Ballab & Anr.'s case (supra) dealt with the addition of colour to a food article which has no relevance as far as the facts of these Appeals are concerned, since it is not the case of the prosecution that any insecticide had been directly introduce .....

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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 Adultera .....

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2(ia)(h) of the 1954 Act. Although, carbonated water was not included in the original Table appended to Rule 65 of the 1955 Rules, as stated hereinbefore, it was introduced in Item 23 of the Table under the heading "Chlorpyrifos" with effect from 17th June, 2009, and the tolerance limit of the presence of insecticide residue was prescribed as 0.001 mg/litre, which, in fact, was the amount of insecticide residue found by the Public Analyst in the sample of Pepsi submitted for such anal .....

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t be said to be adulterated being within the prescribed tolerance limit. 32. The entire controversy arises out of the fact that no specific tolerance limit had been prescribed for sweetened carbonated water under Rule 65 and it was, therefore, presumed that trace of any insecticide would amount to adulteration of the final product. In fact, the High Court, while considering the matter, seems to have misconstrued the submissions made on behalf of the Appellants that the mere presence of insectici .....

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that the article of food has become injurious to health. 33. The High Court summarised its view into several grounds of challenge. Grounds 1 and 2 relate to the non-framing of Rules under Section 23(1-A) (ee) and (hh) 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 liabili .....

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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 the prosecution. However, in any event, the percentage of Carbofuran detected in the sam .....

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could be spelt out. Consequently, the High Court also erred in holding that the non- formulation of Rules under the aforesaid provisions of the 1954 Act could not be said to be fatal for the prosecution. 36. As far as Grounds 3, 4 and 5 are concerned, the High Court failed to consider the reasons given on behalf of the Appellants for not sending the Company's sample to the Forensic Laboratory, to the effect that, since neither any validated method of analysis had been prescribed under Sectio .....

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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. 37. On the question of liability of the Directors of the Company with respect to an offence alleged to have been committed by the Company, the High Court went beyond the ratio of the decision of this Court in S.M.S. Pharma .....

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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 Ru .....

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nd the prescription of tolerance limits for different articles of food acquires great significance. The High Court does not appear to have considered the implications of the failure of the Central Government to frame Rules for the aforesaid purpose. Even the view taken by the High Court with regard to Grounds 3, 4 and 5 is not very satisfactory, as the mere presence of pesticide residue does not ipso facto render the article of food adulterated. Tolerance limits have been prescribed in the Table .....

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