TMI Blog2013 (8) TMI 1129X X X X Extracts X X X X X X X X Extracts X X X X ..... ny. One Mr.Arjunan, yet another Director of the Company, was the second accused; one Mr.Sundaram, the then President of the Company, was the third accused; and one Mr.Suresh, the Chief Manager of the Company, was the fifth accused. Thus, altogether, there were five accused including the petitioners herein in these revision cases. 2. According to the case of the prosecution, in I.D.No.83 of 1984 on the file of the Industrial Tribunal, Chennai, the Tribunal had passed an award directing the Addison Paints Chemicals Limited to pay Dearness Allowance and House Rent Allowance to the workmen and also to implement Settlements under Section 12(3) of the Industrial Disputes Act, dated 24.04.1985 and 21.06.1990. The said award dated 31.12.1992 was notified. Still, the Company did not comply with the said award. With the said allegation, the Association of Addison Paints Chemicals Limited made a representation to the Government on 05.10.1994 requesting the Government to launch prosecution against the Company and others. Based on the said representation and the report of the Deputy Commissioner of Labour-I and the Commissioner of Labour, the Government issued G.O.(D) No.1320 Labour an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s the Appeal were heard together by one and the same judge. By judgment dated 06.02.2008, the lower Appellate Court dismissed the appeal in Crl.A.No.289 of 2003. So far as the revision case in Crl.R.C.No.34 of 2005 is concerned, the lower Court, by a separate judgment, allowed the same and enhanced the sentence of fine from ₹ 1,000/- each to ₹ 5,000/- each, in default, to undergo simple imprisonment for two weeks each. The amount of ₹ 1,000/- already paid as per the order of the trial Court was ordered to be adjusted. Challenging the judgment enhancing the sentence of fine made in Crl.R.C.No.34 of 2005, the petitioners/accused Nos. 1 and 4 have come up with Crl.R.C.No.8 of 2009. Similarly, challenging the dismissal of Crl.A.No. 289 of 2003, the petitioners/accused Nos. 1 and 4 have come up with Crl.R.C.No.9 of 2009. That is how, these two Criminal Revision cases are before me for disposal. 5. The respondents 2 and 3 in the Criminal Revision cases, who are the Prosecution Witnesses 2 and 4 have come up with Crl.O.P.No.8025 of 2008 under Section 482 Cr.P.C. challenging the order made in Crl.R.C.No. 34 of 2005. In this Criminal Original Petition, the petitioners t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , whether prosecution of the Directors and other persons responsible for the Management, without arraying the Company as an accused, is maintainable ? . In paragraph No.3 of the said judgment, the Hon'ble Supreme Court has framed the question as follows:- 3. The core issue that has emerged in these two appeals is whether the Company could have been made liable for prosecution without being impleaded as an accused and whether the Directors could have been prosecuted for offences punishable under the aforesaid provisions without the Company being arrayed as an accused. 12. Before the Hon'ble Supreme Court, the consideration was in respect of Section 141 of the Negotiable Instruments Act, which reads as follows:- 141. Offences by companies.--(1) If the person committing an offence under Section 138 is a company, every person who, 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, 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 nothing contained in this sub-section shall ren ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he eye of law. When the finding that the Company is guilty goes, then, automatically, the conviction against the other persons responsible for the Company should also go. It was on this legal principle, the Hon'ble Supreme Court, ultimately, acquitted the persons responsible for the Company by setting aside the conviction, because the Company was not arrayed as an accused. Applying the said dictum laid down by the Hon'ble Supreme Court, in the instant case, according to the learned senior counsel, the accused are entitled for acquittal. 14. But, Mr.K.M.Ramesh, the learned counsel appearing for the respondents 2 and 3/Prosecution Witnesses 2 and 4 would submit that there is a basic difference between Section 141 of the Negotiable Instruments Act and Section 32 of the Industrial Disputes Act. Section 32 of the Industrial Disputes Act, reads as follows:- 32. Offence by companies, etc.-- Where a person committing an offence under this Act is a company, or other body corporate, or an association of persons (whether incorporated or not), every director, manager, secretary, agent or other officer or person concerned with the management thereof shall, unless he proves that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the learned Magistrate, the revision petitioners herein along with two other accused filed Crl.O.P.No.21668 of 1998 under Section 482 Cr.P.C., seeking to quash the proceedings on the ground that the prosecution of these petitioners alone, in the absence of the Company, was not maintainable. The learned counsel would further submit that the said Criminal Original Petition was dismissed by this Court by order dated 10.09.1999 holding that the prosecution of the Directors of the Company and other persons responsible for the same in the absence of prosecution of the Company is still maintainable. Therefore, according to the learned counsel, the contention of the learned Senior Counsel for the revision petitioners is not sustainable. 19. Mr.S.Shanmuga Velayutham, the learned Public Prosecutor appearing for the first respondent/State would submit that the arguments advanced by Mr.K.M.Ramesh, the learned counsel appearing for the respondents 2 and 3 need to be accepted and the conviction and sentence imposed by the lower Appellate Court should be confirmed. 20. I have considered the above submissions. 21. At the outselt, I should state that fair trial, in any Criminal Case, is gu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndard Chartered Bank v. Directorate of Enforcement, reported in (2005) 4 SCC 530. In the said case the Supreme Court had an occasion to consider whether a body Corporate can be prosecuted and punished for criminal offences. In paragraph Nos.6 and 31, the Constitution Bench has held as follows:- 6. There is no dispute that a company is liable to be prosecuted and punished for criminal offences. Although there are earlier authorities to the effect that corporations cannot commit a crime, the generally accepted modern rule is that except for such crimes as a corporation is held incapable of committing by reason of the fact that they involve personal malicious intent, a corporation may be subject to indictment or other criminal process, although the criminal act is committed through its agents. .... 31. As the company cannot be sentenced to imprisonment, the court cannot impose that punishment, but when imprisonment and fine is the prescribed punishment the court can impose the punishment of fine which could be enforced against the company. Such a discretion is to be read into the section so far as the juristic person is concerned. Of course, the court cannot exercise the sam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut, no one can be condemned, without affording sufficient opportunity to defend, which means, a Company can be punished for any offence committed under the Industrial Disputes Act only by arraying the Company as an accused and after affording opportunity to the said Company. Without making the Company as an accused and without affording any opportunity to the Company, if any finding is recorded by any Court holding the Company guilty of any offence, it will be arbitrary, which will be violative of Article 14 of the Constitution of India. Therefore, the Criminal Court is precluded from recording any finding of guilt against the Company in the absence of the Company being arrayed as an accused and without affording opportunity to the Company. Thus, if we approach the issue by keeping in mind Article 14 of the Constitution of India, then, the argument of Mr.K.M.Ramesh, the learned counsel for the respondents 2 and 3 that in Section 32 of the Industrial Disputes Act, the phrase, as well as the Company is found missing does not merit any consideration. 26. As a matter of fact, in the judgment of the Full Bench of the Hon'ble Supreme Court in Aneeta Hada vs. Godfather Travels ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e a concavity in its reputation. There can be situations when the corporate reputation is affected when a director is indicted. 59. In view of our aforesaid analysis, we arrive at the irresistible conclusion that for maintaining the prosecution under Section 141 of the Act, arraigning of a company as an accused is imperative. The other categories of offenders can only be brought in the dragnet on the touchstone of vicarious liability as the same has been stipulated in the provision itself. We say so on the basis of the ratio laid down in C.V. Parekh which is a three-Judge Bench decision. Thus, the view expressed in Sheoratan Agarwal does not correctly lay down the law and, accordingly, is hereby overruled. The decision in Anil Hada is overruled with the qualifier as stated in paragraph 51. The decision in Modi Distilleries has to be treated to be restricted to its own facts as has been explained by us hereinabove. 27. A cursory reading of the said judgment would make it very clear that if a finding is recorded against the Company, without the Company being arrayed as an accused, it would create a concavity in in its reputation and there may be situations that the corporate r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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