TMI Blog1986 (4) TMI 365X X X X Extracts X X X X X X X X Extracts X X X X ..... as M/s. Nalanda Trading Stores, Bakhtiarpur carrying on the business of a cement selling agency thereat. On the basis of a complaint (Annexure-1) made by Shri Basistha Narayan Singh, General Secretary of the District Janta Party alleging serious irregularities against the petitioners and their firm an inquiry was apparently made and a report dated 28th of September, 1978 of the Assistant District Supply Officer, Barh, (Annexure-2) was rendered. Pursuant thereto, Shri Devendra Kumar, Supply Inspector, Bakhtiarpur, presented a complaint (Annexure-3) in the court of the Additional Chief Judicial Magistrate, Barh. Therein it was expressly averred that the petitioners are the partners of M/s. Nalanda Trading Stores and they are interested in the loss and profit of the business of the cement selling agency. In terms the allegation that the aforesaid business is under the direct control and supervision of the petitioners was made. Numerous allegations coming within the ambit of the offences Under Sections 7, 9 and 10 of the Essential Commodities Act (hereinafter referred to as 'the Act') were enumerated in paragraphs 2 to 9 of complaint and a prayer was made that cognizance Under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, though vain, effort to forcefully distinguish his case or even to assail the correctness of the view in the earlier two Full Benches aforesaid. It, therefore, becomes necessary to examine the matter in detail afresh even at the cost of some repetition. 7. Inevitably the issue herein has to turn on the language of the statute itself and it is, therefore, apt to quote the provisions of Section 10 of the Essential Commodities Act: 10. Offences by Companies. (I) If the person, contravening an order made Under Section 3 is a company, every person who, at the time the contravention 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 contravention and shall be liable to be proceeded against and punished accordingly: Provided that nothing contained in this Sub-section shall render any such person liable to any punishment if he proves that the contravention took place without his knowledge or that he exercised all due diligence to prevent such contravention. (2) Not withstanding anything contained in Sub-section (1), where an offence under this Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able with the partnership firm as well It is well settled that strict criminal liability of companies or partnership firms or other association of individuals is in a class by itself and poses legal problems peculiar to them. The issue of vicarious liability of a partner of a firm through whom the notional firm must necessarily act therefore, comes to the fore in this context. A plain reading of Section 10 of the Act would indicate that it is expressly intended to incorporate the stringent principle of strict vicarious criminal liability of persons, who are in charge of and responsible to the firm for the conduct of its business for all offences committed by the partnership firm. Now strict vicarious liability is somewhat of an exception to the general rule of direct personal culpability and is a modern development through statutory provisions. That there can be such vicarious criminal liability by legislative mandate is no longer in dispute. Nevertheless steeped as we are in the basic principle of criminal jurisprudence that mens rea must be the ingredient of an offence, it needs some effort to accept wholeheartedly the legislative mandate of vicarious criminality even in the abse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es liable therefore, without more, vicariously. The burden is then laid down upon him to establish and prove a total absence of knowledge about the commission of the crime or the diligent prevention thereof. 13. Analysed as above, Section 10(1) spells out a deeming fiction of vicarious liability and also a rule of evidence laying the burden of proof on persons in charge of and responsible to the company for the conduct of its business. 14. Once it is held as above, the somewhat dubious argument of Mr. Sahay, the learned Counsel for the petitioners, falls in its place and stands conclusively repelled. It is settled beyond cavil that rules of evidence and deeming fictions are not to be expressly spelt out and pleaded. They are matters, which are for consideration and application in the course of the trial. To require that the complaint itself must plead a rule of evidence or, in terms, spell out a deeming fiction provided by the Statute therein is an argument bordering on hypertechnicality. One must always keep in mind the broader perspective that the administration of criminal law is more a matter of substance than of form and it should not be allowed to be pettifogged by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upervision of the accused aforesaid. It is manifest from the above that a pleading has expressly been made about the factum of the partnership of all the petitioners, their deep interestedness in the loss and profit of the business of M/s, Nalanda Trading Stores and what is more, it is stated that the business is under the petitioners' direct control and supervision. To contend that the persons indirect control and directly supervising a business are not in charge thereof or are not responsible to the firm for the same, is in my view, an argument of desperation, which must be rejected at the threshold. Clearly enough these pleadings are ample, if rot even a larger equivalent of the requirement, that such a person must be in charge of or responsible to the firm for the conduct of its business. Once the allegations in paragraph 1 have been clearly laid, the argument that the petitioners are not labelled as Managing Directors or to distinguish their case from the reasoning and rationale of Mahmud All v. State of Bihar (supra) must be rejected. The attempted distinction is one without any difference. 17. To finally conclude on this aspect, on the larger purposes of the Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he availability of adequate proof that the offence has been committed with the consent, connivance or neglect or the principal or other officers of the company. The usual and the normal rule of criminal law is that the charge must be brought home directly to the offender without any reasonable doubt. However, Sub-section (2) lightens the burden by providing that even if it is proved that the principal officers were guilty of consent or connivance or negligence with regard to the offence committed by the company or a partnership firm, they would be within the net of culpability. This has been effectuated by an express deeming fiction that if any of the aforesaid ingredients is established, then the officials concerned will be held guilty of that offence and be punished accordingly. Sub-section (2) may truly come into play during the course of the trial and even at its conclusion when it is proved that the offence has been committed with the consent, connivance or neglect or the company's or the firm's principal officers or partners. Thus, the stringent rule in Sub-section (I) in a way even provide; a second line of defence for the prosecution. Even where the case set up is t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ge of and responsible to the company, is in a way rather more fallacious. 21. On this aspect again the dice is heavily loaded against the learned Counsel for the petitioners in view of the contrary decision of the Full Bench in Mahmud Ali v. State of fij/w(supra). Indeed, faced with the uphill task, learned Counsel for the petitioners was somewhat half-hearted on this aspect of the case. Nevertheless, as the point was raised, it has to be necessarily met 22. To conclude on this aspect the answer to question No. (ii) is rendered in the negative, it is held that Sub-section (2) of Section 10 does not mandate the incorporation of the allegation that the offence was committed with the consent or connivance or was attributable to the neglect on the part of the Director of a company or a partner of a firm in the complaint itself. 23. Before parting with this judgment it seems apt to recall that undoubtedly there did appear to be a divergent stream of judicial thought within this jurisdiction on the aforesaid issues. This, however, has now been authoritatively given the quitus by the Full Bench in Mahmud Alt v. The State of Bihar(supra), It is unnecessary to traverse the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. There has already been a delay of well about 8 years in the trial of the case from the date of the commission of the offence because of the regretful pendency of the present petition. The court below shall now expeditiously proceed to conclude the trial. P.S. Sahay, J. 27. I entirely agree. The point of law stands concluded by Full Bench decision of this Court referred to above. Even on facts, there are clear allegations against the petitioners and they have to face the trial. S.S. Hasan, J. 28. I have had the privilege of going through the decision of Hon'ble the Chief Justice and the note of agreement of P. S. Sahay, J. broadly reiterating the views expressed by them in the case of Mahmud All. The State of Bihar (supra) and in the case of Shri Badri Prasad Gupta and Ors. v. The State of Bihar and Anr. (supra). With the greatest of deference for Hon'ble the Chief Justice and P. S. Sahay, J., I have once again to sound a discordant note reiterating my own views in the aforesaid two cases. 29. The two questions that fall for ultimate decision of the Full Bench have been formulated by Hon'ble the Chief Justice in the very first paragraph of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ponsible to describe the individual who could be held responsible vicariously for an offence committed by a company or a firm. The words are purely descriptive and, if I may say so, excludes all others except those who are actually in charge of and responsible to the affairs of the company from being arraigned as an accused in the criminal prosecution under the Act. It is incumbent on the prosecution to give sufficient material in the complaint or the report that would bring the persons involved in the prosecution within the description of in charge of and responsible to the affairs of the company. Taking the facts of this case as a telling instance, all four partners of the firm have been arraigned as accused only on the basis of their position in the firm but without indicating the facts as to how all of them were in charge of and responsible to the affairs of the company. In other words, their being incharge of and responsible to the affairs of the company is inferential from the fact that only they are partners. I may quote here the relevant paragraph of the complaint which is as follows: 1. That there is one M/s. Nalanda Trading Stores situated at Bakhtiarpur and having i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tioned that Ram Kishan Bajaj is the Chairman and R. P. Nevatia is the Managing Director and respondents 7 to 11 are the directors of the Mill and were in charge of and responsible for the conduct of its business at the time of the commission of the offence whereas in the other case the complaint has merely drawn a presumption without any averment. 5. In the instant case, a clear averment has been made regarding the active role played by the respondents and the extent of their liability. In this view of the matter, it cannot be said that para 5 of the complaint is vague and does not implicate respondents 1 to 11. As to what would be the evidence against the respondents is not a matter to be considered at this stage and would have to be proved at the trial. We have already held that for the purpose of quashing the proceedings only the allegations set forth in the complaint have to be seen and nothing further. 6. From a perusal of the various clauses of the complaint, including para 5, it is quite clear that a prima facie case for summoning the accused has been made out and the High Court was absolutely wrong in holding that the allegations made in para 5 are vague. The High ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... airs of the company under Sub-clause (1) but that person can also be arraigned for his direct act of connivance and negligence. To complete the picture Under Section 10(1) of the Act, a person incharge of and responsible to the affairs of the company or a firm apart from being the General Manager, may be a smaller functionary like a munshi, a head clerk, an accountant or even a salesman and not necessarily a partner or a director. Under Section 10(2) of the Act only the person mentioned therein and on the ground contained therein are and can be liable. Needless to say that under Sub-clause (H of Section 10 of the Act, the person to be indicated must be incharge of and responsible to the affairs of the company and the complaint or the Police report must contain sufficient and specific facts. 33. Concluding, therefore, if a complaint or a Police report does not contain facts which would indicate the manner in which the individual is actually in charge of and responsible to the affairs of the company, except when his duties can be determined by his designation, then the prosecution has to be quashed. My view is fortified also by the provisions of Section 11 of the Act which requi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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