Full Judgment Text
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PETITIONER:
STATE (DELHI ADMINISTRATION)
Vs.
RESPONDENT:
I. K. NANGIA AND ANR.
DATE OF JUDGMENT23/10/1979
BENCH:
SEN, A.P. (J)
BENCH:
SEN, A.P. (J)
FAZALALI, SYED MURTAZA
CITATION:
1979 AIR 1977 1980 SCR (1)1046
1980 SCC (1) 258
CITATOR INFO :
D 1988 SC1128 (1)
ACT:
Process, issue of-Test for issue of process-Criminal
Procedure Code, 1973, Section 204 Prevention of Food
Adulteration Act, 1954, Section 17(2), scope of-In a case
where the manufacturer of an article of food is a company,
which has nominated a person under sub-section (2) of
section 17 of the Act, as the person responsible, whether
sales manager of one of its branches can be prosecuted for
an offence punishable under section 16(1)(a) read with
section 7(1) of the Act, when the article of food sold at
the branch is found to be adulterated within the meaning of
section 2(ia) of the Act.
Prevention of Food Adulteration Act, 1954, section
17(2)-Whether, after the introduction of the new section 17
by Act No. 34 of 1976, when an offence is committed by a
company, which has nominated a person responsible under
Section 17(2), it is not permissible to prosecute any other
officer of the company not being nominated under sub-section
(2), unless there is allegation that the offence had been
committed with the consent or connivance of or was
attributable to any neglect on the part of such officer.
HEADNOTE:
On August 31, 1976, the Food Inspector lifted a sample
of ’Postman’ brand refined ground nut oil from M/s. Amar
Provision & General Stores, which was sold/supplied to it by
M/s. Gainda Mull Hem Raj on August 20, 1976 and the same was
found, as per the Public Analyst’s report dated September 9,
1976, to be adulterated due to the presence of Castoroil
(not an edible oil). This adulterated article of food was
supplied/sold to Gainda Mull Hemraj by M/s. Ahmad Oomer Bhoy
through its sales managers at Delhi, T. K. Nangia and Y. P.
Bhasin.
On June 23, 1977, the Delhi Administration filed a
complaint under section 7(1) read with Section 16(1)(a) and
Section 17 against (i) M/s. Ahmed Oomer Bhoy Ahmed Mills,
Bombay manufacturers of well known brand Postman groundnut
oil (ii) their distributors M/s. Gainda Mull Hemraj, New
Delhi, a partnership firm, and its managing Partner Meher
Chand Jain (iii) M/s. Amar Provision and General Stores,
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Netajinagar Market, New Delhi and its owner Amrik Lal, the
retailer (iv) Y. A. Khan, Manager, Quality Control, Ahmed
Mills appointed by the manufacturers as the person
responsible under section 17(2) of the Act, and (v) The two
sales managers, Delhi Branch of M/s. Ahmed Oomer Bhoy,
manufacturers, I.K. Nangia and Y. P. Bhasin.
The Metropolitan Magistrate, Delhi by his order dated
April 1, 1978 found that there was a prima facie case
against all except the two sales managers and issued process
accordingly. He dismissed the complaint against the
respondents on the ground "that they were not concerned with
the manufacturer of the article in question, but had only
effected the sale thereof". The Delhi Administration moved
the High Court in revision against dismissal, but it
declined to interfere.
1017
Allowing the appeal by special leave the Court,
^
HELD: 1. At the initial stage, if there is strong
suspicion which leads the Court to think that there is a
ground for presuming that the accused had committed an
offence, then it is not open to the Court to say that there
was no sufficient ground for proceeding against the accused.
[1020 C-D]
In the instant case, the allegations in the complaint
constitute a prima facie, case against the respondents of
having committed an offence under section 7(1) read with
section 16(1)(a) of the Prevention of Food Adulteration Act,
1954. The words "were in charge of" and "responsible to it
for the conduct of its business" are wide enough to include
all the business activities of M/s. Ahmed Oomer Bhoy at
Delhi who have their office at Delhi and the two respondents
are the sales Managers. [1020 E, G-H, 1021 A]
State of Bihar v. Ramesh Singh, [1978] 1 SCR 257;
applied.
2. The person actually effecting the sale of an
adulterated article of food is directly liable under section
7(i) of the Act. The manufacturers M/s. Ahmed Oomer Bhoy,
Bombay became liable because they were directly selling the
adulterated article through their branch office at Delhi.
The respondents I. K. Nangia and Y. P. Bhasin also became
liable because of the words "by any person on his behalf" in
Section 7 which includes their agents and servants. In view
of this, the learned Metropolitan Magistrate should not have
dismissed the complaint against the respondents. [1021 C-F]
3. On the plain meaning of the new section 17,
introduced by Act 34 of 1976, when an offence has been
committed by a company, where there is no nomination under s
17(2), every person who at the time the offence was
committed was in charge of and was responsible to the
company for the conduct of the business, is deemed to be
guilty of the offence and is liable to be proceeded against
and punished. Notwithstanding the nomination of a person
under s. 17(2), any director, manager, secretary or other
officer of the company [not being a person nominated under
sub-s. (2)] can also be vicariously made liable if it is
proved that the offence has been committed "with the consent
or connivance of, or is attributable to any neglect on the
part of such person". [1023 B-D]
4. To construe section 17(2) of the Act to mean that
the only person liable to be proceeded is the
named/nominated person under section 17(2) would render the
Explanation to Section 17(2) wholly illusory. [1023 E-F]
5. Where there is a large business organisation, with a
widespread network of sales organisation throughout the
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country, it ought to nominate different persons for
different places or face the consequences set forth in s.
17(1)(a)(ii). The Explanation appended to s. 17(2) does, in
terms, contemplate that where a company has different
establishments or branches or different units in any
establishment or branch, it may nominate different persons
in relation to different establishments or branches or units
and the person so nominated in relation to any establishment
or branch or unit shall be deemed to be the person
responsible in respect of such establishment or branch or
unit. The language of the Explanation shows a purpose and,
therefore, a construction consistent with that purpose must
reasonably be placed upon it. [1024 F-H, 1025 A]
1018
The Explanation to s. 17(2), although in terms
permissive imposes a duty upon such a company to nominate a
person in relation to different establishments or branches
or units. There can be no doubt that this implies the
performance of a public duty, as otherwise, the scheme
underlying the section would be unworkable. [1024 A-D]
The Explanation lays down the mode in which the
requirements of s. 17(2) should be complied with. Normally,
the word ’may implies what is optional, but for the reasons
stated, it should in the context in which it appears. mean
’must’. There is an element of compulsion. It is a power
coupled with a duty. Though the company is not a body or
authority, there is no reason why the same principle should
not apply. It is thus wrong to suggest that the Explanation
is only an enabling provision, when its breach entails in
the consequences indicated above. It is not left to one’s
choice, but the law makes it imperative. Admittedly, M/s.
Anand Oomer Bhoy had not at the material time nominated any
person, in relation to their Delhi branch. The matter is,
therefore, squarely conversed by s. 17(1)(a)(ii). [1024D-E,
H, 1025 A]
Julias v. Lord Bishop of Oxford,[1875-85] A.C. 214;
quoted with approval.
6. The individual liability of the sales manager is
distinct and separate from the corporate liability of the
manufacturer. In case of a ’company prosecution’, the
company alongwith its agent, that is, the person nominated
under s. 17(2) as well as the sales manager can both be
prosecuted under s. 7(i) read with s. 16(1) (a).
Notwithstanding the nomination of a person responsible under
s. 17(2), there can also be prosecution of any director,
manager, secretary, or other officer of the company under s.
17(4). But in such a case it is necessary for the
prosecution to prove that the offence has been committed
’with the consent or connivance of, or is attributable to,
any neglect on the part of such person’. [1025 B-D]
JUDGMENT:
CRIMINAL APPELLATE JURISDICTION: Criminal Appeal No.
243 of 1979.
Appeal by Special Leave from the Judgment and Order
dated 13-9-1978 of the Delhi High Court in Criminal Revision
No. 271/78.
U. R. Lalit, R. Bana, M. N. Shroff and Miss A.
Subhashini for the Appellant.
K.L. Arora, R. S. Sodhi and H. C. Gulati for Respondent
No. 1.
V. B. Ganatra, I. N. Shroff and H. S. Parihar for
Respondent No. 3.
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The Judgment of the Court was delivered by
SEN J.-In this appeal, by special leave, from the
judgment of the Delhi High Court, two questions arise which
are one of very general importance. The first is, in a case
where the manufacturer of an article of food is a company,
which has nominated a person under sub-so
1019
(2) of s. 17 of the Prevention of Food Adulteration Act,
1954, as the person responsible, whether the sales manager
at one of its branches can be prosecuted for an offence
punishable under s.16 (1) (a) read with s.7 (i) of the Act,
when the article of food sold at the branch is found to be
adulterated within the meaning of s.2 (ia) of the Act. The
second is, whether after the introduction of the new s.17 by
Act 34 of 1976, when an offence is committed by a company,
which has nominated a person responsible under s.17 (2), it
is not permissible to prosecute any other officer of the
company not being nominated under subs. (2), unless there is
allegation that the offence had been committed ’with the
consent or connivance of, or was attributable to, any
neglect on the part of such officer.
Upon the first question the facts lie within the
smallest possible compass. On June 23, 1977 the Delhi
Administration filed a complaint under s.7 (i) read with
s.16 (1) (a) and s.17 against (1) M/s. Ahmed Oomar Bhoy,
Ahmed Mills, Bombay, manufacturers of the well-known
’postman’ brand or refined groundnut oil, (2) their
distributors M/s. Gainda Mull Hem Raj, New Delhi, a
partnership firm, and its managing Partner Mehar Chand Jain,
(3) M/s. Amar Provision & General Store, Netaji Nagar
Market, New Delhi and its owner Amrik Lal, the retailer, (4)
Y. A. Khan, Manager Quality Control, Ahmed Mills appointed
by the manufacturers as the person responsible under s.
17(2) of the Act, and (5) the two Sales Managers, Delhi
Branch of M/s. Ahmed Oomer Bhoy, manufacturers, I. K. Nangia
and Y. P. Bhasin.
It was alleged that on August 31, 1976, S.D. Sharma,
Food Inspector, New Delhi Municipal Committee lifted a
sample of ’Postman’ brand refined groundnut oil from M/s.
Amar Provision & General Store, which was sold/supplied to
it by M/s. Gainda Mull Hem Raj on August 20, 1976, and the
same by the Public Analyst by his report dated September 9,
1976 was found to be adulterated due to the presence of
’castor oil’ (Not an edible oil). It was further alleged
that this adulterated article of food was supplied/sold to
M/s. Gainda Mull Hem Raj by M/s. Ahmed Oomer Bhoy on August
20, 1976 through its Sales Managers at Delhi, I. K. Nangia
and Y. P. Bhasin.
The Metropolitan Magistrate, Delhi by his order dated
April 1, 1978 found that there was a prima facie case
against M/s. Ahmed Oomer Bhoy, the manufacturers of the
’Postman’ brand refined groundnut oil, their distributors at
Delhi M/s. Gainda Mull Hem Raj and M/s. Amar Provision
Store, the retailer, as well as against Y. A. Khan, the
Quality Control Manager, Ahmed Mills, but declined to issue
any
1020
process against the respondents I. K. Nangia and Y. P.
Bhasin, the two Sales Managers of M/s. Ahmed Oomer Bhoy at
Delhi observing that though they had effected the sale of
the adulterated article of food ’they were not concerned
with the manufacture of the article in question but had only
effected the sale thereof’. He accordingly, dismissed the
complaint against them holding that their prosecution was
misconceived.
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The Delhi Administration moved the High Court in
revision but it declined to interfere.
There can be no doubt that the order made by the
learned Metropolitan Magistrate refusing to issue any
process against the respondents is wholly unwarranted. It
cannot be said that there is no material for presuming that
these respondents had not committed an offence and,
therefore, it was not open to the learned Metropolitan
Magistrate to come to the conclusion that there was no basis
for proceeding against them. The test as laid down by this
Court in the State of Bihar v. Ramesh Singh is that at the
initial stage, if there is a strong suspicion which leads
the Court to think that there is a ground for presuming that
the accused has committed an offence, then it is not open to
the Court to say that there was no sufficient ground for
proceeding against the accused.
In the instant case, the allegations in the complaint
constitute a prima facie case against the respondents of
having committed an offence under s.7 (i) read with s.16 (1)
(a) of the Act. In the complaint, the material allegations
are as follows:
"6. That the adulterated article of food was
supplied/ sold to M/s. Gainda Mull Hem Raj on 20-8-76
by M/s. Ahmed Oomer Bhoy through its sales managers at
Delhi I. K. Nangia and Y. P. Bhasin.
7. That accused Y. A. Khan is the Quality Control
Manager of accused No. 5 and accused I. K. Nangia and
Y. P. Bhasin are the Sales Managers (Local Branch) of
accused No. 5 and were incharge of and responsible to
it for the conduct of its business at the time of
commission of offences by accused No. 5."
The words "were incharge of" and "responsible to it for
the conduct of its business" are wide enough to include all
the business activities of M/s. Ahmed Oomer Bhoy at Delhi.
It is a common ground that they have a Delhi Office at 2-
A/3, Asaf Ali Road, New Delhi, and
1021
that the two respondents I.K. Nangia and Y. P. Bhasin are
the Sales Managers.
The complaint makes a specific allegation that the
respondents were incharge of and were responsible to their
employers for the conduct of their business at Delhi. S. D.
Sharma, Food Inspector, PW 1 has stated during the enquiry
under s. 202 of the Code of Criminal Procedure that the
adulterated article of food in question was sold by them to
the distributors M/s. Gainda Mull Hem Raj vide bill No. 62
dated August 20, 1976. Further, he goes on to, say, that
they were incharge of and responsible to M/s. Ahmed Oomer
Bhoy for the conduct of their business in Delhi at that
time.
Now, the person actually effecting the sale of an
adulterated article of food is directly liable under s.7 (i)
of the Act, which reads:
"7. No person shall himself or by any person on
his behalf manufacture for sale, or store, sell or
distribute.
(i) any adulterated food;"
The manufactures M/s, Ahmed Oomer Bhoy, Bombay became
liable because they were directly selling the adulterated
article through their branch office at Delhi. The
respondents I. K. Nangia and Y. P. Bhasin also became liable
because of the words "by any person on his behalf" which
include their agents and servants. That appears to be the
true construction of the section. In view of this, the
learned Metropolitan Magistrate could not have dismissed the
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complaint against the respondents.
It appears that M/s. Ahmed Oomer Bhoy, Bombay had
appointed the accused Y. A. Khan, Manager Quality Control,
Ahmed Mills to be the person responsible for the company
under s.17 (2) on July 31, 1976. It is argued on the
strength of s. 17 (1) (a) (i) that the respondents could
not, therefore, be prosecuted for the offence committed by
M/s. Ahmed Oomer Bhoy. This contention, in our opinion,
needs only to be stated to be rejected. Not only does it
involve attributing to the Legislature something which was
never intended, but it conflicts with the ordinary canons of
constructions.
The question turns upon a proper construction of the
new s. 17, introduced by Act 34 of 1976, which in so far as
material reads:
"17. (i) 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
1022
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 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; and
(b) 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 render any such person liable to any
punishment provided in this Act if he proves that the
offence was committed without his knowledge and that he
exercised all due 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 such director
or manager as the person responsible, along with the
written consent of such director or manager for being
so nominated.
Explanation.-Where a company has different
establishments, or branches or different units in any
establishment or branch, different persons may be
nominated under this sub-section in relation to
different establishments or branches or units and the
person nominated in relation to any establishment,
branch or unit shall be deemed to be the person
responsible in respect of such establishment, branch or
unit.
(3) x x x x x x x
(4) Notwithstanding anything contained in the
foregoing sub-sections, where an offence under this Act
has been committed by a company and it is proved that
the offence has been committed with the consent or
connivance of, or is
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1023
attributable to, any neglect on the part of, any
director, manager, secretary or other officer of the
company, [not being a person nominated under sub-
section (2)] such director, manager, secretary or other
officer shall also be deemed to be guilty of that
offence and shall be liable to be proceeded against and
punished accordingly."
On the plain meaning of the section, when an offence
has been committed by a company, where there is no
nomination under s. 17 (2), every person who at the time the
offence was committed was in charge of and was responsible
to the company for the conduct of the business, is deemed to
be guilt of the offence and is liable to be proceeded
against and punished. Notwithstanding the nomination of a
person under s.17 (2), any director, manager, secretary or
other officer of the company [not being a person nominated
under sub-s. (2)] can also be vicariously made liable if it
is proved that the offence has been committed "with the
consent or connivance of, or is attributable to any neglect
on the part of such person’.
It is, however, strenuously urged that the company
having nominated the accused Y. A. Khan, Quality Control
Manager, Ahmed Mills to be the person responsible under s.17
(2), he is the only person liable to be proceeded against
throughout the country and the prosecution of the
respondents is wholly misconceived. Our attention has been
drawn to the nomination form, and it says that he shall be
responsible for the company. We are afraid, there is no
substance in this contention. There is nothing in the
document to show that the nomination is effective not only
for the registered office of the company at Bombay but also
for all its branches in different States. Such a
construction would, in our opinion, render the Explanation
to s. 17 (2) wholly illusory.
Where there is a large business organization with a
widespread network of sales organisations throughout the
country, it ought to nominate different persons for
different places or face the consequences set forth in s.17
(1) (a) (ii). The Explanation appended to s.17 (2) does, in
terms, contemplate that where a company has different
establishments or branches or different units in any
establishment or branch, it may nominate different persons
in relation to different establishments or branches or units
and the person so nominated in relation to any establishment
or branch or unit shall be deemed to be the person
responsible in respect of such establishment or branch or
unit. The language of the Explanation shows a purpose and,
therefore, a cons-
1024
truction consistent with that purpose must reasonably be
placed upon it.
We are clear that the Explanation to s. 17(2), although
in terms permissive, imposes duty upon such a company to
nominate a person in relation to different establishments or
branches or units. There can be no doubt that this implies
the performance of a public duty, as otherwise, the scheme
underlying the section would be unworkable. The case, in our
opinion, comes with in the dictum of Lord Cairns in Julius
v. Lord Bishop of Oxford:
"There may be something in the nature of the thing
empowered to be done, something in the object for which
it is to be done, something, in the conditions under
which it is to be done, something in the title of the
persons for whose benefit the power is to be exercised,
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which may couple the power with a duty, and make it the
duty of the person in whom the power is reposed to
exercise that power when called upon to do so."
The Explanation lays down the mode in which the
requirements of s. 17 (2) should be complied with. Normally,
the word ’may’ implies what is optional, but for the reasons
stated, it should in the context in which it appears, mean
’must’. There is an element of compulsion. It is power
coupled with a duty. In Maxwell on Interpretation of
Statutes, 11th Edn. at p. 231, the principle is stated thus:
"Statutes which authorise persons to do acts For
the benefit of others, or, as it is sometimes said, for
the public good or the advancement of justice, have
often given rise to controversy when conferring the
authority in terms simply enabling and not mandatory.
In enacting that they "may" or "shall, if they think
fit", or, "shall have power", or that "it shall be
lawful" for them to do such acts, a statute appears to
use the language of mere permission, but it has been so
often decided as to have become an axiom that in such
cases such expressions may have-to say the least-a
compulsory force, and so could seem to be modified by
judicial exposition." (Emphasis supplied).
Though the company is not a body or authority, there is
no reason why the same principle should not apply. It is
thus wrong to suggest
1025
that the Explanation is only an enabling provision, when its
breach entails in the consequences indicated above. It is
not left to one’s choice, but the law makes it imperative.
Admittedly, M/s. Ahmed Oomer Bhoy had not at the material
time nominated any person, in relation to their Delhi
branch. The matter is, therefore, squarely covered by s. 17
(1) (a) (ii).
On the two questions formulated, the answer is self-
evident. The individual liability of the sales manager is
distinct and separate from the corporate liability of the
manufacturer. In case of a ’company prosecution’, the
company along with its agent, that is, the person nominated
under s.17 (2) as well as the sales manager can both be
prosecuted under s.7 (i) read with s.16 (1) (a).
Notwithstanding the nomination of a person responsible under
s. 17(2), there can also be prosecution of any director,
manager, secretary or other officer of the company under s.
17(4). But in such a case it is necessary for the
prosecution to prove that the offence has been committed
’with the consent or connivance of, or is attributable to,
any neglect on the part of such person’.
The result, therefore, is that the order of the
Metropolitan Magistrate is set aside and he is directed to
issue summons to the respondents and proceed with the trial
according to law.
V.D.K. Appeal allowed.
1026