State (Delhi Administration) v. I. K. Nangia and Anr.

Judgment

CRIMINAL APPELLATE JURISDICTION : Criminal Appeal No. 243 of 1979. Appeal by Special Leave from the Jndgment and Order dated 13-9-1978 of the Delhi High Court in Criminal Revision No. 271/78. U. R. Laliz, 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.

1V. B. Ga11atra, I. N. Shroff and H. S. Parihar for Respondent 'No.

3The 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-s. - ,i1 . ,.......J., STATE V, I. K. NANGIA (Sen, J.) -(2) of s. 17 of th~ 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 adultera_ted 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 !o prosecute any other officer of the company not being nominated under subs.

(2), unless there is allegation th_at the offence had been committed 'with the coru;ent or connivance of, or was attributable to, any neglect -0n the part al 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. Alnned 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 Contr,ol, 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, 19.76, S. D. Sharma, Food Inspector, New Delhi Municipal Committee lifted a sample of 'Postman' brand refined groundnut oil from ~/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 tl1is 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 Metropalitan Magistrate, Delhi by his order dated April 1, 1978 found that there was a prima facie case against M/s. Ahmed Comer Bhoy, the manufacturers of the 'Postman' brand refined groundnut oil, their distributors at Delhi M/s. Gainda Mull Hem Raj and Hi M/s. Amar Provision Store, the retailer, as well as against Y. A. Khan, the Quality Contra!

Manager, Ahmed Mills, but declined to issue any I .. A [1980] 1 S.C.R, process against thei respondents I. K. Nangia and Y. P. Bhasin, &ie two Sales Managers of M/s. Ahmed Oomer Bhoy at Delhi observiqg 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. 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 M~tro- ' ·· ~ politan Magistrate refusing to issue any process against the respon,. dents 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 '\'. 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 c_ase, the allegations in the complaint constitute a prima.jacie 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: "

6That 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. B]jasin.

7That accused Y. A. Khan is the Quality Control Manager of accused No. S and accused I. K. Nangia and Y. P. Bhasin are the Sales Managers (Local Branch) of accused No. S and were incharge of and responsible to it for the conduct of its business at the time of commission of offences by accused No. S." The words "were incharge of' and "responsible to it for the conduct of its busiriess" are wide enough to include all the business activities of M/s. Ahmed Comer Bhoy at Delhi. It is a common !JTOund tliat they have a Delhi Office at 2-A/3., Asaf Ali Road, New Delhi, amj (1) (1978] l S.C.R. 257. L .'II STATE v. I. K, NANGIA (Sen, J.) 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 articfei of food is directly liable under s.7 (i) of the Act, which reads: "7. No person shall himself or by any person on bis behalf manufacture for sale, or store, sell or distribute. (i) any adulterated food;" The manufacturers,, M/t. Ahmed Oomer Bhoy, Bombay became liable because they wete diLectly selling the adulterated article through their branch office at Deihl. The respondents I. K. Nangia and Y. P. Bhasin also became liable because of the words "by any person on bis behalf" which includ~ 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 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, 1916. It is argued on the strength of s. 17 (1) (a) (i) that the reilpondents 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 hew s. 17, introduced by Act 34 of 1976, which iu 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 [1980] 1 S.C.L company for the conduct of the business of the company (hereafter in this section referred to as the person reoponsib!e), or (ii) where no person has been so nominated, every person who at the time the offence was committed was incharg~ 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 tl13t nothing contained in this sub-section shall render any sucli 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. Explanatio11.-Where a company has different establishments, or branches or different units in any establishment or branch, different persons may be nominated nnder this subsection in relation to different establishments or branches or units and the person nominateid 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 (4) Notwithstanding anything contained in the foregoing R 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 J STATE V. I. K. NANGIA (Sen, J.) 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 commitled by a compaiiy, 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 tobe guilty of the offence and is liable to be proceeded against and punished.

Notwithstanding the nomination .of a person under s.17 (2), any i:lirector, 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 !1avin!1'nominat- ·ed 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 ihe respondents is wholly misconceived. Our attention has been drawn to the nomination form, and it says that h<i shall be responsible for the company. We are afraid, there is no substance in this coniention.

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 diffe<ent States. Such a construction would, in our opinion, render tl1e Explanation to s. 17 (2) wholly illusory. Where there is a large business organization with a widespread network of sales organi5ations 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 tem1s, 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 establisliments 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 cstablisl1ment or branch or unit.

The la.guage of the Explanation shows a purpose a®, therefore, a cons- [1980] 1 S.c.Jt, traction 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 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. The case, in our opinion, comes with in the dictum of Lord Cairiis in· Julius v. Lord Bishop of Oxford(') :

"There may be something in tbe nature of the thing empowered to be done, something in the objec\ for which it is to be done, something in the conditions unC!er which it is to be pone, something in the title of .the persons for whose benefit the power is to be exercised, 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 r.equirements of s. 17 (2) should be complied with. Normally, the word 'may' implies what is optional, but for thd 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 be1Tefit of others, or, as it is sometimes said, for the public good or the advancement of justice, have ofteni given rise to controversy when conferring the authority in terms simply enabling and not mandatory. In enacting that they "may" or "shall, if ihey 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 sncb expressions may have-to say the least-a compulsory force, and so could seem to be modified by judicial exposition." (Emphasis supplietf). 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 tl) (1875-85] A.C. 214 .. I STATE v. I. K. NANGii\ (Sen, J.) 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 tim~ nominated any person, in relation to their Delhi branch. The matter is, therefore, squarely covered bys. 17 (1) (a) (ii). On the two questions formulated, the answer is scU-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.l 7 (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. 11-743 SCl/79 0