Allowed

Parth Sajjan Jindal and Ors. v. State of Maharashtra and Anr.

Bombay HC25 Sept 2023APL/1421/2022

Case brief

AI extract

What is this about?

The High Court allowed the criminal application challenging the issuance of process against applicants and quashed the proceedings due to lack of vicarious liability provisions in the statute, insufficient allegations of active role, and absence of application of mind in the impugned order.

What did the court decide?

The criminal application was allowed in terms of prayer clause (a) and the case was disposed of; impugned order quashed.

Parth Sajjan Jindal and Ors. Vs State of Maharashtra and… — Property and Title | Bombay HC (2023)

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Chitra Sonawane.

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APL-1421-2022.doc

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IN THE HIGH COURT OF JUDICATURE AT BOMBAY CRIMINAL APPELLATE JURISDICTION CRIMINAL APPLICATION NO.1421 OF 2022

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1. Parth Sajjan Jindal

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Aged 32 years,
Having my office at JSW Paints
Private Limited
JSW Centre, Bandra Kurla Complex,
Mumbai-400 051

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Digitally signed by CHITRA CHITRA SANJAY SANJAY SONAWANE SONAWANE Date: 2023.09.25 11:20:45 +0530

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2. Sundaresan A.S.
Aged 57 years,
Having my office at JSW Paints
Private Limited
JSW Centre, Bandra Kurla Complex,
Mumbai-400 051

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3. Anunay Kumar
Aged 76 years,
Having my office at JSW Paints
Private Limited
JSW Centre, Bandra Kurla Complex,
Mumbai-400 051

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…
Applicants.

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Versus

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1.State of Maharashtra

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2. Municipal Corporation of Greater
Mumbai through
Mr Shankar B. Mahajan

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Page No. 1 of 10

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25 September 2023

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Chitra Sonawane. APL-1421-2022.doc

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Assistant Law Officer
Assistant Commissioner ‘S’ Ward,
Municipal Office Building, Mangatram,
Petrol Pump, L.B.S. Marg, Bhandup (W),
Mumbai-400078.… Respondents.

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Mr Niranjan Mundargi a/w Mr Dnyaneshwar Jadhav and Mr
Dhavan Shah i/b Legasis Partners for applicant.
Mr AA Palkar, APP for State-Respondent No.1.

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Ms Madhuri More for respondent No.2-Municipal
Corporation of Greater Mumbai.

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 Coram : R.N.Laddha, J.
Reserved on : 1 September 2023
 Pronounced on : 25 September 2023

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Judgment :

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Heard Mr Niranjan Mundargi, the learned Counsel
appearing on behalf of the applicants; Mr AA Palkar, learned
APP, appearing on behalf of respondent No.1/State; and Ms
Madhuri More, the learned Counsel appearing on behalf of
respondent No.2.

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2.The challenge in this application is to the Criminal Case
No.4106570/SS/2022 (‘impugned complaint’) filed by
respondent No.2 against the applicants before the learned
Metropolitan Magistrate, 41st Court, Shindewadi, Dadar,
Mumbai under sections 394(1)(e)(i) read with 471 of the

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Page No. 2 of 10 ____________________________________________ 25 September 2023

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Chitra Sonawane. APL-1421-2022.doc

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Mumbai Municipal Corporation Act, 1888 (‘MMC Act’) and
the Order dated 20.10.2022 (‘impugned order’) passed by the
learned Magistrate for issuance of a process.

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3.It is the case of the prosecution that the applicants are
directors of JSW Paints Private Limited (‘the Company’). On
or around 06.09.2022, a representative of respondent no.2
visited the Company’s premises for inspection. During the
inspection, in the presence of the store manager, Mr Vijay
Yadav, the inspecting officer allegedly found 400 kilograms of
paint and a colour mixing machine. Consequently, the
inspecting officer issued an inspection report dated
06.09.2022 and called upon the applicants to produce valid
licenses or documents for such activity. On failure to produce
such documents, respondent no.2 filed the impugned
complaint against the applicants.

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4.Mr Mundargi, learned Counsel appearing on behalf of
the applicants, submitted that the impugned complaint suffers
from several flaws. Firstly, the complaint does not name the
Company as an accused, despite respondent No.2 mentioning
the Company’s name indicating respondent No.2’s awareness
of the Company in question. Secondly, Mr Vijay Yadav, the
store manager, present during the inspection, was not named

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Page No. 3 of 10 ____________________________________________ 25 September 2023

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Chitra Sonawane. APL-1421-2022.doc

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as an accused in the complaint. Thirdly, the complaint fails to
establish the applicants’ active role in the alleged offence.
Fourthly, the inspection report does not mention the
applicants’ names or explain their involvement in the alleged
offence, especially considering that the premises and trade
activities in question belong to the Company. Lastly, there are
no allegations in the complaint that demonstrate the active
role of the applicants.

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5.Mr Mundargi submitted that the MMC Act does not
include any provision that makes directors vicariously liable
for the alleged acts or omissions of the Company. The
vicarious liability of directors and managing directors arises
only if there is a stipulation to that effect in the statute. He
also points out that the applicants were not at the subject
premises during the inspection.

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6.The learned Counsel complained that the Magistrate
mechanically issued a process against the applicants. The
summoning order does not disclose the penal provisions of the
MMC Act or the process issued in light of section 204 of the
Code of Criminal Procedure, 1973 (‘CrPC’). The impugned
order also did not disclose or indicate that the Magistrate was
satisfied that the allegations in the complaint constituted an

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Page No. 4 of 10 ____________________________________________ 25 September 2023

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Chitra Sonawane. APL-1421-2022.doc

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offence.

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7.Ms Madhuri More, learned Counsel for respondent
No.2, submitted that one Vijay Yadav, stated to be the store
manager, was present on the premises at the time of
inspection. However, he failed to produce a trade/storage
license as required under section 394 of the MMC Act. She
submitted that such a license is mandatory for storage business
activity. She further submitted that Vijay Yadav failed to show
other valid documents regarding the authenticity of business
activity and details about the owner; however, he did
disclosed the name of the Company and its directors. Based
on the information received from him, an inspection report
was prepared and shown to him, on which his signature was
obtained.

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8. The rival contentions now fall for my determination.

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9.It is not disputed that the Company allegedly involved in
the manufacturing of paints has not been made an accused. It
is also not disputed that the applicants’ were not present
during the inspection. It reveals from the record that Vijay
Yadav, who was present at the premises during the inspection,
informed that the applicants are directors of the Company.

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Page No. 5 of 10 ____________________________________________ 25 September 2023

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Chitra Sonawane.

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APL-1421-2022.doc

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10. The learned Counsel for respondent No.2/ MCGM has
fairly admitted that there is no provision in the MMC Act that
makes directors vicariously liable for the acts and omissions of
the company. Apart from the complainant’s bare averments
that Vijay Yadav provided the name of the Company and its
directors, there is no evidence to show that the Company was
being operated with an active role of the applicants.

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11. It is a settled position in law that an individual can be
accused, along with the company, if there is sufficient evidence
to prove their active role and criminal intent. The alleged
criminal intent must have a direct nexus with the accused. The
director’s vicarious liability arises only if there is a provision
in the statute that establishes such liability. The complainant
must make necessary allegations to attract the provisions that
constitute vicarious liability. All these aspects are highlighted
in Shiv Kumar Jatia v. State (NCT of Delhi)1, and Maksud
Saiyed v. State of Gujarat2.

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12. In Sushil Sethi v. State of Arunachal Pradesh3, the
Hon’ble Supreme Court held as follows:

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“8.2. It is also required to be noted that the
main allegations can be said to be against the

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1 2019 SCC OnLine SC 1090

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2 (2008) 5 SCC 668

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3 (2020) 3 SCC 240

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Page No. 6 of 10

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25 September 2023

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Chitra Sonawane. APL-1421-2022.doc

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company. The company has not been made a
party. The allegations are restricted to the
Managing Director and the Director of the
company respectively. There are no specific
allegations against the Managing Director or
even the Director. There are no allegations to
constitute the vicarious liability. In Maksud
Saiyed v. State of Gujarat [Maksud Saiyed v.
State of Gujarat, (2008) 5 SCC 668 : (2008) 2
SCC (Cri) 692], it is observed and held by this
Court that the Penal Code does not contain
any provision for attaching vicarious liability
on the part of the Managing Director or the
Directors of the company when the accused is
the company. It is further observed and held
that the vicarious liability of the Managing
Director and Director would arise provided
any provision exists in that behalf in the
statute. It is further observed that the statute
indisputably must contain provision fixing
such vicarious liabilities. It is further observed
that even for the said purpose, it is obligatory
on the part of the complainant to make
requisite allegations which would attract the
provisions constituting vicarious liability. In
the present case, there are no such specific
allegations against the appellants being
Managing Director or the Director of the
company respectively. Under the circumstances
also, the impugned criminal proceedings are
required to be quashed and set aside.”

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13. If these observations of the Hon’ble Supreme Court are considered in the light of averments made in the impugned complaint, it becomes evident that the complaint does not Page No. 7 of 10 ____________________________________________ 25 September 2023

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Chitra Sonawane. APL-1421-2022.doc

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mention any allegations of vicarious liability against the
applicants for storing paints and a colour mixing machine
without obtaining license from respondent No.2/ MCGM.
Similarly, the MMC Act does not provide for imposing
vicarious liability on the directors of the company, specially
when no active role has been assigned to the applicants.

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14. Furthermore, the impugned order does not mention the
specific penal provision of the MMC Act under which the
process was issued. Additionally, the impugned order fails to
state that the process was issued in accordance with section
204 of CrPC.

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15. In Birla Corpn. Ltd. v. Adventz Investments & Holdings
Ltd.4, the Hon’ble Supreme Court held as follows:

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“33. The order of the Magistrate summoning
the accused must reflect that he has applied his
mind to the facts of the case and the law
applicable thereto. The application of mind
has to be indicated by disclosure of mind on
the satisfaction. Considering the duties on the
part of the Magistrate for issuance of
summons to the accused in a complaint case
and that there must be sufficient indication as
to the application of mind and observing that
the Magistrate is not to act as a post office in
taking cognizance of the complaint, in
Mehmood Ul Rehman [Mehmood Ul Rehman

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4 (2019) 16 SCC 610

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Page No. 8 of 10

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25 September 2023

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Chitra Sonawane. APL-1421-2022.doc

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v. Khazir Mohammad Tunda, (2015) 12 SCC
420 : (2016) 1 SCC (Cri) 124] , this Court
held as under : (SCC p. 430, para 22)

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“22. … The Code of Criminal

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Procedure requires speaking order to
be passed under Section 203 CrPC
when the complaint is dismissed and
that too the reasons need to be
stated only briefly. In other words,
the Magistrate is not to act as a post
office in taking cognizance of each
and every complaint filed before him
and issue process as a matter of
course. There must be sufficient
indication in the order passed by the
Magistrate that he is satisfied that
the allegations in the complaint
constitute an offence and when
considered along with the statements
recorded and the result of inquiry or
report of investigation under Section
202 CrPC, if any, the accused is
answerable before the criminal
court, there is ground for proceeding
against the accused under Section
204 CrPC, by issuing process for
appearance. The application of mind
is best demonstrated by disclosure of
mind on the satisfaction. If there is
no such indication in a case where
the Magistrate proceeds under
Sections 190/204 CrPC, the High
Court under Section 482 CrPC is
bound to invoke its inherent power
in order to prevent abuse of the
power of the criminal court. To be
called to appear before the criminal

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Page No. 9 of 10

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____________________________________________ 25 September 2023

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Chitra Sonawane. APL-1421-2022.doc

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court as an accused is serious matter
affecting one's dignity, self-respect
and image in society. Hence, the
process of criminal court shall not be
made a weapon of harassment”

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(emphasis supplied)”

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16. It is not stated in the complaint that the applicants are
directors of the Company. The impugned order does not
indicate that the learned Magistrate found the allegations in
the complaint sufficient to issue summons for the offence
under section 394(1)(e)(i) punishable under section 471 of the
MMC Act. The summoning order does not specify the offence
for which the prima facie case is made out for which the
process is issued. These omissions suggest a lack of application
of mind by the Magistrate. Furthermore, the contents of the
complaint are conspicuously silent about the active role, if
any, of the applicants.

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17. Resultantly, the application succeeds and is allowed in
terms of prayer clause (a). The application stands disposed of
accordingly.

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 [R.N.Laddha, J.]

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Page No. 10 of 10 ____________________________________________ 25 September 2023

Parth Sajjan Jindal and Ors. v. State of Maharashtra and Anr.

Case brief

What is this about?

What did the court decide?

Parth Sajjan Jindal and Ors. v. State of Maharashtra and Anr.

Case brief

What is this about?

What did the court decide?

What the court decided

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