Allowed

Shri. Hanmant S/O. Arjun Hunachikatti v. Karnataka State Government

Karnataka HC16 Sept 2022CRL.P/102699/2022

Case brief

AI extract

What is this about?

In a criminal petition under Section 482 CrPC, the High Court quashed proceedings against a fertilizer retailer accused of selling substandard product. The court held that since the manufacturer company was not arraigned as an accused, the prosecution against the individual retailer was not tenable under the Essential Commodities Act.

What did the court decide?

The proceedings in C.C. No.338/2021 against the petitioner/accused No.3 are quashed.

Shri. Hanmant S/O. Arjun Hunachikatti… — Constitutional and Fundamental Rights | Karnataka HC (2022)

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CRL.P No. 102699 of 2022

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IN THE HIGH COURT OF KARNATAKA, DHARWAD BENCH DATED THIS THE 16^TH DAY OF SEPTEMBER, 2022

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BEFORE

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THE HON'BLE MS. JUSTICE J.M.KHAZI CRIMINAL PETITION NO. 102699 OF 2022 (482-)

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BETWEEN:

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SHRI. HANMANT S/O. ARJUN HUNACHIKATTI, AGE. 40 YEARS, OCC. BUSINESS, PROP. SHRI LAXMI FERTILIZERS, MUDHOL-587107, TQ. MUDHOL, DIST. BAGALKOT.

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…PETITIONER

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(BY SRI. N. L. BATAKURKI., ADVOCATE)

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AND:

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KARNATAKA STATE GOVERNMENT, R/BY THE FERTILIZER INSPECTOR, CUM ASSISTANT DIRECTOR OF AGRICULTURE, O/O ASSISTANT DIRECTOR OF AGRICULTURE,, BILAGI-587116, TQ. BILAGI, DIST. BAGALKOT. R/BY STATE PUBLIC PROSECUTOR, HIGH COURT BLDG, DHARWAD.

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…RESPONDENT

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(BY SRI. GIRIJA S. HIREMATH., ADVOCATE)

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THIS CRIMINAL PETITION IS FILED U/S.482 OF CR.P.C., SEEKING TO QUASH THE ORDER OF ISSUE OF PROCESS FOR THE OFFENCE PUNISHABLE UNDER CLAUSE 19 OF FERTILIZER (CONTROL) ORDER, 1985 R/W SECTIONS 3 AND 7 OF THE ESSENTIAL COMMODITIES ACT BY THE CIVIL JUDGE AND JMFC,

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CRL.P No. 102699 of 2022

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BILAGI DISTRICT BAGALKOT, IN CC NO.338/2021 DATED 25.06.2021 AGAINST THE ACCUSED NO.3/PETITIONER HEREIN AT VIDE ANNEXURE-A AND CONSEQUENTLY QUASH THE COMPLAINT AT VIDE ANNEXURE-B AGAINST THE PETITIONER HEREIN.

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THIS CRIMINAL PETITION COMING ON FOR ADMISSION, THIS DAY, COURT DELIVERED:

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ORDER

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Petitioner who is arraigned as accused No.3 has filed this petition under Section 482 of Cr.P.C, with a prayer to quash the criminal proceedings initiated against him in C.C. No.338/2021 for the offences punishable under Clause 19 of Fertilizer (Control) Order, 1985 r/w/s 3 and 7 of Essential Commodities Act.

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Learned High Court Government Pleader takes notice for respondent.

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Brief facts leading to the filing of present petition are that complainant i.e., Fertilizer Inspector Bilagi, filed a complaint under Section 200 of Cr.P.C, in P.C. No.113/2021, alleging that accused Nos. 1 to 3 are

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CRL.P No. 102699 of 2022

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the retailers and accused No.4 is the Assistant General Manager of Rashtriya Chemical Fertilizer, Manufacturer and Supplier of 10:26:26 complex fertilizer. On 23.09.2019 when complainant collected samples of the above fertilizer and subjected it to analysis through the Fertilizer Control Lab, Dharwad and Quality Control Laboratory, Fertilizer, Karnal, the samples were found to be substandard. Being the retailers and manufacturer, the accused persons are guilty of the offences punishable under Clause 19 of Fertilizer (Control) Order, 1985 r/w/s 3 and 7 of Essential Commodities Act. The same is being challenged in this petition by petitioner.

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During the course of the arguments learned counsel for petitioner submitted that without arraigning the manufacturing company, the complaint is not maintainable against the petitioner as per Section 10 of the Essential Commodities Act. Only a person who is appointed as responsible person for compliance of the order under Clause 24 of the Fertilizer (Control) Order,

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CRL.P No. 102699 of 2022

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1985, is liable for prosecution and not the retailer. As held by the Hon’ble Apex Court, unless and until company is made party, the individual cannot be prosecuted. The trial Court without application of mind has issued process summons to the petitioner and prays to quash the proceedings.

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On the other hand the learned High Court Government Pleader would submit that the action on the complainant in filing the complaint and registering the case is justified and it is a matter for trial and it is for the petitioner to prove his innocence during trial and prays to dismiss the petition.

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Heard arguments and perused the records.

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Thus it is the specific case of the complainant that 10:26:26 complex fertilizer, manufactured by Rashtriya Chemical Fertilizer was collected on 23.09.2019 from the retailer shop of petitioner, and got it examined through the fertilizer lab and it was found of substandard

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CRL.P No. 102699 of 2022

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quality. Thus accordingly to the complainant both the manufacturer as well as retailer are liable to be prosecuted for the offences punishable under Section Clause 19 of Fertilizer (Control) Order, 1985 r/w/s 3 and 7 of Essential Commodities Act. Though the complainant has arraigned the Assistant General Manager of Rashtriya Chemical and Fertilizer Limited as accused No.4, admittedly the manufacturer i.e., Rashtriya Chemical and Fertilizer Limited, is not arraigned as accused.

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Section 10 of the Essential Commodities Act, 1955, deals with the offence by Companies and it reads as follows:

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10. Offences by companies.— (1) 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:

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CRL.P No. 102699 of 2022

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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.

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(2) Notwithstanding anything contained in sub-section (1), 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 attributable to any neglect on the part of any director, manager, secretary or other officer of the company, 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.

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Perusal of Section 10 of the Essential

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Commodities Act, 1955, makes it evident that wherever contravention is by a Company, then 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.

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CRL.P No. 102699 of 2022

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Therefore, petitioner is being made liable on account of he being a retailer of the product manufactured by Company in question and therefore, until and unless the company is arraigned as accused, the petitioner cannot be held responsible.

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In fact, the Hon’ble Apex Court in Aneeta

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Hada Vs. Godfather Travels and Tours Private Limited¹ while considering the offence committed by the company has held as follows:

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“53 . It is to be borne in mind that Section 141 of the Act is concerned with the offences by the company. It makes the other persons vicariously liable for commission of an offence on the part of the company. As has been stated by us earlier, the vicarious liability gets attracted when the condition precedent laid down in Section 141 of the Act stands satisfied. There can be no dispute that as the liability is penal in nature, a strict construction of the provision would be necessitous and, in a way, the warrant.

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1 (2012) 5 SCC 661

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CRL.P No. 102699 of 2022

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56 . We have referred to the aforesaid passages only to highlight that there has to be strict observance of the provisions regard being had to the legislative intendment because it deals with penal provisions and a penalty is not to be imposed affecting the rights of persons, whether juristic entities or individuals, unless they are arrayed as accused. It is to be kept in mind that the power of punishment is vested in the legislature and that is absolute in Section 141 of the Act which clearly speaks of commission of offence by the company. The learned counsel for the respondents have vehemently urged that the use of the term “as well as” in the section is of immense significance and, in its tentacle, it brings in the company as well as the Director and/or other officers who are responsible for the acts of the company and, therefore, a prosecution against the Directors or other officers is tenable even if the company is not arraigned as an accused. The words “as well as” have to be understood in the context.

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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 drag-net on the touchstone

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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 [(1970) 3 SCC 491 : 1971 SCC (Cri) 97] which is a threeJudge Bench decision. Thus, the view expressed in Sheoratan Agarwal [(1984) 4 SCC 352 : 1984 SCC (Cri) 620] does not correctly lay down the law and, accordingly, is hereby overruled. The decision in Anil Hada [(2000) 1 SCC 1 : 2001 SCC (Cri) 174] is overruled with the qualifier as stated in para 51. The decision in Modi Distillery [(1987) 3 SCC 684 : 1987 SCC (Cri) 632] has to be treated to be restricted to its own facts as has been explained by us hereinabove.”

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In the light of the above judgment and having regard to the fact that the company is not arraigned as accused, I am of the considered opinion that the complaint is not tenable as against the petitioner and therefore, the proceedings are liable to be quashed insofar as the petitioner is concerned. Accordingly, I proceed to pass the following:

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ORDER

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The Criminal petition is allowed .

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