Allowed¶70

A M Manjunatha Kumar v. State of Karnataka

Karnataka HC23 Jan 2025WP/1139/2025

Case brief

AI extract

What is this about?

Section 10 Essential Commodities Act 1955; non-arraignment of proprietary firm / partnership firm / company as accused; prosecution of proprietor and partner under Section 19(A)(B) Fertilizer Control Order 1985 read with Section 7 EC Act; quashing of proceedings; C.C.No.2167/2024; PCR No.232/2024; Addl. Civil Judge & JMFC Madikeri; Karnataka High Court writ petition (GM-RES) Articles 226 and 227; followed Shri Mahesh Naik Crl.P.No.100296/2023 (07.02.2023); Aneeta Hada vicarious liability; Justice S.R. Krishna Kumar; decision dated 23 January 2025; NC: 2025:KHC:3074.

What did the court decide?

Petition allowed; the impugned proceedings in C.C.No.2167/2024 arising out of PCR No.232/2024 on the file of Addl. Civil Judge & JMFC, Madikeri, insofar as the petitioners (accused Nos.1 and 2) are concerned, are quashed. ¶70

A M Manjunatha Kumar Vs State of Karnataka — Writ and Judicial Review | Karnataka HC (2025)

What the court decided

AI extract

Outcome

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Issue for consideration

Whether the proceedings in C.C.No.2167/2024 against the petitioners (proprietor of M/s Coorg Agri Centre and partner of M/s Farmers Fertilizer Company) are maintainable where the proprietary firm and partnership firm were not arraigned as accused parties in terms of Section 10 of the Essential Commodities Act, 1955.

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Court's answer

Section 10 of the EC Act mandates that in a proceeding for an offence under Section 7 of the EC Act read with Section 19(A)(B) of the Fertilizer Control Order, 1985, the complainant was incumbent-bound to arraign the proprietary firm and partnership firm as parties along with the individual accused.

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Ratio / Principle

Since the impugned complaint was filed only against the petitioners and M/s Coorg Agri Centre and M/s Farmers Fertlizer Company were not arraigned as accused persons along with them, the impugned proceedings contravene Section 10 of the EC Act, are not maintainable, and deserve to be quashed.

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Detailed headnote1 paragraphs

HIGH COURT OF KARNATAKA (S.R. Krishna Kumar, J.), W.P. No. 1139 of 2025 (GM-RES), decided 23.01.2025 — Essential Commodities Act, 1955, s.10 — Offences by companies/firms — Prosecution for violation of s.19(A)(B) Fertilizer Control Order, 1985 read with s.7 EC Act initiated against the proprietor of a proprietary firm and a partner of a partnership firm without arraigning the firms themselves as accused — s.10 EC Act makes it incumbent upon the complainant to arraign the firm along with the persons in charge, and non-arraignment vitiates the entire proceedings — Entire proceeding in C.C.No.2167/2024 arising out of PCR No.232/2024 (Addl. Civil Judge & JMFC, Madikeri) against accused Nos.1 and 2 quashed, insofar as the petitioners are concerned — Writ petition under Articles 226 and 227 allowed — Court followed the co-ordinate Bench decision in Shri Mahesh Naik v. State of Karnataka, Crl.P.No.100296/2023 (07.02.2023), which had relied on Aneeta Hada v. Godfather Travels and Tours Pvt. Ltd. on the imperative of arraigning the company for prosecuting officers vicariously.

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NC: 2025:KHC:3074 WP No. 1139 of 2025

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 23^RD DAY OF JANUARY, 2025

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BEFORE

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THE HON'BLE MR JUSTICE S.R.KRISHNA KUMAR

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WRIT PETITION NO.1139 OF 2025 (GM-RES)

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BETWEEN:

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A M MANJUNATHA KUMAR WRONGLY MENTIONED AS M.M.KUMAR IN THE PCR AGED ABOUT 63 YEARS, S/O. A.B. MUTHANNA, PROPRIETOR OF COORG AGRI CENTRE, SRI LAKSHMI COMPLEX, OPP. STATE BANK OF INDIA MAIN BRANCH, MADIKERI-571201

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Digitally signed by LEELAVATHI S R Location: High Court of Karnataka

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SRIKANTH REDDY K.B., WRONGLY MENTIONED AS SRIKANTH REDDY IN PCR AGED ABOUT 56 YEARS, S/O. LATE K.B. LAKSHMI REDDY, WORKING AS A PARTNER, FARMERS FERTILIZER COMPANY, PLOT NO.324, KIADB, INDUSTRIAL BADAVANE, OPP. KRISHNA GRANITE, HOLENARASIPURA ROAD, HASSAN-573201

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…PETITIONERS

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(BY SRI. NITIN RAMESH, ADVOCATE)

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AND:

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STATE OF KARNATAKA REPRESENTED BY RIYAZ AHAMMED SHAREEF, ASSISTANT DIRECTOR OF AGRICULTURE, OFFICE OF THE JOINT DIRECTOR OF AGRICULTURE, MADIKERI-571201

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…RESPONDENT

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(BY SMT. RASHMI JADHAV, ADDL. SPP)

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NC: 2025:KHC:3074 WP No. 1139 of 2025

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THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE ENTIRE PROCEEDING AGAINST THE PETITIONERS / ACCUSED NOS.1 AND 2 IN CC NO.2167/2024 ARISING OUT OF PCR NO.232/2024 BEFORE THE HON’BLE ADDL. CIVIL JUDGE AND JMFC, MADIKERI FOR VIOLATION OF SECTION 19(A)(B) OF THE FERTILIZER CONTROL ORDER, 1985 AND SECTION 7 OF THE ESSENTIAL COMMODITIES ACT, 1955 AT ANNEXURES – A AND B IN SO FAR AS PETITIONERS ARE CONCERNED.

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THIS PETITION, COMING ON FOR PRELIMINARY HEARING , THIS DAY, ORDER WAS MADE THEREIN AS UNDER: CORAM: HON'BLE MR JUSTICE S.R.KRISHNA KUMAR

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ORAL ORDER

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This petition by the accused persons in C.C.No.2167/2024 arising out of PCR No.232/2024 on the file of Addl. Civil Judge & JMFC, Madikeri, seeking quashing of the proceedings filed by the respondent against the petitioners for alleged violation of Section 7 of the Essential Commodities Act, 1955 r/w Section 19(A)(B) of the Fertilizer Control Order, 1985.

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Heard learned counsel for the petitioners and learned Addl. SPP for the respondent and perused the material on record.

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In addition to reiterating the various contentions urged

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in the petition and referring to the material on record, learned counsel for the petitioners invited my attention to the impugned complaint in order to point out that the petitioner No.1 being the

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3 - NC: 2025:KHC:3074 WP No. 1139 of 2025

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Proprietor of M/s Coorg Agri Centre, Madikeri and petitioner No.2 being the partner of Farmers Fertilizer Company, it was incumbent upon the respondent – complainant to arraign the aforesaid proprietary firm and partnership firm as parties to the proceedings in terms of Section 10 of the Essential Commodities Act, 1955 (for short, the ‘EC Act’). It is submitted that non-arraignment of the aforesaid firms as parties in terms of Section 10 of the EC Act would vitiate the entire proceedings, which deserves to be quashed as held by the Co-ordinate Bench of this Court in the case of Shri Mahesh Naik Vs. The State of Karnataka – Crl.P.No.100296/2023 dated 07.02.2023.

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Per contra, learned Addl. SPP submits that there is no merit in the petition and that the same is liable to be dismissed.

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As rightly contended by learned counsel for the petitioners, Section 10 of the EC Act mandates that in a proceedings in relation to offence under Section 7 of the EC Act, r/w Section 19(A)(B) of the Fertilizer Control Order, 1985, it was incumbent upon the respondent – complainant to arraign the proprietary firm and partnership firm as parties along with the petitioners to the proceedings in the absence of which the entire

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NC: 2025:KHC:3074 WP No. 1139 of 2025

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proceedings would be vitiated as held by this Court in Mahesh Naik’s case supra, wherein it was held as under:

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“Learned High Court Government Pleader takes notice for respondent / State.

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2. The question involved in this petition since being by a decision of this Court rendered in Crl.P.No.102651/2022 dated 14.09.2022, with the consent of both the learned counsel, petition is taken up for disposal.

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3. The petitioner has sought to quash the proceedings in C.C.No.573/2021 pending on the file of the Court of Prl. Civil Judge and JMFC, Mudhol.

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4. A private complaint is filed by the Fertilizer Inspector-cum-Assistant Director of Agriculture, (HQ), O/o Joint Director of Agriculture, Bagalkote, against the petitioner and another alleging that they have committed an offence under Clause 19 of the Fertilizer (Control) Order, 1985 ('FCO, 1985' for short) read with Sections 3 and 7 of the Essential Commodities Act, for having manufactured and sold the non- standard fertilizer.

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5. Accused No.1 is said to be the owner / proprietor of the firm M/s. Mahantesh Enterprises, doing business as a retailer in fertilizers and the petitioner/accused No.2 is said to be the Compliance Officer of one ZUARI AGRO CHEMICAL LTD. It is alleged that he is responsible officer for 19-19-19 complex fertilizer of Zuari Agro Chemical Ltd., as per Clause 24 of the FCO, 1985 and the said company has manufactured the non-standard fertilizers in question and

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NC: 2025:KHC:3074 WP No. 1139 of 2025

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supplied to the retailers and thereby committed the aforementioned offence.

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6. The charges leveled against the petitioner is that he has violated Clause 19 of the FCO, 1985 read with Sections 3 and 7 of the Essential Commodities Act. Admittedly, the company is not arraigned as an accused in the complaint. In similar circumstances, a co-ordinate bench of this Court in the above referred petition has held as under:

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"8. 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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Provided that nothing contained in this subsection 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 subsection (1), where en 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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9. Perusal of Section 10 of the Essential 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 compa`ny for

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NC: 2025:KHC:3074 WP No. 1139 of 2025

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

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10. In fact, the Hon'ble Apex Court in Aneeta Hada Vs. Godfather Travels and Tours Private Limited 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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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

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NC: 2025:KHC:3074 WP No. 1139 of 2025

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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 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 three-Judge 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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7. In the light of the above decision, proceedings against the petitioner is not sustainable in law.

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8. Hence, the following:

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ORDER

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i) Petition is allowed,

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ii) The proceedings against the petitioner / accused No.1 in C.C.No.573/2021 on the file of the Court of Prl. Civil Judge and JMFC, Mudhol, is quashed.

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IA-1/2023 is disposed of.”

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In the instant case, it is an undisputed fact as is clear

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from the impugned complaint, which is filed only against the petitioners and the firms i.e., M/s. Coorg Agri Centre and M/s.Farmers Fertlizer Company have not been arraigned as

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NC: 2025:KHC:3074 WP No. 1139 of 2025

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accused persons along with the petitioners and consequently, the impugned proceedings clearly contravenes to Section 10 of the EC Act and the same are not maintainable and deserve to be quashed.

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In the result, I pass the following:

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ORDER

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(i) The petition is hereby allowed .

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(ii) The impugned proceedings in

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C.C.No.2167/2024 arising out of PCR No.232/2024 on the file of Addl. Civil Judge & JMFC, Madikeri, insofar as petitioners are concerned, are hereby quashed.

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Sd/-

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(S.R.KRISHNA KUMAR) JUDGE

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SV;

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List No.: 2 Sl No.: 1

A M Manjunatha Kumar v. State of Karnataka

Case brief

What is this about?

What did the court decide?

A M Manjunatha Kumar v. State of Karnataka

Case brief

What is this about?

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