Full Text
HIGH COURT OF DELHI
RAMESH CHANDRA KATHURIA ..... Petitioner
Through: Mr. Muneesh Malhotra, Ms. Vanya Khanna and Ms. Manpreet Kaur, Advocates.
Through: Ms. Manjeet Arya, APP for State with
SI S. P. Mamaria from PS-Vasant Kunj (S).
JUDGMENT
1. The present proceeding impugns order dated 15.07.2019 passed by Metropolitan Magistrate in Crl. Case No.8592/2017 as well as seeks quashing of FIR No. No.781/2014 registered under Section 33 of Delhi Excise Act and the consequent proceedings.
2. Learned counsel for the petitioner has submitted that the present case arose out of an incident dated 13.08.2014 where one Lakhmi Chand, driver of car No. DL-4CNA-3251 was caught in possession of 15 bottles of different liquor brands and two cases of beer of Kingfisher Brand. He was apprehended on the basis of secret information and during interrogation disclosed the name of the present petitioner who was Managing Director of 2019:DHC:7261 the company who owned the car.
3. Learned counsel for the petitioner has submitted that on receipt of notice u/s 160 Cr.P.C, the petitioner had replied that the co-accused, Lakhmi Chand went to drop an employee who had used the vehicle for unlawful purpose. It was further contended that the petitioner has been summoned in his individual capacity whereas the company has not been made accused in the present case.
4. Per contra, learned APP for the State submitted that the name of the petitioner has come in the disclosure statement of the accused Lakhmi Chand where he had stated that he had purchased the seized liquor bottles at the asking of the present petitioner.
5. I have heard learned counsel for the petitioner and learned APP for the State and have gone through the records.
6. The present case is registered for the offence punishable under Section 33 Delhi Excise Act and during investigation Section 58 Delhi Excise Act was also added. On 25.03.2017, the chargesheet was filed under the aforesaid sections against Lakhmi Chand and the present petitioner. The Investigating Officer along with the chargesheet, also filed site plan and seizure memo of the car, its registration certificate, insurance cover note & policy papers alongwith other documents.
7. It is the grievance of the petitioner that he was not the owner of the car and in fact it was the company who was the registered owner of the car in all the documents seized during the investigation. There is no investigation carried out whether the seized bottles were purchased on that day as stated by Lakhmi Chand in his disclosure statement.
8. The relevant portion of the chargesheet so far as the role of the present petitioner is concerned is reproduced below: “… disclosure statement of accused Lakhmi Chand was taken and owner of the car accused Ramesh Chand Kathuria was also interrogated...”
9. From the material collected during investigation and filed along with the chargesheet i.e., the seizure memo of the car, its RC and insurance papers show that ‘Norma Ispat Pvt. Ltd.’ (hereinafter referred to as ‘company’) was the registered owner of the car.
10. The trial court vide order dated 15.07.2019 framed charge under Section 52(2) read with 58 of Delhi Excise Act against the present petitioner and under Section 33 of Delhi Excise Act with respect to accused Lakhmi Chand. The impugned order, while noting the argument on behalf of the prosecution, passed the following order:- “It is argued by Ld. APP for the State that as per provision of Section 52.[2] of Delhi Excise Act, as accused Ramesh Chand was working as MD of the above said company, therefore, he is presumed to be in-charge of day to day affairs and the above said provision of law presumes that the owner of the vehicle is deemed to be guilty for unlawful use of the vehicle. After hearing the arguments and considering the record, this Court is of the view that there is requirement of making company liable in such cases where any act is done on behalf of the company. In the case in hand, the notice which was given to Ramesh Chand U/s 160 Cr.P.C. is available on record, wherein it is specifically mentioned by him sent the driver i.e. Accused Lakhmi Chand for dropping an employee whereas accused Lakhmi used the vehicle for above said unlawful purpose. From the said reply it is evident that the vehicle was at that point of time under control of accused Ramesh Chand. The fact that accused Lakhmi Chand had or had not used the vehicle on the direction of accused Ramesh Chand is a defence on the part of accused Ramesh Chand which can be adjudicated at the stage of the trial by leading of evidence. Thus, prima facie role of accused Ramesh Chand in respect to ownership of the vehicle brought on record and there is no bar in proceeding against him irrespective of the fact that company has not been made accused in the present matter. The judgment relied upon by the Ld. Counsel for accused are not applicable to the facts of the present case as in the said cases the fraud was committed by company itself therefore no prosecution of the Directors in absence of the company could have taken place who were acting on behalf of the company, whereas in the case in hand, accused Lakhmi Chand was acting on behalf of accused Ramesh Chand. Hence prima facie charge under Section 33 of Delhi Excise Act is made out against accused Lakhmi Chand and Section 52.[2] r/w 58 of Delhi Excise Act is made out against the accused Ramesh Chand”. (emphasis added)
11. The chargesheet as well as the order on charge, despite noting that the petitioner is the Managing Director of the company, proceed on the ground that the petitioner is the owner of the car and hence liable to be proceeded against in the case. The documents collected during investigation, on the other hand, establish that the car was rather owned by the company.
12. I deem it profitable to reproduce Sections 56 & 52 of Delhi Excise Act relates to commission of offence by a company. The same reads as under:-
13. A perusal of Sections 52(2) & 56 of Delhi Excise Act leaves no doubt that wherever an offence is committed by the company, the company has to be necessarily made an accused. The liability, of the person in charge of and responsible to the company for conduct of its business, is only vicarious in nature. The material placed on record along with the chargesheet shows that the seized car was owned by the company. A bare reading of the impugned order on charge, would show that although, the trial court recorded its view that there was requirement of making the company liable in such cases, but still went on to hold that the petitioner was the owner of the vehicle. Admittedly, the petitioner was not present in the car at the time of its seizure. The company has not been made an accused in the charge sheet. Whether, in the absence of adding the company as an accused, the Managing Director/Director can be made vicariously liable has come up for consideration before the courts on more than one occasion.
14. Section 56 of the Delhi Excise Act is pari materia with Section 85 of Information Technology Act, 2000. The Supreme Court (three Judge Bench), in Aneeta Hada v. Godfather Travels & Tours Pvt. Ltd., reported as (2012) 5 SCC 661, while considering a similar controversy with respect to the offence under Information Technology Act drew an analogy with Section 141 of the Negotiable Instruments Act, 1881 and held that a director cannot be held liable for the offence under Section 85 of the IT Act in absence of the Company being arraigned as an accused. The observations made by the Supreme Court are reproduced hereinunder: - “32. We have referred to the aforesaid authorities to highlight that the company can have criminal liability and further, if a group of persons that guide the business of the companies have the criminal intent, that would be imputed to the body corporate. In this backdrop, Section 141 of the Act has to be understood. The said provision clearly stipulates that when a person which is a company commits an offence, then certain categories of persons in charge as well as the company would be deemed to be liable for the offences under Section 138. Thus, the statutory intendment is absolutely plain. As is perceptible, the provision makes the functionaries and the companies to be liable and that is by deeming fiction. A deeming fiction has its own signification. xxx xxx xxx
39. The word “deemed” used in Section 141 of the Act applies to the company and the persons responsible for the acts of the company. It crystallises the corporate criminal liability and vicarious liability of a person who is in charge of the company. What averments should be required to make a person vicariously liable has been dealt with in S.M.S. Pharmaceuticals Ltd. In the said case, it has been opined that the criminal liability on account of dishonour of cheque primarily falls on the drawee (sic drawer) company and is extended to the officers of the company and as there is a specific provision extending the liability to the officers, the conditions incorporated in Section 141 are to be satisfied.
40. It has been ruled as follows: (S.M.S. Pharmaceuticals Ltd. case, SCC pp. 95-96, para 4)
41. After so stating, it has been further held that while analysing Section 141 of the Act, it will be seen that it operates in cases where an offence under Section 138 is committed by a company. In para 18 of the judgment, it has been clearly held as follows: (S.M.S. Pharmaceuticals Ltd. case, SCC p. 102) “18. … there is almost unanimous judicial opinion that necessary averments ought to be contained in a complaint before a person can be subjected to criminal process. A liability under Section 141 of the Act is sought to be fastened vicariously on a person connected with a company, the principal accused being the company itself. It is a departure from the rule in criminal law against vicarious liability.”
58. Applying the doctrine of strict construction, we are of the considered opinion that commission of offence by the company is an express condition precedent to attract the vicarious liability of others. Thus, the words “as well as the company” appearing in the section make it absolutely unmistakably clear that when the company can be prosecuted, then only the persons mentioned in the other categories could be vicariously liable for the offence subject to the averments in the petition and proof thereof. One cannot be oblivious of the fact that the company is a juristic person and it has its own respectability. If a finding is recorded against it, it would create a concavity in its reputation. There can be situations when the corporate reputation is affected when a Director is indicted.
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 dragnet 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 which is a three-Judge Bench decision. Thus, the view expressed in Sheoratan Agarwal does not correctly lay down the law and, accordingly, is hereby overruled. The decision in Anil Hada is overruled with the qualifier as stated in para
51. The decision in Modi Distillery has to be treated to be restricted to its own facts as has been explained by us hereinabove.
64. Keeping in view the anatomy of the aforesaid provision, our analysis pertaining to Section 141 of the Act would squarely apply to the 2000 enactment. Thus adjudged, the Director could not have been held liable for the offence under Section 85 of the 2000 Act. Resultantly, Criminal Appeal No. 1483 of 2009 is allowed and the proceeding against the appellant is quashed. As far as the Company is concerned, it was not arraigned as an accused. Ergo, the proceeding as initiated in the existing incarnation is not maintainable either against the company or against the Director. As a logical sequitur, the appeals are allowed and the proceedings initiated against Avnish Bajaj as well as the Company in the present form are quashed.”
15. Again, in Anil Gupta v. Star India Pvt. Ltd., reported as (2014) 10 SCC 373, Ajit Balse v. Ranga Karkere, reported (2015) 15 SCC 748, Charanjit Pal Jindal v. L. N. Metalics, reported as (2015) 15 SCC 768 and Himanshu v. B. Shivamurthy & Ors., reported as (2019) 3 SCC 797, the Supreme Court while relying on its decision in Aneeta Hada (supra) reiterated that the proceeding against the Manging Director/Director cannot be continued in absence of making the company a party to the proceedings.
16. A Coordinate Bench of this Court in Matrix Cellular Services Pvt. Ltd. v. Sanjay Mukerji reported as (2013) 196 DLT 649, while considering the offence of contempt of Court committed by a company within the meaning of Section 12(4) of the Contempt of Court Act, 1971 relied on the decision in Aneeta Hada (Supra) and held that the officers of the company cannot be prosecuted in the absence of company being arraigned as an accused.
17. Similarly, another Coordinate Bench of this Court in Rakesh Jain v. Union of India, reported as (2014) 145 DRJ 449, while considering the scope of Section 68 of FERA, 1973 drew parallels with Section 141 of the Negotiable Instruments Act, 1881 came to the conclusion that vicarious liability cannot be fastened on the Directors without making the company an accused.
18. A Single Judge Bench of Gujarat High Court at Ahmedabad in Managing Directors Sanghi Industries Limited v. State of Gujarat, reported as 2016 SCC Online Guj 6303, while dealing with the offence committed by the company under Section 199 of Motor Vehicle Act, 1998 for over loading the vehicle used for transportation of the material from one factory to another held that provision of Section 141 of the NI Act is identical/pari materia with Section 199 of Motor Vehicle Act and in the absence of joining the company as an accused, the complaint against the Managing Director of the company cannot be continued.
19. As already noted above, the seized car was owned by the company. The company has not been made an accused. The case of the investigating agency itself is that the petitioner is not the owner of the car and is only the Managing Director of the company. Further, the trial court in the impugned order dated 15.07.2019 itself notes that there was requirement of making the company liable in such cases however, still goes on to hold that the present petitioner is the owner of the car.
20. Accordingly, I am of the view that in the facts and circumstances of the case, the proceedings against the present petitioner are liable to be set aside. Consequently, the aforesaid FIR and consequent proceedings against the present petitioner are quashed.
21. The petition is accordingly disposed of along with the pending application.
JUDGE DECEMBER 24, 2019 ssc/p’ma