STATE OF NCT OF DELHI THROUGH PROSECUTING OFFICER, INSECTICIDES, GOVERNMENT OF NCT, DELHIversusRAJIV KHURANA

                  (2010] 9 S.C.R. 387


  STATE OF NCT OF DELHI THROUGH PROSECUTING                        A
   OFFICER, INSECTICIDES, GOVERNMENT OF NCT,
                      DELHI
                               v.
                      RAJIV KHURANA
            (Criminal Appeal no. 1380 of 2010)                     B
                       JULY 30, 2010

 [DALVEER BHANDARI AND K.S. RADHAKRISHNAN,
                             JJ.)
                                                                   c
     Insecticides Act, 1968 - s.33 - Offences by companies
- Vicarious liability - Held: A person is vicariously liable for
commission of an offence under the Act if at the relevant time
he was incharge of and was also responsible to the company
for conduct of its business - Mere allegation in the complaint     D
that the accused was director of the company and nothing to
indicate, even prima facie, that he was incharge of the
company and also responsible to the company for the
conduct of its business would not be enough to hold him
vicariously liable - Code of Criminal Procedure, 1973 - s. 482.    E

      The prosecution case was that the product
manufactured by the company was not found to be in
conformity with the prescribed ISi specification. On the
basis of the communication by the company that the
                                                                   F
respondent was its Regional Technical Director and was
responsible for the quality of the product, criminal
proceedings were initiated against the respondent. The
trial court issued summons against the respondent. The
High Court allowed the petition filed by the respondent
under section 482, Cr.P.C. and quashed the summons.                G
The order of High Court was challenged by State in the
instant appeal.

    Dismissing the appeal, the Court
                             387                                   H
    388      SUPREME COURT REPORTS               [2010] 9 S.C.R.


A     HELD: It is imperative to specifically aver in the
  complaint that the accused was in charge of and was
  responsible for the conduct of business of the company.
  Unless clear averments are specifically incorporated in
  the complaint, the respondent cannot be compelled to
B face the rigmarole of a criminal trial. The complaint
  showed that except a bald statement that the respondent
  was director of the manufacturer, there was no other
  allegation to indicate, even prima facie, that he was
  incharge of the company and also responsible to the
C company for the conduct of its business. In view of clear
  legal position, there was no infirmity in the impugned
  judgment. [Paras 13, 21, 22] [398-A-B; 393-F-H; 394-A;
  398-C]

      S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla & Another
D (2005) 8 SCO 89; Monaben Ketanbhai Shah & Another v.
  State of Gujarat & Others (2004) 7 SCC 15; Municipal
  Corporation of Delhi v. Ram Kishan Rohtagi & Others (1983)
  1 SCC 1; State of Haryana v. Brij Lal Mittal & Others (1998)
  5 SCC 343; K.P. G. Nair v. Jindal Menthol India Ltd. (2001)
E 10 SCC 218; Katta Sujatha (Smt.) v. Fertilizers & Chemicals
  Travancore Ltd. & Another (2002) 7 SCC 655; Sabitha
    Ramamurthy and Another v. R.B.S. Channabasavaradhya
    (2006) 10 SCC 581; K.K. Ahujd v. V.K. Vora and Another
    (2009) 10 sec 48 - relied on.
F
                           Case Law Reference:
          (2005) 8 sec 89         relied on        Paras 7, 15
          (2004) 1 sec 15         relied on        Para 1O
G         (1983) 1 sec 1          relied on        Para 12
          (1998) 5 sec 343        relied on        Para 13
          (2001) 10 sec 218       relied on        Para 14

H         (2002) 7 sec 655        relied on        Para 14
   STATE OF NCT OF DELHI v. RAJIV KHURANA                    389


    (2006) 1o sec 581          relied on          Para 16           A

    (2009) 1o sec 48           relied on          Paras 17, 19

    CRIMINAL APPELLATE JURISDICTION: Criminal Appeal
No. 1380 of 2010.
                                                                    B
    From the Judgment & Order dated 02.01.2008 of the High
Court of Delhi at New Delhi in Crl. M. C. No. 2639 of 2006.

    P.P. Malhotra, ASG, T.S. Doabia, Rachana Srivastava,
Sadhana Sandhu, M.D. Doabia, D.S. Mahra for the Appellant.          c
    Siddharth Luthra, Mti Sharma, Kalyan Roy, Anurag,
Ashwani Kumar for the Respondent.

    The Judgmert of the Court was delivered by
                                                                    D
    DALVEER BHANDARI, J. 1. Leave granted.

     2. This appeal has been filed by the appellant State of
National Capital Territory of Delhi against the judgment of the
High Court of Delhi dated 2.1.2008 in Criminal Miscellaneous
Case No. 2639 of 2006 whereby the High Court has quashed            E
the summons issued by the trial court.

      3. The appellant submitted that the Company had
specifically stated in its letter dated 19.1.2000 that respondent
Rajiv Khurana was the Regional Technical Director handling the      F
quality control in the company. The relevant portion of the said
letter is reproduced as under:

    "We shall be happy to cooperate with you in all such quality
    issues about our Mortem product range. Our quality control
    is handled by Mr. Rajeev Khurana, Regional Technical            G
    Director."

    4. It is submitted that section 33 of the Insecticides Act,
1968 provides that:
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    390      SUPREME COURT REPORTS                  [2010] 9 S.C.R.


A         "33. Offences by companies.-(1 )Whenever. an offence
          under this Act has been committed by a company, every
          person who at the time of the offence was committed was
          in charge of, or was responsible to the company for the
          conduct of the business of the company, as well as the
B         company, shall be deemed to be guilty of the offence and
          shall be liable to be proceeded against and punished
          accordingly:

                Provided that nothing contained in this suo-section
          shall render any such person liable to any punishment
c         under this Act if he proves that the offence was committed
          without his knowledge or that he exercised all due
          diligence to prevent the commission of such offence.

                 (2) Notwithstanding anything contained in sub-section
D         (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
E         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.

                 Explanation - For the purpose of this section:-

F                (a) "company" means any body corporate and
                 includes a firm or other association of individuals;
                 and

                 (b) "director", in relation to a form, means a
G                partner in the firm."

         5. The appellant also submitted that the respondent was
    the person responsible for the quality of the product which has
    not been found conformed to the prescribed ISi specification.

H
    STATE OF NCT OF DELHI v. RAJIV KHURANA                    391
            [DALVEER BHANDARI, J.]

The appellant further submitted that the company communicated        A
to the appellant that the respondent was responsible for the
quality of the product. In this view of the matter, the High Court
was not justified in allowing the petition filed by the respondent
under section 482 of the Code of Criminal Procedure.
                                                               B
     6. According to the respondent, under section 33 of the
Insecticides Act, 1968 the liability cannot be fastened on the
respondent. According to him, the offence, if any, was
committed by the Company M/s. Reckitt & Colman of India
Limited. The Company continues to face the prosecution but · c
according to the facts of this case the respondent cannot be
summoned by the court because he was not responsible or in
charge of the affairs of the company. It was also submitted by
the respondent that it was the bounden duty of the Magistrate
to ensure that the process was issued only against whom there D
were specific allegations in the complaint.

    7. The respondent placed reliance on the judgment of this
Court in S. M. S. Pharmaceuticals Ltd. v. Neeta Bhalla &
Another (2005) 8 SCC 89.
                                                                     E
     8. The respondent further submitted that the complaint filed
by the appellant before the trial court was sought to make the
respondent vicariously liable under section 33 of the
Insecticides Act. 1968 for the alleged offence under section 29
of the Act, whereas no role has been ascribed to the                 F
respondent by the appellant towards the commission of the
alleged offence. It was also submitted that the appellant has
also failed to establish that the respondent was the Directbr or
the Manager or the Secretary or any other officer of the
company in any way responsible or in charge of the affairs of        G
the company, to be vicariously liable for the alleged offence
stated to have been committed by the company. The
respondent submitted that in the absence of such specific
averments, the learned Magistrate was not justified in issuing
the summoning .order against the respondent. It was also
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    392       SUPREME COURT REPORTS                   [2010] 9 S.C.R.


A   submitted that the provision of vicarious liability is an exception
    to the normal rule of criminal jurisprudence and no one is to be
    held criminally liable for an act of another. Such exception is
    carved out by specific insertion in statues extending criminal
    liability to others.
B
          9. According to the respondent, section 33(1) has three
    tests namely: (a) a person being in charge, (b) responsible for
    day to day affairs of the company; and (c) at the time when the
    offence was committed.

C       10. The respondent further submitted that mere naming a
  person in the title of a complaint even as a partner of a firm
  (although under the Partnership Act, each partner is liable under
  section 25), does not satisfy the test of the deeming provision
  contained in section 141 (1) of the Negotiable Instruments Act,
D 1881 which is para materia to section 33(1) of the Insecticides
  Act, 1968 as held by this court in Monaben Ketanbhai Shah
  & Another v. State of Gujarat & Others (2004) 7 SCC 15. In
  the said case, this court observed as under:-

          " ..... The primary responsibility is on the complainant to
E
          make necessary averments in the complaint so as to
          make the accused vicariously liable. For fastening the
          criminal liability, there is no presumption that every partner
          knows about the transaction. The obligation of the
          appellants to prove that at the time the offence was
F         committed they were not in charge of and were not
          responsible to the firm for the conduct of the business of
          the firm, would arise only when first the complainant makes
          necessary averments in the complaint and establishes that
          fact. The present case is of total absence of requisite
G         averments in the complaint."

        11. The respondent submitted that sub-section (2) of
  section 33 of the Insecticides Act, 1968 makes "other officers"
  liable, but that is essential liability not to the position and control
H of the company at the time of commission of the offence as in
   STATE OF NCT OF DELHI v. RAJIV KHURANA                  393
           [DALVEER BHANDARI, J.]

sub-section (1 ), but to the specific act of consent, connivance   A
and negligence, which need to be met and in that sense
distinguishable from sub-section (1) of section 33 of the
Insecticides Act, 1968.

     12. In Municipal Corporation of Delhi v. Ram Kish an B
Rohtagi & Others (1983) 1 SCC 1, the Food Inspector,
Municipal Corporation filed a complaint before the Metropolitan
Magistrate against the respondents alleging commission of
offence under Sections 5/7, Prevention of Food Adulteration
Act as the sample of food article (Morton toffees) manufactured C
by the Company (respondent 5) had been found by the Public
Analyst to be not of the prescribed standard. The Inspector
alleged in the complaint that the accused-respondents were
Manager (respondent 1) and Directors (respondent 2 to 4) of
the Company (respondent 5) "and as such they were incharge
of and responsible for the conduct of business of accused 2 D
(the Company) at the time of sampling". Pursuant to the
complaint the proceedings against the respondents were
commenced. But the High Court quashed the proceedings
against all the respondents under Section 482, Cr.P.C. on the
ground that the complaint did not disclose any offence.         E

     13. In State of Haryana v. Brij Lal Mittal & Others (1998)
5 sec 343, it was held that the vi.carious liability of a person
for being prosecuted for an offence committed under the Act
by a company arises if at the material time he was incharge of F
and was also responsible to the company for the conduct of
its business. Simply because a person is a director of the
company it does not necessarily mean that he fulfils both the
above requirements so as to make him liable. Conversely,
without being a director a person can be incharge of and G
responsible to the company for the conduct of its business.
From the complaint in question we, however, find that except
a bald statement that the respondents were directors of the
manufacturers, there is no other allegation to indicate, even
prima facie, that they were incharge of the company and also H
    394      SUPREME COURT REPORTS                   [2010] 9 S.C.R.


A   responsible to the company for the conduct of its business.

         14. K.P. G. Nair v. Jindal Menthol India Ltd. (2001) 10
    sec 218 was a case of this court under the Negotiable
    Instruments Act. 1881 and it was found that the allegations in
    the complaint did not either in express words or with reference
8
    to the allegations contained therein make out a case that at the
    time of commission of the offence the appellant was in charge
    of and was responsible to the company for the conduct of its
    business. It was held that t~e requirements of Section 141 of
    the Negotiable Instruments Act, 1881 were not met and the
C   complaint against the accused was quashed. The same view
    has been taken in Katta Sujatha (Smt.) v. Fertilizers &
    Chemicals Travancore Ltd. & Another (2002) 7 SCC 655.

        15. The respondent placed reliance on the case of S. M. S.
D   Pharmaceuticals Ltd. (supra), wherein this Court has held as
    under:

          "19. In view of the above discussion, our answers to the
          questions p0sed in the reference are as under:
E               (a) It is necessary to specifically aver in a complaint
          under Section 141 that at the time the offence was
          committed, the person accused was in charge of, and
          responsible for the conduct of business of the company.
          This averment is an essential requirement of Section 141
F         and has to be made in a complaint. Without this averment
          being made in a complaint, the requirements of Section
          141 cannot be said to be satisfied.

                (b) The answer to the question posed in sub-para (b)
          has to be in the negative. Merely being a director of a
G
          company is not sufficient to make the person liable under
          Section 141 of the Act. A director in a company cannot
          be deemed to be in charge of and responsible to the
          company for the conduct of its business. The requirement
          of Section 141 is that the person sought to be made liable
H
   STATE OF NCT OF DELHI v. RAJIV KHURANA                   395
           [DALVEER BHANDARI, J.]

    should be in charge of and responsible for the conduct of      A
    the business of the company at the relevant time. This has
    to be averred as a fact as there is no deemed liability of
    a director in such cases.

           (c) The answer to Question (c) has to be in the B
    affirmative. The question notes that the managing director
    or joint managing director would be admittedly in charge
    of the company and responsible to the company for the
    conduct of its business. When that is so, holders of such
    positions in a company become liable under Section 141 c
    of the Act. By virtue of the office they hold as managing
    director or joint managing director, these persons are in
    charge of and responsible for the conduct of business of
    the company. Therefore, they get covered under Section
    141. So far as the signatory of a cheque which is. D
    dishonoured is concerned, he is clearly responsible for the
    incriminating act and will be covered under sub-section (2)
    of Section 141."

     16. In Sabitha Ramamurthy and Another v. R.B.S.
Channabasavaradhya (2006) 10 SCC 581 this court held there         E
was absence of requisite averments in the complaint not
containing any statement that ttie appellants were in charge of
the business of the company at l11e material time. The statement
of witness also did not specifically allege that the appellants
were in charge of the business of the company. This Court held     F
that requirement of section 141 of the Negotiable Instruments
Act was not complied with and the complaint was liable to be
quashed.

     17. In K.K. Ahuja v. V.K. Vora and Another(2009) 10 SCC       G
48, this court observed that the averment in a complaint that
an accused is a director and that he is in charge of and is
responsible to the company for the conduct of the business of
the company, duly affirmed in the sworn statement, may be
sufficient for the purpose of issuing summons to him. But if the
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    396      SUPREME COURT REPORTS                  (2010) 9 S.C.R.


A accused is not one of the persons who falls under the category
  of 'persons who are responsible to the company for the conduct
  of the business of the company', then merely by stating that 'he
  was in charge of the business of the company' or by stating
  that 'he was in charge of the day to day management of the
B company' or by stating that he was in charge of, and was
  responsible to the company for the conduct of the business of
  the company', he cannot be made vicariously liable under
  Section 141 ( 1) of the Act.

        18. The ratio of all these cases is that the complainant is
C required to state in the complaint how a Director who is sought
  to be made an accused, was in charge of the business of the
  company or responsible for the conduct of company's business.
  Every Director need not be and is not in charge of the business
  of the company. If that is the position with regard to a Director,
D it is needless to emphasise that in the case of non-Director
  officers, there is ail the more necessary to state what were his
  duties and responsibilities in the conduct of business of the
  company and how and in what manner he is responsible or
  liable.
E
         19. In K.K. Ahuja's case (supra) the court summarized the
    position under section 141 of the Act as under:-

                (1) If the accused is the Managing Director or a Joint
          Managing Director, it is not necessary to make an averment
F         in the complaint that he is in charge of, and is responsible
          to the company, for the conduct of the business of the
          company. It is sufficient if an averment is made that the
          accused was the Managing Director or Joint Managing
          Director at the relevant time. This is because the prefix
G         "Managing" to the word "Director" makes it clear that they
          were in charge of and are responsible to the company, for
          the conduct of the business of the company.

              (ii) In the case of a Director or an officer of the
H         company who signed the cheque on behalf of the
   STATE OF NCT OF DELHI v. RAJIV KHURANA                   397
           [DALVEER BHANDARI, J.]

    company, there is no need to make a specific averment           A
    that he was in charge of and was responsible to the
    company, for the conduct of the business of the company
    or make any specific allegation about consent, connivance
    or negligence. The very fact that the dishonoured cheque
    was signed by him on behalf of the company, would give          B
    rise to responsibility under sub-section (2) of Section 141.

          (iii) In the case of a Director, secretary or manager
    [as defined in Section 2(24) of the Companies Act] or a
    person referred to in clauses (e) and (f) of Section 5 of the   c
    Companies Act, an averment in the complaint that he was
    in charge of, and was responsible to the company, for the
    conduct of the business of the company is necessary to
    bring the case under Section 141 (1) of the Act. No further
    averment would be necessary in the complaint, though            D
    some particulars will be desirable. They can also be made
    liable under Section 141(2) by making necessary
    averments relating to consent and connivance or
    negligence, in the complaint, to bring the matter under that
    sub-section.
                                                                    E
          (iv) Other officers of a company cannot be made
    liable under sub-section (1) of Section 141. Other officers
    of a company can be made liable only under sub-section
    (2) of Section 141, by averring in the complaint their
    position and duties in the company and their role in regard     F
    to the issue and dishonour of the cheque, disclosing
    consent, connivance or negligence.

     20. The court further observed that the trauma, harassment
and hardship of the criminal proceedings in such cases may          G
be more serious than the ultimate punishment, it is not proper
to subject all and sundry to be impleaded as accused in a
complaint against a company, even when the requirements of
section 138 read with section 141 of the Act are not fulfilled.
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    398     SUPREME COURT REPORTS                  [2010] 9 S.C.R.


A        21. The legal position which emerges from a series of
    judgments is clear and consistent that it is imperative to
    specifically aver in the complaint that the accused was in charge
    of and was responsible for the conduct of business of the
    company. Unless clear averments are specifically incorporated
s   in the complaint, the respondent cannot be compelled to face
    the rigmarole of a criminal trial.

        22. In view of clear legal position, we do not find any
  infirmity in the impugned judgment. This appeal being devoid
C of any merit is accordingly dismissed.

    D.G.                                        Appeal dismissed.