HINDUSTAN UNILEVER LIMITED versus THE STATE OF MADHYA PRADESH on 5 November 2020

[2020] 9 S.C.R. 455

HINDUSTAN UNILEVER LIMITED

v.

THE STATE OF MADHYA PRADESH

(Criminal Appeal No. 715 of 2020)

NOVEMBER 05, 2020

[L. NAGESWARA RAO, HEMANT GUPTA AND

AJAY RASTOGI, JJ.]

Prevention of Food Adulteration Act, 1954 – s.17 – FoodSafety and Standards Act, 2006 – s.97 – General Clauses Act, 1897– s.6 – A complaint was filed by inspector of Food and Health onthe basis of a sample taken on 07.02.1989 in respect of DaldaVanaspati Khajoor Brand Ghee manufactured by the Company –The said proceeding was decided by the Supreme Court in R. Banerjee& Ors. v. H.D. Dubey & Ors., wherein the matter was remandedback to the trial Magistrate to inquire into the question whether thenomination forms nominating appellant and one another personwere received and acknowledged by the Local (Health) Authority –In terms of the said directions, the trial Court passed an orderabsolving the directors of the Company and prosecution was orderedto continue against the appellant/nominated officer – Thereafter,the trial Court in 2015, convicted the appellant under variousprovisions of the 1954 Act – There was no order passed by the trialCourt to convict the Company of any offence – In an appeal, theAdditional Sessions Judge affirmed the conviction of the appellant– However, the High Court in its order noticed that if the Companyis acquitted of the charges, the said benefit will also directly go tothe appellant – Thus, the conviction and sentence passed againstthe appellant, being a nominated person of the Company was setaside and the matter was remitted back to the trial Court for passingthe fresh judgment – Before the Supreme Court, the appellant soughtbenefit under the Food Safety and Standards Act, 2006 which cameafter the Prevention of Food Adulteration Act, 1954 was repealed –Held: In the 2006 Act, the repeal and saving clause contained ins.97(1)(iii) and (iv) specifically provides that repeal of the Act shallnot affect any investigation or remedy in respect of any such penalty,forfeiture or punishment and the punishment may be imposed, “as

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Aif the 2006 Act had not been passed” – Thus, in view of s.97 of the2006 Act, as also u/s.6 of the General Clauses Act, 1897, theproceedings would continue under the 1954 Act – No benefit canbe taken under the 2006 Act as the prosecution and punishmentunder the 1954 Act is protected – As far as the course adopted bythe High Court to remand the matter to the trial Court is concerned,Bthere is no material distinction between s.141 of the NegotiableInstruments Act, 1882 and s.17 of the 1954 Act which makes thecompanies as well as the nominated person to be held guilty of theoffences and/or liable to be proceeded and punished accordingly –Clauses (a) and (b) of s.17 are not in alternative but in conjoint –CTherefore, in the absence of the Company, the nominated personcannot be convicted or vice-versa – Since the Company was notconvicted by the trial Court, the finding of the High Court to revisitthe judgment will be unfair to the appellant/nominated person whohas been facing trial for more than last 30 years – The failure ofthe trial Court to convict the Company renders the entire convictionDof the nominated person as unsustainable – Thus, the order passedby the High Court is set aside.

Allowing the appeals, the Court

Conclusion

Allowing the appeals, the Court

HELD: 1. In terms of Section 6 of the General ClausesAct, 1897, unless a different intention appears, the repeal of aEstatute does not affect any investigation, legal proceeding orremedy in respect of any such right, privilege, obligation, liability,penalty, forfeiture or punishment and any such investigation, legalproceeding or remedy may be instituted, continued or enforced,and any such penalty, forfeiture or punishment may be imposedFas if the Repealing Act or Regulation had not been passed. Butin the Food Safety and Standards Act, 2006, the repeal and savingclause contained in Section 97 (1)(iii) and (iv) specifically providesthat repeal of the Act shall not affect any investigation or remedyin respect of any such penalty, forfeiture or punishment and thepunishment may be imposed, “as if the 2006 Act had not beenGpassed”. [Para 15][465-E-G]

2. Thus, in view of Section 97 of the 2006 Act, as also underSection 6 of the General Clauses Act, 1897, the proceedingswould continue under the Act. No benefit can be taken under the2006 Act as the prosecution and punishment under the Act isHprotected. [Para 17][466-C-D]

3. The question now narrows down as to whether the courseadopted by the High Court to remand the matter to the trial courtafter more than 30 years to cure the defect which goes to theroot of the trial, though permissible in law, is justified. [Para19][468-F]

4. Clause (a) of Sub-Section (1) of Section 17 of thePrevention of Food Adulteration Act, 1954 makes the personnominated to be in charge of and responsible to the company forthe conduct of business and the company shall be guilty of theoffences under clause (b) of Sub-Section (1) of Section 17 of theAct. Therefore, there is no material distinction between Section141 of the NI Act and Section 17 of the Act which makes theCompany as well as the Nominated Person to be held guilty ofthe offences and/or liable to be proceeded and punishedaccordingly. Clauses (a) and (b) are not in the alternative butconjoint. Therefore, in the absence of the Company, theNominated Person cannot be convicted or vice versa. Since theCompany was not convicted by the trial court, this Court findsthat the finding of the High Court to revisit the judgment will beunfair to the appellant/Nominated Person who has been facingtrial for more than last 30 years. Therefore, the order of remandto the trial court to fill up the lacuna is not a fair option exercisedby the High Court as the failure of the trial court to convict theCompany renders the entire conviction of the Nominated Personas unsustainable. [Para 22][471-A-D]

State of Punjab v. Mohar Singh AIR 1955 SC 84 :[1955] 1 SCR 893; Tiwari Kanhaiyalal & Ors. v.Commissioner of Income Tax, Delhi (1975) 4 SCC 101: [1975] 3 SCR 927; Aneeta Hada v. Godfather Travels& Tours Private Limited (2012) 5 SCC 661 : [2012] 5SCR 503 – relied on.

R. Banerjee & Ors. v. H.D. Dubey & Ors. (1992) 2SCC 552 : [1992] 2 SCR 221; Nemi Chand v. State ofRajasthan (2018) 17 SCC 448; T. Barai v. Henry AhHoe & Anr. (1983) 1 SCC 177 : [1983] 1 SCR 905;Trilok Chand v. State of Himachal Pradesh (2020) 10SCC 763 – referred to.

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CRIMINAL APPELLATE JURISDICTION: Criminal Appeal No.715 of 2020.

From the Judgment and Order dated 09.01.2020 of the High Courtof Madhya Pradesh at Jabalpur in Criminal Revision No. 37 of 2020.

DWith

Criminal Appeal No. 716 of 2020

Dr Abhishek Manu Singhvi, Siddharth Luthra, Sr. Advs, Ms. PriyaPuri, Vibhav Srivastava, Ranjay Dubey, Yati Sharma, Ms. Supriya Juneja,Aditya Singla, Harsh Yadav, Ms. Ankita Tiwari, Arjun Garg, AbhijeetEShrivastava, Ms. Shrutika Garg, Advs. for the appearing parties.

The Judgment of the Court was delivered by HEMANT GUPTA, J.

1. The challenge in the present appeals is to an order passed byFthe High Court of Madhya Pradesh, Jabalpur on 9.1.2020 whereby therevision filed by Shri Nirmal Sen, appellant/Nominated Officer (Incharge)of the Hindustan Unilever Limited[1], was allowed, however the matterwas remitted back to the trial court to revisit the evidence adduced byboth the parties, so far it relates to the appellants, Nirmal Sen and theCompany. The operative part of the order reads thus:G

“8. If the company-Hindustan Lever Limited is acquitted of thecharges, the said benefit will also directly go to the applicant. Inview whereof, this Court finds a glaring and patent defect in thejudgment of the trial Court as well as in the judgment of the H1 Hereinafter referred to as “Company”.

HINDUSTAN UNILEVER LIMITED v. THE STATE OFMADHYA PRADESH [HEMANT GUPTA, J.]

appellate Court, thus, this Court, in these premises, finds it fit tointerfere in the judgment of the trial Court in exercise of therevisional jurisdiction under Section 401(1) of Cr.P.C., hence, thisCourt is inclined to set aside the conviction and sentence passedagainst the applicant being a nominated person of the companyand remitted back the matter to the trial Court for passing freshjudgment considering the company-Hindustan Lever Limited thathad already been arrayed as an accused along with the applicant.

9. In view of aforesaid discussions, this revision is allowed. Theimpugned conviction and sentence passed against the applicant ishereby set aside and the matter is remitted back to the trial Courtto revisit the evidence adduced by both the parties and also revisitits judgment dated 16/06/2015, so far as it relates with the applicantand company-Hindustan Lever Limited thereafter again pass aseparate judgment after providing opportunity of hearing to theapplicant as well as the company-Hindustan Lever Limited withoutgetting prejudice with the discussions made by the appellate Courtand this Court.”

2. Brief facts leading to the present appeals are that a complaintwas filed by Shri H.D. Dubey, Inspector, Food and Health, on the basisof a sample taken on 7.2.1989 in respect of Dalda Vanaspati KhajoorBrand Ghee manufactured by the Company, in terms of the provisionsof The Prevention of Food Adulteration Act, 1954[2]. The sample ofVanaspati Ghee was taken from the godown of Lipton India Limitedwhich was found to be adulterated as the melting point was found to be41.8 degree centigrade which is higher than the normal range i.e. asagainst 31-41 degree centigrade. Initially, the complaint was filed againstthe Directors of the Company as well as that of Lipton India Limited.However, the said proceedings came to be decided by this Court in ajudgment reported as R. Banerjee & Ors. v. H.D. Dubey & Ors.[3]wherein it was held as under:

“12. In the result, the appeals are allowed. The order of the learnedMagistrate as well as the impugned order of the High Court areset aside. The matters are remanded to the learned trial Magistratewith a direction to inquire into the question whether the nominationforms nominating H. Dayani and Dr Nirmal Sen were received 2 For short, the ‘1954 Act’

3 (1992) 2 SCC 552

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Aand acknowledged by the Local (Health) Authority competent toreceive and acknowledge the same. This question will beconsidered as a preliminary question and the learned magistratewill record a finding thereon. If he comes to the conclusion thatthe nomination forms had been acknowledged by the competentLocal (Health) Authority he shall drop the proceedings againstBthe Directors of the company, other than the company and thenominated persons. If on the other hand he comes to the conclusionthat the prescribed forms had been acknowledged by a personother than the competent Local (Health) Authority he will proceedagainst all the persons who are shown as the accused in theCcomplaint i.e. all the Directors including the nominated personand the company. The appeals are allowed accordingly.”

3. In terms of the directions of this Court, it appears that thelearned trial court passed an order on 6.7.1993 absolving the Directorsof the Company and the prosecution was ordered to continue againstDthe appellant Nirmal Sen. The said order is not on record but it appearsthat no proceedings were continued against the Company inasmuch as ithas four accused, namely, Lipton India Limited, Mohd. Saleem, HarishDayani and Nirmal Sen were arrayed as accused.

4. The Act was then repealed and the Food Safety and StandardsEAct, 2006[4] came into force on 23.8.2006.

5. The learned trial court vide judgment dated 16.6.2015 convictedthe appellant/Nominated Officer under various provisions of the 1954Act. The learned trial court held as under:

“58. That on the basis of the above complete evidence analysis, itFis certified that on the day of the incident, the accused Dr. NirmalSen was a nominee of Hindustan Limited Company and the goodsof the said company were given to the palm plantation oil vanaspatifrom Godown Rathore Clearing and Forwarding Agency, Panagar,Jabalpur, Mohd. Salim. Sale of Vanaspati by Hindustan LiverGLimited to the complainant food inspector H.D. Dubey went topurchase there. At the time when the said product was sold, theadulteration was came in light, and according to rule 32(f) of the H4 For short, the ‘2006 Act’

Act, the details were not even duly marked, which comes underthe category of false impression in print of the packet or pouch.

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60. Therefore, the accused Dr. Nirmal Sen was found to be guiltyunder Section 2(1G)(K) r/w Section 32(F)/7(i)/16(A)(i) and Section2(ia)(m) r/w 7(i)/16(1)/(a)(i) of Food Adulteration Act, 1954 andFood Adulteration and Prevention Act under Section 14 r/w Rule2(A) r/w Section 7(v)/16(1C).”

6. A complete reading of the order passed by the trial court doesnot lead to an inference that the Company was represented at any stageduring the course of trial. It is to be noted that in the aforementionedjudgment, there was no order passed by the learned trial court to convictthe appellant-Company of any offence. The appellant Nirmal Sencontested the proceedings and was convicted by the trial court.

7. In an appeal against the said judgment, the learned AdditionalSessions Judge held that the prosecution was found to be maintainableagainst Rathore Clearing and Forwarding Agency and the Company butthe same was not mentioned in the impugned judgment and order. TheCourt held as under:

“31. ….As per order dated 6.7.1993, the Hindustan Lever Limitedalso has been held accused, but erroneously, it could not havebeen mentioned in the impugned judgment and order. As per law,any company is a legal personality and it cannot be undergoimprisonment sentence. The appellant Nirmal Sen being thenominee for the offence of the aforesaid company, has beenpunished. In such situation, the appellant does not seem to beentitled for get any benefit only on the mere technical grounds.”

8. The learned counsel for the appellant placed reliance on thejudgment of this Court reported as Nemi Chand v. State of Rajasthan[5]before the learned Additional Sessions Judge, in support of the argumentthat pursuant to the repeal of the Act, only punishment of fine has beencontemplated under the 2006 Act. Thus, since the provisions of the 2006Act are beneficial to the accused, the accused is entitled to such benefitsprovided by the 2006 Act. It was found that the decision in Nemi Chandhas been passed in exercise of the jurisdiction conferred on the A

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Aconstitutional courts, but the First Appellate Court does not have anysuch specific constitutional power. The Court rejected the applicabilityof the 2006 Act as the punishments imposed under the repealed Acthave been saved by Section 97 of the 2006 Act. The Court held asunder:

B“39. There is no doubt in it that as a result of amendment made bythe post facto laws, if the sentence given for any offence is lessenedor rejected then the accused is entitled to get benefit of it underArticle 20 of the Constitution of India. But is also mentionablethat the accused has been prosecuted and sentenced under the“Act” of 1954 in the matter under consideration and in place of it,Cthe Food Safety and Standard Act, 2006 has been implementedsince 24.08.2006. By section 97 (1) of this new Act, the Act of1954 has been repealed but it also has been provided that actioncould be kept continued under the repealed Act and any suchpenalty, confiscation or punishment could be charged like it thatDas if this Act be not passed.

40. Thus, with regard to the offence occurred before the date ofimplementation of the new Act, the provisions of the “Act” of1954 have applicability and it cannot be held the punishment hasbeen lessened by amending in the offence under Section 16 of theEold Act by the new Act. It seems from the records that the casehas remained pending for several years before the Ld. Trial Courtbut several Stays submitted by the accused persons are alsoresponsible for this delay and on this ground, they are not entitledfor any sympathy. Keeping in view to the gravity of the offence,the sentence awarded to the appellant Nirmal Sen by the Ld.FSubordinate Court in the case seems in accordance with law andof appropriate and no need to interfere in it does not seem.”

9. With the aforesaid discussion, the learned Additional SessionsJudge affirmed the conviction of the appellant/Nominated Officer butthe conviction of the accused Harish Dayani and Mohd. Saleem was setGaside and they were acquitted.

10. The High Court in its order noticed that if the Company isacquitted of the charges, the said benefit will also directly go to theappellant/Nominated Officer. A glaring and patent defect in the judgmentof the trial court as well as in the judgment of the appellate court wasH

observed by the High Court. Thus, the conviction and sentence passedagainst the appellant, being a nominated person of the Company, wasset aside and the matter was remitted back to the trial Court for passingfresh judgment.

11. Before this Court, two-fold arguments were raised by thelearned counsels for the appellants. Dr. Abhishek Manu Singhvi, learnedsenior counsel appearing on behalf of the appellant/Nominated Officerargued that the appellant was charged for the violation of Section 2(ia)(m)read with Section 7(i) of the Act. Such violation attracted a sentence ofnot less than six months and up to 3 years and a fine of Rs.1,000/- underSection 16(1)(a)(i), whereas under the 2006 Act, the punishment of suchadulteration which is related to only higher melting point is fine of Rs.5lakhs and Rs.1 lakh under Sections 3(1)(zx) and 3(1)(i) respectively.The reliance is placed upon judgments of this Court in T. Barai v. HenryAh Hoe & Anr.[6], Nemi Chand and Trilok Chand v. State of HimachalPradesh[7].

12. Mr. Siddharth Luthra, learned senior counsel for the appellant-Company raised an argument that the Company was not convicted bythe trial court. Therefore, the High Court in revision could not havepassed an order of retrial, more so when the Company was not givenany notice of being heard. Since there was no order of conviction by thetrial court, as also no opportunity of hearing was given, such order is incontravention of sub-section (2) of Section 401 of the Code of CriminalProcedure, 1973[8]. Section 401 (2) of the Code reads thus:

“401(2). No order under this section shall be made to the prejudiceof the accused or other person unless he has had an opportunityof being heard either personally or by pleader in his own defence.”

13. We do not find any merit in the arguments raised by Dr. Singhviwith respect to the punishment provided under the 2006 Act. The judgmentof this Court in T. Barai is consequent to amendment in the Act whenSection 16A was inserted by the Parliament. Similarly, the judgment inNemi Chand was a judgment arising out of the amendment in the Actonly. The benefit of amendments in the Act, has been rightly granted tothe accused in an appeal arising out of the proceedings under the Act.

6 (1983) 1 SCC 177

7 Criminal Appeal No. 1831 of 2010 decided on 1.10.2019

8 For short, the ‘Code’

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ABut in the present case, the Act has been repealed by Section 97 of the2006 Act, however, the punishments imposed under the Act have beenprotected. Section 97 of the 2006 Act, which came into force on 5.8.2011,is as follows:

“97. Repeal and savings.—(1) With effect from such date* asBthe Central Government may appoint in this behalf, the enactmentand orders specified in the Second Schedule shall stand repealed:

Provided that such repeal shall not affect:—

(i) the previous operations of the enactment and orders underrepeal or anything duly done or suffered thereunder; orC(ii) any right, privilege, obligation or liability acquired, accrued orincurred under any of the enactment or orders under repeal; or

(iii) any penalty, forfeiture or punishment incurred in respectDof any offences committed against the enactment and ordersunder repeal; or

(iv) any investigation or remedy in respect of any such penalty,forfeiture or punishment, and any such investigation, legal proceedings or remedy mayEbe instituted, continued or enforced and any such penalty,forfeiture or punishment may be imposed, as if this Act hadnot been passed:

(2) If there is any other law for the time being in force in anyState, corresponding to this Act, the same shall upon theFcommencement of this Act, stand repealed and in such case, theprovisions of Section 6 of the General Clauses Act, 1897 (10 of1897) shall apply as if such provisions of the State law had beenrepealed.

(3) Notwithstanding the repeal of the aforesaid enactment andGorders, the licences issued under any such enactment or order,which are in force on the date of commencement of this Act,shall continue to be in force till the date of their expiry for allpurposes, as if they had been issued under the provisions of thisAct or the rules or regulations made thereunder.

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(4) Notwithstanding anything contained in any other law for thetime being in force, no court shall take cognizance of an offenceunder the repealed Act or orders after the expiry of a period ofthree years from the date of the commencement of this Act.”(Emphasis Supplied)

14. Section 6 of the General Clauses Act, 1897 provides the effectof repeal as under:

“Where this Act or any Central Act or Regulation made after thecommencement of this act repeals any enactment hitherto madeor hereafter to be made, then, unless a different intention appears,the repeal shall not- (e) affect any investigation, legal proceeding or remedy in respectof any such right, privilege, obligation, liability, penalty, forfeitureor punishment.......

and any such investigation, legal proceeding or remedy may beinstituted, continued or enforced, and any such penalty, forfeitureor punishment may be imposed as if the Repealing Act orRegulation had not been passed.”

15. In terms of Section 6 of the General Clauses Act, 1897, unlessdifferent intention appears, the repeal of a statute does not affect anyinvestigation, legal proceeding or remedy in respect of any such right,privilege, obligation, liability, penalty, forfeiture or punishment and anysuch investigation, legal proceeding or remedy may be instituted, continuedor enforced, and any such penalty, forfeiture or punishment may beimposed as if the Repealing Act or Regulation had not been passed. Butin the 2006 Act, the repeal and saving clause contained in Section 97(1)(iii) and (iv) specifically provides that repeal of the Act shall not affectany investigation or remedy in respect of any such penalty, forfeiture orpunishment and the punishment may be imposed, “as if the 2006 Acthad not been passed”. The question as to whether penalty or prosecutioncan continue or be initiated under the repealed provisions has beenexamined by this Court in State of Punjab v. Mohar Singh[9],whereinthis Court examined Section 6 of the General Clauses Act which is onlines of Section 38(2) of the Interpretation Act of England. It was heldas under:

9 AIR 1955 SC 84

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9 AIR 1955 SC 84

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A“6. Under the law of England, as it stood prior to the InterpretationAct of 1889, the effect of repealing a statute was said to be toobliterate it as completely from the records of Parliament as if ithad never been passed, except for the purpose of those actions,which were commenced, prosecuted and concluded while it wasan existing law [Vide Craies on Statute Law, 5th edn, p. 323] . ABrepeal therefore without any saving clause would destroy anyproceeding whether not yet begun or whether pending at the timeof the enactment of the Repealing Act and not already prosecutedto a final judgment so as to create a vested right [ Vide Crawfordon Statutory Construction, p. 599-600w]. To obviate such resultsCa practice came into existence in England to insert a saving clausein the repealing statute with a view to preserve rights and liabilitiesalready accrued or incurred under the repealed enactment. Lateron, to dispense with the necessity of having to insert a savingclause on each occasion, Section 38(2) was inserted in theInterpretation Act of 1889 which provides that a repeal, unlessDthe contrary intention appears, does not affect the previousoperation of the repealed enactment or anything duly done orsuffered under it and any investigation, legal proceeding or remedymay be instituted, continued or enforced in respect of any right,liability and penalty under the repealed Act as if the RepealingEAct had not been passed. Section 6 of the General Clauses Act,as is well known, is on the same lines as Section 38(2) of theInterpretation Act of England.

9. The offence committed by the respondent consisted in filing afalse claim. The claim was filed in accordance with the provisionof Section 4 of the Ordinance and under Section 7 of theOrdinance, any false information in regard to a claim was apunishable offence. The High Court is certainly right in holdingthat Section 11 of the Act does not make the claim filed under theOrdinance a claim under the Act so as to attract the operation ofSection 7. Section 11 of the Act is in the following terms:

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“The East Punjab Refugees (Registration of Land Claims)Ordinance 7 of 1948 is hereby repealed and any rules made,notifications issued, anything done, any action taken in exerciseof the powers conferred by or under the said Ordinance shallbe deemed to have been made, issued, done or taken in exercise H

of the powers conferred by, or under this Act as if this Act hadcome into force on 3rd day of March, 1948”.

……………….The truth or falsity of the claim has to beinvestigated in the usual way and if it is found that theinformation given by the claimant is false, he can certainly bepunished in the manner laid down in Sections 7 and 8 of theAct. If we are to hold that the penal provisions contained inthe Act cannot be attracted in case of a claim filed under theOrdinance, the results will be anomalous and even if on thestrength of a false claim a refugee has succeeded in getting anallotment in his favour, such allotment could not be cancelledunder Section 8 of the Act. We think that the provisions ofSections 47 and 8 make it apparent that it was not the intentionof the Legislature that the rights and liabilities in respect ofclaims filed under the Ordinance shall be extinguished on thepassing of the Act, and this is sufficient for holding that thepresent case would attract the operation of Section 6 of theGeneral Clauses Act. It may be pointed out that Section 11 ofthe Act is somewhat clumsily worded and it does not makeuse of expressions which are generally used in saving clausesappended to repealing statutes; but as has been said above thepoint for our consideration is whether the Act evinces anintention which is inconsistent with the continuance of rightsand liabilities accrued or incurred under the Ordinance and inour opinion this question has to be answered in the negative.”

16. In another judgment reported as Tiwari Kanhaiyalal & Ors.v. Commissioner of Income Tax, Delhi[10], the assessments werecompleted under the Income Tax Act, 1922 after the Income Tax Act,1961 came into force. There was search on the premises of the assessee.The revised returns were filed after the Income Tax Act, 1961 cameinto force. The penalty proceedings were initiated and it was levied underthe 1961 Act. Later, the complaints were filed alleging commission ofthe offences under Section 277 of 1961 Act. Another set of complaintswere filed under the Income Tax Act, 1922. This Court held that thecomplaints under the 1922 Act remains unaffected. It was held as under:

“7. It is advisable to discuss and dispose of a new point whicharose during the hearing of these appeals. Sub-section (1) of 10 (1975) 4 SCC 101

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ASection 297 of the 1961 Act repealed the 1922 Act including Section52. In sub-section (2) no saving seems to have been provided forthe launching of the prosecution under the repealed Section 52 ofthe 1922 Act. It does not seem correct to take recourse to clause(h) of Section 297(2) to make the offences come under Section277 of the 1961 Act as was endeavoured to be done by theBrespondent in the first 12 complaint petitions. But then from noclause under sub-section (2) a different intention appears in thisregard from what has been said in Section 6 of the General ClausesAct. On the facts alleged the criminal liability incurred underSection 52 of the 1922 Act remains unaffected under clause (c)Cof Section 6 of the General Clauses Act….”

17. Thus, in view of Section 97 of the 2006 Act, as also underSection 6 of the General Clauses Act, 1897, the proceedings wouldcontinue under the Act. No benefit can be taken under the 2006 Act asthe prosecution and punishment under the Act is protected.D

18. The judgment of this Court in Trilok Chand is the onlyjudgment which has given benefit of the 2006 Act and the sentence wasimposed by imposing a fine of Rs.5,000/-. The attention of the Courtwas not drawn to Section 97 of the 2006 Act, which protects thepunishments given under the repealed Act. Therefore, the order in TrilokEChand is on its own facts.

19. However, we find merit in the argument of Mr. Luthra thatthe order of remand by the High Court to the trial court against theCompany cannot be sustained for the reason that such an order waspassed without giving an opportunity of hearing, as contemplated underFSection 401(2) of the Code. The question thus now narrows down as towhether the course adopted by the High Court to remand the matter tothe trial court after more than 30 years to cure the defect which goes tothe root of the trial, though permissible in law, is justified.

20. A three-Judge Bench of this Court in Aneeta Hada v.GGodfather Travels & Tours Private Limited[11] considered the questionof conviction of the Directors in the absence of the Company inproceedings under Section 138 of the Negotiable Instruments Act, 1881[12]as also in the proceedings under Information Technology Act, 2000. This 11 (2012) 5 SCC 661H12 For short, the ‘NI Act’

HINDUSTAN UNILEVER LIMITED v. THE STATE OFMADHYA PRADESH [HEMANT GUPTA, J.]

Court held that Section 141 of the NI Act dealing with offences bycompanies contemplates that every person who at the time the offencewas committed, was in charge of, and was responsible to the companyfor the conduct of the business of the company, as well as the company,shall be deemed to be guilty of the offence and shall be liable to beproceeded against and punished accordingly. This Court, consideringthe said provision, held as under:

“38. From the aforesaid pronouncements, the principle that canbe culled out is that it is the bounden duty of the court to ascertainfor what purpose the legal fiction has been created. It is also theduty of the court to imagine the fiction with all real consequencesand instances unless prohibited from doing so. That apart, the useof the term “deemed” has to be read in its context and further, thefullest logical purpose and import are to be understood. It is becausein modern legislation, the term “deemed” has been used formanifold purposes. The object of the legislature has to be kept inmind.

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56. We have referred to the aforesaid passages only to highlightthat there has to be strict observance of the provisions regardbeing had to the legislative intendment because it deals with penalprovisions and a penalty is not to be imposed affecting the rightsof persons, whether juristic entities or individuals, unless they arearrayed as accused. It is to be kept in mind that the power ofpunishment is vested in the legislature and that is absolute in Section141 of the Act which clearly speaks of commission of offence bythe company. The learned counsel for the respondents havevehemently urged that the use of the term “as well as” in thesection is of immense significance and, in its tentacle, it brings inthe company as well as the Director and/or other officers whoare responsible for the acts of the company and, therefore, aprosecution against the Directors or other officers is tenable evenif the company is not arraigned as an accused. The words “aswell as” have to be understood in the context.

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58. Applying the doctrine of strict construction, we are of theconsidered opinion that commission of offence by the company is A

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Aan express condition precedent to attract the vicarious liability ofothers. Thus, the words “as well as the company” appearing inthe section make it absolutely unmistakably clear that when thecompany can be prosecuted, then only the persons mentioned inthe other categories could be vicariously liable for the offencesubject to the averments in the petition and proof thereof. OneBcannot be oblivious of the fact that the company is a juristic personand it has its own respectability. If a finding is recorded against it,it would create a concavity in its reputation. There can be situationswhen the corporate reputation is affected when a Director isindicted.

C59. In view of our aforesaid analysis, we arrive at the irresistibleconclusion that for maintaining the prosecution under Section 141of the Act, arraigning of a company as an accused is imperative.

……….”

21. Section 17 of the Act reads as under:D

“17. Offences by companies—(1) Where an offence under thisAct has been committed by a company—

(a) (i) the person, if any, who has been nominated under sub-section (2) to be in charge of, and responsible to, the company forEthe conduct of the business of the company (hereinafter in thissection referred to as the person responsible), or

(ii) where no person has been so nominated, every person who atthe time the offence was committed was in charge of, and wasresponsible to, the company for the conduct of the business of theFcompany; and (b) the company, shall be deemed to be guilty of the offence and shall be liable tobe proceeded against and punished accordingly:

Provided that nothing contained in this sub-section shall renderGany such person liable to any punishment provided in this Act if heproves that the offence was committed without his knowledgeand that he exercised all due diligence to prevent the commissionof such offence.

(2) *********”H

22. Clause (a) of Sub-Section (1) of Section 17 of the Act makesthe person nominated to be in charge of and responsible to the companyfor the conduct of business and the company shall be guilty of the offencesunder clause (b) of Sub-Section (1) of Section 17 of the Act. Therefore,there is no material distinction between Section 141 of the NI Act andSection 17 of the Act which makes the Company as well as the NominatedPerson to be held guilty of the offences and/or liable to be proceededand punished accordingly. Clauses (a) and (b) are not in the alternativebut conjoint. Therefore, in the absence of the Company, the NominatedPerson cannot be convicted or vice versa. Since the Company was notconvicted by the trial court, we find that the finding of the High Court torevisit the judgment will be unfair to the appellant/Nominated Personwho has been facing trial for more than last 30 years. Therefore, theorder of remand to the trial court to fill up the lacuna is not a fair optionexercised by the High Court as the failure of the trial court to convict theCompany renders the entire conviction of the Nominated Person asunsustainable.

23. In view of the above, the appeals are allowed and the orderpassed by the High Court is set aside. Resultantly the complaint isdismissed.

Ankit Gyan

Appeals allowed.

A

B

C

D

E

F

G

H