Dr. Arijit Pasayat, J.— Leave granted.
2. Challenge in this appeal is to the judgment of a learned Single Judge of the Delhi High Court quashing the order passed by the learned Special Judge under the Essential Commodities Act, 1955 (in short “the Act”).
3. Background facts as noted by the High Court are as follows:
On 23-1-1988, a complaint was lodged by the Enforcement Inspector with the Station House Officer of Police Station Moti Nagar, New Delhi, alleging that Swatantra Bharat Mills had, by declaring and stamping wrong fibre compositions for the cloth, contravened the provisions of the Textile Commissioner's Notification dated 23-11-1981 and Clause 17 of the Textile (Control) Order, 1986 rendering themselves liable for penal action for violation of the order made under Section 3 of the Act punishable under Section 7 thereof.
4. On 11-2-1988, an FIR was registered on the basis of the said complaint. On 6-5-1988, the charge-sheet was filed in court, but there was only one accused, namely, A.K Rohtagi, who was shown in Column 4 for the offence, inter alia, under Section 7 of the said Act. On that date, the court passed the following order:
“New challan filed today. It be checked and registered. The accused person be summoned for 9-6-1988.”
Thereafter, the accused A.K Rohtagi appeared and was released on bail.
5. On 4-12-1990, a supplementary challan was filed and the court passed the following order:
“Supplementary challan filed today. It be checked and registered. The accused be summoned for 18-12-1990 as main case is already fixed for 18-12-1990.”
In the supplementary charge-sheet, the said A.K Rohtagi was again shown in Column 4. However, in Column 2, the respondents along with R.C Kesar and Lala Bansidhar were shown in Column 2. It appears that on 18-2-1991, Respondent 2 V.K Malhotra appeared in court and on 22-2-1991, the court passed the following order:
“V.K Malhotra mentioned in Column 2 is not required for the time being. He is being discharged. Only the accused persons mentioned in Columns 3/4 of the challan under Section 173 CrPC was to be summoned and not those mentioned in Column 2 of that report.”
6. On 24-4-1991, the earlier charge-sheet and the supplementary charge-sheets were consolidated and the court observed that summons were issued to some of the accused and that the predecessor court by order dated 22-2-1991 had mentioned that these persons may not be summoned for the time being.
7. Thereafter, the court directed that the matter should come up for arguments on 4-6-1991 on the question whether the persons named in Column 2 be summoned as accused. In the order dated 11-2-1994, it is recorded as under:
“It appears that in the supplementary challan, four accused were placed in Column 2 and have not been summoned so far probably on the presumption that they have not been sent up for trial by the police. However, a perusal of the final report in the supplementary challan would show that the police has specifically mentioned that there was a violation of Clause 17 of the Textile Control Order, 1986 by Swatantra Bharat Mills which is a company by virtue of Section 10 of the Act and the Managing Director, General Manager, Executive Director (Textile) and Supervisors, Folding Division are liable and should be summoned.”
Accordingly, the court came to the view that the respondents along with other two mentioned in Column 2, namely, R.C Kesar and Lala Bansidhar be also summoned.
8. The basic stand before the High Court was that the deeming provision of Section 10 of the Act cannot be applied to the facts of the case. The High Court found that Swatantra Bharat Mills was nothing but a unit of the body corporate known as DCM Ltd. But it cannot be called to be an association of individuals. So holding, the proceedings so far as the respondents are concerned were quashed.
9. Learned counsel for the appellant State submitted that true scope and ambit of the Explanation appended to Section 10 has not been kept in view.
10. Learned counsel for the respondents on the other hand supported the judgment. Additionally, it is submitted that the infraction as alleged is of a very minor nature and, therefore, continuance of the proceedings shall not be appropriate.
11. To appreciate rival submissions it would be necessary to take note of Section 10 of the Act. The said provision reads as follows:
“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 (sic 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:
Provided that nothing contained in this sub-section shall render any such person liable to any punishment if he proves that the contravention took place without his knowledge or that he exercised all due diligence to prevent such contravention.
(2) Notwithstanding anything contained in sub-section (1), where an offence under this Act has been committed by a company and it is proved that the offence has been committed with the consent or connivance of, or is attributable to any neglect on the part of, any Director, Manager, Secretary or other officer of the company, such Director, Manager, Secretary or other officer shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly.
Explanation.—For the purposes of this section,—
(a) ‘company’ means any body corporate, and includes a firm or other association of individuals; and
(b) ‘director’ in relation to a firm means a partner in the firm.”
12. In Dulichand Laxminarayan v. CIT AIR 1956 SC 354, 1956 SCR 154 it was inter alia observed that the expression “person” has not been defined and applying the definition under the General Clauses Act, 1897 (in short “the General Clauses Act”) body of individuals can be covered under the expression “person”. Sub-section (42) of Section 3 of the General Clauses Act has been statutorily incorporated by way of an Explanation under Section 10.
13. “7. The section appears to our mind to be plain enough. If the contravention of the order made under Section 3 is by a company, the persons who may be held guilty and punished are: (1) the company itself, (2) 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, whom for short we shall describe as the person in charge of the company, and (3) any Director, Manager, Secretary or other officer of the company with whose consent or connivance or because of neglect attributable to whom the offence has been committed, whom for short we shall describe as an officer of the company. Any one or more or all of them may be prosecuted and punished. The company alone may be prosecuted. The person-in-charge only may be prosecuted. The conniving officer may individually be prosecuted. One, some or all may be prosecuted. There is no statutory compulsion that the person-in-charge or an officer of the company may not be prosecuted unless he be ranged alongside the company itself. Section 10 indicates the persons who may be prosecuted where the contravention is made by the company. It does not lay down any condition that the person-in-charge or an officer of the company may not be separately prosecuted if the company itself is not prosecuted. Each or any of them may be separately prosecuted or along with the company. Section 10 lists the persons who may be held guilty and punished when it is a company that contravenes an order made under Section 3 of the Essential Commodities Act. Naturally, before the person-in-charge or an officer of the company is held guilty in that capacity it must be established that there has been a contravention of the order by the company.
8. The above position was highlighted in Sheoratan Agarwal v. State of M.P (1984) 4 SCC 352”
See State of Punjab v. Kasturi Lal (2004) 12 SCC 195
14. Added to that, the threshold interference does not appear to be in order. The stand as taken by the respondents was essentially the defence which is to be considered at the time of trial. The impugned judgment is unsupportable and is set aside.
15. The appeal is allowed.