AUROBINDO SOCIETY Vs. STATE

JUDGEMENT

(1.) THIS is an application for quashing the proceedings in C.C. No. 395 of 1982 on the file of the Chief Judicial Magistrate, Pondicherry.

(2.) THE facts which led to this petition may briefly be stated. THE petitioner is Sri Aurobindo Society which was registered under the West Bengal Societies Registration Act on the 24th of September, 1960 at Calcutta. THE Mother of the Sri Aurobindo Ashramam was designated as the permanent President of the Society. THE Mother conceived of the idea of an international township of AUROVILIE to be located at the outskirts of Pondicherry. THE international township was intended to be a self-contained unit and to demonstrate a new way of life guided by higher consciousness by bringing together peoples of different countries. THE Mother approved of establishment of an Indian Pavilion named Bharat Nivas, in the meeting of Administrative Committee of the Society on the 14th of June, 1970. THE said Bharat Nivas was to contain an auditorium, a restaurant and State Government Pavilions. THE petitioner society received a sum of Rs. 75.05 lakhs from the Central Government and State Government towards the construction of the pavilions between the period 1st January, 1968 and 31st March, 1976. THE Mother left her physical body on the 17th of November, 1973. On 26th June, 1974 Sri Navajata was designated as the Chairman of the Society and ShyamSunder Jhunjhunwala as General Secretary and Treasurer of the petitioner-Society. On a complaint given by Kirect Joshi, Educational Adviser, Government of India, Ministry of Education and Culture, Department of Education, New Delhi, a case was registered by the respondent in Crime No. 2/80 SIV-I on 15th October, 1980 against Navajata, Chairman, and others for offences under section 120-B read with sections 40G, 409, 420, 467, 468, 471 and 477-A, Indian Penal Code. THE respondent after investigation filed the charge-sheet on 30th October, 1982 against the petitioner-Society for an offence under section 406, Indian Penal Code, and against the second petitioner for an offence under section406 read with section 109, Indian Penal Code. THE petitioners filed an application under section 239, Criminal Procedure Code to discharge the accused, but that was dismissed by the Chief Judicial Magistrate, Pondicherry. THE petitioners seeks to quash the proceedings in C. C. No. 395 of 1982 on the ground: (1) that the offence under section 406, Indian Penal Code, has not been made out against the petitioner-Society (2) that the allegation against the accounted that a sum of Rs. 18,74,688.55 do not stand accounted for in the books of accounts will not amount to dishonest misappropriation and that S. S. Jhunjhunwala cannot be charged for abetment of the offence which is alleged to have been committed through him by the petitioner-Society (3) that there is no mens rea on the part of the accused and (4) that action can be taken only under the West Bengal Societies Act and resort to the provisions of the Indian Penal Code is not proper as contravention of the provisions of the gifts made by the Central and State Governments does not amounts to commission of Criminal Offence.

(3.) THE next contention of Mr. Natarajan, learned Counsel for the petitioners, is that the first petitioner Society cannot in any event be held to have committed an offence under section 406, Indian Penal Code, as the essential ingredient of that offence is mens rea. He pointed out that no one could attribute a blameworthy act to the Society and section 406, Indian Penal Code, is not an offence requiring no mens rea Mr. Natarajan, learned Counsel for the petitionerers invited my attention to sections 2 and 11 of the Indian Penal Code. Section 2 states that every person shall be liable to punishment under the Code and not otherwise for every act or omission contrary to the previsions thereof of which he shall be guilty within India and section 11 states that the word person includes any company or Association or body of persons, whether incorporated or not. A reading of these two sections would very clearly show that a company or a corporate body shall be liable for indictment. My attention was invited to State of Maharashtra v. Syndicate Transport Company. (A.I.R. 1964 Bom. 115). That was a case where a private limited company along with its officers was prosecuted for offences under sections 420 and 406 or section 403, Indian Penal Code. Charges were framed under section 420, Indian Penal Code, against the company and others. When the company went up in revision to the Sessions Court with a request to quash the proceedings against it, the extra Additional Sessions Judge reported the case to the High Court with recommendation to quash the charges framed. That recommendation was made with a view that the corporate body acts only through its agents or servants and the mens rea of such agents or servants cannot be attributed to the company and that it would not be possible to sentence a company to imprisonment and a charge under section 420, Indian Penal Code, could not be contained against the company, as the offence under section 420, Indian Penal Code, is mandatorily punishable with imprisonment. Paranjipe, J., held that despite the generality of the definition of a person given in section 11 of the Penal Code, a corporate body or a company shall not be indicatable for offences which can be committed only by a human individual or for offences which can be committed only by a human individual or for offences which must be punished with imprisonment, that the offence of cheating under section 420, Indian Penal Code, shall be punished with imprisonment and that a company cannot be prosecuted for that offence mandatorily involving punishment of imprisonment and that barring these exceptions, a corporate body ought to be indicatable for criminal acts or omissions of its directors or authorised agents or servants whether they involve mens rea or not, provided they have acted or have purported to act under authority of the corporate body or in pursuance of the aims or objects of the corporate body. THE learned Author on Harriss Criminal Law, 21st Edition, at page 109, referring to Criminal responsibility, states thus: Corporation may be held vicariously responsible in exactly the same circumstances as a natural person. However, the liability of corporations is hot limited exclusively to vicarious responsibility. Corporations can now, at least in theory, be convicted of most crimes. Corporations, being legal fictions, can only act and think through their officers and servants. For the purposes of imposing criminal responsibility upon corporations (either than vicarious responsibility) only the conduct and accompanying mental state of senior officers, acting in the course of their employment, can be imputed to a corporation. If a senior officer, for example, makes a false statutory return (e.g. a tax return) on behalf of the corporation, knowing it to be false, the corporation can be convicted of the offence which is thereby committed. So also, it has been held, a corporation may be convicted of a common law conspiracy to defraud the conduct and the guilty mind of the senior official involved being imputed to the corporation. THE limitations upon the liability of corporations may be noted. First, only the conduct and accompanying mental state of persons in control of the corporation may be imputed to the corporation. This would include directors, managers with a controlling voice and probably branch managers. Secondly, these officers must be acting within the scope of their employment. Thirdly, a company and its director cannot be convicted of conspiracy, when the only human being who broke the law or intended to do so was the director. Fourthly, corporations cannot convicted of the few crimes which cannot be punished by a fine, e.g., murder. Finally, it is difficult to see how corporations could commit certain offences, e.g., sexual offences. But it is not impossible that a corporation could be convicted of crimes involving personal violence, e.g., the directors order an unlawful trip to be built on corporation property to cash trespassers. In the case of Rex v. I.C.R. Bauiage Limited, (1944) 1 K. B. 551 a company was charged along with others with an offence of conspiracy to defraud. THE company wasconvicted and was ordered to be fined. THE company appealed. THE question arose whether a limited company can be indicted for the offence charged with. Counsel for the company contended that the indictment against a limited company for any offence involving mens rea must be had for the reason that a company not being a natural person cannot have mind, honest or otherwise, and that consequently though in certain circumstances it is civilly liable for the fraud of its officers, it is immune from criminal process. Per contra, Counsel for the Crown-stated that a limited company like any other entity recognised by the law, can as a general rule, be indicted for its criminal acts which from the very necessity of the case must be performed by human agency and which in given circumstances become the acts of the company. THE appeal was dismissed and Stable, J., in his judgment observed as follows: THE offences for which a limited company cannot be indicted are, it was argued, exceptions to the general rule arising from the limitations which must inevitably attach to an artificial entity, such a company. Included in these exceptions are the cases in which, from its very nature, the offence cannot be committed by a corporation, as, for example, perjury, an offence which cannot by vicariously committed, or bigamy, an offence which a limited company, not being a natural person, cannot commit vicariously or otherwise. A further exception, but for a different reason, comprises offences of which murder is an example, where the only punishment the Court can impose is corporal, the basis on which this exception rests being that the Court will not stultify itself by embarking on a trial in which, if a verdict of guilty is returned, no effective order by way of sentence can be made. In our judgment these contentions of the Crown are substantially sound, and the existence of these exceptions, and it may be that there are others, is by no means inconsistent with the general rule. THE exception in favour of a company thus created was for an offence where the only punishment that the Court can impose is corporal. It should be noted here that in the case referred to Rex v. I.C.R. Bauiage Limited. (1944) 1 K.B. 551 a fine has been imposed. It should further be noted that under section 406, Indian Penal Code, the punishment prescribed is imprisonment of either description or a term which may extend to three years or with fine or with both. In such circumstances, it cannot be said that the first petitioner cannot be proceeded against for, it is the case of the prosecution that the society had the mens rea because it had acted through the second petitioner and others.