SHYAM MADANMOHAN RUIA Vs. M R MAHAKALKAR

JUDGEMENT

(1.) BY this writ petition the Directors of the Company i. e. Raptakos Brett and Co. Ltd. have challenged the order of issue of process for offence punishable under Section 18 (a) (i), 18 (b), 18 (c) and Rule 17 (j) read with Section 18 (a) (vi) of Drugs and Cosmetics Act 1940 and punishable under Section 27 of the said Act, passed by the learned Judicial Magistrate, Thane. The accused no. 1 viz. Mr. Madanmohan Ramnarain Ruia died before filing of this Petition. The material facts are as below:-

(2.) THE Petitioner no. 10 is a Company incorporated under the Indian Companies Act. At the relevant time Petitioner no. 9 was factory manager. THE factory is situated at 1st Pokharan Road, Majiwada, Thane. THE Petitioner nos. 1 to 10 are the directors of Company. Respondent no. 1 is the Drugs Inspector whereas Respondent no. 2 is the State. Respondent no. 1 filed the complaint in the Court of the Judicial Magistrate, First Class and as per allegations made in the complaint these facts are not in dispute.

(3.) THIS order has been impugned in the present writ petition and during the argument before me the challenge was restricted to the Petitioner nos. 1 to 8 only who are the directors of the Company (original accused nos. 2 to 9) The learned Counsel for the Petitioners restricted his argument to the question of law and drew my attention to Section 34 of the Drugs and Cosmetics Act, 1940. Section 34 of the said Act reads as under:- S. 34 Offences by companies - 1) Where an offence under this Act has been committed by a company, every person who at the time the offence was committed was in charge of, and was responsible to the company for the conduct of the business of the company, as well as the company shall be deemed to be guilty of the offences and shall be liable to be proceeded against and punished accordingly. Mere perusal of the said Section clearly shows that in case of offence by the Company, the legislature has with an intention to protect the directors who are not in charge of day to day business of the Company has incorporated in the Section that every person who is responsible to the Company for the conduct of the business of the company as well as the company is deemed to be guilty. The proviso of the said section provides that if any such person liable to any punishment provided in 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 cannot be held guilty. The sub section (2) provides that when offence is committed by a company and it is proved that the offence has been committed with the consent or conviance of, 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. In the present case the complaint was filed by the Drug Inspector who is well aware of the provisions of the Act and its presumed to be conversant with the procedure of filing complaints. In spite of this, he has chosen to lodge in the complaint against the accused nos. 1 to 9 who are directors whereas the accused no. 10 is the factory and no. 11 is the company. The complainant has not even alleged that the Respondent no. 1 to 9 are responsible for carrying on day to day business of the company. In the absence of such an averment in the complaint, the accused nos. 1 to 9 cannot be said to have committed any offence even if it is accepted that rest of the facts are taken to have been established by the complainant at the trial. In the absence of any allegation in the complaint, the complainant can also not adduce any evidence for connecting the accused nos. 1 to 9 with the commission of the said offence therefore in the absence of any averment in the complaint connecting the accused nos. 1 to 9 that the commission of offence if any, as required by aforesaid provisions of Section 40 of the Drugs and Cosmetics Act, 1940, the learned Magistrate could not have taken cognizance of the offence against accused nos. 1 to9.The provisions of Section 40 are enacted to protect the innocent directors of the company. It need not be stated in so many terms that the entire board of directors of the company may not be aware of the day to day business or each transaction of the said company and therefore the legislature has protected such persons by introduction of Section 40 from facing prosecution in respect of any offence under the Drugs and Cosmetics Act for which the persons in charge of day to day business of the company are responsible. On behalf of the Respondents Ms. Kantharia, learned A. P. P. contended that accused could have pressed for discharge before the learned Magistrate. In my view, this amounts to negativing the protection accorded under Section 40 of the Drugs and Cosmetics Act. If the averments in the complaint fall short of showing that the directors i. e. accused nos. 1 to 9 were responsible for day to day business of the company. The learned Magistrate could not have taken cognizance against the Petitioner - accused nos. 1 to 8 and therefore the order of issue of process so far it relates to the Petitioners nos. 1 to 8 is liable to be quashed and the complaint deserves to be dismissed against them. So far as accused no. 10 is concerned, he is admittedly the factory manager and by the nature of his duties, he can be expected to be incharge of the day to management of the business of the company and therefore the petition was not pressed so far it relates to the company and factory manager of the company i. e. Petitioner nos. 9 to 10.In the result, I find that learned Magistrate has erred in exercising the jurisdiction vested in him while issuing process against Petitioner nos. 1 to 8 and therefore the said order so far as it relates to issuance of process against these petitioners, who are shown in the complaint being Case No.17 of 1989 on the file of the Judicial Magistrate, First Class, Thane Court No.2 as accused nos. 2 to 9 is liable to be quashed and complaint is against them stands dismissed by allowing the petition of petitioner nos. 1 to 8.The learned Magistrate shall proceed to decide the case according to law as against accused nos. 10 and 11 (Petitioner Nos. 9 and 10 herein) Order accordingly. .