MINATI DAS Vs. STATE OF ORISSA

JUDGEMENT

(1.) The petitioners, who are Directors of Maa Tara Rice Industries Private Limited, a company incorporated under the provisions of the Companies Act, in this application under Section 482, Cr.P.C. have challenged the initiation of the Criminal Procedure in T.R. Case No. 18 of 2001 in the Court of the learned Chief Judicial Magistrate (Judge, Special Court), Sambalpur for commission of offences under Sections 7 and 9 of the Essential Commodities Act, 1955 for violation of the Provisions of Orissa Rice and Paddy Control Order, 1965, Orissa Rice and Paddy/Procurement (Levy) and Restrictions on Sale and Movement Order, 1982 and Orissa Declaration of Stocks and Prices of Essential Commodities Order, 1973.

(2.) The case of the petitioners is that one M/s. Jagannath Rice Mill of Durgapalli in the district of Sambalpur had been financed by the Orissa State Financial Corporation and the same was taken over by the Corporation for non-payment of the dues. Maa Tara Rice Industries Private Limited, a Company registered under the Companies Act consisting of four Directors including the petitioners have purchased the said unit from the Corporation in the month of November, 2000. After obtaining license under the provisions of Orissa Rice and Paddy Control Order, 1965 in the name of Prabhat Kumar Biswal in the month of November, 2000 the Company started operating its business. The said Prabhat Kumar Biswal is the Managing Director of the Company and apart from Shri Biswal, there are three other Directors, namely, Sunil Kumar Agarwal and the petitioners before this Court. It is further case of the petitioners that on 5-1-2001 a resolution was passed by the Board of Directors of the Company that both the petitioners being non-working Directors would not be responsible for day to day affairs of the Company whether administrative or financial. Under the direction of the Collector, Sambalpur on 5-2-2001 a physical verification of the stock was conducted by the Executive Magistrate and Civil Supplies Officers, but no irregularities were found. However, on 31-3-2001 a search was conducted by the Vigilance Department and on the basis of such search and inspection, the Vigilance Department lodged an F.I.R. with the Superintendent of Police, Vigilance on 9-4-2001 vide Sambalpur Vigilance P.S. Case No. 33 of 2001 on the following allegations. The company procured 55.735 quintals of paddy in between 1-12-2000 and 31-3-2001 from different farmers without stating the detail address of the farmers in the receipt from whom they procured the paddy. Further the company had received orders and had shown procurement of paddy from out side districts, but could not produce the certificate at the time of inspection and thereby violated the provisions of Orissa Rice and Paddy Control Order, 1965 (Rule-7) as well as the Provisions of Orissa Rice and Paddy/Procurement (Levy) and Restrictions on Sale and Movement Order, 1982 and Rule 3 of the Orissa Declaration of Stocks and Prices of Essential Commodities Order, 1973 and as such committed the offences under Sections 7 and 9 of the Essential Commodities Act. The further case of the petitioners is that the Confiscation Proceeding under Section 6-A of the Essential Commodities Act, 1955 i.e. E.C. Case No. 10 of 2001 was dropped as no offence was committed by the company, but charge-sheet was submitted against all the Directors on 30/06/2001 for commission of offences under Sections 7 and 9 of the Essential Commodities Act and on the basis of such charge-sheet, the learned C.J.M. took cognizance of the offences as aforesaid by order dated 13-9-2001.

(3.) Shri Sanjit Mohanty, the learned Sr. advocate appearing on behalf of the petitioners submitted that if the entire prosecution case is accepted to be true, the same does not make out a case against the petitioners. According to Shri Mohanty, there is no specific allegation in the F.I.R. or in the charge-sheet that both the petitioner s violated any of the provisions mentioned above and, therefore, no offence having been committed by the petitioners, the learned C.J.M. could not have taken cognizance of the offences so far as the petitioners are concerned. The second submission made by shri Mohanty is that the date on which the offence is alleged to have been committed, the petitioners were neither in charge of nor responsible to the conduct of the business of the company. Rather the resolution of the Board of Directors of the Company shows that the petitioners were non-working Directors of the company and not responsible for the day to day affairs of the Company whether administrative or financial. According to shri Mohanty, only because a person is Director of a Company does not necessarily mean that he fulfils the requirements of the provisions of law i.e. in-charge of and responsible for the day to day affairs of the Company in order to bring the liability. In absence of any material to show that a Director of the Company is in-charge of and responsible for its day to day affairs, no criminal liability can be attracted for any offence committed by the Company. Referring to certain pari materia provisions in other Acts as well as some decisions in this regard, it was submitted by Shri Mohanty that in absence of any material to show that the petitioners were in charge of and responsible for day to day affairs of the Company, the proceeding could not have been initiated against them. Shri D. K. Mohapatra, the learned counsel appearing for the Vigilance Department, on the other hand, submitted that there being no dispute that the petitioners are also Directors of the Company, at this stage of the proceeding, it cannot be said that they were not in charge of and responsible for day to day affairs of the Company and it will be open for them to prove during trial that they were not in charge of and responsible for day to day affairs of the Company or had no knowledge about the affairs of the Company and take the advantage of the proviso to sub-section (1) of Section 10 of the Essential Commodities Act, 1955. He also submitted that the petitioners undisputedly being the Directors of the Company, it cannot be said that no prima facie case is made out against them.