Nominated person faces trial for 30 years in Dalda Ghee adulteration case while HUL never gets convicted. SC says either both get convicted or none

Supreme Court: In the case dating back to 1989, relating to the adulteration of Dalda Vanaspati Khajoor Brand Ghee, wherein the company was absolved of all charges but prosecution against it’s nominated office Nirmal Sen continued, the 3-judge bench of L. Nageswara Rao, Hemant Gupta* and Ajay Rastogi, JJ has held that in the absence of the Company, the Nominated Person cannot be convicted or vice versa.

In the present case, the Trial Court did not pass any order to convict the Company but convicted the appellant Nirmal Sen. The Madhya Pradesh High Court, however, set aside the order of conviction and remitted back the matter to the trial court for passing fresh orders against the appellant Nirmal Sen and the Company. The reasoning given for the same was that if the Company is acquitted of the charges, the said benefit will also directly go to the appellant/Nominated Officer. It also noticed that there was a glaring and patent defect in the judgment of the trial court as well as in the judgment of the appellate court.

Senior Advocate Dr. Abhishek Manu Singhvi, appearing on behalf of the appellant/Nominated Officer argued that the appellant was charged for the violation of Section 2(ia)(m) read with Section 7(i) of the Prevention of Food Adulteration Act, 1954 (the 1954 Act). Such violation attracted a sentence of not less than six months and up to 3 years and a fine of Rs.1,000/- under Section 16(1)(a)(i), whereas under the Food Safety and Standards Act, 2006 (the 2006 Act), the punishment of such adulteration which is related to only higher melting point is fine of Rs.5 lakhs and Rs.1 lakh under Sections 3(1)(zx) and 3(1)(i) respectively.

The Court, however, did not find any merit in the aforementioned argument and said that though the 1954 Act has been repealed by Section 97 of the 2006 Act, however, the punishments imposed under the 1954 Act have been protected. It noticed that in terms of Section 6 of the General Clauses Act, 1897, unless different intention appears, the repeal of a statute does not affect any investigation, legal proceeding or remedy in respect of any such right, privilege, obligation, liability, penalty, forfeiture or punishment and any such investigation, legal proceeding or remedy may be instituted, continued or enforced, and any such penalty, forfeiture or punishment may be imposed as if the Repealing Act or Regulation had not been passed.

“But in the 2006 Act, the repeal and saving clause contained in Section 97 (1)(iii) and (iv) specifically provides that repeal of the 1954 Act shall not affect any investigation or remedy in respect of any such penalty, forfeiture or punishment and the punishment may be imposed, “as if the 2006 Act had not been passed”.”

It was, hence, held that in view of Section 97 of the 2006 Act, as also under Section 6 of the General Clauses Act, 1897, the proceedings would continue under the Act.

“No benefit can be taken under the 2006 Act as the prosecution and punishment under the 1954 Act is protected.”

Senior Advocate Siddhartha Luthra, appearing for the Company, argued that the order of remand by the High Court to the trial court against the Company cannot be sustained for the reason that such an order was passed without giving an opportunity of hearing, as contemplated under Section 401(2) of the Code. The Court found strength in this argument and held the course adopted by the High Court to remand the matter to the trial court after more than 30 years to cure the defect which goes to the root of the trial, though permissible in law, was not justified.

It explained that Clause (a) of Sub-Section (1) of Section 17 of the 1954 Act makes the person nominated to be in charge of and responsible to the company for the conduct of business and the company shall be guilty of the offences under clause (b) of Sub-Section (1) of Section 17 of the Act. Hence, Clauses (a) and (b) are not in the alternative but conjoint. Therefore, in the absence of the Company, the Nominated Person cannot be convicted or vice versa.

Since the Company was not convicted by the trial court, the finding of the High Court to revisit the judgment was found to be unfair to the appellant/Nominated Person who has been facing trial for more than last 30 years.

“Therefore, the order of remand to the trial court to fill up the lacuna is not a fair option exercised by the High Court as the failure of the trial court to convict the Company renders the entire conviction of the Nominated Person as unsustainable.”

[Hindustan Unilever Ltd. v. State of Madhya Pradesh, 2020 SCC OnLine SC 905, decided on 05.11.2020]

*Justice Hemant Gupta has penned this judgment 

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