Bombay High Court: In an application questioning the correctness of order dated 19-05-2014 passed by Judicial Magistrate First Class (‘JMFC’) to issue process for offences under Sections 18(1), 49 and 36(1) of the Legal Metrology Act, 2009 (‘LM Act’) read with Rule 18(1) and 24 of Legal Metrology (Packaged Commodities) Rules, 2011 (‘LM Rules’), G.A. Sanap, J. quashed and set aside the said order holding that specific averments were required in the complaint regarding their role in conducting business of the company to fasten vicarious liability on Directors.
In the instant matter, the Inspector of Legal Metrology filed a complaint against Raymond Ltd. and the applicant being the Managing Director of the company, and the remaining directors were also accused. The complaint stated that the said Inspector noticed a cardboard package of fabric during his visit which lacked a declaration regarding name of the commodity, name and particulars of manufacturer, packer, number of pieces etc. The Inspector drew the panchanama, seized the said package, issued a compounding notice to the company and filed a complaint before JMFC alleging that said violations constitute an offence under the LM Act. The JMFC in return took cognizance of the matter and issued process against the applicant and other directors.
While the High Court had earlier quashed and set aside order for issuing process against 8 remaining directors, the applicant contended that the complaint lacked any specific averments over specific role of the applicant being in-charge or responsible for conducting the company’s business.
The Court scrutinized Section 49(1) of LM Act laying the provision for “offences by companies and power of Court to publish name, place of business, etc., for companies convicted”. The Court pointed out the applicant’s contention that no one was nominated for exercising powers under Section 49(2) of LM Act, and the same was not countered by the prosecution.
The Court said that Section 49(1) provides complete mechanism for fixing vicarious liability of the Managing Director/Directors for offences committed by the company. However, the complaint did not show any specific averments to fasten such vicarious liability on the applicant or remaining directors, and that no role was attributed to the applicant in commission of crime.
The Court observed that
“Until and unless a specific averment is made in the complaint that Managing Director or Director was in-charge of and was responsible to the company for conduct of its business, the Magistrate should not have taken cognizance against the applicant and other Directors.”
It further pointed that the company was arrayed as accused and alleged offence was committed by the company, the vicarious liability of any of the Directors would arise by deeming fiction and therefore, necessary averments were required in the complaint to fasten vicarious liability on Directors. The Court also highlighted that averments in the complaint were as vague as the vagueness could be, stating that besides the company name, it was pleaded in general that accused is either owner/partner/director of the company, but no specific averments were made to attribute any role in any capacity to fasten liability for prosecution of the applicant, a fact left unconsidered by the JMFC.
The Court noted that as per the scheme under Section 49 of LM Act, the JMFC was required to apply his mind to the legal provisions and facts, and record prima facie satisfaction about the role of the applicant before the issuing process, while he/she issued the process mechanically. The Court said that the order passed by the Magistrate could not be sustained, and therefore, quashed and set aside the order dated 19-05-2014 to the extent of instant applicant.
[Gautam Hari Singhania v. State of Maharashtra, 2023 SCC OnLine Bom 1254, decided on 8-06-2023]
Judgment by: Justice G.A. Sanap
Advocates who appeared in this case :
For Applicant: Advocate H.V. Thakur;
For Non-Applicant: Additional Public Prosecutor Amit Chutke.
