Case Note & Summary
The judgment pertains to two criminal writ petitions filed by directors and a company against criminal proceedings initiated under the Prevention of Food Adulteration Act, 1954. The petitioner in WP No. 4069 of 2016, Mr. Om Prakash Bhatt, was a director of Hindustan Unilever Limited (HUL). The petitioners in WP No. 137 of 2017 were HUL and four of its directors. The proceedings arose from a complaint filed by the Municipal Corporation of Greater Mumbai (MCGM) alleging that a sample of 'Knorr Soup' manufactured by HUL was adulterated. The Magistrate took cognizance and issued process against the company and its directors. The petitioners sought quashing of the criminal proceedings on the ground that the directors were not in charge of the day-to-day business at the relevant time and that there were no specific allegations against them as required under Section 10 of the Act. The court analyzed the provisions of Section 10 of the Prevention of Food Adulteration Act, 1954, which creates vicarious liability for directors only if they were in charge of and responsible for the conduct of the business at the time of the offence, or if the offence was committed with their consent, connivance, or attributable to their neglect. The court found that the complaint lacked specific averments against the directors and that the material on record did not prima facie show that they were in charge of the business. The court held that continuing the proceedings against the directors would be an abuse of process and quashed the proceedings against them. However, the proceedings against the company were allowed to continue. The court also noted that the company could be prosecuted independently.
Headnote
A) Criminal Law - Vicarious Liability of Directors - Section 10 Prevention of Food Adulteration Act, 1954 - Requirement of Specific Allegations - The court considered whether directors can be prosecuted for an offence under the Act without specific averments that they were in charge of and responsible for the conduct of the business at the time of the offence. Held that mere designation as director is insufficient; there must be prima facie material showing that the director was in charge of and responsible for the conduct of the business, or that the offence was committed with consent, connivance, or attributable to neglect on his part. (Paras 10-15) B) Criminal Law - Quashing of Criminal Proceedings - Inherent Powers under Section 482 CrPC - Abuse of Process - The court examined whether criminal proceedings against directors who were not in charge of day-to-day business at the relevant time constitute an abuse of process. Held that continuing such proceedings would be an abuse of the process of court and are liable to be quashed. (Paras 16-20) C) Food Adulteration - Liability of Company and Directors - Section 10 Prevention of Food Adulteration Act, 1954 - Distinction Between Company and Directors - The court clarified that the liability of directors is not automatic upon the company's guilt; separate and specific allegations must be made against each director to attract vicarious liability. (Paras 12-14)
Issue of Consideration
Whether directors of a company can be vicariously liable under Section 10 of the Prevention of Food Adulteration Act, 1954 for an offence committed by the company in the absence of specific allegations that they were in charge of and responsible for the conduct of the business at the time of the offence.
Final Decision
The court allowed the petitions and quashed the criminal proceedings against the directors. The proceedings against the company were allowed to continue.
Law Points
- Vicarious liability of directors under Section 10 of Prevention of Food Adulteration Act
- 1954 requires specific averments that the director was in charge of and responsible for the conduct of business at the time of the offence
- mere designation as director is insufficient
- criminal proceedings cannot be initiated without prima facie material showing consent or connivance or neglect
