SRI. NAGARAJ L v. STATE OF KARNATAKA

1. SRI. NAGARAJ L, S/O LAKSHMINARAYANA K.G, AGED ABOUT 51 YEARS, WORKING AT EXCEED CROP SCIENCE PVT. LTD., PLOT NO.17 AND 26, KIADB INDUSTRIAL BADAVANE, KOORGALLI, BELAVADI POST, MYSURU - 570 018, RESIDING AT NO.4695, 11TH MAIN, VIJAYNAGAR 2ND STAGE, MYSURU - 570 017.

2. H.S. CHIDANANDA, S/O. SANNASIDDAPPA, AGED ABOUT 54 YEARS, CHIEF OPERATING OFFICER, EXCEED CROP SCIENCE PVT. LTD., PLOT NO.17 AND 26, KIADB INDUSTRIAL BADAVANE, KOORGALLI, BELAVADI POST, MYSURU - 570 018, RESIDING AT NO.500, SIRI, NORTH PARK AVENUE, ROOPANAGARA, 7TH CROSS, BOGADI, MYSURU - 570 026. (BY SMT. MANASI SHARMA, ADVOCATE FOR SRI. NITIN RAMESH, ADVOCATE) …PETITIONERS Location: HIGH COURT OF KARNATAKA - 2 - NC: 2024:KHC:46878 WP No. 27979 of 2024 AND: STATE OF KARNATAKA, REPRESENTED BY RIYAZ AHAMMED SHAREEF, ASSISTANT DIRECTOR OF AGRICULTURAL, OFFICE OF THE JOINT DIRECTOR AGRICULTURAL, MADIKERI - 571 201. …RESPONDENT (BY SRI. M.M. WAHEEDA, HCGP) THIS W.P. IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA R/W SEC. 528 OF BNSS, 2023 PRAYING TO QUASH THE ENTIRE PROCEEDING AGAINST THE PETITIONERS / ACCUSED NO.1 AND 2 IN C.C.NO. 2166/2024 ARISING OUT OF P.C.R NO. 230/2024 PENDING ON THE FILE OF HONBLE ADDL. CIVIL JUDGE AND JMFC COURT, MADIKERI FOR VIOLATION OF SEC 19(a)(b) OF THE FERTILIZER CONTROL ORDER, 1985, PUNISHABLE UNDER SEC. 7 ESSENTIAL COMMODITIES ACT, 1955 AT ANNX-A AND B AND ETC., THIS PETITION, COMING ON FOR PRELIMINARY HEARING, THIS DAY, ORDER WAS MADE THEREIN AS UNDER: CORAM: HON'BLE MR JUSTICE M.NAGAPRASANNA ORAL ORDER The petitioners are before this Court calling in question proceedings in C.C.No.2166/2024 for the offence punishable under Section 7 of the Essential Commodities Act, 1955.

2. Heard Smt. Manasi Sharma, learned counsel for Sri. Nitin Ramesh, learned counsel appearing for the petitioners - 3 - NC: 2024:KHC:46878 WP No. 27979 of 2024 and Smt. M.M. Waheeda, learned High Court Government Pleader appearing for the respondent.

3. The learned counsel appearing for the petitioners submits that the issue in the lis stands answered by plethora of judgments as the Company is not a made party, as obtaining under Section 10 of the Essential Commodities Act, 1955.

4. This Court in Crl.P.No.101041/2023, disposed on

16.05.2023, has considered the very same issue and has held as follows: “3. Learned counsel for the petitioner would submit that this court in Crl.P.No.100103/2022 concerning accused No.2 has quashed the proceedings in terms of its order dated 21.02.2022. This court has held as follows: “2. The petition is filed calling in question the proceedings instituted against the petitioner for the offence punishable under Sections 3 and 7 of the Essential Commodities Act, 1955. The allegation is against the Company. The complaint without at the outset making the Company as a party/accused to the proceedings would be not maintainable in the light of Section 10 of the Essential Commodities Act, 1955.

3. Section 10 of the Essential Commodities Act, 1955 reads as follows: “10. Offences by companies.— (1) If the person contravening an order made under section 3 is a company, every person who, at contravention 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 contravention and shall be liable to be proceeded against and punished accordingly: Provided that nothing contained in this sub-section shall render any such person liable to any punishment if he proves that the contravention took - 4 - NC: 2024:KHC:46878 WP No. 27979 of 2024 place without his knowledge or that he exercised all due diligence to prevent such contravention. (2) Notwithstanding anything contained in sub- section (1), where an offence under this Act has been committed by a company and it is proved that the offence has been committed with the consent or connivance of, or is attributable to any neglect on the part of any director, manager, secretary or 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. Explanation.—For the purposes of this section,— (a) “company’’ means any body corporate, and includes a firm or other association of individuals; and (b) “director’’ in relation to a firm means a partner in the firm.

4. Section 10 of the Act is in pari materia with Section 141 of the Negotiable Instruments Act, 1881 which is interpreted by the Apex Court in the case of in the case of Aneeta Hada vs. Godfather Travels & Tours Pvt. Ltd., reported in (2012) 5 SCC 661, wherein the Hon’ble Apex Court has held as follows :

53. It is to be borne in mind that Section 141 of the Act is concerned with the offences by the company. It makes the other persons vicariously liable for commission of an offence on the part of the company. As has been stated by us earlier, the vicarious liability gets attracted when the condition precedent laid down in Section 141 of the Act stands satisfied. There can be no dispute that as the liability is penal in nature, a strict construction of the provision would be necessitous and, in a way, the warrant.

56. We have referred to the aforesaid passages only to highlight that there has to be strict observance of the provisions regard being had to the legislative intendment because it deals with penal provisions and a penalty is not to be imposed affecting the rights of persons whether juristic entities or individuals, unless they are arrayed as accused. It is to be kept in mind that the power of punishment is vested in the legislature and that is absolute in Section 141 of the Act which clearly speaks of commission of offence by the company. The learned counsel for the respondents have vehemently urged that the use of the term “as well as” in the Section is of immense significance and, in its tentacle, it brings in the company as well as the director and/or other officers who are responsible for - 5 - NC: 2024:KHC:46878 WP No. 27979 of 2024 the acts of the company and, therefore, a prosecution against the directors or other officers is tenable even if the company is not arraigned as an accused. The words “as well as” have to be understood in the context.

59. In view of our aforesaid analysis, we arrive at the irresistible conclusion that for maintaining the prosecution under Section 141 of the Act, arraigning of a company as an accused is imperative. The other categories of offenders can only be brought in the dragnet on the touchstone of vicarious liability as the same has been stipulated in the provision itself. We say so on the basis of the ratio laid down in C.V. Parekh (supra) which is a three-Judge Bench decision. Thus, the view expressed in Sheoratan Agarwal (supra) does not correctly lay down the law and, accordingly, is hereby overruled. The decision in Anil Hada (supra) is overruled with the qualifier as stated in paragraph 51. The decision in Modi Distilleries (supra) has to be treated to be restricted to its own facts as has been explained by us hereinabove.”

5. In the light of the issue standing covered by the Judgment rendered by the Apex Court and the admitted fact that the Company is not a party in these proceeding, the proceedings are rendered unsustainable and therefore stand obliterated against the petitioner.”

4. The reason for quashing the proceedings against accused No.2, is that the company has not been made as party to the crime and it is in violation of the judgment of the Hon’ble Apex Court in the case of Aneeta Hada vs. Godfather Travels & Tours Pvt. Ltd., reported in (2012) 5 SCC 661. In the light of the said finding, the subject petition also deserves to succeed, in the manner in which relief is granted to accused No.2.” (Emphasis supplied) In the light of the afore-quoted judgment and the facts obtaining in the case at hand, as there is no compliance with the mandate of the statute as obtaining under Section 10 of the - 6 - NC: 2024:KHC:46878 WP No. 27979 of 2024 Essential Commodities Act, 1955, the petition deserves to succeed.

5. For the aforesaid reasons, the following: ORDER a. The writ petition is allowed. b. The proceedings in C.C.No.2166/2024 pending on the file of Additional Civil Judge and JMFC Court, Madikeri, stand quashed. Sd/- (M.NAGAPRASANNA) JUDGE JY List No.: 1 Sl No.: 222 CT: BHK