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2010 (7) TMI 881 - HC - Companies LawWhether a director of a company would be deemed to be in charge of, and responsible to the company for conduct of the business of the company and, therefore, deemed to be guilty of the offence unless he proves to the contrary? Held that - It is the admitted case of the petitioner that he is the General Manager, West Bengal of Indian Oil Corporation Limited. He being the General Manager of the company by very nature of his duty it can always be prima facie inferred that being the General Manager he is in charge and responsible to the accused company for carrying on its day to day business. Therefore, there is a prima facie case so far as the petitioner no. 2 is concerned that he is vicariously liable for the offences committed by the accused company of which he is the General Manager. Hence, even in absence of requisite averment in the petition of complaints, the question of quashing of the case against him does not at all arise. In the result, while both the criminal revisions so far as the petitioner no. 1 is concerned succeeds and the criminal case against him stands quashed, but both the aforesaid criminal revisions so far as the petitioner no. 2 is concerned stands dismissed for the reasons stated hereinabove.
Issues Involved:
1. Quashing of Complaint Case No. C-773 of 2004. 2. Quashing of Complaint Case No. C-649 of 2004. 3. Requisite averment in complaints under Section 74 of the Standards of Weights and Measures Act, 1976, and Section 62 of the Standards of Weights and Measures (Enforcement) Act, 1985. 4. Vicarious liability of company officers. Detailed Analysis: 1. Quashing of Complaint Case No. C-773 of 2004: The petitioners sought to quash Complaint Case No. C-773 of 2004, which involved alleged violations under Section 63 of the Standards of Weights and Measures Act, 1976, and Sections 51 and 61 of the Standards of Weights and Measures (Enforcement) Act, 1985. The principal ground for quashing was the absence of requisite averments in terms of Section 74 of the Standards of Weights and Measures Act, 1976, and Section 62 of the Standards of Weights and Measures (Enforcement) Act, 1985. The court found that the complaint lacked specific averments regarding the petitioners' responsibility for the conduct of the company's business at the time the offence was committed. 2. Quashing of Complaint Case No. C-649 of 2004: Similarly, the petitioners sought to quash Complaint Case No. C-649 of 2004, which involved alleged violations under Section 63 of the Standards of Weights and Measures Act, 1976, and Section 51 of the Standards of Weights and Measures (Enforcement) Act, 1985. The court examined the complaints and found that the requisite averments were absent, making the complaints untenable. 3. Requisite Averment in Complaints: The court emphasized the necessity of specific averments in complaints under Section 74 of the Standards of Weights and Measures Act, 1976, and Section 62 of the Standards of Weights and Measures (Enforcement) Act, 1985. The court referred to the case of S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla & Anr., which held that it is essential to aver in the complaint that the accused was in charge of and responsible for the conduct of the business of the company at the time the offence was committed. The absence of such averments renders the complaint insufficient to meet the legal requirements. 4. Vicarious Liability of Company Officers: The court analyzed the vicarious liability of the petitioners, particularly focusing on their roles within the company. The court referred to the judgments in S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla & Anr. and K.K. Ahuja v. V.K. Vora & Anr., which clarified that merely being a director or officer is not sufficient to establish liability. There must be specific averments that the individual was in charge of and responsible for the conduct of the company's business. - Petitioner No. 1 (Chairman): The court found that the complaint lacked any specific averments regarding the Chairman's responsibility for the conduct of the company's business. Therefore, the complaints against Petitioner No. 1 were quashed. - Petitioner No. 2 (General Manager): The court noted that Petitioner No. 2 was described as the General Manager in both the complaints and the criminal revision. It was inferred that by the very nature of his duties, the General Manager is in charge of and responsible for the company's day-to-day business. Therefore, there was a prima facie case of vicarious liability against Petitioner No. 2, and the complaints against him were not quashed. Conclusion: The criminal revisions succeeded for Petitioner No. 1, and the complaints against him were quashed. However, the criminal revisions for Petitioner No. 2 were dismissed, as there was a prima facie case of vicarious liability against him. The applications for extension of interim orders became infructuous and were disposed of accordingly.
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