1992 (3) TMI 360 - SC - Indian Laws

Summary

Issues Involved:
1. Permissibility of prosecuting Directors and Managers under Section 17(1) of the Prevention of Food Adulteration Act, 1954.
2. Validity and effect of nominations made under Section 17(2) of the Act.
3. Determination of the competent Local (Health) Authority for receiving and acknowledging nominations.

Issue-wise Detailed Analysis:

1. Permissibility of Prosecuting Directors and Managers under Section 17(1):
The primary issue addressed is whether it is permissible to launch a prosecution under Section 17(1) of the Prevention of Food Adulteration Act, 1954, against the Directors and Managers of public limited companies, despite the companies having made nominations under Section 17(2). Section 17(1) stipulates that if an offence under the Act is committed by a company, the nominated person or, if no person is nominated, every person in charge of the company at the time of the offence can be prosecuted. The proviso to this section offers a defense, allowing the accused to prove that the offence was committed without their knowledge and despite due diligence.

2. Validity and Effect of Nominations under Section 17(2):
The companies argued that they had made valid nominations as required by Section 17(2), which should limit prosecution to the nominated individuals and the companies themselves, unless it can be shown that the offence was committed with the consent, connivance, or negligence of other Directors, Managers, or Officers. The court emphasized that if a valid nomination exists, only the nominated person can be proceeded against under Section 17(1)(a)(i). However, if the nomination is invalid, prosecution can extend to all persons in charge of the company at the time of the offence under Section 17(1)(a)(ii).

3. Determination of the Competent Local (Health) Authority:
The court examined whether the nominations were properly communicated to and acknowledged by the competent Local (Health) Authority. For Lipton India Limited, the nomination of H. Dayani was questioned due to alterations in the nomination form and whether it was acknowledged by the appropriate authority. For Hindustan Lever Limited, the nomination of Dr. Nirmal Sen was also scrutinized for proper acknowledgment. The court directed the trial magistrate to investigate whether the nominations were received and acknowledged by the competent Local (Health) Authority.

Conclusion:
The Supreme Court allowed the appeals, setting aside the orders of the learned Magistrate and the High Court. The matters were remanded to the trial magistrate to determine the validity of the nominations and whether they were acknowledged by the competent Local (Health) Authority. If the nominations were valid and acknowledged by the competent authority, the proceedings against the Directors, other than the nominated persons, should be dropped. If not, the prosecution should proceed against all accused persons, including the Directors, nominated persons, and the companies.