2023 (5) TMI 1378 - HC - Indian Laws

Legality of criminal proceeding - mandatory provision under section 202 Cr.P.C not followed and cognizance taken - HELD THAT - The person who is looking into the day to day affairs of the company and was responsible at the time of offence can only be prosecuted and in that view of the matter in absence of any averment to that effect vicarious liability upon the petitioners are not liable to be fastened upon them as there is no such averment in the complaint petition and the case of the petitioners is fully covered in view of the judgment rendered in the case of State (N.C.T. of Delhi) v. Rajeev Khurana 2010 (7) TMI 283 - SUPREME COURT . Considering that argument this Court has also decided the same issue in the case of M/s Maithon Power Limited and Others v. The State of Jharkhand and Others 2022 (3) TMI 83 - JHARKHAND HIGH COURT . It is worth considering that there is no exception to the section 202 Cr.P.C, and in that view of the matter, even in the Government complaint case, section 202 Cr.P.C is mandatory and it is admitted that the petitioners are stationed at Delhi and seeing that the learned magistrate was required to follow the mandatory provision of section 202 Cr.PC which has been amended vide Amendment Act, 2005, making it mandatory to postpone the issue of process where the accused resides in an area beyond the territorial jurisdiction of the Magistrate concerned. The entire criminal proceeding in connection with G.O.C.R No. 61 of 2013, T.R. No. 879 of 2014 including order taking cognizance dated 15.07.2013 pending in the court of learned Chief Judicial Magistrate, Deoghar are quashed - Petition allowed.

Summary

Issues:
Quashing of criminal proceeding in connection with G.O.C.R No. 61 of 2013, T.R. No. 879 of 2014 including order taking cognizance dated 15.07.2013 pending in the court of learned Chief Judicial Magistrate, Deoghar.

Analysis:

1. The petition was filed to quash the criminal proceeding related to the violation of the Drugs and Cosmetics Act, 1940. The complaint alleged that the manufacturer sold a drug as a nutritional supplement without the required license, violating the Act. The manufacturer's attempt to mislead the investigation process was highlighted, leading to the prosecution approval.

2. The counsel for the petitioners argued that the complaint lacked specific allegations against the petitioners, who were directors of the company. Citing legal precedent, it was emphasized that to charge a director, it must be shown that they were in charge of or responsible for the company's business affairs.

3. The petitioners contended that they were stationed in Delhi, and the court took cognizance without following the mandatory provision under section 202 Cr.P.C., which requires an inquiry before issuing summons, especially when the accused resides outside the magistrate's territorial jurisdiction.

4. The State counsel defended the cognizance order, citing irregularities in the case. However, the court examined the complaint and cognizance order, finding no assertion that the petitioners were involved in the day-to-day operations of the company, a crucial factor for prosecution under the Act.

5. Referring to section 34 of the Drugs and Cosmetics Act, the court clarified that prosecution can only be directed at individuals responsible for the company's conduct at the time of the offense. In the absence of such averments against the petitioners, vicarious liability could not be imposed on them.

6. Relying on legal precedents and the amendment to section 202 Cr.P.C., the court concluded that the magistrate should have postponed issuing process due to the petitioners' location outside the jurisdiction. Failure to conduct the mandatory inquiry under section 202 Cr.P.C. rendered the cognizance order invalid.

7. Consequently, the court quashed the entire criminal proceeding, including the order taking cognizance, in connection with G.O.C.R No. 61 of 2013, T.R. No. 879 of 2014. The petition was allowed and disposed of, ensuring compliance with procedural requirements and protecting the petitioners' rights.

8. The judgment highlighted the importance of specific allegations against individuals for prosecution under the Act, emphasizing the need for due diligence in legal proceedings to prevent unjust harassment and ensure fair treatment of the accused.