1988 (8) TMI 200 - HC - Central Excise

Summary

Issues:
1. Revision petition under Sections 397, 399/401 of the Code of Criminal Procedure for setting aside the charge framed against the petitioners under Section 7 of the Essential Commodities Act, 1955.
2. Interpretation of Section 10(1) of the Act regarding the liability of individuals in a company or partnership firm for contraventions.
3. Allegations against the petitioners for violations under the Essential Commodities Act and the legal requirements for establishing liability under Section 10(1).

Analysis:

1. The judgment involves a revision petition challenging the charge framed against the petitioners under Section 7 of the Essential Commodities Act, 1955. The prosecution alleged that the firm, M/s. Pinky Builders, committed various violations, and the petitioners, being partners of the firm, should also be held responsible under Section 10(1) of the Act. However, the charge sheet did not establish that the firm itself was charged, and the conditions for invoking Section 10(1) were not met. The court emphasized that liability under Section 10(1) arises only when the company or firm is charged first, and the individuals are in charge of the company's business, which was not the case here. The judgment referenced a Supreme Court case highlighting that liability under Section 10 can only be imposed when the contravention is by the company itself, not just its employees or partners.

2. The judgment delves into the legal interpretation of Section 10(1) of the Act, emphasizing that individuals can be deemed guilty of contraventions if they were in charge of and responsible for the company's business at the time of the offense. The court cited previous cases to define "in charge of" as having overall control of the day-to-day business operations. It was noted that mere partnership in a firm does not automatically imply being in charge of the business. The court highlighted the importance of proving that the individuals were responsible for the conduct of the business, which was lacking in the prosecution's case against the petitioners. The judgment underscored the necessity of specific allegations and evidence to establish liability under Section 10(1).

3. The judgment scrutinized the factual aspect of the case, noting that the prosecution failed to provide evidence that the petitioners were in overall control of the firm's daily operations. The court emphasized that being a partner in a firm does not inherently confer responsibility for the business's management. The prosecution's reliance on the partnership deed was deemed insufficient as it did not prove that the petitioners were in charge of the firm's business. The court concluded that the charge against the petitioners was based on inadequate grounds and lacked the necessary allegations and evidence to establish liability under Section 10(1) of the Act. Consequently, the court quashed the charge against the petitioners and discharged them from the case.