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TMI Blog2010 (11) TMI 1047X X X X Extracts X X X X X X X X Extracts X X X X ..... sis under Section 23(1-A)(hh) of the Prevention of Food Adulteration Act, 1954, hereinafter referred to as "the 1954 Act", could a prosecution have been launched against the Appellants based on a report submitted by the Public Analyst using the method of the Directorate General of Health Services (D.G.H.S.) ? (2) Could a prosecution have been launched against the Appellants in the absence of any validated method of analysis to ascertain the percentage of pesticide residue present in a Carbonated beverage, which renders the report of the Public Analyst unreliable, particularly when it does not indicate that such percentage of the pesticide residue is injurious to health and, therefore, adulterated within the meaning of Section 2(ia)(h) of the aforesaid Act? (3) What is the effect of non-specification of the level of tolerance in respect of the presence of pesticide residue in Sweetened Carbonated Water in the Table appended to Rule 65(2) of the Prevention of Food Adulteration Rules, 1955, hereinafter referred to as "the 1955 Rules"? and (4) What is the liability of the Directors of a company which is said to have committed defaults within the meaning of Section 17 of the 1954 Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the report of the Public Analyst could not be relied upon for launching prosecutions against the Appellants under the provisions of the 1954 Act, especially when such report did not even indicate that the presence of the amount of pesticide residue detected is injurious to health and that the sample of Pepsi submitted for analysis would, therefore, have to be considered as adulterated under Section 2(ia)(h) of the 1954 Act. 6. It was strenuously urged that even if it be assumed that the Public Analyst had detected the presence of pesticide residue, his opinion that the presence of the pesticide residue at such levels rendered the articles injurious to health under Section 2(ia)(h) of the 1954 Act, cannot be accepted in the absence of a validated method of analysis. Mr. Chagla submitted that whether an article of food is adulterated or not has to be determined under the Rules framed by the Central Government under Section 23 of the 1954 Act. Under Section 23(1A) the Central Government is empowered to make rules, inter alia, for defining the standards of quality and fixing the tolerance limits of pesticide permissible in any article of food. The Rule-making authority, in consultat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aged drinking water and no one has contended to the contrary, nor is the Appellants being prosecuted for violating such standard. He contended that the complaint is based exclusively on the Public Analyst's report, which, in fact, stood vitiated for various reasons. It was urged that to the extent the report indicates that the product manufactured by the Appellants is adulterated as per Rule 65 and A.01.01, the same was misconceived since neither Rule 65 nor A.01.01, at the relevant point had prescribed a tolerance limit for carbonated water. It was contended that the High Court has, in fact, recorded that the prosecution proceeded on the sole allegation that the samples of carbonated beverages purchased by the Food Inspectors are adulterated under Section 2(ia)(h) of the Act. Based on the said submissions, the High Court confined the allegations only to violation of the aforesaid provision of the Act and the same is also reflected in the impugned judgment of the High Court. 9. As will appear from the report of the Public Analyst filed in connection with Criminal Appeal No.836 of 2010, a pesticide residue of Carbofuran amounting to 0.001 mg/litre was detected in the sample of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... therein for quashing the proceedings pending before the Judicial Magistrate, First Class, Alwaye. The proceedings had been initiated on the complaint filed by the Food Inspector, Edapally Circle, Ernakulam District, under Sections 2(ia)(a) and (m), 7(1) and 16(1)(a)(i) and Section 17(1) of the Prevention of Food Adulteration Act, 1954 read with Rule 5 of the Prevention of Food Adulteration Rules, 1955, which were ultimately quashed, inter alia, on the ground that no prosecution would be maintainable where no standard is prescribed under the Rules. It was urged that the report not having disclosed any material to support the opinion, stood clearly vitiated and ought not to have been relied upon. 13. On the question of maintaining an appeal under Section 13(2) of the P.F.A. Act, 1954, Mr. Chagla contended that the courts below had erred in holding that the Appellant ought to have challenged the report by filing an appeal to the Central Food Laboratory and not having done so, was not entitled to such relief. Learned counsel submitted that the Court did not appreciate the futility of preferring an appeal under Section 13(2) of the 1954 Act, since admittedly, no validated method of an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... person responsible, along with the written consent of such director or manager for being so nominated. Explanation.- Where a company has different establishments or branches or different units in any establishment or branch, different persons may be nominated under this sub-section in relation to different establishments or branches or units and the person nominated in relation to any establishment, branch or unit shall be deemed to be the person responsible in respect of such establishment, branch or unit." 15. It was firstly submitted that one Somesh Dahale, Manager, Quality Control, of the Company, had been nominated under Sub-section (2) of Section 17 to be in-charge and responsible for the conduct of the business of the Company and was, therefore, the person responsible within the meaning of Sub- section (1). 16. In addition to the above, Mr. Chagla submitted that since no allegation had been made in the complaint against the Directors of the Company as to whether they were either in charge or responsible to the Company for its day-to-day management, the liability of the offence alleged to have been committed by the Company, could not be extended to them. Reference was mad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and its Directors and employees for alleged violation of the provisions of Section 16(1)(a)(i) read with Section 2(ia)(a), 2(ia)(h), 7(1) of the 1954 Act and Rule 65 of the 1955 Rules, were, therefore, liable to be quashed. 20. Ms. Indu Malhotra, learned Senior Advocate, appearing for Pepsico India Holdings Pvt. Ltd. in Criminal Appeal No.842 of 2010 (arising out of SLP(Crl.)No.5818/2009), while adopting Mr. Chagla's submissions re-emphasised the decision of this Court in Everest Advertising (P) Ltd.'s case (supra) with regard to the question of vicarious liability of the Directors of a Company in regard to offences which may have been committed without their knowledge or consent. Ms. Malhotra submitted that it was well-established through judicial precedent that while the Managing Director or Deputy Managing Director of a Company would be deemed to be aware of actual transactions in a given situation, the Chairman of a large company or a Director of a Company may not be so aware, as in the instant case. 21. In this regard, Ms. Malhotra also referred to the provisions of the Insecticide Act, 1968, which by virtue of the Explanation to Rule 65 has been made applicable to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ules framed under Section 23(1-A)(ee) and (hh), the methods of analysis resorted to by the Public Analyst, could not be relied upon, was considered at length by the High Court. Considering the provisions of Section 23(1-A) (ee)(hh) of the 1954 Act, the High Court held that in the event the argument advanced on behalf of the Appellants was to be accepted, it would lead to an anomalous situation. On the other hand, the High Court was of the view that the said provisions would be applicable in respect of certain tests which could not be conducted and permitted to be conducted in every laboratory. The non-formulation of Rules under Section 23(1-A)(ee)(hh) for analysis of carbonated beverages, could not, therefore, be construed as being fatal to the prosecution. 23. Mr. Bhat then submitted that Rule 4 of the 1955 Rules, provides for analysis of food samples and under Sub-rule (9) provides that the "Manual of Method of Analysis" brought out by the Ministry of Health and Family Welfare, is to be adopted for analysing the samples of food articles. However, in case no parameter is available in the manuals for the methods of analysis, the other methods of analysis indicated therein are to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Corporation of Delhi Vs. Purshotam dass Jhunjunwala & Ors. [(1983) 1 SCC 9], in which the Chairman, Managing Director and Director of the Mill were found to be in-charge of and responsible for the conduct of its business at the time of commission of offence and, accordingly, their prayer for quashing the complaint was rejected. 27. Mr. Jaideep Gupta, learned Senior Advocate, who appeared for State of Kerala in Criminal Appeal No.837 of 2010, adopted Mr. Bhat's submissions. 28. In reply to Mr. Bhat's submissions, Mr. Chagla while reiterating his earlier submissions, contended that the submissions with regard to Rule 65 of the 1955 Rules had been given up by the State of Kerala before the High Court, though such submission was disputed by Mr. Bhat. He also added that Rule 65 deals with raw products and not finished products and the decision in Prem Ballab & Anr.'s case (supra) dealt with the addition of colour to a food article which has no relevance as far as the facts of these Appeals are concerned, since it is not the case of the prosecution that any insecticide had been directly introduced in sweetened carbonated water manufactured by the Company. 29. From the su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Pepsi could not be said to be adulterated being within the prescribed tolerance limit. 32. The entire controversy arises out of the fact that no specific tolerance limit had been prescribed for sweetened carbonated water under Rule 65 and it was, therefore, presumed that trace of any insecticide would amount to adulteration of the final product. In fact, the High Court, while considering the matter, seems to have misconstrued the submissions made on behalf of the Appellants that the mere presence of insecticide residue does not render the article of food as being adulterated. The presence of insecticides within the limits prescribed in the Table to Rule 65 cannot, therefore, be said to have caused adulteration of the article of food in question. In fact, in paragraph 21 of its judgment, the learned Single Judge of the High Court observed that he was inclined to agree with the learned counsel for the Petitioners that the mere presence of insecticide residue could not ipso facto justify the conclusion that the article of food has become injurious to health. 33. The High Court summarised its view into several grounds of challenge. Grounds 1 and 2 relate to the non-framing of Rules ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly specified for such examination, such an exercise would have been futile. In our view, no useful purpose could have been served by sending the second sample to the Forensic Laboratory, unless a defined tolerance limit of the presence of the pesticides was available in regard to Sweetened Carbonated Water. It may be noted that the High Court had itself observed that mere presence of insecticide residue to any extent could not justify an allegation that the article of food was adulterated, but contrary to such observation, the High Court went on to hold that the Sweetened Carbonated Water manufactured by the Appellants was adulterated within the meaning of Section 2(ia)(h) of the 1954 Act. 37. On the question of liability of the Directors of the Company with respect to an offence alleged to have been committed by the Company, the High Court went beyond the ratio of the decision of this Court in S.M.S. Pharmaceuticals Ltd.'s case (supra) upon holding that the principles set out in the said decision could not be understood in any mechanical or rigid manner. Instead, the High Court based its judgment on the decision of this Court in N. Rangachari Vs. Bharat Sanchar Nigam Ltd. [(2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... above, and relying instead on the decision of Rangachari's case (supra), the facts of which were entirely different from the facts of this case. It is now well established that in a complaint against a Company and its Directors, the Complainant has to indicate in the complaint itself as to whether the Directors concerned were either in charge of or responsible to the Company for its day-to-day management, or whether they were responsible to the Company for the conduct of its business. A mere bald statement that a person was a Director of the Company against which certain allegations had been made is not sufficient to make such Director liable in the absence of any specific allegations regarding his role in the management of the Company. 40. It has to be kept in mind that although an argument was advanced with regard to the restrictions imposed on the use of insecticides under Rule 65 of the 1955 Rules, it is apparent from the order of the learned Single Judge that such a ground was given up by the respondents and the arguments were confined only with regard to the alleged violation of Section 2(ia)(h) of the 1954 Act. 41. Having considered the matter in its totality and also ..... X X X X Extracts X X X X X X X X Extracts X X X X
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