M/S. V.B.C. EXPORTS PVT. LTD. AND ANR.versusCOMMANDER S.D. BAIJAL AND ORS.

                  M/S. V.B.C. EXPORTS PVT. LTD. AND ANR.                              A
                                           v.
                     COMMAN:JER S.D. BAIJAL AND ORS.

                                  AUGUST 1, 1996

                IM.K. MUKHERJEE AND S.P. KURDUKAR, JJ.]                               B

           MGJitime Zones of India (Regulation of Ffrhing by Fm~ign Vessels)
     Act, 1981: Sections 5(1)(6), 12 and 17.

           MGJitime Zones of India (Regulation of Fishing by Foreign Vessels)         C
     Rules, 1982: Rules 8( l)(d)(2) and 16.

            Foreign ressels-Fishing in 111alitilne zones of India-Violation of con-
     ditions of pennit-Prosecution for-Liability of chGJtered Companies and
     their Managing Directors-Held they are liable for violation of conditions of
     pennit-Mere instnlctions given by cha1terers to Masters of Shi]JS to ensure      D
     compliance with mies does not absolve the Janner of their liability.
·•          Respondent No. 1, the Commander of Coast Guard Ship 'Vikram',
     intercepted and seized a number of foreign vessels as they \Vere fishing in
     the Maritime Zone of India in a depth of less than 40 fathoms of water in
                                                                                      E
     contravention of the terms and conditions of the permits granted under
     Section S of the Maritime Zones on India (Regulation of Fishing by
     Foreign Vessels) Act, 1981. The Trial Court convicted the Companies
     which owned the vessels and their Managing Directors but acquitted the
     Charterers-Companies and their Managing Directors. On appeal the
     Charterer-Companies and their Managing Directors were also convicted             F
     and sentenced hy the High Court. The Charterer-Companies and their
     I\.1anaging Directors preferred appeal before this Court contending that
     (i) strict instructions had been given hy them to the Master of Vessels not
     to commit any breach of permit conditions and if the masters of the ships
     had violated their express command not to fish in the prohibited depth,          G
     only the owners of the ships would he liable for the contravention and not
     the appellants, as charterers; and (ii) even if the Charterers-Companies
     were liable for the offence alleged their Managing Directors could not be
     prosecuted.

           Dismissing the appeals, this Court                                         H
                                        233
    234                  SUPREME COURT REPORTS (1996) SUPP. 4 S.C.R.

A         HELD : 1. From a combined reading of the provisions of the
    Maritime Zones of India (Regulation of Fishing by Foreign Vessels) Act,
    1981 and Maritime Zones of India (Regulation of Fishing by Foreign
    Vessels) Rules, 1982 it is manifest that for the alleged offence the
    Charterers have been specifically made liable to be convicted not only
    under Rule 16 but also under Section 12 of the Act. In view of the plain
B
    language of Rule 8(l)(d), Rule 8(2) and Rule 16, Section 5(6) of the Act
    has no manner of application whatsoever. Even if it is assumed that the
    Charterers had no knowledge as to what was going on in the High Court
    Seas, knowledge must be attributable to them for every foreign vessel
    (trawler) is supposed to be equipped with wireless equipment for com-
C   munication in terms of its requirements and it is expected that the
    Charterer will be in touch with the trawlers wherever they are and for that
    matter get assistance fron1 the coast guard for any communication with
    the trawlers. [237-E-G]

          2. Section 17(1) of the Act clearly.. says that when the offence is
D
    committed by a Company, persons responsible to the Company for the
    day-to-day business will be also liable along with the Company for the
    offence committed unless, of course, they can prove that the offence was
    committed without their knowledge or they exercised due diligence to
    prevent its commission. The evidence on ·record unmistakably proves that
E the managing Directors herein were responsible to their respective Com-
    panies for the conduct of their business and they did not bring on record
    any material to•avail of the proviso of the above sub-section and, for that
    matter, to exonerate themselves from the offences committed by their
    Companies. (238-B-D]
F
          CRIMINAL APPELLATE JURISDICTION: Criminal Appeal No.
    573-74 of 1987 Etc.

         From the Judgment and Order dated 24.4.87 of the Bombay High
    Court in Crl.A. No. 660 of 1986.
G
          Yashank Adhayaru, Nikhil Sakhandade, R.N. Karanjawala, Ms. Nan-
    dini Gore, Ms. Ruby Ahuja and Manik Karanjawala for the Appellants.

           V .C. Mahajan, P. Parmaswaran and W.A. Quadri for lhe Respon-
H dents.
     V.B.C. EXPORTS PVT.LID. v. S.D. BAUAL [M.K MUKHERJEE,J.]            235

      S.M. Jadhav and AS. Bhasme (NP), for the Respondents.                     A

      The Judgment of the Court was delivered by

      M.K. MUKHERJEE, J. These appeals have been heard together as
they involve common questions of fact and Jaw and this judgment will
dispose of all of them. Facts relevant for disposal of the appeals are as       B
under :

       In the month of July 1984, Coast Guard ship 'Vikram' intercepted
and seized a number of foreign vessels (trawlers), which were operating on
permits granted under Section 5 of the Maritime Zones of India (Regula-
tion of Fishing by Foreign Vessels) Act. 1981 ('Act' for short to fish in the
                                                                                c
maritime zones of India, on the allegation that they were fishing in a depth
of Jess than 40 fathoms of water in contravention of the terms and condi-
tions of the permits. For the alleged contravention the Companies which
owned the vessels and their Managing Directors as well the Companies
which had chartered them and their Managing Directors were prosecuted           D
before the Additional Chief Metropolitan Magistrate, Bombay on com-
plaints filed by S.D. Baijal (the respondent No. 1 in all these appeals), the
Commander of 11 Vikram'. The prosecutions ended in conviction of the
owners of the vessels and their Managing Directors and acquittal of the
Charterer - Companies and their Managing Directors. Besides, in some of         E
those cases the vessels were also ordered to be confiscated.

      Against their convictions and the orders of confiscation of the vessels
the owners and their Managing Directors filed separate appeals; and the
Respondent No. 1, in his turn, filed appeals challenging the acquittal of the
Charterer-Companies and their Managing Directors. The High Court dis-           F
missed the appeals preferred at the instance of the owners of the vessels
but allowed the appeals of Respondent No. 1 and convicted and sentenced
the Charterer-Companies and their Managing Directors. The above orders
of convictibn and sentence recorded by the High Court against the
Charterers and their Managing Directors are under challenge in these            G
appeals.

       Mr. Adhyaru, the learned counsel appearing on behalf of the appel-
lants, did not assail the concurrent finding of the learned Courts below that
the vessels were fishing in a depth of less then 40 fathoms of water in
contravention of the terms and conditions of the permit. He, however H
    236                   SUPREME COURT REPORTS [1996) SUPP. 4 S.C.R.

A   strenuously argued that having regard to the admitted fact that the appel-
    lants had given clear instructions to the masters of the ship, in accordance
    1vith Section 5 (6) of the Act, to ensure compliance with the provisions of
    the Act, the Rules framed thereunder and the conditions of the permits, the
    High Court was not at all justified in upsetting the judgment of the trial
    Court so far as the appellants were concerned. He contended that when the
B   vessels were on high sea it was impossible for the Charterers to control their
    movements and, therefore, if the masters of the ships violated their express
    command not to fish in the prohibited depth, only the owners of the ships
    would be liable for the contravention and not the appellants, as Charterers.
    To buttress his contention he pressed into service the follmving findings
c   recorded by the learned Magistrate while acquitting the appellants :

             "Shri Baijal P.W. 1 No. 1 in para 36 of the evidence has admitted
             that there is no way to prevent contravention of rule or condition
             of the permit. In para 37 of the evidence he has admitted that
             charterers has no physical control over the trawlers when they are
D            on the High Sea. The charterer had asked the masters not lo
             commit any breach of rule or condition of the permit. Beyond this
             charterer could do nothing11 •

          To appreciate the above contention of Mr. adhyaru it will be neces-
E sary to refer to the relevant provisions of the Act, Rules and the conditions
    of the permit. Sub-section (1) of Section 5 of the Act provides that any
    Indian citizen, who-intends to use any foreign vessel for fishing within the
    maritime zone of India, is required to obtain a permit for the purpose and
    sub-section (6) thereof casts an obligation upon the permit holder to ensure
F   that every person employed by him complies in the course of his employ-
    ment, with the provisions of the Act, or any Rules or Orders made
    thereunder and the conditions of such permit. Section 12 lays down the
    extent of penalty that can be imposed for contravention of the provisions
    of the permit granted under Section 5 of the Act. The other Section which
    is relevant for our purpose is Section 17(1) of the Act which reads thus :
G
             "Where an offence under this· Act has been committed by a
             company, every person who at the time the offence was committed,
             was in charge of, and was responsible to, the company for the
             conduct of the business of the company, as well as the company,
H            shall be deemed to be guilty of the offence and shall be liable to
         V.B.C. EXPORTS PVT. LID. v. S.D. BAIJAL[M.K MUKHERJEE, J.]         237

            be proceeded against and punished accordingly :                        A

                Provided that nothing contained in this sub-section shall render
            any such person liable to any such punishment provided in this Act
            if he proves that the offence was committed without his knowledge
            or that he had exercised all due diligence to prevent the commis-
                                                                                   B
            sion of such offence".

           Coming now to the Rules framed under the Act we find that Rule
    8(1), in its different clauses, lays down the terms and conditions lo which
    a permit shall be subjected to. Rule 8(1)( d), with which we are mainly
    concerned in these appeals, prohibits the Charterer from fishing within a      C
    depth of 40 fathoms in the maritime zone of India. Rule 8(2) expressly
    states that the Charterer shall be bound by all or any of the terms and
    conditions mentioned in sub-rule (1). Rule 16 speaks of the contravention
    of the terms and conditions of permits and Rule and it provides that any
    contravention of the provisio~s of the Rules shall be punishable with fine     D
    which may extend to Rs. 50,000, without prejudice to the penalties which
    may be awarded under the Act.

           From the combined reading of the above provisions of the Act and
    the Rules it is manifest that for the offence with which we are concerned
    in these appeals, the Charterers have been specifically made liable to be E
    convicted not only under Rule 16 but also under Section 12 of the Act. In
    view of the plain language of Rule 8(1)(d), Rule 8(2) and Rule 16, Section
    5(6) of the Act to which reference has been made by Mr. Ahdyaru has no
    manner of application whatsoever. Even if we proceed on the assumption
    that the Charterers had no knowledge as to what was going on in the High F
    Seas, knowledge must be attributable to them for every foreign vessel
    (trawler) is supposed to be equipped with wireless equipment for com-
    munication in terms of its requirements and it is expected that the
    Charterer will be in touch with the trawlers wherever they are and for that
    matter get assistance from the coast guard for any communication with the G
    trawlers. If Mr. Adhyaru's contention, that once it is proved that strict
    instructions had been given by the Charterer to the master of the vessel
    not to commit any breach the former would be absolved of the liability for
    such breach, is to be accepted then, under no circumstances can a
    Charterer be successfully prosecuted even if a case of flagrant violation of


-
    the terms and conditions of the permit like those of clause 8(1)(d), which H
    238                  SUPREME COURT REPORTS [1996) SUPP. 4 S.C.R.

A   expressly says that the Cha11erer (emphasis supplied) shall not fish within
    the prohibited zone and depth, is conclusively made out.

          It was next contended by Mr. Adhyaru that even if the Charterer-
    Companies were liable for the offence alleged, their Managing Directors
    could not be prosec;ited. This contention is also devoid of any merit
B   Section 17(1) ,of the Act, which has been quoted earlier, clearly says that
    when the offence is commilled by a Company, persons responsible to the
    Company for the day-to-day business will be also liable along with the
    Company for the offence committed unless, of course, they can prove that
    the offence was committed without their knowledge or they exercised due
C   diligence to prevent its commission. The evic.!ence on record unmistakably
    proves that the Managing Directors herein were responsible to their
    respective Companies for the conduct of their business and they (the
    Managing Directors) did not bring on record any material to avail of the
    proviso of the above sub-section and, for that matter, to exonerate them·
    selves from the offences committed by their Companies.
D
         For the foregoing discussion we do not find any merit in these
    appeals which are dismissed.

    T.N.A.                                                  Appeals dismissed.




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