Holding

The High Court’s order quashing the process against the Managing Director was erroneous; cognizance was properly taken, investigation records cannot quash the complaint, and the director can be liable, but the prosecution must be closed due to the excessive delay, with exemplary costs imposed.

Summary

The Deputy Chief Controller of Imports and Exports filed a complaint under Section 5 of the Imports and Exports (Control) Act, 1947 against Parle Bottling Co. Ltd. and its Managing Director, alleging contravention of licence conditions. The complaint was transferred to another magistrate court, where cognizance was taken under proviso (a) of Section 200 of the Criminal Procedure Code without the complainant being examined, and the accused sought recall of the summons, which was dismissed. The Bombay High Court quashed the process against the Managing Director, holding that the magistrate had not applied his mind and that a company cannot act through its director without specific allegations of aiding or abetting. The Supreme Court allowed the appeal, ruling that the High Court erred: the magistrate’s taking of cognizance was proper, investigation records are not evidence to quash a complaint, and the Managing Director could be liable as an agent of the company. However, because the alleged offence occurred about twenty years earlier, the Court closed the case against the Managing Director and imposed exemplary costs of Rs.10,000.

Issues considered

Whether cognizance under proviso (a) of Section 200 CrPC can be taken without examining the complainant.
Whether records of investigation can be used to quash a criminal complaint.
Whether a managing director can be prosecuted as a principal offender under Section 5 of the Imports and Exports (Control) Act, 1947 when the company is the licencee.
Whether the passage of twenty years since the alleged offence bars continuation of the prosecution in the interest of justice.
Whether exemplary costs may be imposed on the accused for dilatory conduct.

Legislation cited

Subjects

Imports and Exports (Control) ActSection 5Criminal Procedure CodeSection 200cognizancecomplaintmanaging director liabilityquashing of processdelay in prosecutionexemplary costscriminal procedure

Judgment

A
T.J. STEPHEN & ORS.
v.
PARLE BOTTLING CO. (P) LTD. & ORS.
'l
,
MARCH 22, 1988

B [RANGANATH MISRA AND
MURARI MOHON DUTT, JJ.] ).._
• Imports and Exports (Control) Act, 1947: Section 5-Prosecu-
tion of Company and its Managing Director-Examination of comp-
lainant, the Deputy Chief Controller of Imports and Exports-Whether
·-
necessary-Whether complaint can be quashed by referring to records ·~
c of investigation.
y
Criminal Procedure Code, 1973: Section 200-Prosecution of I·
Company and its Managing Director under section 5 of the Imports and
Exports (Control) Act, 1947-Examination of complainant-Whether
D necessary and relevant.

A complaint filed in the court of the Chief Metropolitan Magis-
Irate by the appellant, Chief Controller of Imports and Exports, against
respondents Nos. l and 2, a private limited company and its Managing
Director for the alleged commission of an offence under s. S of the
E Imports and Exports (Control) Act, 1947 was subsequently transferred .r\.
to another court and cognizance of the offence alleged was takeu with-
out examining the appellant as proviso (a) of s. 200 of the Code of
Criminal Procedure was applicable to this complaint.

An application filed by the accused persons for recall of summons
.
~
F and dismissal of complaint was dismissed by the trial Magistrate. An
appeal against the aforesaid order was dismissed by the High Court. A
special leave application filed against the High Court's order was dis-
missed by the Supreme Court.

An application made at the trial stage for the discharge of respon-
G dent No. 2, the Managing Director on the plea that there was no allega-
tion of any criminal misconduct against him and the Company-respon-
dent No. l was prepared to admit its guilt and may be appropriately ~
penalised, was dismissed by the trial court.

On appeal, the High Court quashed the process issued against
H respondent No. 2 on the ground that the order of issuance of process
'
296 '
T.J. STEPHEN v. PARLE BOTTLING CO. 297
r was clearly as a result of non-application of mind by the trial Judge
A
because when the process was issued against the petitioners, the Depart-
ment and the State had merely filed a complaint case along with list of
• witnesses and documents, and none of the statements of witnesses or
'
copies of documents was produced before the trial Judge, and that
respondent No. 2 could not be prosecuted under s. 5 of the Act, as the
prosecution intended to charge him as principal offender alongwith B
.J. respondent No. l the Company and there were no allegations in the
complaint that respondent No. 2 either aided or abetted in the contra-

- vention of the licence conditions by respondent No. l Company.

Allowing the Department's appeal,
1\ ( -
·- I; I
HELD: 1. l The High Court had not cared to look into proce- c
dural law applicable to the factual situation before it. If a refe-
rence had been made to section 200, Proviso (a) of Code of Criminal
Procedure, the proceedings against respondent No. 2 could not have
been quashed. [299G-H]
D
1.2 Records of investigation are not evidence in the instant case,
and a complaint could not be quashed by referring to the investigation
records, particularly when the petition of the complainant did allege
facts which prima facie show commission of an offence. [300B]
-A
The High Court overlooked the fact that similar objections raised E
earlier were rejected by the same High Court, and this decision was
upheld by the Supreme Court, and drew a distinction between the two
situations, by saying that records of investigation were not available on
the earlier occasion. l300A-B)

t-· 1.3 The licensee was a company and a company by itself conld not
act, and has to act through someone. Since there was clear allegation F
that the Managing Director had committed the offence, acting on behalf
of the licensee, there was no justification for quashing the proceedings
against respondent No. 2. l300C I
Order of the High Court is vacated. However, since t~e offence was
committed W years back, it would not be in the interest of justice to allow G
_;._ a prosecution to start and the trfal to be proceeded with at this belated
stage even though respondent No. 2 has no equity in his favour and the
delay has been mostly on account of his ma/a fide move. Hence the case
against respondent No. 2 is directed to be closed forthwith. [300E, GI
CRIMINAL APPELLATE JURISDICTION: Criminal Appeal H
No. 175 of 1988.
298 SUPREME COURT REPORTS (1988) 3 S.C.R.

A From the Judgment and Order dated 10.2.86 in the High Court
of Bombay in Crl. Writ Petition No. 295 of 1986.

Kuldeep Singh, Solicitor General, Ms. A. Subhashini, Mrs.
Sushma Suri and B. Parthasarthy for the Appellants.

B C.L. Sareen, O.K. Khuller, R.C. Kohli and Mrs. H. Wahi for
the Respondents. )._

The following Order of the Court was delivered:
-
c
ORDER
·--\ I
Special leave granted.
.11
This appeal is by special leave. The appellant who is Deputy
Chief Controller of Imports and Exports filed a complaint in the Court
of Chief Metropolitan Magistrate, Bombay alleging commission of
D offence under Section 5 of the Imports and Exports (Control) Act,
1947 by the respondents 1 and 2. The said case got transferred to the
Court of the Additional Chief Metropolitan Magistrate, 38th Court,
Ballard Estate, Bombay and was numbered as 82/S of 1983. The re-
spondent No. l is a private limited company with its registered office
at Bombay and the respondent No. 2 is its Managing Director. To this ,,..,.
E complaint proviso (a) of Section 200 of the Code of Criminal Proce-
dure was applicable. Therefore, cognizance was taken of the offence
alleged without examining the appellant. On 17.1.1983, an application
was filed on behalf of the two accused persons for recall of the
summonses and dismissal of the complaint. On 12th of May 1983, the
learned Magistrate dismissed the petition. The order of the learned
F magistrate was assailed before the High Court and on 2.9.1983, the
~
High Court dismissed it. Then the matter was brought to this Court by
filing an application for special leave on 12.12.1983, this Court dismis-
sed the leave application. The case set down for trial after charges
were framed. An application was made to the trial court at this stage to
discharge the Managing Director, Respondent No. 2 in exercise of
G inherent powers by contending that the company was prepared to
admit its guilt and may be appropriately penalised and the Managing
Director against whom there was no allegation of any criminal conduct
,>-.
should be discharged. The learned Magistrate by a reasoned order
dated 17th February, 1986, dismissed the application and directed that
the trial should proceed against both. That order was assailed by the
H resondents before the Bombay High Court by filing a criminal writ
T.J. STEPHEN v. PARLE BOTILING CO. 299
y petition. The High Court by its order dated 10th July, 1986, which is
A
impugned in this appeal, held:

"On perusal of the averments it is seen that at the time the
learned Trial Judge issued/processed against the petition-
ers accused, the Department and the State had merely filed
a complaint case along with list of witnesses and docu- B
_;_, ments. None of the statements of witnesses ot copies of
documents were produced before the Trial Judge. The

- _)--.
''
complainant's verification statement is also not recorded.
As such the order of issuance of process is clearly a result of
non-application of mind by the trial Judge. Such order
would mean that merely on filing a complaint the process
c
~
'
r could be issued. It would be unjust to the accused if process
is issued against him by the Magistrate without first statisfy-
ing himself about the nature of the case and whether there
exists sufficient grounds for proceeding with the case. Since
this is not done, then in the instant case the process issued
against petitioner No. 2 (Managing Director) is liable to be D
quashed on this ground alone. Without short circuting the
other grounds it must be pointed out that perusal of the
complaint and in particular page 23 of the complaint shows
that the prosecution intends to charge petitioner No. 2 as
the principal offender along with the petitioner No. 1-<:om-
pany. That is not possible for the simple reason that off- E
ence under Section 5 of the Imports and Exports (Control)
Act is done Principally by the licencee (Company in this
case) and/or by the abetter to the offence. There are no
allegations in the complaint that the petitioner No. 2 either
aided or abetted in the contravention of licence conditions
~ by the petitioner No. 1-Company. As such on this ground F
' also the process issued against petitioer No. 2 is liable to be
and is quashed and set aside."

The criticism advanced by the learned Judge against the trying Magis-
!rate is wholly untenable and is perhaps applicable to the learned
Judge. If reference had been made to Section 200 Proviso (a) of the G
' Code of Criminal Procedure, what has been advanced as the most
.....1, impressive ground for quashing the proceedings against the respon-
dent No. 2 could not at all have bee_n accepted. The learned Judge
obviously has not cared to look into the procedural law applicable to
the factual situation before him. The learned Judge also lost sight of
the fact that similar objections had once been raised and his High H
•

300 SUPREME COURT REPORTS [1988] 3 S.C.R. .

Court had refused to entertain the same and the order of the High
i
A
Court had been upheld here by dismissing the special leave petition.
The portion we have extracted from the order of the High Court
suggested that the learned Judge wanted to draw a distinction between
then and now by saying that the records of investigation had not then
been available. Records of investigation are not evidence in this case
B and adcompl~nt coutdhnot bhe quashed byfrefherring to the invde~dtiga tion )...
1
recor s particu ar1y w en t e pelit10n o t e comp1amant 1 a ege 11
facts which prima facie show commission of an offence. The learned
Judge did note the fact that the licencee was a company but lost sight of
the fact that a company by itself could not act. Obviously the Com-
pany has to act through some one. In the petition of the complainant -----,
-
C there was clear allegation that the Managing Director had committed ',,,,,

the offence acting on behalf of the licencee. If the complainant's peti- ~ '
tion had been properly scrutinized the second ground advanced in the
impugned order for quashing the proceedings against the Managing
Director could not have been utilised in the impugned order. Both the
grounds are wholly untenable and, therefore, the order of the High
D Court has got to be reversed. We allow the appeal and vacate the order
of the High Court.

Once the order of the High Court is vacated the order of the
learned Magistrate would revive and the prosecution as direc~ed by the
learned Magistrate has now to continue. The petition of the complain,
E ant at page 21 of the paper-book shows that the offence was commit-
ted between 1967 and 1969 which is some 20 years back. While we
have no sympathy for the respondent No. 2 and we are clearly of the
opinion that he has no equity in his favour and the delay after the
complaint had been filed has been mostly on account of his ma/a fide
move, we do not think it would be in the interest of justice to allow a
p prosecution to start 20 years after the offence has been committed. If
we could convict the respondent No. 2 in accordance with law, we
would have been prepared to do so taking the facts of the case and
conduct of the respondent into consideration but that would not be
possible within the framework of the law of procedure. We, therefore,
do not propose to allow the learned Magistrate to proceed with the
G trial of the case at this belated stage.

We accordingly direct the case to be closed against respondent
No. 2 without further delay. Ordinarily, in a criminal case of this type
there would have been no order for costs. But keeping in view the
background of the case, the manner in which the respondent No. 2 has
H behaved and the fact that he is squarely responsible for delaying the
T.J. STEPHEN v. PARLE BOTILING CO 301

proceedings by reiterating the same contention twice over. We are of A
the definite opinion that the respondent No. 2 should be made to
suffer exemplary costs. We accordingly direct that he shall be called
upon to pay a sum of Rs.10,000 by way of costs and. the said amount is
to be deposited in the trial court within orie month hence failing which the
trial court shall have a direction to recover the same as fine and pay the B
amount to the complainant. Compliance shall be reported to the
J Registry of this Court.

- N.P.V.

,--l.