2020 (11) TMI 1021 - SC - Indian Laws

Supreme Court clarifies remand order, emphasizes company's right to be heard

Hindustan Unilever Limited Versus The State of Madhya Pradesh

The Supreme Court held that the High Court's order remanding the case back to the trial court against the company was unsustainable due to the lack of an ... Dishonor of Cheque - whether the course adopted by the High Court to remand the matter to the trial court after more than 30 years to cure the defect which goes to the root of the trial, though permissible in law, is justified? - offences by companies - Section 141 of the NI Act - HELD THAT:- A three-Judge Bench of this Court in ANEETA HADA VERSUS GODFATHER TRAVELS & TOURS (P.) LTD. [2012 (5) TMI 83 - SUPREME COURT] considered the question of conviction of the Directors in the absence of the Company in proceedings Under Section 138 of the Negotiable Instruments Act, 1881 For short, the NI Act as also in the proceedings under Information Technology Act, 2000. This Court held that Section 141 of the NI Act dealing with offences by companies contemplates that 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, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly. Application disposed off. Issues Involved:1. Legality of the High Court's order remitting the matter back to the trial court.2. Applicability of the Food Safety and Standards Act, 2006, to offenses committed under the Prevention of Food Adulteration Act, 1954.3. Conviction of the nominated officer and the company's liability.4. Whether the company was given an opportunity of being heard under Section 401(2) of the Code of Criminal Procedure, 1973.Issue-wise Detailed Analysis:1. Legality of the High Court's Order Remitting the Matter Back to the Trial Court:The High Court of Madhya Pradesh set aside the conviction and sentence of the appellant, a nominated officer of the company, and remitted the matter back to the trial court to revisit the evidence. The High Court found a 'glaring and patent defect' in the judgments of both the trial court and the appellate court. The High Court's order emphasized that if the company is acquitted, the benefit should extend to the nominated officer. The High Court's decision to remand the matter was based on the need to pass a fresh judgment considering the company's involvement.2. Applicability of the Food Safety and Standards Act, 2006, to Offenses Committed Under the Prevention of Food Adulteration Act, 1954:The appellant argued that the 2006 Act, which replaced the 1954 Act, should apply, as it provides for lesser penalties. The Supreme Court, however, held that Section 97 of the 2006 Act protects punishments imposed under the repealed Act. The Court cited Section 6 of the General Clauses Act, 1897, which stipulates that the repeal of a statute does not affect any investigation, legal proceeding, or remedy in respect of any right, privilege, obligation, liability, penalty, forfeiture, or punishment. The Court concluded that the proceedings would continue under the 1954 Act, and no benefit could be derived from the 2006 Act.3. Conviction of the Nominated Officer and the Company's Liability:The trial court convicted the appellant under various provisions of the 1954 Act, finding that the sample of Vanaspati Ghee was adulterated. The appellate court affirmed the conviction of the appellant but acquitted other accused individuals. The Supreme Court noted that the trial court's judgment did not indicate that the company was represented during the trial. The appellant's conviction was based on the evidence that the product was adulterated and not duly marked as required by law.4. Whether the Company was Given an Opportunity of Being Heard Under Section 401(2) of the Code of Criminal Procedure, 1973:The Supreme Court found merit in the argument that the High Court's order of remand was passed without giving the company an opportunity of being heard, as required under Section 401(2) of the Code. The Court emphasized that any order under this section should not prejudice the accused or other persons unless they have had an opportunity of being heard. The Court referred to the principle that the company must be arraigned for the prosecution of its officers to be valid, as established in the case of Aneeta Hada v. Godfather Travels & Tours Private Limited.Conclusion:The Supreme Court concluded that the High Court's order remanding the matter to the trial court against the company could not be sustained due to the lack of an opportunity for the company to be heard. The Court upheld the applicability of the 1954 Act for offenses committed before the 2006 Act came into force and confirmed that the protections under Section 97 of the 2006 Act and Section 6 of the General Clauses Act, 1897, ensure the continuation of proceedings under the repealed Act. The Court emphasized the necessity of arraigning the company for the prosecution of its officers to be valid.