Supreme Court quashes proceedings against nominee under Prevention of Food Adulteration Act: Hari Shankar Aggarwal vs. State of Rajasthan (2021) INSC 123 (10 March 2021)

Introduction

Date of the Judgment: 10 March 2021

Citation: (2021) INSC 123

Judges: Ashok Bhushan, J., S. Abdul Nazeer, J., Hemant Gupta, J.

Can a person be held liable for food adulteration solely based on information from the Commercial Tax Department, when the Local Health Authority has a different nominee on record? The Supreme Court of India addressed this question in a recent case, clarifying the importance of proper nomination procedures under the Prevention of Food Adulteration Act, 1954. This judgment highlights the distinction between a company’s director and its officially nominated representative for legal purposes. The judgment was delivered by a three-judge bench comprising Justices Ashok Bhushan, S. Abdul Nazeer, and Hemant Gupta, with the opinion authored by Justice Ashok Bhushan.

Case Background

The case originated from a complaint filed by the Medical and Health Department of Rajasthan on the basis of an inspection conducted on 02 March 2002 at Oswal Traders Shop. The complaint alleged an offense under Section 7/16 of the Prevention of Food Adulteration Act, 1954. The complaint stated that the nominee of the firm, M/s Bhola Baba Milk Food Industry, was Hari Shankar Aggarwal, based on information received from the Commercial Tax Department, Jaipur. However, the complaint also mentioned that according to information from the Local Health Officer, Mathura, the director of the same company was Devendra Singh Bhadauria.

The Judicial Magistrate, Jhalwar, Rajasthan, took cognizance of the offense and issued summons on 04 August 2003. Hari Shankar Aggarwal challenged this order, arguing that he was not the nominee of the firm and that Devendra Singh Bhadauria had been officially nominated. He presented evidence that the nomination of Devendra Singh Bhadauria had been submitted to the Chief Medical Officer, Mathura, on 21 October 1995. The Special Judge dismissed his petition on 16 February 2018, which led to a Criminal Miscellaneous Petition in the High Court, which was also rejected.

Timeline

Course of Proceedings

The Judicial Magistrate, Jhalwar, took cognizance of the offense based on the complaint and issued summons against Hari Shankar Aggarwal. Aggarwal challenged this order before the Special Judge, arguing that he was not the nominee of the firm and that the nomination of Devendra Singh Bhadauria had been duly submitted to the Chief Medical Officer, Mathura. The Special Judge dismissed Aggarwal’s petition, stating that the document submitted by Aggarwal was dated prior to the incorporation of the company. Aggarwal then filed a Criminal Miscellaneous Petition in the High Court, which was also rejected. The High Court upheld the Special Judge’s decision, leading to the appeal before the Supreme Court.

Legal Framework

The primary legal provision in this case is Section 17 of the Prevention of Food Adulteration Act, 1954. This section deals with the responsibilities of companies in relation to food adulteration. Specifically, Section 17(2) states that a company can nominate a director or manager as the person responsible for the company’s affairs, provided that the nomination is communicated to the Local Health Authority in the prescribed form and manner, along with the written consent of the nominee.

The relevant portion of Section 17 of the Prevention of Food Adulteration Act, 1954 is as follows:

“17. Offences by companies.—(1) Where an offence under this Act has been committed by a company,—
(a) the person, if any, who has been nominated under sub-section (2) to be in charge of, and responsible to, the company for the conduct of the business of the company (hereafter in this section referred to as the person responsible); or
(b) where no person has been so nominated, 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:
Provided that nothing contained in this sub-section shall render any such person liable to any punishment provided in this Act if he proves that the offence was committed without his knowledge or that he exercised all due diligence to prevent the commission of such offence.
(2) Any company may, by order, authorise any of its directors or managers or secretary to exercise all such powers and take all such steps as may be necessary or expedient to prevent the commission by the company of any offence under this Act and may give notice to the Local Health Authority in such form and in such manner as may be prescribed that it has nominated such director or manager or secretary as the person responsible along with written consent of such director or manager or secretary.”

Arguments

Appellant’s Arguments:

• The appellant, Hari Shankar Aggarwal, argued that he was not the nominee of the firm. He presented Form VIII, which was submitted to the Chief Medical Officer, Mathura, on 21 October 1995, nominating Devendra Singh Bhadauria as the responsible person.
• The appellant contended that the complaint itself mentioned that the Local Health Officer, Mathura, had identified Devendra Singh Bhadauria as the director of M/s Bhola Baba Milk Food Industry.
• The appellant submitted that the cognizance taken against him was erroneous, as the information from the Commercial Tax Department should not override the information with the Local Health Authority.

Respondent’s Arguments:

• The State of Rajasthan argued that the document submitted by the appellant was not reliable because it was dated 21 February 1995, while the company was incorporated on 06 March 1995.
• The respondent claimed that the burden of proof regarding the date of nomination lay on the appellant.
• The respondent submitted that the nomination form was issued on the letterhead of the company, which was not appropriate.

Issues Framed by the Supreme Court

The Supreme Court considered the following issue:

1. Whether the High Court was correct in rejecting the Criminal Miscellaneous Petition filed by the appellant and whether cognizance could have been taken against the appellant for the offence under Section 7/16 of the Prevention of Food Adulteration Act, 1954.

Treatment of the Issue by the Court

Authorities

The Supreme Court considered the following legal provisions:

• Section 17 of the Prevention of Food Adulteration Act, 1954: This section deals with offenses by companies and the nomination of a responsible person.

Judgment

How each authority was viewed by the Court?

• Section 17 of the Prevention of Food Adulteration Act, 1954: The Court interpreted Section 17(2) of the Act to mean that the nomination of a director or manager as the person responsible for the company’s affairs must be communicated to the Local Health Authority in the prescribed form and manner. The court emphasized that the information with the Local Health Authority is what matters for determining liability.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the fact that the complaint itself contained contradictory information. While the complaint mentioned the appellant’s name based on information from the Commercial Tax Department, it also stated that, according to the Local Health Officer, Mathura, the director of the company was Devendra Singh Bhadauria. The Court emphasized that for the purposes of Section 17 of the Prevention of Food Adulteration Act, 1954, the nomination has to be given to the Local Health Authority. The Court also noted that the nomination form was in the prescribed format and was duly received by the Chief Medical Officer, Mathura.

The Court’s reasoning was primarily based on the interpretation of Section 17 of the Prevention of Food Adulteration Act, 1954, and the facts presented in the complaint. The Court emphasized that the information with the Local Health Authority is what matters for determining liability under the Act.

The Court considered the argument that the nomination form was dated before the company’s incorporation but rejected it, stating that the form was received by the Chief Medical Officer on 21.10.1995, and that the date of the form itself was not relevant. The Court also rejected the argument that the form was on the company’s letterhead, stating that it was in the prescribed Form VIII. The Court’s final decision was based on the principle that the Local Health Authority’s records are crucial for determining liability under the Prevention of Food Adulteration Act, 1954.

The Court quoted from the complaint itself:

“10. That the Krishna Brand Ghee procured by M/s Falaudi Trading Co. from Bhole Baba Milk Food Industry 181 Sindhi Colony Whose Bill No.3074 dated 05/03/2002 was produced from which it is clear that M/s Falaudi Trading Co. has procured Ghee from the said firm. From the information received from Commercial Tax Department, Jaipur the nominee of the said firm is Sh. Hari Shankar Aggarwal S/o Vasudev Aggarwal, therefore, he has also been made a party.”

“11. That the boxes were labeled as Bhole Baba Milk Food Industry, Agra and the said firm was given several letters even then, no information regarding the firm was rejected. According to information received from local health officer, Mathura the director of Bhole Baba Milk Food Industry Namely Devendra Singh Bhadauria S/o Ram Sewak Singh Badoria R/o Hanuman Nagar, Fatehabad, District Agra, has been made a party.”

The Court also observed:

“When the nomination was in Form VIII and duly sent and received, it cannot be rejected on the ground that it was sent on the letter head of the company.”

“As observed above, the averments in the complaint itself clearly indicate that it was the name of Devendra Singh Bhadauria which was with the Local Health Authority, hence it was he who was responsible for the affairs of the company and reference of Hari Shankar Aggarwal whose name was informed by the Commercial Tax Department, has no relevance.”

Key Takeaways

• The Supreme Court emphasized the importance of proper nomination procedures under Section 17 of the Prevention of Food Adulteration Act, 1954.
• The Court clarified that the Local Health Authority’s records are crucial for determining liability in food adulteration cases.
• Information from other departments, such as the Commercial Tax Department, cannot override the nomination information held by the Local Health Authority.
• A nomination form in the prescribed format (Form VIII) should not be rejected simply because it was sent on the company’s letterhead.
• The Court highlighted that specific allegations against the person being impleaded are necessary.

Directions

The Supreme Court allowed the appeal and set aside the order taking cognizance as well as the orders passed by the Courts below.

Specific Amendments Analysis

There were no specific amendments discussed in the judgment.

Development of Law

The ratio decidendi of this case is that for the purposes of Section 17 of the Prevention of Food Adulteration Act, 1954, the nomination of a director or manager as the person responsible for the company’s affairs must be communicated to the Local Health Authority in the prescribed form and manner. The information with the Local Health Authority is what matters for determining liability under the Act. This judgment clarifies that information from other departments cannot override the nomination information held by the Local Health Authority.

Conclusion

In the case of Hari Shankar Aggarwal vs. The State of Rajasthan, the Supreme Court quashed the proceedings against the appellant, emphasizing that the nomination of a responsible person under the Prevention of Food Adulteration Act, 1954, must be communicated to the Local Health Authority in the prescribed manner. The Court held that the information from the Commercial Tax Department was not sufficient to establish the appellant’s liability when the Local Health Authority had a different nominee on record. This judgment underscores the importance of adhering to proper nomination procedures and relying on the records of the Local Health Authority in food adulteration cases.