Oral Order:

1. Heard the learned Counsel for the petitioner - orig.accused No.2 and the learned APP for the State.

2. The petitioner is seeking quashing of complaint being C.C. No.494/PS of 2006 which is pending before the learned Addl. Chief Metropolitan Magistrate, 37th Court at Esplanade, Mumbai. The said case is under Section 5 of the Cable Television Network (Regulation) Act, 1995 read with Rule 6 of the Cable Television Network Rule, 1994. [ hereinafter referred to as the "said Act" for brevity. ]

3. The respondent filed a criminal complaint alleging that accused No.1 i.e. Star India Pvt. Ltd., had broadcast a movie "Sarfarosh" on 6th June, 2006 which is not suitable for un-restricted public exhibition. Hence, the offence. At the relevant time, the petitioner was working with Star India Pvt. Ltd., as Chief Executive Officer and hence he has been made an accused in the present case.

4. Mr.Desai pointed out that the Producer and Director of the movie were awarded "Swarna Kamal" and cash prize of Rs.40,000/- each for the said movie and the movie was judged the "Best Popular Film providing wholesome entertainment" in the 47th National Film Awards. Hence, it is submitted that it cannot be said that the movie was not suitable for un-restricted public exhibition.

5. Thereafter Mr.Desai submitted that nothing has been specifically alleged or averred in the said Complaint with regard to the alleged role of the petitioner herein in commission of the alleged offence committed by accused No.1 Company. Mr.Desai submitted that in the complaint except for a vague and bald statement alleging that "the act of Accused Company and its Directors have contravened" the provisions of Section 5 of the Cable Television Networks (Regulation) Act, 1995 read with Rule 6(O) of the Cable Television Networks Rules, 1994 there are no further averments. He submitted that the law is well settled that a director of a company cannot be prosecuted for an offence in the absence of a specific allegation in the complaint. Simply because a person is a Director of a company, it does not necessarily mean that he becomes liable for prosecution under a vicarious liability provision. Mr.Desai placed reliance on a decision of the Honble Supreme Court in the case of K.Srikanth Singh vs. North East Securities Ltd., and Anr. reported in 2007(9) SCALE = JT 2007 (9) SC 449 [LQ/SC/2007/920] wherein while referring inter-alia to the decisions in the case of S.M.S. Pharmaceuticals Ltd. reported in JT 2007 (4) SC 230 [LQ/SC/2007/217] and Sabitha Ramamurthy reported in (2006) 10 SCC 581 [LQ/SC/2006/824] it was held that for showing vicarious liability of a Director of a Company, it was incumbent to plead that the accused was responsible to the Company for the conduct of the business of the Company in the complaint.

6. The above position is also reiterated in the case of N.Rangachari vs. Bharat Sanchar Nigam Ltd. reported in (2007) 5 SCC 108 [LQ/SC/2007/527] . Again in the case of Everest Advertising Pvt. Ltd. vs. State, Govt. of NCT of Delhi and Ors. Reported in (2005) 5 SCC 54, this Court relying on S.M. Pharmaceuticals (supra) and Saroj Kumar Poddar vs. State (NCT of Delhi) and Anr. reported in (2007) 3 SCC 693 [LQ/SC/2007/58] on the question of the liability of the company official held that :

"The averments must state that the person who is vicariously liable for commission of the offence of the Company both was incharge of and was responsible for the conduct of the business of the Company. Requirements laid down therein must be read conjointly and not disjunctively. When a legal fiction is raised, the ingredients therefore must be satisfied."

Mr.Desai submitted that to the same effect is the decision of this Court in the case of N.K.Wahi vs. Shekhar Singh and Ors. reported in AIR 2007 SC 1454 [LQ/SC/2007/323] . Mr.Desai submitted that averments in the complaint would not give rise to an inference that the petitioner was in charge of and was responsible for the conduct of the business of the company or was responsible for the day-to-day affairs of the Company. He submitted that in the absence of necessary averments in the complaint, the petitioner cannot be made liable.

7. Thus, Mr.Desai submitted that the learned Magistrate erred in law by failing to appreciate that the process cannot be issued as against the petitioner in the absence of specific allegation or averment explaining the alleged role of the petitioner in the commission of the offence.

8. It was further submitted that the learned Addl. Chief Metropolitan Magistrate erred in law by issuing process as against the petitioner under Section 16 of the Cable Television Network (Regulation) Act, 1995 which is a general provision which does not in any manner contemplate vicarious liability of officers of companies for alleged commission of offences by companies and in fact the relevant Section is Section 17.

9. Section 16 of the said Act, deals with punishment for contravention of provisions of this Act and Section 17 deals with offences by companies. As in the present case, accused No.1 is a company, Section 16 would not be applicable and Section 17 would be applicable. Section 17 of the said Act reads as under :

"17.Offences by Companies.

(1) 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, 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, if he proves that the offence was committed without his knowledge or that he had exercised all due diligence to prevent the commission of such offence.

(2) Notwithstanding anything contained in sub-section (1), where any offence under this Act has been committed by a company and it is proved that the offence has been committed with the consent or connivance of, or is attributable to any negligence on the part of, any director, manager, secretary or other officer of the company, such director, manager, secretary or other officer shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly.

Explanation.-- For the purposes of this section, --

(a) "company" means any body corporate and includes a firm or other association of individuals; and

(b) "director" in relation to a firm, means a partner in the firm."

10. Section 17 of the Cable Television Networks (Regulation) Act, 1995 is pari materia with Section 141 of the Negotiable Instruments Act, Section 34 of the Drugs and Cosmetics Act, 1940, Section 62 of the Standards of Weights and Measures Act and Section 10 of the Essential Commodities Act.

Section 141 of Negotiable Instruments Act reads as under :

"141.Offences by companies.--(1) If the person committing an offence under section 138 is 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, 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 person liable to punishment if he proves that the offence was committed without his knowledge, or that he had exercised all due diligence to prevent the commission of such offence:

[Provided further that where a person is nominated as a Director of a company by virtue of his holding any office or employment in the Central Government or State Government or a financial corporation owned or controlled by the Central Government or the State Government, as the case may be, he shall not be liable for prosecution under this Chapter.]

(2) Notwithstanding anything contained in sub-section (1), where any offence under this Act has been committed by a company and it is proved that the offence has been committed with the consent or connivance of, or is attributable to, any neglect on the part of, any director, manager, secretary or other officer of the company, such director, manager, secretary or other officer shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly.

Explanation.-- For the purpose of this section,--

(a) "company" means any body corporate and includes a firm or other association of individuals; and

(b) "director", in relation to a firm, means a partner in the firm.

11. Section 34 of Drugs and Cosmetics Act, 1940 reads as under :

"34.Offences by companies.-- (1) 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 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) Notwithstanding anything contained in sub-section (1), where any offence under this Act has been committed by a company and it is proved that the offence has been committed with the consent or connivance of, or is attributable to any neglect on the part of, any director, manager, secretary or other officer of the company, such director, manager, secretary or other officer shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly.

Explanation.-- For the purposes of this section--

(a) "company" means a body corporate and includes a firm or other association of individuals; and

(b) "director" in relation to a firm means a partner in the firm."

12. Section 62 of the Standards of Weights and Measures (Enforcement) Act, 1985 reads as under :

62. Offences by companies-- (1) If the person committing an offence under this Act is 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, 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 person liable to punishment if he proves that the offence was committed without his knowledge, or that he had exercised all due diligence to prevent the commission of such offence.

(2) Notwithstanding anything contained in sub-section (1), where any offence under this Act has been committed by a company and it is proved that the offence has been committed with the consent or connivance of, or is attributable to, any neglect on the part of, any director, manager, secretary or other officer of the company, such director, manager, secretary or other officer shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly.

Explanation.-- For the purposes of this section,--

(a) "company" means a body corporate and includes a firm or other association of individuals; and

(b) "director", in relation to a firm, means a partner in the firm."

13. Mr.Desai submitted that the relevant Section of the is identical to Section 141 of the Negotiable Instruments Act, Section 34 of the Drugs and Cosmetics Act, 1940 and Section 62 of the Standards of Weights and Measures Act.

14. In the case of S.M.S. Pharmaceuticals Ltd. Vs. Neeta Bhalla and another, reported in (2005) 8 Supreme Court Cases 89, [LQ/SC/2005/943] which is a decision by a Bench of three Honble Judges of the Supreme Court, in a case u/s.141 of Negotiable Instruments Act, the following questions arose before the Bench on a reference being made to it by a two- Judge Bench of the Supreme Court. The questions which are relevant to the facts of the present matter are as under :

"(a) Whether for purposes of Section 141 of the Negotiable Instruments Act, 1881, it is sufficient if the substance of the allegation read as a whole fulfil the requirements of the said section and it is not necessary to specifically state in the complaint that the person accused was in charge of, or responsible for, the conduct of the business of the company.

(b) Whether a director of a company would be deemed to be in charge of, and responsible to, the company for conduct of the business of the company and, therefore, deemed to be guilty of the offence unless he proves to the contrary.

(c) Even if it is held that specific averments are necessary, whether in the absence of such averments the signatory of the cheque and or the managing directors or joint managing director who admittedly would be in charge of the company and responsible to the company for conduct of its business could be proceeded against.".

. In view of the questions which arose before it, the Supreme Court held as under :

"18. To sum up, there is almost unanimous judicial opinion that necessary averments ought to be contained in a complaint before a person can be subjected to criminal process. A liability under Section 141 of theis sought to be fastened vicariously on a person connected with a company, the principal accused being the company itself. It is a departure from the rule in criminal law against vicarious liability. A clear case should be spelled out in the complaint against the person sought to be made liable. Section 141 of thecontains the requirements for making a person liable under the said provision. That the respondent falls within the parameters of Section 141 has to be spelled out. A complaint has to be examined by the Magistrate in the first instance on the basis of averments contained therein. If the Magistrate is satisfied that there are averments which bring the case within Section 141, he would issue the process. We have seen that merely being described as a director in a company is not sufficient to satisfy the requirement of Section 141. Even a non-director can be liable under Section 141 of the. The averments in the complaint would also serve the purpose that the person sought to be made liable would know what is the case which is alleged against him. This will enable him to meet the case at the trial.

19. In view of the above discussion, our answers to the questions posed in the reference as under :

(a) It is necessary to specifically aver in a complaint under Section 141 that at the time the offence was committed, the person accused was in charge of, and responsible for the conduct of business of the company. This averment is an essential requirement of Section 141 and has to be made in a complaint. Without this averment being made in a complaint, the requirements of Section 141 cannot be said to be satisfied.

(b) The answer to the question posed in sub-para (b) has to be in the negative. Merely being a director of a company is not sufficient to make the person liable under Section 141 of the. A director in a company cannot be deemed to be in charge of and responsible to the company for the conduct of its business. The requirement of Section 141 is that the person sought to be made liable should be in charge of and responsible for the conduct of the business of the company at the relevant time. This has to be averred as a fact as there is no deemed liability of a director in such cases.

(c) The answer to Question (c) has to be in the affirmative. The question notes that the managing director or joint managing director would be admittedly in charge of the company and responsible to the company for the conduct of its business. When that is so, holders of such positions in a company become liable under Section 141 of the. By virtue of the office they hold as managing director or joint managing director, these persons are in charge of and responsible for the conduct of business of the company. Therefore, they get covered under Section 141. So far as the signatory of a cheque which is dishonoured is concerned, he is clearly responsible for the incriminating act and will be covered under sub-section (2) of Section 141."

15. Thereafter the matter was referred to the Division Bench for decision in the case. In the case of S.M.S. Pharmaceuticals the High Court had held that no case had been made out for issuance of any summons against the accused as the allegations contained in the complaint, as against the accused therein were vague, indefinite and do not satisfy the requirements of law as contained in Section 141 of the Negotiable Instruments Act. The Division Bench of the Supreme Court observed that no error can be found in the impugned judgment and the appeal came to be dismissed. This decision is reported in JT 2007 (4) SC 230 [LQ/SC/2007/217]

16. In the case of State of Haryana vs. Brij Lal Mittal & Ors. reported in (1998) 5 Supreme Court Cases 343 [LQ/SC/1998/539] the High Court quashed the prosecution launched against the directors of the company. The State preferred an appeal to the Supreme Court. The Supreme Court held that vicarious liability of a person for being prosecuted for an offence committed under the Drugs and Cosmetics Act, 1940, by a company arises if at the relevant time he was in charge of and was also responsible to the company for the conduct of its business. Simply because a person is director of the company it does not necessarily mean that he fulfils both the above requirements so as to make him liable. In the said case, except a bald statement in the complaint, that the respondents were directors of the company, there was nothing to indicate even prima facie that they were in charge of the company and also responsible to the company for the conduct of its business and, therefore, the Supreme Court dismissed the appeal filed by the State of Haryana.

17. In the case of Shri.Pannalal Sunderlal Choksi vs. the State of Maharashtra reported in 2000 ALL MR (Cri) 1668 = 2000 (4) Mh.L.J. 674 this High Court quashed the process issued against the accused holding that unless there is material to show that the accused had direct control over the manufacturing activity and the accused are also responsible for the conduct of the business of the said company, they cannot be proceeded with. Reliance was placed on the decision of the Supreme Court in the case of M/s.Pepsi Foods Ltd. vs. Special Judicial Magistrate reported in A.I.R. 1998 SC 128 [LQ/SC/1997/1443] . The case of Shri Pannalal was under the Drugs & Cosmetics Act. I have already observed above that the provisions of the present Act and Drugs and Cosmetics Act are identical.

18. In the present case the complainant has not at all stated in the complaint as to whether the petitioner at the relevant time was in charge of and was also responsible to the company for the conduct of business of the company. His status as director of the respective company cannot be taken into account for the purpose of prosecution. If it is shown that he was in charge of and was also responsible to the company for the conduct of business of the company at the relevant time then the position would be different.

19. The phraseology used in Section 17 of thehas a special significance. A commission of offence by company under the requires different treatment by virtue of Section 17 of the. The phraseology used in Section 17 of theconveys actual participation in day-to-day affairs of the company.

20. In the decisions cited above wherein the provision of law is identical to the one in the present case, it has been held that in the absence of necessary averments in the complaint a person cannot be prosecuted. In the present complaint also, the necessary averments are absent. In this view of the matter, the complaint deserves to be quashed. Hence, complaint being C.C. No.494/PS of 2006 which is pending before the learned Addl. Chief Metropolitan Magistrate, 37th Court at Esplanade, Mumbai is quashed in respect of the present petitioner.

21. Criminal Writ Petition is disposed of accordingly.