- 1 - HC-KAR NC: 2025:KHC:34284 CRL.P No. 10530 of 2025 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 2ND DAY OF SEPTEMBER, 2025 BEFORE THE HON'BLE MR. JUSTICE SACHIN SHANKAR MAGADUM CRIMINAL PETITION NO. 10530 OF 2025 BETWEEN: MR NIYAZ AHAMAD PATEL, S/O. MAQBUL PATEL, AGE 50 YEARS, OCC PVT. EMPLOYMENT, R/O. H.NO. 5100, BHIM NAGAR, NIPPANI (RURAL), TAL: NIPPANI, DIST: BELAGAVI - 591 237. …PETITIONER (BY SRI. ABHIJEET S. KANKONKAR, ADVOCATE) AND: SRI. PAVAN M.P, FERTILIZER INSPECTOR AND ASSISTANT DIRECTOR OF AGRICULTURE (CENTRAL), OFFICE OF THE JOINT DIRECTOR OF AGRICULTURE DAVANGERE - 577 001. …RESPONDENT (BY SMT. RASHMI JADHAV, ADDL. SPP) THIS CRL.P IS FILED U/S.482(FILED U/S.528 BNSS) OF CR.P.C PRAYING TO ALLOW THIS PETITION AND QUASH THE ENTIRE PROCEEDINGS IN C.C.NO.386/2024 PENDING ON THE FILES OF PRINCIPAL SENIOR CIVIL JUDGE AND CJM, DAVANAGERE UNDER CLAUSE 19(B) OF FERTILIZER (ORGANIC, NON ORGANIC AND MIXTURE) (CONTROL) ORDER Digitally signed by SHARADAVANI B Location: High Court of Karnataka - 2 - HC-KAR NC: 2025:KHC:34284 CRL.P No. 10530 of 2025 1985 AND SEC.7 OF ESSENTIAL COMMODITIES ACT AGAINST THE PETITIONERS/ACCUSED NO.2. THIS PETITION, COMING ON FOR ORDERS, THIS DAY, ORDER WAS MADE THEREIN AS UNDER: CORAM: HON'BLE MR. JUSTICE SACHIN SHANKAR MAGADUM ORAL ORDER The petitioner/accused No.2 is being prosecuted for offences punishable under Section 19(B) of the Fertilizer (Inorganic, Organic or Mixed) (Control) Order, 1985, and for violation of Section 7 of the Essential Commodities Act, 1955 (for short, “the Act”). 2. The petitioner has assailed the proceedings in C.C. No.386/2024 on the sole ground that he cannot be subjected to prosecution for the aforesaid offences in view of the mandatory requirement under Section 10 of the Act, 1955. In support of this contention, reliance is placed on the judgment of a coordinate bench in Crl.P. No.5781/2023. Referring to the said judgment, learned counsel submits that in an identical factual matrix, it was - 3 - HC-KAR NC: 2025:KHC:34284 CRL.P No. 10530 of 2025 held that unless the company itself is arraigned as an accused, its employee or proprietor, in his individual capacity, cannot be prosecuted. It is further urged that the petitioner is only an employee of the company, working as a chemist, and therefore, the continuation of proceedings against him is unsustainable. 3. I have heard the learned counsel for the petitioner as well as the learned Additional Special Public Prosecutor and perused the records. 4. This Court has given its anxious consideration to the judgment rendered by the coordinate bench in a case arising out of identical circumstances. For ready reference, paragraphs 8 to 10 of the said judgment are extracted herein below: 8. Section 10 of E.C. Act deals with the offence by Companies and it reads as follows: 10. Offences by companies.— (1) If the person contravening an order made under section 3 is a company, every person who, at the time the contravention 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 contravention and shall be - 4 - HC-KAR NC: 2025:KHC:34284 CRL.P No. 10530 of 2025 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 contravention took place without his knowledge or that he exercised all due diligence to prevent such contravention. (2) Notwithstanding anything contained in sub-section (1), where an 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. 9. Perusal of Section 10 of the E.C. Act, 1955 makes it evident that wherever contravention is by a Company, then every person who, at the time the contravention 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 contravention and shall be liable to be proceeded against and punished accordingly. Therefore, petitioner is being made liable on account of he being an employee of Company in question and therefore, until and unless the company is arraigned as accused, the petitioner cannot be held responsible. “53. It is to be borne in mind that Section 141 of the Act is concerned with the offences by the company. It makes the other persons vicariously liable for commission of an offence on the part of the company. As has been stated by us earlier, the vicarious liability gets attracted when the condition precedent laid down in Section 141 of the Act stands satisfied. There can be no dispute that as the liability is penal in nature, a strict construction of the provision would be necessitous and, in a way, the warrant. … … … - 5 - HC-KAR NC: 2025:KHC:34284 CRL.P No. 10530 of 2025 56. We have referred to the aforesaid passages only to highlight that there has to be strict observance of the provisions regard being had to the legislative intendment because it deals with penal provisions and a penalty is not to be imposed affecting the rights of persons, whether juristic entities or individuals, unless they are arrayed as accused. It is to be kept in mind that the power of punishment is vested in the legislature and that is absolute in Section 141 of the Act which clearly speaks of commission of offence by the company. The learned counsel for the respondents have vehemently urged that the use of the term “as well as” in the section is of immense significance and, in its tentacle, it brings in the company as well as the Director and/or other officers who are responsible for the acts of the company and, therefore, a prosecution against the Directors or other officers is tenable even if the company is not arraigned as an accused. The words “as well as” have to be understood in the context. 59. In view of our aforesaid analysis, we arrive at the irresistible conclusion that for maintaining the prosecution under Section 141 of the Act, arraigning of a company as an accused is imperative. The other categories of offenders can only be brought in the drag-net on the touchstone of vicarious liability as the same has been stipulated in the provision itself. We say so on the basis of the ratio laid down in C.V. Parekh [(1970) 3 SCC 491 : 1971 SCC (Cri) 97] which is a three- Judge Bench decision. Thus, the view expressed in Sheoratan Agarwal [(1984) 4 SCC 352 : 1984 SCC (Cri) 620] does not correctly lay down the law and, accordingly, is hereby overruled. The decision in Anil Hada [(2000) 1 SCC 1 : 2001 SCC (Cri) 174] is overruled with the qualifier as stated in para 51. The decision in Modi Distillery [(1987) 3 SCC 684 : 1987 SCC (Cri) 632] has to be treated to be restricted to its own facts as has been explained by us hereinabove.” 5. In light of the authoritative pronouncement of the Hon’ble Apex Court in Aneeta Hada vs. Godfather Travels - 6 - HC-KAR NC: 2025:KHC:34284 CRL.P No. 10530 of 2025 and Tours Private Limited, reported in (2012) 5 SCC 661, it is now well-settled that for fastening criminal liability in respect of offences committed by a company, the company itself must be arraigned as an accused. In the absence of such arraignment, the prosecution of its employees, directors, or officers, in their individual capacity, cannot be sustained in law. The coordinate bench of this Court, while dealing with an identical factual situation arising under the provisions of the Essential Commodities Act, 1955, has quashed the proceedings on this very ground, reiterating the principle that vicarious liability can be imposed only when the company is made an accused. 6. In the present case, the petitioner has specifically contended that he is only an employee of the fertilizer company and is working as a chemist. The records do not disclose that the company itself has been made a party to the proceedings. Following the dictum laid down by the Hon’ble Supreme Court as well as the binding precedent of - 7 - HC-KAR NC: 2025:KHC:34284 CRL.P No. 10530 of 2025 the coordinate bench, this Court is of the considered view that the continuation of criminal proceedings against the petitioner, in the absence of arraignment of the company, is impermissible in law. Consequently, the proceedings initiated solely against the petitioner/accused No.2 are unsustainable and stand vitiated. ORDER i. The criminal petition is hereby allowed; ii. The proceedings pending in C.C. No.386/2024 on the file of the Principal Senior Civil Judge and Chief Judicial Magistrate, Davangere, insofar as they relate to the present petitioner/accused No.2, are quashed. iii. Any pending interlocutory applications in this petition shall stand disposed of accordingly. Sd/- (SACHIN SHANKAR MAGADUM) JUDGE HDK/CT: BHK