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Judgment
P.K. Sethuraman, J.—In both those cases the same petitioner has come forward with the prayer to call for the records and quash the
proceedings in S.T.C. Nos. 16 of 1987 and 14 of 1987, on the file of the Special Court for Essential Commodities Act cases at Madurai. It is the
contention of the petitioner that he was the President of the Thamaraikulam Agricultural Co-operative Society Limited, and the Society is having its
registered office at Thamaraikulam and it is an authorised dealer for the sale and supply of essential commodities to the family card holders
registered with the Society and the Society distributes essential commodities to the family card holders through its Branch Vaigai Fair Price Shop
situated in the village. In the affidavit filed it has been mentioned that he was serving as a President of the Society for over 3 years and there is a
Secretary who is incharge of the overall administration of the affairs of the Society arid there are three salesmen employed by the Society who are
incharge of day to day conduct of the business at Branch Vaigai Fair Price Shop.
The Tahsildar, Flying Squad, Madurai, is stated to have inspected Branch Vaigai Fair Price Shop at Thamaraikulam and the accounts and
stocks were verified by the officers in the presence of the three salesmen who were present in the shop. The Tahsildar and the team found that the
bills were prepared as though rice was sold to the family card holders at a higher price, but no entries had been made in the family cards. They also
found that false bills were prepared as though essential commodities were supplied to the family card holders and in this regard the Tahsildar is
shown to have given a complaint on 7th January, 1987 before the Civil Supplies C.I.D., Police Station, Theni, and they registered the case in
Crime No. 1 of 1987 for offences under Cls.6(2)(c) and 6 (2)(iii) of the Tamil Nadu Scheduled Commodities (Distribution by Card System)
Order 1988 read with S. 7(1)(a)(i) of the Essential Commodities Act. In the Special Court for Essential Commodities Act cases the Society and
the petitioner, who is the President of the Society besides two others in S.I.C. No. 15 of 1987, and the Society and the President (the petitioner)
besides four others in S.T.C. No. 14 of 1987 have been charge sheeted. In the charge sheet the petitioner had been shown to have been the
President from 30th June, 1984 to 30th November, 1984 and he was incharge of overall affairs of the Society including appointment of salesman
and other employees. But according to the petitioner he was not incharge of day to day business of the fair price shop though he was in overall
charge of the affairs of the Society. Under S. 10(1) of the Essential Commodities Act only those persons who are incharge of the day to day
conduct of the business are alone liable to be prosecuted. The petitioner cannot be vicariously held liable for the act of the salesmen in a branch
shop. There is no allegation that the petitioner conspired with the salesmen. The fourth accused A. Ramakrishnan in S.T.C. No. 16 of 1987 and
A5 v. Radhakrishnan and A6 P. Narayanan in S.T.C. No. 14 of 1987 were appointed on 17th December, 1984 and 30th July, 1984 by a
resolution for writing proper accounts and keeping the stock registers up-to-date. In such circumstances the petitioner has filed these two petitions
for quashing the proceedings.
Both the cases are shown to have been charge-sheeted after completion of the investigation in Crime No. 1 of 1987 and the Tahsildar is shown
to have inspected in both the cases on 7th January, 1987, only. In both the cases the offences alleged are under Cl.6(2) of T.N.S.C. (DCS)
Order, 1982 and under Ss. 3 and 7(1)(a)(ii) and 10 of Essential Commodities Act, 1955 and Clause 14 (1)(a) of T.N.S.C. (DCS) Order, 1982.
There are six accused in S.T.C. No. 14 of 1984 and four accused in S.T.C. No. 15 of 1984. In both the cases the Petitioner has been shown as
A2 and the Society as Al. In S.T C. No. 14 of 1984 it is mentioned that the acts of commission and omission by A5 and A6 are attributable to the
negligence on the part of A2 to A4 exercise due diligence to prevent the commission of such offences. Further A3 to A6 were shown to have been
incharge and responsible for the conduct of the business of A1, and it is mentioned for acts of commission and omission of A5 and A6, Al his been
shown liable. In S.T.C. No. 15 of 1984 A2 to A4 have been shown incharge and responsible for the conduct of the business at the relevant time.
For acts of commission and omission of A4, A1 had been shown as liable. In S.T.C. No. 14 of 1984 out of the total number of 8 witnesses, four
are official witnesses and four persons are the card holders who have been shown in the memo of evidence cited to speak about their non-
purchase of Maida from the fair price shop during the period between June, 1984 and November, 1984 for their family cards. In S.T.C. No. 15 of
1987, 15 witnesses have been shown out of which five witnesses are official witnesses and 5 witnesses are card holders out of which 4 have been
cited to speak about their purchase of rice at a higher rate and other facts and five persons to speak about their non-purchase of rice through
family cards, a witness is also cited from the Then Cooperative Society to speak about the supply of 40 bags of rice through invoice dated 10-6-
1935.
At the time of hearing of these petitions learned Counsel for the petitioner submitted that even during the time when the Tahsildar visited viz., 1st
July, 1986 no doubt the petitioner happened to be the President of the Society. But unfortunately the said fact had not been properly mentioned
either in the charge-sheet or in the complaint. But on the other hand it had been shown that he was the President from 30th June, 1984 to 30th
November, 1984. Under S. 10(1) of the Essential Commodities Act, if the person contravening an order made under S. 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 liable to be proceeded against. Under the
proviso it is stated that nothing 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. Again under sub-S. (2) of S. 10 it is stated that not with standing
anything contained in sub-S. (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. As regards the petitioner it has been alleged in the charge sheet in S.T.C. No. 14 of 1987 that the petitioner
being the President was in overall charge of the affairs of A1 including the appointment of salesmen and other employees and the acts of
commission and omission by A5 and A6 are attributable to the negligence on the part of A2 to A4 to exercise due diligence to prevent the
commission of such offences. There is nothing to indicate when the Tahsildar inspected and checked the stores the President was available. Merely
because the President happened to be a person who appointed the salesman it cannot be said that the President will become liable for the acts of
commission and omission by the salesmen. In S.T.C. No. 15 of 1987 it has been mentioned that the acts of commission and omission are
attributable to the negligence on the part of A2 the President and A3 who was the Secretary to exercise due diligence to prevent the commission of
such offences. While under S. 10(g) what is required to be proved is that the offence had been committed with the consent or connivance or is
attributable to any neglect on the part of any director, manager, secretary, etc., then they will become liable. At the time of inspection by the
Tahsildar, as already stated, only the salesmen were present. Learned counsel for the petitioner relied on two decisions reported in Viswanathan v.
State Superintendent of Police 1982 L.W. Cri. 70. and Ramamurthi, K.G. v. Inspector of Police 1983 L.W. Cri. 62. Both the decisions had been
rendered by the learned Judge M.N. Moorthy, J. The decision reported in Viswanathan v. State Superintendent of Police 1982 L.W. Cri. 70.,
related to a case of the President of the Co-operative Society charged along with the Secretary under Ss. 409 and 477A, I P.C., read with S. 34,
I.P.C. A petition had been filed under S. 482, Crl. P.C. by the President who was A1 to quash the proceedings. In that case the learned Judge
had observed with regard to the entries relating to that case that when entries of number of persons are there it may not be possible to check each
and every entry by the President himself. The other decision reported in Ramamurthi, K.S. v. State Inspector of Police 1983 L.W. Cri. 62., also
was rendered in a petition filed u/s 482, Crl. P.C. The case related to the Manager of the Amaravathi Co-operative Sugar Mill employees Co-
operative stores on deputation and the facts revealed that a cheque dated 27th July, 1968 signed by A3 the Vice President had been encashed by
the Manager. While the cheque was for Rs. 2,090, only Rs. 2,000 had been credited in the cash book and had been signed by A1 and there had
been misappropriation of Rs. 90. According to the bye-law the petitioner was the ex-officio President and therefore he was sought to be made
liable under the bye-law of the Co-operative Society. In that case also the learned Judge pointed out that in view of the fact that during the
particular time the petitioner happened to be the President of the concerned Society and in the proceeding there is nothing to implicate the
petitioner, the proceeding to be quashed. Having regard to the principles laid down in the decisions and also the facts, I feel the contention of the
petitioner has to be accepted. Accordingly both the petitions are allowed and the proceedings against the petitioner in S.T.C. Nos. 14 of 1987 and
16 of 1987 on the file of the Special Court for Essential Commodities Act cases, Madurai, are quashed.