Legal Metrology Act | Karnataka HC Quashes Case Against Ex-Employee Not Shown To Be In Charge Of Company Affairs

The Karnataka High Court has quashed criminal proceedings against a former in-house counsel of a publishing company.

It held that an employee cannot be proceeded against merely on the basis of his designation when the complaint does not specifically state that he was in charge of the company's affairs.

Justice H.P. Sandesh observed that the complaint did not contain any such averment against Prashant Kumar Joshi, who was shown as General Manager (Legal) of Pearsons Educations, Dorling Kindersley (India) Pvt. Ltd.

The court also noted that there was no material to show that Joshi had been nominated under Section 49 of the Legal Metrology Act, 2009, to be responsible for the company's business.

“Having considered the provisions of Section 49 of the Act 2009, it is very clear that if any offence under this Act has been committed by a company, the person 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 shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly. Where no person has been nominated, every person, who at the time the offence was in charge of, and was responsible to, the company for the conduct of the business of the company and also the company shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly.,” the court observed while explaining how Section 49 operates.

In simple terms, Section 49 does not automatically make every employee of a company criminally liable for an offence allegedly committed by the company. It covers the company and the person nominated to be in charge of and responsible to it for the conduct of its business.

Where no person has been nominated, it covers those who were in charge of and responsible for the company's business when the offence was committed.

The court also referred to the Supreme Court's rulings in Aneeta Hada v. M/s Godfather Travels and Tours Pvt. Ltd. (2012) and Pepsi Foods Ltd. v. Special Judicial Magistrate (1998).

Those cases dealt with Section 141 of the Negotiable Instruments Act, which concerns the criminal liability of people responsible for a company's conduct.

The company itself had not been made an accused in the present case. The court held that this was in violation of Section 49 of the Legal Metrology Act, referring to the principles laid down in those Supreme Court decisions.

The complaint described Joshi and the company's Managing Director as the “manufacturer-cum-publisher” of the textbook. It did not state that Joshi was in charge of the company's affairs or that he was the person responsible for its business.

“Nothing is stated in the complaint that this petitioner was in charge of the affairs of the company and he being shown as General Manager (Legal), the question of initiating the criminal prosecution against this petitioner is nothing but an abuse of process, which amounts to miscarriage of justice,” the court observed.

The proceedings arose from an inspection carried out by a Legal Metrology Inspector at the premises of a distributor, Surya Infotainment Products Pvt. Ltd., in Bengaluru on January 27, 2012. The inspector found its Business Head, K.M. Paniraj, in possession of a pre-packed Pearson-published textbook, Engineering Drawing.

According to the complaint, the package did not carry declarations including the manufacturer's name and full address, maximum retail price, manufacturing or packing month and year, net contents, and consumer-care telephone number and email address.

The complaint alleged that the retailer's keeping of the package for sale violated Section 18 of the Legal Metrology Act read with Rule 18(1) of the Legal Metrology (Packaged Commodities) Rules, 2011. The alleged violation was punishable under Section 36 of the Act.

A private complaint was filed under Section 200 of the Code of Criminal Procedure. The magistrate subsequently took cognizance of the alleged violations. Joshi was made the second accused in his capacity as General Manager (Legal), while the company's Managing Director was made the first accused.

The proceedings against the Managing Director had already been quashed by the high court in 2019. In that case, the court found that he had ceased to be the company's Managing Director with effect from April 14, 2011. There was no prima facie material showing that he remained associated with the company on the date of the inspection.

In Joshi's case, the high court quashed the proceedings on a different basis. There was no specific averment that he was in charge of the company's affairs. There was also no material showing that he had been nominated under Section 49 of the Act.

“If the proceedings is continued, it is nothing but an abuse of process,” the court observed.

It allowed the petition and quashed proceedings against Joshi