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Criminal Miscellaneous No. 48 of 1961, decided on 18th August, 1961.
Criminal prosecution‑
Company or corporation whether and when can 6e prosecuted criminally‑Electricity Act (IX of 1910), S. 42.
A company or corporation may be prosecuted and held criminally liable, except in the case of those offences which cannot be committed vicariously or for which the punishment must of necessity be only imprisonment, transportation or death. And in the case of offences which as specifically created by a statute as penalties for breach of duty, there can be no doubt at all that a corporation would be liable, irrespective of the fact that the statute does not expressly say so.
Section 42 of the Electricity Act, 1910 deals with acts of omission or commission on the part of a licensee under the Act. It is a statute creating specific offences and prescribing penalties against the licensee. There is nothing in the terms of the Act to indicate that the liability will not be enforced against the licensee if it happens to be a company or corporation. Since in appropriate cases criminal liability can be, and is, enforced against a company or a corporation, there is, therefore, no legal or juristic difficulty in enforcing the terms of section 42 of the Electricity Act, 1910. That being so, any prosecution under section 42 must conform to those terms. The penalty prescribed in the section is only a fine, and there is no obligation on the Court to impose imprisonment in default of payment of fine. The fine can always be realised from the property of the company if it be a licensee.
Where, a person filed three complaints under section 42 of the Electricity Act, 1910 and chosen to prosecute not the company which was the licensee but individuals it was held that the individuals may or may not be connected with the licensee and so the prosecution of the individuals instead of the licensee company was a violation of the express terms of section 42 of the Act and, therefore, illegal.
Attorney‑General v. Walkergate Press Limited 142 L T R 408 and The King v. Grubb 2 K B 683 distinguished.
Director of Public Prosecutions v. Kent and Sussex Con tractors, Limited (1944) 1 K B 146; Rex v. I. C. R Haulag, Limited and others (1944) 1 K B 511 ; Emperor v. Dhanraj Mills Ltd. A I R 1943 Bom. 182 and Anath Bandhu v. Corporation of Calcutta A I R 1952 Cal. 759 ref.
Halsbury's Laws of England, Third Edn. Vol. IX, page 90, para. 183 ref.
Saeed‑ur‑Rahman for Petitioner.
Mushtaq Hussain Additional A. G, for the State.
Dates of hearing: 24th and 31st July, 1961.
In Criminal Miscellaneous Applications Nos. 48, 492 and 963 of 1961 the question raised concerns the interpretation of sec tion 42 of the Electricity Act of 1910. In the first two Applications the petitioner is Dr. Chiragh Ali Chishti who is the Managing Director of the Northern India Electric Supply Company Limited, Khanewal; whereas the third application is by Dr. Chiragh Ali Chishti's son Zafar Ali, who is, working as the Secretary of the Power House at Jhang.
2. The facts stated are that one Abdul Ghaffar, Proprietor of Tasnim Oil Mills Khanewal, has filed two criminal complaints against Dr: Chiragh Ali Chishti and one against Zafar Ali under section 42 of the Electricity Act of 1910. Along with these main accused persons some others have also been associated, presumably because they are the employees of the Northern India Electric Supply Company Limited, Khanewal.
3. It is contended on behalf of the petitioners that the complaints are inspired by personal malice on the part of Abdul Ghaffar again3t Dr. Chiragh Ali Chishti and in any case, they, are in contravention of the express terms of section 42 of the Electricity Act which contemplates that only the licensee shall be prosecuted, which in this case is the Company and not Dr. Chiragh Ali Chishti or his son Zafar Ali. For these reasons a prayer is made that the proceedings in the three cases be quashed.
4. I do not intend to deal with the question of malice, for the reason that the three applications can easily be disposed of with reference to section 42 of the Electricity Act. This section reads as follows:‑
"42. Whoever‑---
(a) being a licensee, save as permitted under section 27 or section 51 or by his license, supplies energy or lays down or places any electric supply‑line or works outside the area of supply; or,
(b) being a licensee, in contravention of the provisions of this Act or of the rules thereunder or in breach of the conditions of his license and without reasonable excuse, the burden of proving which shall lie on him, discontinues the supply of energy or fails to supply energy; or
(c) makes default in complying with any order issued to him under section 34, subsection (2); shall be punishable with fine which may extend to one thousand rupees, and, in the case of a continuing offence or default, with a daily fine which may extend to one hundred rupees."
5. It was contended by Mr. Mushtaq Husain, the learned Additional Advocate‑General, that there is authority for the proposition that in respect of certain criminal offences it is the office‑bearers or the agents of the company who should be pro secuted and not the company; and one reason for this view is that a company cannot be sent to prison for failure to pay fine. It was, 'therefore, submitted by him that although section 42 of the Electricity Act imposes penalties on the licensee, this should be no bar to prosecution of the Managing Director or other employees of the licensee under this section.
6. The question of the criminal liability of a company or a corporation came up for consideration in Director of Public Prosecutions v. Kent and Sussex Contractors, Limited ((1944) 1 K B 146). That was a case under the Motor Fuel Rationing Order, 1941, and information s were preferred against the respondent company that it had with intent to deceive, made use of a document signed by the transport manager of the company, which was false in a material particular, and that in furnishing information in the document for the purposes of the order, the company made a statement which it knew to be false in a material particular.
The question formulated by the Lord Chief Justice was worded thus:
"This special case raises the question whether a limited company, being a body corporate, can in law, be guilty of the offences charged against the respondent, or whether a company is incapable of any act of will or state of mind such as that laid in the information."
After considering several authorities on the subject the learned Judge came to the following conclusion :‑
"In the present case the first charge against the company was of doing something with intent to deceive, and the second was that of making a statement which the company knew to be false in a material particular. Once the ingredients of the offences are stated in that way it is unnecessary, in my view, to inquire whether it is proved that the company's officers acted on its behalf. The officers are the company for this purpose ************. The offences created by the regulation are those of doing some thing with intent to deceive or of making a statement known to be false in a material particular. There was ample evidence, on the facts as stated in the special case, that the company, by the only people who could act or speak or think for it had done both these things, and I can see nothing in any of the authorities to which we have been referred which requires us to' say that a company is incapable of being found guilty of the offences with which the respondent company was charged."
7. The same view was affirmed in Rex v. I. C. R. Haulage, Limited and others ((1944) 1 K B 551), where, following the view taken in the first case just cited, it was held that "an indictment for a common law conspiracy to defraud will lie against a limited company."
8. Again in Emperor v. Dhanraj Mills Ltd. (A I R 1943 Dom. 182), it was held that "a corporation can be prosecuted and convicted under sec tion 6 of the Merchandise Marks Act (IV of 1889), because a corporation can apply a false trade description to goods through its agents". In Anath Bandhu v. Corporation of Calcutta (A I R 1952 Cal. 759), the view was expressed that a' limited company can be proceeded against under the Calcutta Municipal Act of 1913, "as a person includes a limited liability company." It was added that "the question of sentence also need not generally stand in the way of a trial of this kind because except in the case where no other sentence than imprisonment or transportation or death is provided, there is nothing to prevent a Court from indicting a suitable fine and a sentence of fine need not carry with it any direction of imprisonment in default. There may be fine alone and sections 386 and 3a8 of the Criminal Procedure Code would' show how such fines can be realised and there is nothing to prevent the application of those sections to the case of a limited liability company in idealising fines."
9. The view that a company or a corporation can be pro secuted criminally also finds support from observations in Halsbury's Laws of England (Para. 183 on page 90 of Volume 9 Third Edition) to the following effect : ‑
"A corporation cannot be found guilty of criminal offences, such as treason or Murder, for which death or imprisonment is the only penalty, nor can it be indicted for offences which can not be vicariously committed, such as perjury or bigamy. Subject to these exceptions, a corporation may be indicated and convicted for the criminal acts of its agents or servant acting within the scope of his authority, and the knowledge or intention of the agent or servant may be imputed to the corporation.
"Wherever a duty is imposed by statute in such a way that a breach of the duty amounts to a disobedience of the law, then, if there is nothing in the statute either expressly or impliedly to the contrary, a breach of the statute is an offence for which a ‑corporation may be indicted, whether or not the statute refers in terms to corporations."
10. Two cases were cited at the bar by the learned Additional Advocate‑General in which it had been held that in certain circumstances a limited company was not liable to penalties prescribed in a criminal statute. The first of these cases was Attorney‑General v. Walkergate Press Limited (142 L T R 408). That was how ever, a case where in the first place in some sections of the statute the words "politic or corporate body" were employed, and their omission from the relevant section was taken as an indication that Chiragh All the particular penalty was not to apply to a corporation; and Abdul secondly, one of the penalties was in any case such that it was Ghaffor wholly inappropriate in the case of a corporation. The penalty ‑ was "and shall also be deemed a rogue and a vagabond, or rogues Anwarul and vagabonds." It was rightly pointed out that such a penalty Haq, I could hardly be imposed 'on a fictitious person like a corporation. The case, therefore, does not appear to advance the argument of Mr. Mushtaq Hussain.
The second case relied upon in. this‑ behalf was The King v. Grubb (2 K B 683). It is sufficient to reproduce the relevant head‑note to show that the case has no application here‑‑
"When property is, or is intended to be, entrusted to a com pany, and a person directing and controlling the company, by whose instructions the property has passed into the possession of the company and has been converted, intended to convert it fraudulently, that person may have committed an offence under section 1 of the Larceny Act, 1901, whether the property was fraudulently converted to the use or benefit of the company or to his own use or benefit. If he did the acts with an intent‑ to defraud, it is no defence to indictment under section 1 to prove that he did them as the agent or servant of the company. If the company was used by his directions as the instrument to enable him in the name of the company to become possessed. of' the property and by means of the company to convert it fraudulently to his own'.' use or benefit, he has committed an offence under section 1."
12. It will be seen that‑ as' a legal proposition it is well established that a company or & corporation may be prosecuted and held criminally liable, except in the case of those offences which cannot be committed vicariously or for which the punishment must of necessity be imprisonment, transportation or death. And in the case of offences which as specifically created by a statute as penalties for breach of duty, there can be no doubt at all that a corporation would be liable, irrespective of the fact that the statute does no expressly say so.
13. Now, section 42 deals with the a6ts of omission or commission on the part of a licensee under the Electricity Act. In other words here is a case of a statute creating specific offences and prescribing penalties against the licensee. There is nothing in the terms of the Act to indicate that the liability will not be enforced against the licensee if it happens to be a company or a corporation. We have already seen that in appropriate cases criminal liability can, and is, enforced against a company or a corporation. 1n other words there is no legal or juristic difficulty in enforcing the terms of section 42 of the Electricity Act. That being so, any prosecution under section 42 must conform to those terms. The penalty prescribed in the section is only a fine, and there is no obligation on the Court to impose imprisonment in default of payment of fine. The fine can always be realised from the property of the company.
14. In the three complaints filed by the respondent he has chosen to prosecute not the licensee but individuals who may or may not be connected with the licensee. This is a violation of the express terms of section 42 of the Electricity Act and, therefore, illegal. The proceedings in all the three cases are hereby quashed and the petitioners and their co‑accused persons discharged. The petitions are accepted.
K. B. A.
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