Company must be made accused if case registered against director: Karnataka High Court

The Karnataka High Court has ruled that if a case is registered against the director of a company, the company itself must also be named as an accused.

The court made the observation as it quashed proceedings against the deputy manager and the chief operating officer of a Bengaluru-based insecticide manufacturing company.

The Agriculture Department registered a case against Pavana Kumar Uppalapati and Biplob Chatterjee, the Deputy Manager (Quality Control and Liaison) and Chief Operating Officer, respectively, of Aries Agro Limited, Bengaluru. It also named Venkata Subbaiah Eranty, proprietor of Sri Gayathri Agencies, Pavagada, Tumakuru.

The action was taken based on an October 10, 2023, inspection showing Potassium Salt of Phosphonic Acid (Kphonic) was being sold without a licence, violating the Insecticides Act, 1968, and the Insecticides Rules, 1971.

A private complaint was filed for offences punishable under sections 6(1), 9(1), 10, 10(D), 12, and 15 of the Insecticides Act. Subsequently, in November 2023, the JMFC court at Pavagada took cognisance and issued summons.

Challenging the proceedings in the high court, the petitioners argued that the order taking cognizance violated Section 33 of the Insecticides Act, 1968, which stipulates that both the responsible person and the company must be made parties to the case.

Justice S Rachaiah noted that if offences are committed by a company or firm, the person in charge of or responsible for the day-to-day affairs of the firm is deemed guilty of the offences.

"In other words, if any case is required to be registered against the director of a company or firm, the company must be made one of the accused. In the instant case, in the absence of the company being made as one of the accused, the complaint cannot be maintainable. However, the trial court, while taking cognisance, has failed to take note of the said aspect, hence, the order of taking cognizance is termed as non-application of mind and deserves to be set aside," the court said.