Nominated Officer cannot be convicted if Company is not being made a party: SC

Hindustan Unilever Limited Vs State of Madhya Pradesh (Supreme Court)

A three-Judge Bench of this Court in Aneeta Hada Godfather Travels & Tours Private Limited¹¹ considered the question of conviction of the Directors in the absence of the Company in proceedings under Section 138 of the Negotiable Instruments Act, 1881 as also in the proceedings under Information Technology Act, 2000. This Court held that Section 141 of the NI Act dealing with offences by companies contemplates that every person who at the time the offence 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 offence and shall be liable to be proceeded against and punished accordingly.

Clause (a) of Sub-Section (1) of Section 17 of the Act makes the person nominated to be in charge of and responsible to the company for the conduct of business and the company shall be guilty of the offences under clause (b) of Sub-Section (1) of Section 17 of the Act. Therefore, there is no material distinction between Section 141 of the NI Act and Section 17 of the Act which makes the Company as well as the Nominated Person to be held guilty of the offences and/or liable to be proceeded and punished accordingly. Clauses (a) and (b) are not in the alternative but conjoint. Therefore, in the absence of the Company, the Nominated Person cannot be convicted or vice versa. Since the Company was not convicted by the trial court, we find that the finding of the High Court to revisit the judgment will be unfair to the appellant/Nominated Person who has been facing trial for more than last 30 years. Therefore, the order of remand to the trial court to fill up the lacuna is not a fair option exercised by the High Court as the failure of the trial court to convict the Company renders the entire conviction of the Nominated Person as unsustainable.

FULL TEXT OF THE SUPREME COURT JUDGEMENT

1. The challenge in the present appeals is to an order passed by the High Court of Madhya Pradesh, Jabalpur on 9.1.2020 whereby the revision filed by Shri Nirmal Sen, appellant/Nominated Officer (Incharge) of the Hindustan Unilever Limited¹, was allowed, however the matter was remitted back to the trial court to revisit the evidence adduced by both the parties, so far it relates to the appellants, Nirmal Sen and the Company. The operative part of the order reads thus:

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