A) ABSTRACT / HEADNOTE

The judgment in Hindustan Unilever Limited v. State of Madhya Pradesh examines the interplay between corporate criminal liability, vicarious liability of nominated officers, and the effect of repeal and savings clauses under Indian criminal jurisprudence. The Supreme Court was required to decide whether prosecution and punishment under the Prevention of Food Adulteration Act, 1954 could continue despite its repeal by the Food Safety and Standards Act, 2006, and whether a nominated officer could be convicted independently when the company itself was not convicted.

The Court reaffirmed the settled doctrine under Section 6 of the General Clauses Act, 1897 and Section 97 of the 2006 Act, holding that repeal does not extinguish pending prosecutions or liabilities unless a contrary intention is expressly stated. It categorically rejected the argument that the accused could claim the benefit of the milder penal regime under the 2006 Act.

More significantly, the judgment clarifies that Section 17 of the 1954 Act creates conjoint and not alternative liability. The Court held that the company and the nominated person form an inseparable unit for the purpose of prosecution. In the absence of conviction of the company, conviction of the nominated officer alone was held to be legally unsustainable.

The Court further deprecated the High Court’s decision to remand the matter after three decades to cure a fundamental defect, holding such remand to be unfair, prejudicial, and contrary to principles of criminal justice. The ruling strengthens safeguards against prolonged criminal trials and reinforces strict compliance with statutory requirements in corporate prosecutions.

Keywords:
Corporate Criminal Liability; Vicarious Liability; Repeal and Savings Clause; Food Adulteration Law; Nominated Officer

B) CASE DETAILS

C) INTRODUCTION AND BACKGROUND OF JUDGEMENT

The case arises from a prosecution initiated in 1989 under the Prevention of Food Adulteration Act, 1954, alleging adulteration of vanaspati ghee manufactured by Hindustan Unilever Limited. The prosecution spanned over three decades, traversing multiple judicial forums and legislative transitions. The central controversy involved the liability of a nominated officer vis-à-vis the company after repeal of the parent statute.

The background is legally significant due to the repeal of the 1954 Act by the Food Safety and Standards Act, 2006. The accused sought to invoke the beneficial sentencing provisions of the later enactment, contending that only fine was prescribed therein. This raised constitutional and statutory questions concerning retrospective benefit, repeal, and savings.

Additionally, the case is rooted in an earlier remand by the Supreme Court in R. Banerjee v. H.D. Dubey, where the Court directed determination of the validity of nomination under Section 17. The trial court subsequently proceeded only against the nominated officer while effectively abandoning prosecution against the company.

This procedural anomaly became the fulcrum of the present appeal. The High Court attempted to rectify the defect by remanding the matter for reconsideration against the company as well. The Supreme Court was thus confronted with the legality of such remand after thirty years, the correctness of convicting a nominated officer alone, and the applicability of repealed penal provisions.

D) FACTS OF THE CASE

A food inspector collected a sample of Dalda Vanaspati Khajoor Brand Ghee on 07.02.1989 from a godown in Jabalpur. The sample failed the prescribed standard due to excess melting point, rendering it adulterated under Section 2(ia)(m) of the 1954 Act.

A complaint was filed against the company, its directors, and other intermediaries. The matter reached the Supreme Court earlier in R. Banerjee, wherein directions were issued to verify whether nomination under Section 17 was validly acknowledged by the competent authority.

Pursuant thereto, the trial court absolved the directors and continued proceedings only against the nominated officer, Dr. Nirmal Sen. Crucially, the company, though arrayed as an accused, was never convicted nor effectively tried.

In 2015, the trial court convicted the nominated officer under multiple provisions of the 1954 Act and imposed imprisonment and fine. The appellate court affirmed the conviction. The High Court, however, noticed a patent defect since acquittal of the company would necessarily enure to the benefit of the nominated officer. It set aside the conviction and remanded the matter for fresh consideration against both.

The accused approached the Supreme Court challenging both the denial of benefit under the 2006 Act and the legality of remand after three decades.

E) LEGAL ISSUES RAISED

i. Whether prosecution and punishment could continue under the Prevention of Food Adulteration Act, 1954 after its repeal by the Food Safety and Standards Act, 2006?

ii. Whether the accused was entitled to claim the benefit of lesser punishment under the 2006 Act?

iii. Whether a nominated officer could be convicted independently in the absence of conviction of the company under Section 17 of the 1954 Act?

iv. Whether the High Court was justified in remanding the matter after more than thirty years to cure a foundational defect in trial?

F) PETITIONER / APPELLANT’S ARGUMENTS

The counsels for the appellant submitted that the offence alleged pertained only to excess melting point and, under the 2006 Act, attracted only monetary penalty. Relying on T. Barai, Nemi Chand, and Trilok Chand, it was contended that beneficial legislation must apply retrospectively.

It was further argued that the company was never convicted, and therefore vicarious liability of the nominated officer could not survive. Reliance was placed on Aneeta Hada, asserting that arraignment and conviction of the company is a condition precedent.

The remand order was assailed as violative of Section 401(2) CrPC since it prejudicially affected the accused without affording opportunity of hearing and attempted to fill lacunae after inordinate delay.

G) RESPONDENT’S ARGUMENTS

The counsels for the State submitted that Section 97 of the 2006 Act expressly saves penalties and prosecutions under the repealed Act. The accused could not seek benefit of a statute which specifically preserved earlier liabilities.

It was argued that nomination under Section 17 fastened responsibility on the nominated officer and conviction was legally sustainable. The delay, according to the State, was attributable to the accused.

The State supported the High Court’s remand as a permissible corrective measure within revisional jurisdiction.

H) JUDGEMENT

The Supreme Court rejected the plea for application of the 2006 Act, holding that Section 97 read with Section 6 of the General Clauses Act expressly protected pending prosecutions and punishments. The Court distinguished Nemi Chand and T. Barai as cases involving amendments, not repeal with savings.

The Court held that Section 17 of the 1954 Act creates conjoint liability of the company and the nominated person. Drawing parity with Section 141 of the Negotiable Instruments Act and relying on Aneeta Hada, it was held that conviction of the company is a sine qua non.

The failure of the trial court to convict the company rendered the entire prosecution defective. The High Court’s attempt to remand after thirty years was held to be unjust, unfair, and prejudicial. The appeals were allowed and the complaint dismissed.

a) RATIO DECIDENDI

The repeal of a penal statute does not extinguish liabilities unless expressly stated. Further, under Section 17 of the Prevention of Food Adulteration Act, 1954, prosecution of a nominated officer is legally impermissible without prosecution and conviction of the company.

b) OBITER DICTA

Prolonged criminal trials undermine fairness. Courts must be cautious in ordering remands to cure defects that go to the root of jurisdiction after inordinate delay.

c) GUIDELINES

i. Courts must ensure arraignment and adjudication of the company in prosecutions involving vicarious liability.
ii. Remand to fill foundational lacunae after prolonged delay should be avoided.
iii. Savings clauses must be given full statutory effect.

I) CONCLUSION & COMMENTS

The judgment fortifies doctrinal clarity on corporate criminal liability. It prevents misuse of vicarious liability provisions by ensuring strict statutory compliance. The ruling also upholds fairness by protecting accused persons from endless litigation and retrospective procedural correction. It is a significant precedent in food safety jurisprudence and corporate criminal law.

J) REFERENCES

a) Important Cases Referred

i. R. Banerjee v. H.D. Dubey, (1992) 2 SCC 552 : [1992] 2 SCR 221
ii. State of Punjab v. Mohar Singh, AIR 1955 SC 84 : [1955] 1 SCR 893
iii. Tiwari Kanhaiyalal v. CIT, (1975) 4 SCC 101 : [1975] 3 SCR 927
iv. Aneeta Hada v. Godfather Travels, (2012) 5 SCC 661 : [2012] 5 SCR 503

b) Important Statutes Referred

i. Prevention of Food Adulteration Act, 1954
ii. Food Safety and Standards Act, 2006
iii. General Clauses Act, 1897
iv. Code of Criminal Procedure, 1973