IN THE COURT OF SH. DIG VINAY SINGH, ACMM-03 (IPR), ROHINI, DELHI

FIR NO.243/02

PS MAYAPURI

STATE VS. JITENDER GULATI ORS.

U/S. 63 OF COPYRIGHT ACT, 1957.



                                           ORDER ON CHARGE

1.

Brief facts of this case are that four accused namely Kulbeer Singh, Devesh Kumar Rathore, Surender Wadhwa and Jitender Gulati have been sent up for trial for offences u/s.63/65 & 68A of the Copyright Act, 1957 and, section 292/468/471 of IPC.

2. The case of prosecution is that Indian Music Industry (hereinafter referred to as IMI) is a trade association of various music companies in India and, the said IMI claims to be authorised by the member music companies in India to take appropriate action against infringement of their copyright. Said IMI further authorised M/s. Super Network to take such necessary action against piracy. On behalf of M/s. Super Network, Mr. Hansraj Gautam, gave a written complaint on 25.11.2002 to the DCP stating that it has come to the knowledge of the complainant that at premises no. C-3/12, Mayapuri Industrial Area, Phase II, New Delhi, infringement of copyright is being done by a company namely M/S Namit Plastics. On this complaint, a raiding party was organised and on 27.11.2002, the said premises no. C-3/11, Mayapuri Indl. Area, was raided. It is the case of prosecution that at the said factory a company by the name of M/S Sidharth Optical Disc was being run and, at the time of raid, the door was opened by accused no.2 Devesh Kumar Rathore. Accused no.1 Kulbeer was also present in the factory. From the said factory 482 MP3 songs infringed CDs; 13 MP3 stampers; 39 positives of MP3 audio CDs; 10600 VCDs of blue films (obscene films); 9 blue films stampers; 21 positives of blue films; two CD recording machines; two CD recording units; one CD printer; one 14" colour TV; one CD player; two computer speakers and one audio/video to RR converter, were ORDER ON CHARGE/STATE VS. JITENDER GULATI ORS./ FIR NO.243/02/PS MAYAPURI/U.S.63 of Copyright Act, 1957/01.7.2009/ Page 1 of 23 k recovered. The VCDs/MP3s were found to be infringed and, therefore, they were seized and both accused no.1 & 2 namely Kulbeer Singh and Devesh Kumar Rathore were arrested. The premises were sealed. Subsequently, on their disclosure, the said premises was again raided after desealing the same on 01.12.2002 i.e. after three days after the initial raid, and again 22500 VCDs of different titles, 547 stampers and 274 masters were seized. The premises were again sealed.

3. It is the case of investigating agency that accused no.3 Surender Wadhwa obtained anticipatory bail and joined investigation. During the hearing of anticipatory bail, he claimed that the company i.e. M/s. Sidharth Optical Disc has indemnity bonds and purchase orders for reproduction of CDs received from third parties which were, during the course of investigation, supplied to the investigating officer from time to time and they were verified to be genuine. Out of the recovered 547 stampers, 274 masters and 22500 VCDs which were seized on 01.12.2002, all the VCDs i.e. 22500 VCDs, 523 stampers (out of 547 stampers), and 272 masters (out of 274 masters) were released after they were verified by the IO and pursuant to the order of Court. That means, out of the case property recovered on 01.12.2002, only 24 stampers and 2 masters remained which are claimed to have been used for infringement. During investigation, accused no.3 Surender Wadhwa supplied the investigating officer various indemnity bonds given to M/S Sidharth Optical Disc, by the persons/companies who placed the order for replicating/reproducing the CDs.

4. Out of those stampers and masters which are remaining, the investigating agency claim that 6 stampers + 1 master relates to films "Ek Phool Do Maali and Phool Aur Pathar" and was sent for replication alongwith an indemnity bond signed by accused no.4 Jitender Gulati. Investigating agency claims that the descendant's of the producers of those two films denied having authorised anyone to replicate the CDs of films. There is one more 'master' relating to film "Kuwaari Dulhan" regarding which indemnity bond is signed by accused no.4 Jitender Gulati, but investigating agency claims that since producers of that film was not traceable, therefore, it could not be known whether accused Jitender Gulati had any licence/authority to reproduce the work or not. Investigating ORDER ON CHARGE/STATE VS. JITENDER GULATI ORS./ FIR NO.243/02/PS MAYAPURI/U.S.63 of Copyright Act, 1957/01.7.2009/ Page 2 of 23 k agency further claims that out of the remaining stampers and masters which were recovered on 01.12.2002, the producers could not be traced and, therefore, it is not known whether the third parties i.e. M/s. Kamal Electronics Producers and M/s. Friends Video who gave order for reproduction to M/s. Sidharth Optical Disc were authorised or not to get the copies reproduced from M/s. Sidharth Optical Disc.

5. Thus, regarding fourth accused Jitender Gulati, the case of investigating agency is that he placed orders for replication of CDs pertaining to movies "Ek Phool Do Maali and Phool Aur Pathar", amongst certain other films, but so far as these two films are concerned, he was not authorised to get it reproduced and, therefore, he is an offender. The letter dated 16.10.2002, vide which this accused no.4 Jitender Gulati placed the order with M/s. Sidharth Optical Disc Pvt. Ltd., is on record, on which signatures of accused no.4 Jitender Gulati are tallied by the handwriting expert with the admitted signatures and specimen signatures of the accused no.4 Jitender Gulati.

6. Thus, the case of investigating agency as revealed from chargesheet against the above said four accused is that accused Kulbeer was an employee and accused Devesh Kumar Rathore was a director of M/s. Sidharth Optical Disc Pvt. Ltd., and they were physically present on 27.11.2002, when the raid was conducted and infringed material was recovered. It is also the case of prosecution that the accused Devesh Kumar Rathore being director was also in charge of and responsible for the conduct of the business of the company and similarly accused Kulbeer was also managing the affairs of company, therefore, they both are claimed to be liable.

7. Regarding, accused no.3 Surender Wadhwa, it is the claim of investigating agency that he was also one of the directors of the company, rater he is claimed to be managing Director, of the company. He was not found present on the day when the raid was conducted on two occasions. Perusal of chargesheet reveals that it is mentioned by the investigating agency that accused Surender Wadhwa is placed in column no.4 of the chargesheet for facing trial since he applied for Superdari and got the seized goods released in his name and he also perused other matters in Court. Besides this, against accused no.3, it is alleged that ORDER ON CHARGE/STATE VS. JITENDER GULATI ORS./ FIR NO.243/02/PS MAYAPURI/U.S.63 of Copyright Act, 1957/01.7.2009/ Page 3 of 23 k accused no.1 Kulbeer and accused no.2 Devesh Kumar Rathore in their disclosure statements told the IO that accused Surender Wadhwa was the Managing Director of M/s Sidharth Optical disc.

8. I have already mentioned the role attributed to accused Jitender Gulati is that he placed orders for replication of CDs of two movies "Ek Phol Do Maali and Phool Aur Pathar" to be reproduced/replicated by M/s. Sidharth Optical Disc without having any authority/licence from the copyright holders of those movies.

9. The investigating agency alongwith the chargesheet has also filed on record the copy of the minutes of the Boards of Directors of M/s. Sidharth Optical Disc which are dated 09.2.2002 i.e. nine months prior to the alleged recovery. In the said minutes book, it is mentioned that Surender Wadhwa and D.K.S. Rathore were Directors of this company. The item no.1 of said meeting mentions that accused Surender Wadhwa, on the request of accused D.K.S. Rathore agreed to act as the Chairman of the meeting and then it was recorded as follows :

"Resolved that Sh. Surinder Wadhwa, Director of the company be and is hereby elected as the Chairman of this meeting of the Board of Directors of the company and shall continue to act upon as such the Chairman in future also until otherwise decided by the Board" Then Sh. Surinder Wadhwa, took the chair and welcomed the Directors to the First Meeting of the Board of Directors of the company".

10. In the same minutes, at item no.12, it is recorded as follows : "The Chairman informed the Board that since the company has started its business activities, it is necessary to delegate power to someone to act on behalf of the Board to carry on the day to day activities including manufacturing, running and supervision of factory premises, production, sales, purchase, accounts, income tax, sales tax, excise laws factory Act. Compliance of trade mark, patent laws and all other laws applicable to the company until otherwise decided by the Board then he suggested the name of Sh. D.K.S. Rathore, Director of the company. The matter was discussed and in this connection the following resolution was passed unanimously.

"Resolved that Sh. D.K.S. Rathore, Director of the company be and is hereby authorised to handle all kinds of day to day operations of the company including ORDER ON CHARGE/STATE VS. JITENDER GULATI ORS./ FIR NO.243/02/PS MAYAPURI/U.S.63 of Copyright Act, 1957/01.7.2009/ Page 4 of 23 k manufacturing, running and supervision of factory premises, production sales, purchase, accounts, income tax, sales tax, excise laws, factories Act, compliance of trade mark, patent laws and all other laws applicable to the company until otherwise decided by the Board".

11. It may be mentioned that the minutes dated 09.2.2002 are relied upon by none other than the prosecution itself. This document is filed by the prosecution itself and a specific query was asked to Ld. APP and the investigating officer whether this document is verified to which the investigating officer replied that these minutes are genuine and, therefore, relied upon by the prosecution and it is also stated by the IO that even the concerned clerk from the Registrar of Companies was also examined and is cited as a witness to prove this document.

12. Before proceeding further it may be mentioned that law regarding considerations at the stage of charge are well-settled now. The court has power to sift and weigh the evidence for the limited purpose of finding out whether or not a prima facie case against accused has been made out. It is held that when the material placed before the court discloses great suspicion against the accused which has not been properly explained the court will be justified in framing charge. The judge should not make a roving inquiry into the pros and cons of the matter and weigh the evidence is if he was conducting a trial. If on the basis of materials on record a court could come to the conclusion that commission of the offence is a provable consequence, a case of framing of charge exists. To put it differently, if the courts were to think that the accused might have committed the offence it can frame a charge, though for conviction the conclusion is required to be that the accused has committed the offence. At the stage of framing of a charge probative value of the materials on record cannot be gone into, the material brought on record by the prosecution has to be accepted as true at that stage. The truth, veracity and effect of the evidence which the prosecutor proposes to adduce are not to be meticulously judged. Nor is any weight to be attached to the probable defence of the accused. It is not obligatory for the Judge at that stage of the trial to consider in any detail and weigh in a sensitive balance whether the facts, ORDER ON CHARGE/STATE VS. JITENDER GULATI ORS./ FIR NO.243/02/PS MAYAPURI/U.S.63 of Copyright Act, 1957/01.7.2009/ Page 5 of 23 k if proved, would be incompatible with the innocence of the accused or not. The standard of test and judgment which is to be finally applied before recording a finding regarding the guilt or otherwise of the accused is not exactly to be applied at this stage of deciding the matter under S. 227 or S. 228 of the code. At that stage the Court is not to see whether there is sufficient ground for conviction of the accused or whether the trial is sure to end in his conviction. But at the initial stage if their is a strong suspicion which leads the Court to think that there is ground for presuming that the accused has committed an offence then it is not open to the Court to say that there is no sufficient ground for proceeding against the accused. While deciding the question of framing of charge in a criminal case, the court is not to apply exactly the standard and test which it finally applies for determining the Guilt or otherwise. This being the initial stage of the trial, the court is not supposed to decide whether the materials collected by the investigating agency provides sufficient ground for conviction of the accused or whether the trial is sure to culminate in his conviction. What is required to be seen is whether there is strong suspicion which may lead to the court to think that there is ground for presuming that the accused has committed an offence. Reliance placed on the cases of Union of India vs. Prafulla Kumar AI R 1979 Supreme Court 366 : State of Maharashtra and others vs. Som Nath Thapa and others JT 1996 (4) SC 615 ; State of Bihar v. Ramesh Singh, AI R 1977 S C. 2018: (1 977 CRI LJ 1606) ; Umar Abdula Sakoor Sorathia vs. Intelligence officer narcotic control bureau JT 1999 (5) SC 394 ; Kallu Mal Gupta vs. State 2000 I AD Delhi 107.

13. Ld. counsel for accused no.1 Kulbeer Singh argued that no charge against Kulbeer Singh is made out since he was merely an employee and he was merely managing marketing. It is argued that this accused is neither owner nor director of M/s. Sidharth Optical Disc and articles were not taken by him on Superdari and he was not to gain anything, therefore, he cannot be charged.

14. I am afraid none of the arguments advanced on behalf of this accused gives any benefit to the accused. It is the case of prosecution that this accused was ORDER ON CHARGE/STATE VS. JITENDER GULATI ORS./ FIR NO.243/02/PS MAYAPURI/U.S.63 of Copyright Act, 1957/01.7.2009/ Page 6 of 23 k physically present on 27.11.2002 inside the factory where he was working and from where a large part of infringed material was recovered. It is not necessary that in order to be liable a person has to be director of a company.

15. Section 69 of the Copyright Act, 1957, clearly provides that where any offence under the said act is committed by the company, 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, shall be deemed to be guilty of such offence and shall be liable to be proceeded against.

16. Sub section (2) of section 69 of the said Act further provides that notwithstanding anything contained in sub section (1), if it is proved that the offence was committed with the consent or connivance of, or is attributable to the negligence on the part of, director, manager , secretary or other officer of the company, such person shall also be deemed to be guilty and liable to be proceeded against.

17. The definition in sub sec (2) of this section is wider enough to include any officer in the company who was in connivance with or who consented or due to whose negligence the offence is committed. The stand of accused Kulbeer that he was merely an employee and not a director does not help his case at all. There is statement u/s 161 Cr.P.C. of witnesses particularly employees of the company that this accused was actively involved in procuring business for the company regarding reproduction of CDs. There are other communications with third parties which show that the accused was procuring business for reproduction of CDs. There is a disclosure statement of this accused Kulbeer Singh and pursuant to that disclosure statement, the second set of infringed material was recovered on 01.12.2002. The recovery pursuant to the disclosure of accused Kulbeer makes admissible the said part of the disclosure which has led to the recovery. No doubt u/s.25 & 26, confession made to a police officer and confession made while in custody of police officer, except when it is made in the presence of a Magistrate, is inadmissible. But section 27 of the Indian Evidence Act, 1872, makes admissible such information, whether confession or not, which relates distinctly to the fact discovered in consequence of the information provided by an accused. This recovery pursuant to disclosure of this ORDER ON CHARGE/STATE VS. JITENDER GULATI ORS./ FIR NO.243/02/PS MAYAPURI/U.S.63 of Copyright Act, 1957/01.7.2009/ Page 7 of 23 k accused together with the earlier recovery and other material on record show that this accused Kulbeer was actively involved in the management of the affairs of the company. The presence of the accused in the factory at the time of recovery where infringement was being done together with the documents on record show that Kulbeer was actively participating in the business of the company and once this is shown, prima facie it is enough at this stage to frame charges against accused Kulbeer Singh.

18. In view of above discussion, prima facie there are sufficient material against accused Kulbeer Singh to frame charges u/s.63,65 & 68-A of Copyright Act, 1957, as also u/s.292 of IPC.

19. So far as second accused Devesh Kumar Rathore is concerned his Counsel argued that no charges against this accused are made out since this accused was not a director but he was also merely an employee. It is also argued that the offence of infringement requires specific mens rea and knowledge which is lacking in this case and, therefore, charges cannot be framed. It is also argued that none of the CDs recovered were played by the prosecution to see its contents and in such circumstances how infringement is presumed and how it can be said that the blue film CDs were pornographic in nature. Ld. Counsel for the accused even went to the extent of arguing that there is a very fine distinction between expression of art and obscenity and also that unless copies of all such CDs are supplied, the accused is deprived of proper opportunity to rebut. This accused even dispute the minutes dated 09.2.2002 as mentioned above which are against this accused. It is claimed that this accused was not a director and was merely an engineer. It is also argued that in the complaint it is mentioned that infringement is being committed by company Namit Plastics, whereas in the chargesheet the case was made against Sidharth Optical Disc. It is also argued that no site plan was prepared by the IO as to from which place of factory what thing was recovered. It is also argued that regarding recovery on 01.12.2002, the case of the prosecution remains only qua two films and how the prosecution is presuming that the two plates/stampers recovered were pertaining to that film only and also that copies of that plate were not given to the accused.

ORDER ON CHARGE/STATE VS. JITENDER GULATI ORS./ FIR NO.243/02/PS MAYAPURI/U.S.63 of Copyright Act, 1957/01.7.2009/ Page 8 of 23 k

20. None of the arguments raised on behalf of accused Devesh Kumar Rathore is of any help to him. The argument that copies of plates/stampers and blue film CDs etc. are not supplied to the accused is absolutely misconceived. It is not necessary in every case that copies of the case property particularly the cases of this nature, the infringed copies are to be supplied. In some cases, there may be machinery which may be huge and heavy. If the arguments of this accused are to be accepted, the accused will start asking copies of those machines also. It is also noticed that mostly those machines are expensive. I don't see any reason as to why prosecution should be burdened with such additional expenses to prepare copies of infringed articles or plates for supply of the same to accused. At the stage of charge, it is sufficient that those were found to be infringed by the witnesses during investigation. When the case property will be produced in the Court, the contents of the same can indeed be seen by playing those CDs/MP3 during evidence. Therefore, arguments that copies of plates and CDs not supplied to the accused are without force. Similarly, the argument that there is a distinction between expression of art and obscenity is also matter of trial and at this stage, what is to be seen is whether the CDs were containing pornographic material. It is on record in the statement of witnesses that those CDs were containing pornographic material and at this stage, it is sufficient to frame charges.

21. The next argument of the accused that he was not a director or that he was merely an engineer is absolutely against the record which the prosecution has filed. Memorandum of article of association of the company M/s. Sidharth Optical Disc is on record which shows that Devesh Kumar Rathore was director. It is already mentioned above that the minutes dated 09.2.2002 were verified by the investigating agency and were found to be genuine. Those minutes contains signatures of this accused and in the item no.12 taken on that day in the meeting, it is specifically mentioned that it is this accused who was responsible for all business activities, day to day activities, including manufacturing running and supervision of factory premises, production, sale, purchase, account, taxation and compliance of the laws of land. Besides this, there are number of documents placed on record with the chargesheet which shows that this ORDER ON CHARGE/STATE VS. JITENDER GULATI ORS./ FIR NO.243/02/PS MAYAPURI/U.S.63 of Copyright Act, 1957/01.7.2009/ Page 9 of 23 k accused who was actively managing the business of this company with various clients and he has signed various such communications sent to the clients of the company. This accused was also physically present in the factory when it was raided and on the disclosure of this accused, again recovery dated 01.12.2002 was effected. The said part of disclosure is admissible u/s.27 of the Evidence Act, as mentioned above. The argument that the site plan was not prepared and the difference of name of company in the complaint and ruqqa is also of no help to the accused at this stage. The case of prosecution is that although complaint mentioned the name of M/s Namit Plastics but when the premises was physically raided, the company was found to be run under the name of Sidharth Optical Disc and recovery was effected from there. This accused is a director of Sidharth Optical Disc, rather the documents alongwith the chargesheet, which this accused communicated with the clients of company, and also the minutes dated 09.2.2002 clearly reveals that it was this accused who was managing the affairs of M/s. Sidharth Optical Disc.

22. Accordingly, there are prima facie sufficient material to frame charges u/s.63,65 & 68-A of Copyright Act, 1957 and section 292 of IPC against this accused Devesh Kumar Rathore also.

23. Counsel for accused no.3 Surender Wadhwa argued that charges against this accused also are not made out. It is argued that the complaint in the present case is undated and on a printed format, where after filling up certain blanks, the name of Namit Plastics is mentioned. It is also argued that the first date of the complaint which appears on the complaint is 25.11.2002 and, there is no marking by DCP to ACP and, as to how the ACP started action on this complaint is anybody's guess. It is also argued that without registering FIR, how the raid could be conducted and such raid and seizure is illegal. It is further argued that as to from where Jasvinder Sharma's name came to be mentioned in the ruqqa, whereas it is not there in the complaint. It is next argued that SI Ranbir Singh, who is a witness of everything himself became the Investigating Officer and the investigation was not assigned to anybody else and, as to how before the raid was conducted, the name of accused came to be known to the police. It is argued that all these things shows that it is a false case and it is ORDER ON CHARGE/STATE VS. JITENDER GULATI ORS./ FIR NO.243/02/PS MAYAPURI/U.S.63 of Copyright Act, 1957/01.7.2009/ Page 10 of 23 k general complaint, therefore, no charges can be framed.

24. Again, none of the arguments raised as above on behalf of the accused Surender Wadhwa is of any help to him. All the contentions as raised above are questions of fact including the question whether the case is truthful or not, which can be decided only after trial and after the evidence is recorded and it cannot be prejudged without taking evidence. It is well settled law that defects in investigation, if any cannot go to the benefit of accused unless prejudice is shown similarly the Investigating Officer SI Ranbir Singh was himself a witness of everything and himself investigated the case is also not a fatal lacuna and benefit of the same can be asked by the accused only if serious prejudice is shown. Those questions can be gone into after the evidence is recorded and not prior to it. The arguments which are raised above might prove to be good arguments at the stage of cross examination of witnesses or at the stage of final arguments. But at the stage of charge when only prima facie case is to be seen, none of these arguments help the case of accused Surender Wadhwa at all.

25. On behalf of accused Surender Wadhwa second limb of argument raised is that, he was not in charge of and responsible for the conduct of business of the company, he was not even present in the factory; vide resolution dated 09.2.2002, it was accused Devesh Kumar Rathore, who was managing the affairs of the company and, therefore, this accused Surrender Wadhwa cannot be charged as there is no evidence whatsoever with the prosecution to show that this accused Surender Wadhwa was in charge of and responsible for the conduct of the business of the company. It is also argued that without charging the company and without making the company as an accused, charges against accused Surender Wadhwa cannot be framed. It is also argued that perusal of chargesheet would reveal that he has been charge sheeted merely because he applied for Superdari and in order to hold this accused vicariously liable, his liability as on the date of offence is to be seen and not his subsequent conduct. Ld. Counsel for accused Surender Wadhwa relied upon various cases.

26. Hon'ble Supreme Court in a catena of judgment has held that a Managing Director of a company is deemed to be incharge of and responsible for the conduct of the business of the company. In the case of SMS Pharmaceuticals ORDER ON CHARGE/STATE VS. JITENDER GULATI ORS./ FIR NO.243/02/PS MAYAPURI/U.S.63 of Copyright Act, 1957/01.7.2009/ Page 11 of 23 k Vs. Neeta Bhalla & another (2005) 8 SCC 89, a three Judge Bench of Hon'ble Supreme Court has held that a Managing Director or a Joint Managing Director would be admittedly incharge of and responsible to the company for the conduct of its business. It was held that holders of such position in a company make them liable by virtue of the office they hold as Managing Director or Joint Managing Director. To the same effect is the decision in various other cases of Hon'ble Supreme Court and this issue is no longer res Integra.

27. Section 69 of the Copyright Act, 1957, specifically provides that those directors who are in charge of and responsible for the conduct of business of the company would be deemed to be guilty and liable. The question in this case regarding accused Surender Wadhwa is, whether he was in charge of and responsible for the conduct of business of the company? In case material prima facie suggest that accused Surender Wadhwa was a Managing Director, as claimed by the prosecution, there would be a presumption that he was in charge of and responsible for the business of company and he would be vicariously liable since every Managing Director is presumed to be in charge of and responsible for the conduct of the business of the company.

28. All that is mentioned in the chargesheet against accused Surender Wadhwa is that accused Surender Wadhwa is charge sheeted and is placed in column no. 4 because he obtained the articles on Superdari after the raid. I am afraid this stand of prosecution is absolutely misconceived. In order to impose a vicarious liability, the investigating agency was supposed to bring some material on record other than obtaining the goods on superdari, which shows that accused Surender Wadhwa was in charge of and responsible for the business of the company on the day when the offence is committed and prosecution cannot rely on the circumstance after of the commission of the offence that the accused was in charge of and so responsible. It may also be mentioned here that the vicarious liability does not get invoked merely because a person is in charge of the business of the company rather in order to fasten vicarious liability u/s. 69 of the Copyright Act, 1957, the person must be shown to be both in charge of as well as responsible for the conduct of business of the company.

29. Hon'ble Supreme Court in the case of Everest Advertising Pvt. Ltd. Vs. ORDER ON CHARGE/STATE VS. JITENDER GULATI ORS./ FIR NO.243/02/PS MAYAPURI/U.S.63 of Copyright Act, 1957/01.7.2009/ Page 12 of 23 k State AIR 2007 SC 1650 has specifically observed that the liability of a director must be determined on the date of offence and also it was held that before legal fiction of fastening vicarious liability is invoked/raised, the ingredients thereof must be satisfied. It is also mentioned that a Chairman of a company may not be aware of the transaction. Merely on the basis that accused Surender obtained goods on Superdari, the accused cannot be fastened with vicarious liability.

30. However, Section 69 of the Copyright Act, 1957, and as mentioned above, provides, that where any offence is committed by a company under this Act, every person who at the time the offence was committed was incharge 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 such offence. The proviso clause of subsection (1) of section 69 provides that if a person proves that the offence was committed without his knowledge or that he exercised all due diligence to prevent the commission of such offence, he shall not be liable.

30. The question whether the offence was committed without knowledge of accused Surender Wadhwa or that he exercised all due diligence to prevent the commission of offence, would arise only after evidence is taken, since ,such fact will have to be proved in evidence. This issue cannot be prejudged without taking evidence. The very word used in the proviso is that if such person proves (emphasis supplied). The word proving means proving in evidence. Therefore, accused Surender Wadhwa cannot claim that the offences were committed without his knowledge or that he exercised due diligence to prevent the commission of such offences.

31. Not only this, subsection (2) of section 69 is wider in definition and it reads, that notwithstanding anything contained in subsection (1), where an offence under this Act has been committed by a company, and it is proved that the offence was committed with the consent or connivance of, or is attributable to any negligence on the part of, any Director, Manager, Secretary or other officer of the company, such person shall also be deemed to be guilty of that offence.

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32. In the case of U.P. Pollution Control Board v. M/s. Modi Distillery, (SC) 1988 A.I.R. (SC) 1128 : 1988 Cri.L.J. 1112, section 47 of the Prevention of Food Adulteration Act, 1954 which is akin to section 69 of Copyright Act came up for consideration and supreme court held in para 5 as follows;

"On a plain reading of sub-s. (1) of S. 47 of the Act, where an offence has been committed by a company, every person who at the time of the commission of the offence was 'in charge of and 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. Proviso to sub-s. (1) however engrafts an exception in the case of any such person if he were to prove that the offence was committed without his knowledge or that he exercised all due diligence to prevent the commission of such offence. It would be noticed that sub-s. (1) of S. 47 is much wider than sub-s. (4) of S. 17 of the Prevention of Food Adulteration Act, 1954 which fell for consideration in I. K. Nangia's case. Furthermore, proviso to sub-s. (1) shifts the burden on the delinquent officer or servant of the company responsible for the commission of the offence. The burden is on him to prove that he did not know of the offence or connived in it or that he had exercised all due diligence to prevent the commission of such offence. The non obstante clause in sub-s. (2) expressly provides that notwithstanding anything contained in subs. (1), where an offence under the Act has been committed by a company and it is proved that the offence has been committed with the consent or connivance of, or, is attributable to any neglect on the part of, any director, manager, secretary or other officer of the company, such director, manager, secretary or other officer shall also be deemed to be guilty of that offence, and shall be liable to be proceeded against and punished accordingly. "

33. In the present case, it is the case of prosecution that accused Surender Wadhwa was a Managing Director, and even though the minutes dated 09.2.2002 is true, but still accused Surender Wadhwa was managing the affairs ORDER ON CHARGE/STATE VS. JITENDER GULATI ORS./ FIR NO.243/02/PS MAYAPURI/U.S.63 of Copyright Act, 1957/01.7.2009/ Page 14 of 23 k of the company. Whether or not accused Surender Wadhwa was managing the affairs after 09.2.2002, but one thing is clear that even after 09.2.2002, the accused Surender Wadhwa was taking part in the affairs of the company. Some of the communications by the third party which are on record show that accused Surender Wadhwa was actively taking part in the affairs of the company. There is one letter dated 31.8.2002 by M/s. AEC Info race which is addressed to this accused Surender Wadhwa as Managing Director. There is another letter dated 08.10.2002 by M/s. Spinks India wherein the name of accused figures. Similarly, there is one letter dated 07.9.2002 by Venus Records & Tapes. There is another letter dated 01.7.2002 to the accused Mr. Wadhwa from Lucky Star Entertainment which goes to say that further to discussion between the accused Surender Wadhwa and the sender of the letter, order was being placed. Besides this, there is statement of the witnesses u/s.161 Cr.P.C. namely Mohinder Singh and Prabhat Kumar, employees of the company who has specifically stated that accused Surender Wadhwa was involved in procuring orders. All these primafacie suggest that accused Surender Wadhwa was managing the affairs of the company despite the minutes dated 09.2.2002. At least it shows gross negligence by accused Surender Wadhwa and consent and connivance of this accused due to which the offence was committed by the company M/s. Sidharth Optical Disc. Primafacie, therefore, the case of accused Surender Wadhwa is covered u/s.69 (2) of the Copyright Act, 1957, and, therefore, accused Surender Wadhwa is liable to be charged for the offences committed by the company M/s. Sidharth Optical Disc.

31. Ld. Counsel for the accused Surender Wadhwa relied upon the case of N.K. Wahi Vs. Shekhar Singh and others, 2007 (4) SCALE (page 188) to show that only such person would be liable who at the time when the offence was committed was in charge of and responsible to the company for the conduct of the business of the company. Merely being a director of the company in absence of any evidence or allegation that he was in charge of and so responsible, a director would not be liable. It was also held that to launch a prosecution, therefore, against the alleged directors, there must be specific allegation in the complaint as to the part played by them in the transaction and that there should ORDER ON CHARGE/STATE VS. JITENDER GULATI ORS./ FIR NO.243/02/PS MAYAPURI/U.S.63 of Copyright Act, 1957/01.7.2009/ Page 15 of 23 k be clear and unambiguous allegation as to how the directors are in charge of and responsible for the conduct of the business of the company. It is also mentioned that description should be clear and although it is not necessary to use precise words from the provisions of the Act but still in absence of any such evidence or specific evidence, such complaint would not be maintainable. To the same effect is the decision in the case of K. Srikant Singh Vs. M/s. North East Securities Ltd., 2007(9) SCALE (page 371). He has also placed reliance upon the case of Vidyawati Lakhotia Vs. Local Health Authority, 2001(60) DRJ 242, from Delhi High Court, wherein it was held that when the petitioner in that case was not shown to be anywhere responsible for the conduct of the business of the firm, the petitioner could not be held responsible. Reliance is also placed upon the case of State of Madras Vs. C.V. Parekh, AIR 1971 SC 447, wherein it was held that when an offence is committed by a clerk of company and there was no evidence from which it could be inferred that Manager of Director had any knowledge of the offence, mere circumstances that they were in de-facto management of affairs of company and were aware of arrival of goods which were subsequently sold by the clerk could only create suspicion but not proof against them and the Manager and the Director cannot be convicted.

32. The judgments relied upon by the accused as above does not help the case of accused Surender wadhwa as they are distinguishable on facts as discussed above and that the case of accused is covered u/s 69(2) of the Act.

33. Ld. counsel for accused Surender Wadhwa also relied upon the case of N.L. Lakhotia & Ors. vs. State 36(1988) DLT 175, to argue that if the company is not prosecuted or punished, the Directors cannot be prosecuted. That case was for offence u/s.53 of the MRTP Act.

34. In Anil Hada v. Indian Acrylic Ltd., (SC) 2000(1) R.C.R.(Criminal) 1 : 2000 A.I.R. (SC) 145 : 2000 Cri.L.J. 373 similar question arose for consideration. That, when a company, which committed the offence under Section 138 of the Negotiable Instruments Act (hereinafter referred to as `the Act') eludes from being prosecuted thereof, can the Directors of that company be prosecuted for that offence ? Hon'ble supreme court after discussing sec 141 ORDER ON CHARGE/STATE VS. JITENDER GULATI ORS./ FIR NO.243/02/PS MAYAPURI/U.S.63 of Copyright Act, 1957/01.7.2009/ Page 16 of 23 k of N.I. Act which is akin to sec 69 of Copyright Act held as follows;

" 9. Three categories of persons can be discerned from the said provision who are brought within the purview of the penal liability through the legal fiction envisaged in the Section. They are: (1) The company which committed the offence, (2) Everyone who was in charge of and was responsible for the business of the company, (3) any other person who is a director or a manager or a secretary or officer of the company, with whose connivance or due to whose neglect the company has committed the offence. "

"12. If the offence was committed by a company it can be punished only if the company is prosecuted. But instead of prosecuting the company if a payee opts to prosecute only the persons falling within the second or third category the payee can succeed in the case only if he succeeds in showing that the offence was actually committed by the company. In such a prosecution the accused can show that the company has not committed the offence, though such company is not made an accused, and hence the prosecuted accused is not liable to be punished. The provisions do not contain a condition that prosecution of the company is sine qua non for prosecution of the other persons who fall within the second and the third categories mentioned above. No doubt a finding that the offence was committed by the company is sine qua non for convicting those other persons. But if a company is not prosecuted due to any legal snag or otherwise, the other prosecuted persons cannot, on that score alone, escape from the penal liability created through the legal fiction envisaged in Section 141 of the Act. "

"20. We, therefore, hold that even if the prosecution proceedings against the company were not taken or could not be continued, it is no bar for proceeding against the other persons falling within the purview of sub-sections (1) and (2) of Section 141 of the Act. In the light of the aforesaid view we do not consider it necessary to deal with the remaining question whether winding up order of a company would render the company non-existent. "

3. In U.P. Pollution Control Board v. M/s. Modi Distillery and others, ORDER ON CHARGE/STATE VS. JITENDER GULATI ORS./ FIR NO.243/02/PS MAYAPURI/U.S.63 of Copyright Act, 1957/01.7.2009/ Page 17 of 23 k AIR 1988 SC 1128 a prosecution was moved against members of the Board of Directors of M/s. Modi Distillery under Section 44 of the Water (Prevention and Control of Pollution) Act, 1974. Section 47 of that Act is identical to Section 141 of the N.I. Act. M/s. Modi Distillery was not arraigned as an accused in that case and hence the High Court quashed the proceedings as against the others. Supreme Court set aside the judgment of the High Court on the premise that even if there was any such technical flaw it was a curable flaw and directed the trial court to implead the company also as an accused.

4. So far as the contention of the counsel for accused Surender Wadhwa that unless the company was made an accused, the accused Surender Wadhwa cannot be charged its concerned, no doubt that company has not been chargesheeted in this case till date. But law nowhere restricts the powers of this Court to summon the company at this stage. It is settled that even at this stage, this Court can summon an additional accused if it appears to be involved in the present case.

5. In S. W. I. L. limited vs. State of Delhi (2001) 6 SCC 670= JT (2001) 6 SC 405 it was held that there is no bar under section 190 Cr. P. C. that once the process is issued against some accused, on the next date, the Magistrate cannot issue process to some other persons against whom there is some material on record, even though his name was not included as accused in the chargesheet.

35. In the present case, the company M/s. Sidharth Optical Disc committed offences u/s.63,68A and 65 of Copyright Act, 1957 and also u/s.292 of IPC. The said company needs to be proceeded against for those offences.

36. The question as to whether a company can be proceeded against when a mandatory imprisonment is prescribed in law came up for consideration before a Constitution Bench of Supreme Court in Standard Chartered Bank and Others v. Directorate of Enforcement and Others, 2006(2) RCR(Criminal) 85 : 2006(1) Apex Criminal 451 : [(2005)4 SCC 530] ORDER ON CHARGE/STATE VS. JITENDER GULATI ORS./ FIR NO.243/02/PS MAYAPURI/U.S.63 of Copyright Act, 1957/01.7.2009/ Page 18 of 23 k wherein Supreme Court upon considering a large number of decisions as also the principle "lex non cogit ad impossibilia" opined :

"30. As the company cannot be sentenced to imprisonment, the court has to resort to punishment of imposition of fine which is also a prescribed punishment. As per the scheme of various enactments and also the Indian Penal Code, mandatory custodial sentence is prescribed for graver offences. If the appellants' plea is accepted, no company or corporate bodies could be prosecuted for the graver offences whereas they could be prosecuted for minor offences as the sentence prescribed therein is custodial sentence or fine. We do not think that the intention of the legislature is to give complete immunity from prosecution to the corporate bodies for these grave offences. The offences mentioned under Section 56(1) of the FERA Act, 1973, namely, those under Section 13; clause (a) of sub-section (1) of Section 18; Section 18-A; clause (a) of sub-section (1) of Section 19; sub-section (2) of Section 44, for which the minimum sentence of six months' imprisonment is prescribed, are serious offences and if committed would have serious financial consequences affecting the economy of the country. All those offences could be committed by company or corporate bodies. We do not think that the legislative intent is not to prosecute the companies for these serious offences, if these offences involve the amount or value of more than Rs. one lakh, and that they could be prosecuted only when the offences involve an amount or value less than Rs. one lakh. (Emphasis supplied) As the company cannot be sentenced to imprisonment, the court cannot impose that punishment, but when imprisonment and fine is the prescribed punishment the court can impose the punishment of fine which could be enforced against the company . Such a discretion is to be read into the section so far as the juristic person is concerned. Of course, the court cannot exercise the same discretion as regards a natural person. Then the court would not be passing the sentence in accordance with law. As regards company , the court can always impose a sentence of fine and the sentence of imprisonment can be ignored as it is impossible to be carried out in respect of a company . This appears to be the intention of the legislature and we find no difficulty in ORDER ON CHARGE/STATE VS. JITENDER GULATI ORS./ FIR NO.243/02/PS MAYAPURI/U.S.63 of Copyright Act, 1957/01.7.2009/ Page 19 of 23 k construing the statute in such a way. We do not think that there is a blanket immunity for any company from any prosecution for serious offences merely because the prosecution would ultimately entail a sentence of mandatory imprisonment. The corporate bodies, such as a firm or company undertake a series of activities that affect the life, liberty and property of the citizens. Large- scale financial irregularities are done by various corporations. The corporate vehicle now occupies such a large portion of the industrial, commercial and sociological sectors that amenability of the corporation to a criminal law is essential to have a peaceful society with stable economy."

37. Ld. counsel for the accused also placed reliance upon the case of Maqsood Syed Vs. State of Gujarat and Others, 2007 (11) SCALE (Page 318) wherein it was held that there is no provision for attaching vicarious liability on the part of the Managing Director or the directors of the company when the accused is the company unless there is specific provision in the statute existing in that behalf. On the basis of this judgment, it is argued that for the offence u/s. 292 IPC there cannot be any vicarious liability. Reliance is also placed upon the case of S.K. Alagh Vs. State of UP, AIR 2008 SC 1731, wherein also it was held that in absence of any provision laid down under statute, a Director of a company or an employee cannot be held to be vicariously liable.

38. No doubt in the Indian Penal Code there is no provision for vicarious liability therefore accused Surender Wadhwa cannot be charged for the offence u/s 292 of IPC.

39. Reliance is lastly placed upon the case of State Vs. Md. Iqbal Gazi, 154 (2008) DLT 481, to support the argument that without registering FIR, when the complaint disclosed cognizable offences, seizure was illegal. The said judgment does not anywhere lays down such a law. All that it says is, that where information is given to Officer Incharge of a PS which discloses cognizable offence, the officer in charge is bound to reduce information in writing in book prescribed in this behalf u/s.154 of Cr.P.C..

34. Accordingly, it is ordered that against accused Surender Wadhwa charges u/s.63,68A and 65 of the Copyright Act, 1957, be framed and ORDER ON CHARGE/STATE VS. JITENDER GULATI ORS./ FIR NO.243/02/PS MAYAPURI/U.S.63 of Copyright Act, 1957/01.7.2009/ Page 20 of 23 k the company M/s. Sidharth Optical Disc be summoned as an accused.

35. Coming to the question of charge against fourth accused Jitender Gulati, as mentioned above, the prosecution case against him is only regarding duplicating the CDs/VCDs of two movies namely 'Phool Aur Pathar' and 'Ek Phool Do Maali'. The case of prosecution against him is that the accused Jitender Gulati asked the accused M/s. Sidharth Optical Disc to reproduce/replicate the CDs of these movies whereas accused Jitender Gulati had no such assignment of copyright or licence of copyright from the producers of movie or the copyright holders of the movie. The prosecution also chargesheeted accused Jitender Gulati for the offences u/s.468 & 471 of IPC.

36. Section 468 of IPC provides punishment, where a document is forged for the purposes of cheating.

37. Section 471 of IPC provides punishment for using a forged document by a person knowing or having reasons to believe it to be forged.

38. In the present case, the prosecution was specifically question as to which is the document which is claimed to be forged by the accused. Prosecution claims that accused Jitender Gulati as proprietor of M/s. Shanti Enterprises wrote a letter to M/s. Sidharth Optical Disc Pvt. Ltd., which is dated 16.10.2002 under his signatures and vide this letter the accused company was supplied stampers/masters for replication and it was vide this letter that the stampers/masters of movie 'Phool Aur Pathar' and 'Ek Phool Do Mali' was supplied to accused company. Ld. APP for the State argued that in this letter the accused Jitender Gulati claimed that he has copyright of the said movies and, therefore, this letter is forged. The signatures of accused Jitender Gulati is confirmed by the handwriting expert, but I am afraid that these allegations does not bring the document within the definition of forgery as defined in section 464 of IPC.

39. Section 464 of IPC so far as relevant for our purposes, provides that a person is said to make a false document, if he dishonestly or fraudulently makes, sign, seals or execute a document or part of a document; or makes any mark denoting the execution of a document, with the intention of causing it to be ORDER ON CHARGE/STATE VS. JITENDER GULATI ORS./ FIR NO.243/02/PS MAYAPURI/U.S.63 of Copyright Act, 1957/01.7.2009/ Page 21 of 23 k believed that such document or part of document was signed, made, sealed, executed or affixed by or by the authority of a person by whom or by whose authority he knows that it was not so made, signed, sealed or executed. In the present case at the most it can be said that the accused Jitender Gulati made a false claim in the letter dated 16.10.2002, but merely making a false claim by itself does not bring the document within the document of making a false document as defined in section 464 of IPC. Once forgery is not there, there is no question of using a forged document, therefore, charges u/s.468 & 471 of IPC are not made out against accused Jitender Gulati.

40. Ld. counsel Sh. Suman Kapoor for accused Jitender Gulati argued that charges under Copyright Act cannot be framed against accused since he is not connected with the company, he was not present at the spot at the time of recovery, nothing was recovered from his possession. Ld. Counsel for the accused Jitender Gulati during arguments relied upon documents dated 16.7.1998 executed between Ralan Productions and Kay Kay Vision vide which copyright of movie 'Phool Aur Pathar' is claimed to be assigned to M/s. Kay Kay Vision. He also relied upon one document executed by M/s. Kay Kay Vision in favour of M/s. Wide Angel Media Ltd., assigning the copyright further and one letter by M/s. Wide Angel Media Ltd., in favour of M/s. Shanti Enterprises. Similarly, regarding movie 'Ek Phool Do Maali' he relied on a document executed by Goel Cine Corporation in favour of M/s. Jordan Electronics and on letter by Jordan Electronics in favour of M/s. Shanti Enterprises. He also relied upon one document dated 20.11.2002 to show that stampers of these two movies were given to the accused company only for testing purposes. On the basis of these documents, he argued that the IO of this case without verifying these documents to be genuine or not chargesheeted the accused.

41. The IO of this case was questioned about these documents, and the IO specifically stated that these documents were not supplied by the accused to the investigating agency during investigation nor its original were ever produced and these documents are not at all relied upon by the prosecution.

42. Hon'ble Supreme Court in the case of State of Orissa Vs. Devender Nath Padhi, AIR 2005 SC 359 has specifically held that at the stage of charge, the ORDER ON CHARGE/STATE VS. JITENDER GULATI ORS./ FIR NO.243/02/PS MAYAPURI/U.S.63 of Copyright Act, 1957/01.7.2009/ Page 22 of 23 k documents relied upon by the prosecution only can be looked into and the documents relied upon by an accused in his defence cannot be considered. In such circumstances, these documents have no bearing on the question of decision on charge and cannot be looked into by this Court. Even otherwise, the accused did not furnish the original of these documents and claimed on 06.6.2009 in the Court that originals were given to accused company and the accused was unaware about the status of these original documents.

43. The question which arises is what offence is made out against accused Jitender Gulati?

44. Section 51 of the Copyright Act, 1957 defines infringement and section 63 of the Copyright Act, 1957 provides that any person who knowingly infringes or abets the infringement of the copyright in a work shall be punishable.

45. In the present case, when the accused Jitender Gulati supplied stampers of these two movies namely 'Phool Aur Pathar' and 'Ek Phool Do Maali' without having any copyright in his favour, he abetted the reproduction of the CDs of these two movies by the accused company.

46. Section 13 of the Copyright Act, 1957 provides that copyright subsists in a cinematograph film. Section 14 of the Copyright Act, 1957 provides that in case of a cinematograph film, the right to make the copy of a film, including a photograph of any image, vest exclusively with the copyright holder.

47. Accordingly, primafacie there are sufficient material to frame charges u/s.63 of the Copyright Act, 1957 against accused Jitender Gulati.

48. Charges against all the four accused be framed accordingly, as above.

49. Since M/s. Sidharth Optical has been summoned today as an additional accused, therefore, formal charges be framed against all the accused together with the accused company.

st ANNOUNCED IN OPEN COURT ON 1 July, 2009.

DIGVINAY SINGH ADDITIONAL CHIEF METROPOLITAN MAGISTRATE­03 IPR, ROHINI, DELHI ORDER ON CHARGE/STATE VS. JITENDER GULATI ORS./ FIR NO.243/02/PS MAYAPURI/U.S.63 of Copyright Act, 1957/01.7.2009/ Page 23 of 23 k