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R/CR.MA/4284/2008 JUDGMENT
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/CRIMINAL MISC.APPLICATION NO. 4284 of 2008
With
R/CRIMINAL MISC.APPLICATION NO. 4285 of 2008
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR.JUSTICE A.Y. KOGJE
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1 Whether Reporters of Local Papers may be allowed to
see the judgment ?
2 To be referred to the Reporter or not ?
3 Whether their Lordships wish to see the fair copy of the
judgment ?
4 Whether this case involves a substantial question of law
as to the interpretation of the Constitution of India or any
order made thereunder ?
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ARUN P. PATEL DIRECTOR
Versus
STATE OF GUJARAT
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Appearance:
MR DEVEN PARIKH, SENIOR ADVOCATE with MR CHETAN K
PANDYA(1973) for the PETITIONER(s) No. 1
MR PRAVIN P PANCHAL(2059) for the PETITIONER(s) No. 2
MR. YOGENDRA THAKORE(3975) for the PETITIONER(s) No. 2
MR SUNIL L MEHTA(2910) for the RESPONDENT(s) No. 2
MR VAIBHAV A VYAS(2896) for the RESPONDENT(s) No. 2
None for the RESPONDENT(s) No. 1-State
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CORAM: HONOURABLE MR.JUSTICE A.Y. KOGJE
Date : 27/07/2018
ORAL JUDGMENT
1. These applications arise from the same complaint being Water Pollution Criminal Case 92/1992, filed by the respondent no.2-Gujrarat Pollution Control Board (hereinafter to be referred to Page 1 of 17 R/CR.MA/4284/2008 JUDGMENT as "GPCB) against accused no.1 Company, its Directors and other personnel. With the consent of the parties, both these applications are taken up for hearing jointly.
2. The facts being common and the applications being preferred by a Chairman and 2 Directors of the company, the facts are taken from CR.M.A. 4284/2008.
3. This application is filed by the 2 Directors of the accused no.1 company, whereas the other application being CR.M.A. 4285/2008 is filed by the Chairman of the accused no.1 company. Both these applications are filed under Section 482 for quashing of Water Pollution Criminal Case no.92 of 1992 pending with the Additional Chief Judicial Magistrate at Gandevi.
4. While admitting these applications, interim relief was granted and now it is reported that the proceedings are stayed as on date in connections with this Criminal Case.
5. The facts in brief are that Criminal Case came to be registered against company and its office bearers on 26.02.1992, wherein on the same day the Magistrate has issued summons upon the accused persons. It appears that an application came to be moved on behalf of accused no.1, 2, 3, 5 and 6 for discharging the applicants therein, which came to be rejected by a reasoned order dated 25.01.2008 and the Magistrate Court proceeded to frame charge against the accused persons. It is at this stage that the Page 2 of 17 R/CR.MA/4284/2008 JUDGMENT present applications are filed for quashing of the Criminal Case.
6. Learned Senior Advocate Mr.Parikh appearing with Mr. Pandya took this Court through the allegations made in the Criminal Case and submitted that in the entire complaint, though only mention of the applicant is in paragraph 3, wherein, it appears that only cause is applicants were Chairman and Directors of the company, they are arraigned as accused. It is submitted that nowhere in the complaint any specific allegation is made so as to consider the applicants to be responsible for day-to-day functioning of the company or thereby any role is played by applicants in commission of the offence.
6.1 It is submitted that previously, against very company, complaints of similar nature have been filed and in those complaints also the applicants were faced with the same allegations however, ultimately all the applications have been discharged from the said complaints. It is therefore submitted that even in the present case the applications ought to have been discharged in any case since the present application is for quashing and that no role is pointed out against applicants the Criminal Case qua the applicants being quashed.
6.2 It is submitted that not only the contents of the complaint but even the evidence recorded at the pre-charge stage do not disclose any role of any of the applicants.
Page 3 of 17
R/CR.MA/4284/2008 JUDGMENT 6.3 Learned Senior Advocate referred to the provisions of Water Act more particularly Section 47 and submitted that so as to attract the provisions of Section 47, firstly there has to be a specific allegation that the applicants were responsible for the conduct and the business of the company and thereafter it was also necessary to allege that the offence which is alleged to have been committed by the company was with the consent or connivance of the applicants. It is submitted that Section 47(2) specifically mentions consent or connivance or any neglect on the part of any Director, Manager, Secretary or other Officers of the company such as Director, Manager, Secretary or other Officers would be deemed to be guilty of that offence but Sub Section 2 does not specify a Chairman or a professional Director to be held vicariously responsible. It is argued that there appears to specific purpose for not including Chairman or Professional Directors in this Section as if the provisions of the Company's Act are referred to within its own under Section 267 of the Company's Act that provides for appointment of Managing Director and whole time Director, it also specifies about their remuneration and therefore, automatic burden of responsibility of the functioning of the company for which such persons are appointed as Managing Director of whole time Director. It is submitted that there is no specific provisions under the Company's Act with regards to the Chairman.
6.4 He thereafter drew attention of this Court to the proceeding Page 4 of 17 R/CR.MA/4284/2008 JUDGMENT in connection with the previous complaints of the similar nature and submitted that whether this very company and its Directors were arraigned as an accused for the same kind of allegation. Some of the Directors had filed applications before this Court for quashing and the applications in connection with these Directors has been allowed thereby quashing the proceedings against them. He specifically draws attention of this Court to the observations made in CR.M.A. 1678/1990, which was filed by one of the Professional Directors of this company and submitted that even before filing of the complaint it was necessary for the board to gather certain basic information in connection with the involvement of any person with the day-to-day affairs of the company before impleading such person as an accused. 6.5 Learned senior advocate thereafter referred to judgment of the Apex Court in the case of Sunil Bharti Mittal Vs. Central Bureau of Investigation, reported in (2015) 4 SCC, 609, to contend that that when individual is alleged to have committed an offence along with the company, there has to be sufficient evidence of his active role along with criminal intent. It is submitted that in the instant case, there is no specific allegation of any role having been played by any of the applicants in committing of the offence. He thereafter relied upon the judgment of the Apex Court in the case of Gunmala Sales Private Limited Vs. Anu Mehta & Ors ., reported in (2015) 1 SCC, 103, to contend that even in the case of Page 5 of 17 R/CR.MA/4284/2008 JUDGMENT attracting vicarious liability of the Director, the basic requirement is to make specific averment in the complaint that the accused person, in his capacity as a Director, was in-charge and responsible for company for the conduct of his absence.
6.6 Learned Senior Advocate lastly submitted that in any case of the matter, it is only the Chairman and the Professional Directors who are before the Court and all the three of them are now senior citizens, eighty years of age and therefore, no useful purpose will be served in prosecuting them when the company and the other Directors who are responsible for managing the affairs of the company which is already before the Court of the Magistrate. It is further submitted that considering the nature of allegations being pollution in environment, the applicants would volunteer to make any financial contribution.
7. As against this, learned advocate Mr. Vaibhav Vyas appearing for the GPCB strongly opposed the applicants and contended that from the allegations made in the complaint there is no doubt that the company was indulging in an activity which was causing water pollution and therefore, polluting not only the river but also the earth and the aquatic life.
7.1 It is submitted that the paragraph 3 of the complaint is very specific and that it is specifically alleged that the accused no.2 (an applicant herein) is the Chairman and others are the Directors and Page 6 of 17 R/CR.MA/4284/2008 JUDGMENT all of them are responsible for the conduct of the business and administration. He thereafter submitted that in each of the paragraphs of the complaint allegations are made that all the accused are jointly responsible for the offence. 7.2 He specifically drew attention of this Court to paragraph 3, 7, 12 and 13 and submitted that the applicants are also responsible for causing pollution.
7.3 It is vehemently submitted that there is strong case against applicants more particularly when the company and the present applicants were also arraigned as an accused in Criminal Case of same nature filed by GPCB in previous years for discharge of effluents. It is submitted that allegations are made in the complaint that though the company was granted consent to operate however, such consent was an conditional one and it was the responsibility of all the concerned including the applicants that no breach of such condition is committed. The fact that despite it being brought to the knowledge of the accused persons still the accused persons including applicants continue to cause pollution by discharging the affluent in breach of the condition and therefore, the case of the applicants is clearly covered under Section 47(2) as the consent/ connivance of the applicants as is required to be presumed in view of their continuing to commit the offence of the same nature.
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R/CR.MA/4284/2008 JUDGMENT 7.4 In respect to the contention of the applications that in previous occasion when the Criminal Case against applicants were filed of same nature and the Court has discharged them by reasoned orders, learned advocate for the GPCB submits that such discharge was on a technical ground and that there is a vital difference in the allegations made in the complaints where the applicants are discharged as against allegations made in the present complaint.
7.5 Learned advocate for the GPCB has heavily relied upon the judgment of the Apex Court in case of U.P. Pollution Control Board V/s Dr.Bhupendra Kumar Modi & Anr., reported in (2009) 2 SCC 147. He drew attention of this Court to paragraphs 6, 7 and 21 of the judgment and to content that there is no need to give minute details of the role played by the accused persons in the complaint and even if prima facie allegations are made that would be sufficient to take the case out of the purview quashing. 7.6 It is lastly submitted that while rejecting the discharged applications cogent reasons were given by the Magistrate and therefore no interference is called for. It is further submitted that previously also the applications of CR.M.A. 4284/2008 had filed the 2751/1992 against this very complaint and was withdrawn and therefore this Court may not entertain the application.
8. Heard learned advocate for the respective parties and Page 8 of 17 R/CR.MA/4284/2008 JUDGMENT perused the documents on record.
9. The Criminal Case is filed for an offence under Sections 24, 25, 33(2), 41(2), 43, 44 and 47 of Water (Prevention & Control of Pollution) Act, 1974.
10. The perusal of the complaint would reveal that the complaint is filed under the sanction of the Chairman of the GPCB alleging that the accused company was discharging polluted water in huge quantity by an underground drainage line three kilometers long into the Kopoli Khadi leading to Ambika river. Referring to various provisions of the Water Act it is alleged that industry is prohibited from discharging of polluted water, not only that the accused company which was granted consent under Section 25/26 of the Water Act was obliged to apply with the condition of such consent order but the accused company is not complying with such conditions and is discharging the polluted water as mentioned above. It is also alleged that on previous occasion for the same reason Criminal Case no. 58 of 1988 was filed under Section 33 of the Water Act, thereafter Criminal Case 162 of 1988 and 712 of 1989 were also filed against the accused company and its office bearers including the applicants. It is also alleged that when the inspection was carried out on 03.07.1991 and samples of effluents were collected and cent to the laboratory for its analysis. The laboratory had reported that the discharge of effluents is in breach of the condition mentioned in the consent order. Page 9 of 17
R/CR.MA/4284/2008 JUDGMENT
11. The Court has perused the relevant paragraphs, particularly paragraph 3 wherein it is alleged that the accused no.1 is the company, accused no.2 is the Chairman, accused no.3 Managing Director (Shri Madhusudan D. Patel, reportedly expired) and accused no.4 to 11 be Directors and accused no.12 to be Production Manager, and therefore all these accused were managing and administering the affairs of the company. Thereafter the perusal of the entire complaint would reveal that no other specific allegations are made against the applicant except for the accused no.12, the Production Manager.
12. Thereafter the Court has perused the deposition of the witnesses recorded at the pre-charge stage vide exhibit 211 by the complainant and exhibit 249 by the Senior Environment Scientist of the GPCB. Even in such deposition, no mention is made with regards to the role of any of the applicants. Section 47(2) of the Water Act reads as under:
"(2) Notwithstanding anything contained in sub-section (1), where an offence under this 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."Page 10 of 17
R/CR.MA/4284/2008 JUDGMENT
13. In this regard the reliance of the applicants on the judgment of the Apex Court in the case of Gunmala Sales Private Limited (supra) is appropriate wherein, the Apex Court while examining vicarious liability provisions under the Negotiable Instruments Act has held as under:
"28. We are concerned in this case with Directors who are not signatories to the cheques. So far as Directors are not signatories to the cheques or who are not Managing Directors or Joint Managing Directors are concerned, it is clear from the conclusions drawn in the abovementioned cases that it is necessary to aver in the complaint filed under Section 138 read with Section 141 of NI Act that at the relevant time when the offence was committed, the Directors were in charge of and were responsible for the conduct of the business of the company. This is a basic requirement. There is no deemed liability of such Directors. This averment assumes importance because it is the basic and essential averment which persuades the Magistrate to issue process against the Directors. That is why this Court in SMS Pharma (1) observed that the question of requirement of averments in a complaint has to be considered on the basis of provisions contained in Section 138 and 141 of the NI Act read in the light of the powers of a Magistrate referred to in Sections 200 to 204 of the Code which recognise the Magistrate's discretion to reject the complaint at the threshold if he finds that there is no sufficient ground for proceeding. Thus, if this basic averment is missing the Magistrate is Page 11 of 17 R/CR.MA/4284/2008 JUDGMENT legally justified in not issuing process. But, here we are concerned with the question as to what should be the approach of a High Court when it is dealing with a petition filed under Section 482 of the Code for quashing such a complaint against a Director. If this averment is there, must the High Court dismiss the petition as a rule observing that the trial must go on? Is the High Court precluded from looking into other circumstances, if any? Inherent power under Section 482 of the Code is to be invoked to prevent abuse of process of any court or otherwise to secure ends of justice. Can such fetters be put on the High Court's inherent powers? We do not think so.
14. The Supreme Court in the case of Sunil Bharti Mittal (supra) has held that there has to be a specific charge or specific role attributed to the Director to attract the ingredients of the offence to make out the offence against Director. The Apex Court in this judgment has held as under in paras-42 to 44:
"42. No doubt, a corporate entity is an artificial person which acts through its officers, directors, managing director, chairman etc. If such a company commits an offence involving mens rea , it would normally be the intent and action of that individual who would act on behalf of the company. It would be moreso, when the criminal act is that of conspiracy. However, at the same time, it is the cardinal principle of criminal jurisprudence that there is no vicarious liability unless the statute specifically provides so.
43. Thus, an individual who has perpetrated the Page 12 of 17 R/CR.MA/4284/2008 JUDGMENT commission of an offence on behalf of a company can be made accused, along with the company, if there is sufficient evidence of his active role coupled with criminal intent. Second situation in which he can be implicated is in those cases where the statutory regime itself attracts the doctrine of vicarious liability, by specifically incorporating such a provision.
44. When the company is the offendor, vicarious liability of the Directors cannot be imputed automatically, in the absence of any statutory provision to this effect. One such example is Section 141 of the Negotiable Instruments Act, 1881. In Aneeta Hada, (AIR 2012 SC 2795) (supra), the Court noted that if a group of persons that guide the business of the company have the criminal intent, that would be imputed to the body corporate and it is in this backdrop, Section 141 of the Negotiable Instruments Act has to be understood. Such a position is, therefore, because of statutory intendment making it a deeming fiction. Here also, the principle of "alter ego", was applied only in one direction namely where a group of persons that guide the business had criminal intent, that is to be imputed to the body corporate and not the vice versa . Otherwise, there has to be a specific act attributed to the Director or any other person allegedly in control and management of the company, to the effect that such a person was responsible for the acts committed by or on behalf of the company."
15. Considering the aforementioned provision, this Court is of the view that in order to attract Section 47(2), it would be necessary that in a compliant, specific allegation of a very specific role Page 13 of 17 R/CR.MA/4284/2008 JUDGMENT attributed to the applicants would be necessary. In fact, from the deposition of the witnesses, it is coming on record that the applicants were not even residing or available at the premises on day-to-day basis and they were residing in Ahmedabad, far away from place Gandevi. Therefore to presume consent or connivance to attract Section 47(2) as argued by the advocate for GPCB, cannot be accepted. It is a well known principle of law that vicarious liability is foreign to criminal law.
16. The Court also finds that in the complaint, reference is made to previous application being CR.M.A. No. 58 of 1988 under Section 33 of the Water Act, Criminal Case no. 1662 of 1988 and Criminal Case 712 of 1989. Criminal Case no.1662 of 1988 is on record at Annexure 'E' and the Court finds that the accused is same as in the present Criminal Case. It is found that by reasoned order dated 04.10.2014, the applicants along with the some of the co- accused have been discharged. In the Criminal Case no.58 of 1988, one of the accused who was the Director of the company had filed CR.M.A. 1678 of 1990 for quashing, which came to be allowed by order dated 11.09.1997 by this Court. In this order it would be relevant to mention that the Court observed as under:-
"The petitioner is a practising Advocate and that is what his main vocation is. Incidentally, he might have accepted Directorship, but unless it is shown by making necessary averments in the complaint that, in fact, he is in charge and was responsible to the Company for the Page 14 of 17 R/CR.MA/4284/2008 JUDGMENT conduct of the business of the Company, merely because he was a Director at the relevant time, he cannot be impleaded as an accused.
The complainant could have obtained the necessary information by calling upon the Company to disclose who infact, are the persons that can be impleaded as accused as per the provisions of Section 47 sub-section (1) of the Act and instead of taking this pain and trying to ascertain as to who amongst the Directors and amongst the employees of the Company could be held responsible only because persons like the present petitioner happens to be the Directors if they were to face criminal charges, obviously, this Court will interfere."
17. The Court also finds that in the complaint being Criminal Case no. 712 of 1989, wherein, a Professional Director of this very company had filed CR.M.A.912 of 2000 for quashing and by order dated 17.01.2002, this Court had quashed the Criminal Case no.712 of 2018. From the record, it is appearing that two applicants of CR.M.A. 4284 of 2008 are the Professional Directors engaged in their respective activities at Ahmedabad and would not be held directly responsible for day-to-day functioning of the company and it administration.
18. So far as reliance placed by learned advocate for the GPCB on the judgment in the case of Bhupendrakumar Modi (Supra) is concerned, it is found that the Supreme Court, after examining the specific averments made in the complaint, has ascertained the Page 15 of 17 R/CR.MA/4284/2008 JUDGMENT specific role of the applicant in day-to-day affairs of the decision making process. Moreover, in that case the Supreme Court was examining the case of a Managing Director who was engaged in day-to-day affairs and decision making of the company and had therefore set aside the order of the High Court. In the instant case, as discussed in the proceedings paras, not only in the complaint but also even from the pre-charge stage evidences recorded, specific role of the applicants is not coming out on record. In the opinion of this Court, a mere mention in paragraph 3 that all of the accused person are responsible for running and administering the company, in itself would not be sufficient to construe an offence. Moreover, nothing is on record to suggest that any notice under the provisions of the Water Act was specifically addressed to the Chairman or the Professional Directors, who are the applicants before this Court. With no such notice on record, the argument of the GPCB that the applicants continued to commit the breach of the condition of consent despite issuance of notice as referred in the complaint, itself cannot be accepted nor the argument of the GPCB can be accepted that as there are previous offence registered against the applicants of the very nature in the very capacity, still the present complaint was registered, meaning thereby that there is a consent or connivance on part of the application under Section 47(2) of the Water Act. As recorded earlier, the application have been already discharged in the previous complaints. Moreover, as the complaint is of same nature Page 16 of 17 R/CR.MA/4284/2008 JUDGMENT and against the same company, criminal proceedings against the present applicants are also require to be quashed and set aside.
19. Lastly, considering the age of the applicants being eighty years and the offer made on behalf of the applicants to deposit an amount for a good cause with the complainant Board, this Court is of the view that the prosecution of the applicants may not be continued. It is further directed that the Water Pollution Criminal Case No. 92 of 1992 is quashed and qua the present applicants namely Shri Arun P.Patel, Shri Maitre B. Harivallabhdas and Smt. Devika Natwarlal Patel. However, considering the passage of time that has lapsed, direction is issued to Additional chief Judicial Magistrate, Gandevi to forthwith proceed with Water Pollution Criminal Case No. 92 of 1992 qua the remaining accused. The Chief Judicial Magistrate not to be influenced by the observation made herein.
20. The applicants are directed to deposit jointly an amount of Rs.1,25,000/- with the local office of the GPCB within a period of one month from today. The GPCB is directed to accept such amount and put it to an appropriate use in the interest of the environment.
21. The applications are allowed. Rule is made absolute to the aforesaid extent.
(A.Y. KOGJE, J) URIL Page 17 of 17