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LABHUBEN KESHAVLAL VADALIYAV/SGUJARAT POLLUTION CONTROL BOARD - THRO' ASSISTANT LAW OFFICE R/CR.MA/5773/2012 CAV JUDGEMNT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD CRIMINAL MISC.APPLICATION (FOR QUASHING & SETTING ASIDE FIR/ORDER) NO. 5773 of 2012 FOR APPROVAL AND SIGNATURE: HONOURABLE MR.JUSTICE R.M.CHHAYA ================================================================1
Whether Reporters of Local Papers may be allowed to see the judgment ?
2To be referred to the Reporter or not ?
3Whether their Lordships wish to see the fair copy of the judgment ?
4Whether this case involves a substantial question of law as to the interpretation of the Constitution of India, 1950 or any order made thereunder ?
5Whether it is to be circulated to the civil judge ?
================================================================ LABHUBEN KESHAVLAL VADALIYA & 2....Applicant(s) Versus GUJARAT POLLUTION CONTROL BOARD - THRO' ASSISTANT LAW OFFICE & 1....Respondent(s) ================================================================ Appearance:
MR VIMAL M PATEL, ADVOCATE for the Applicant(s) No. 1 - 3 MR RITURAJ M MEENA, ADVOCATE for the Respondent(s) No. 1 MS MOXA THAKKAR, APP for the Respondent(s) No. 2 RULE SERVED BY DS for the Respondent(s) No. 1 ================================================================ CORAM:
HONOURABLE MR.JUSTICE R.M.CHHAYA Date : 10/05/2013 CAV JUDGEMNT By way of this application under Section 482 of the Code of Criminal Procedure Code, 1973, the petitioners have prayed for quashing and setting aside the impugned complaint filed by respondent No.1-Gujarat Pollution Control Board, which is registered as Criminal Case No.273 of 1991 in the Court of learned Judicial Magistrate First Class, Gondal, Dist:Rajkot, for the alleged offence under Sections 24 and 25 read with Sections 43, 44 and 47 of the Water (Prevention & Control of Pollution) Act, 1974 ( the Act for short). The present petitioners were partners of the Firm namely M/s.Chhaya Dyes and Chemicals .
2. It appears from bare reading of the impugned complaint that the officers of Gujarat Pollution Control Board visited the factory premises of the said Firm on 16.11.1990 and accordingly, inspection report came to be prepared as provided under Section 23 of the Act, wherein it was found that the effluent is being discharged without obtaining any consent and a sample came to be collected as can be culled out from the said inspection report. On basis of the said report, the Competent Authority of respondent No.1-Board got permission to file the present complaint on 08.02.1991 and accordingly, the impugned complaint came to be filed against the Firm being original accused no.1 and others-accused nos.2 to 8 being partners of the said Firm.
3. It is further averred in the impugned complaint, more particularly, Para-10 of the complaint that the sample came to be collected on 16.11.1990 and on basis of which the impugned complaint has been filed.
4. It further appears that the discharge application came to be preferred by the present petitioners being original accused nos.6, 7 and 4 respectively. It was, inter alia, contended in the said application that as far as petitioner nos.1 and 3 are concerned, they have retired from accused No.1-Firm w.e.f 08.04.1987. It was further contended that when the inspection was carried out on 16.11.1990, petitioner nos.1 and 3 were not even partners of the said Firm, and therefore, petitioner nos.1 and 3 cannot be held liable for the alleged offence. Similarly, petitioner no.2 i.e. original accused no.7 filed a discharge application on the ground that petitioner no.2 stays in U.S.A. and is only a sleeping parter and is not involved in day-to-day affairs and management of the said Firm.
5. It further appears from the record that the said applications came to be dismissed by learned Chief Judicial Magistrate, Gondal on 10.02.2012 and came to the conclusion that as once the process is issued, there are no powers of review of an order and opined that remedy lies in invoking Section 482 of the Code.
6. Mr.Vimal Patel, learned counsel for the petitioners contended that petitioner Nos.1 and 3 have retired from the original accused No.1-Firm w.e.f 08.04.1987 and relied upon the copy of the Deed of Dissolution of the partnership Firm dated 08.04.1987. Mr.Patel, further contended that on the date on which, inspection was carried out on basis of which the impugned complaint is filed, petitioner Nos.1 and 3 were not even the partners of the said Firm and therefore, they cannot be saddled with criminal liability and that too vicariously only because of the fact that they are once the partners of the said Firm. He further contended that as far as petitioner No.2 is concerned being original accused No.7, she also stays in U.S.A. and entered as sleeping partner in the said Firm w.e.f 19.10.1987 as can be seen from the Partnership Deed at Annexure-D to the application, and therefore, was not in day-to-day management of original accused No.1-Firm. It was thus submitted that petitioner No.2 cannot be held vicariously liable for the alleged offence under the said Act. Mr.Patel, contended that no prima facie case is made out against any of the petitioners and even if, the complaint is taken at its face value in view of the fact that petitioner Nos.1 and 3 were not partners on the date on which, the inspection was carried out by respondent No.1. Mr.Patel, further submitted that on wrong information about the petitioners, petitioner Nos.1 and 3 are straightway arraigned as accused in the impugned complaint without proper verification. He further submitted that no specific allegations are made in the complaint as to the role played by the petitioners. It was further submitted that it bornes out from bare reading of the impugned complaint that no offence is culled out against the petitioners and therefore, the complaint amounts to harassment to the petitioners and even petitioner No.2 being sleeping partner and was not in day-to-day management of the Firm, no vicarious liability that too criminal liability can be fastened upon petitioner No.2.
Mr.Patel, submitted that impugned complaint qua present petitioners would amount to abuse of process of Court and law and therefore, this Court may exercise its inherent powers to secure the ends of justice and quash the impugned complaint as prayed for. Mr.Patel, learned counsel for the petitioners in order to buttress his arguments has relied upon the judgment of the Hon'ble Apex Court in the case of Anita Malhotra Vs. Apparel Export Promotion Council and Anr., reported in 2012(1)SCC 520 and National Small Industries Corporation Ltd. Vs. Harmeet Singh Paintal & Anr., reported in AIR 2010 SC (Supp) 569 and in the case of Shri Moosa Raza Vs. State of Gujarat & Anr., reported in 2009 (2) GLH 200 passed by this Court.
8. Per contra, Mr.Rituraj Meena, learned counsel for respondent No.1-Board has opposed this application and submitted that, even though, undertaking was filed by all the partners of accused No.1-Firm, the same was violated and even earlier, criminal case was launched against accused No.1-Firm and all its partners being Criminal Case No.628 of 1956 before the Court of learned Judicial Magistrate First Class, Gondal. He further submitted that whether the petitioners were in day-to-day affairs of the management or not, is a matter of trial and submitted that this Court under Section 482 of the Code should not embark upon an inquiry whether the evidence in question is relied or not. Relying upon the judgment of the Hon'ble Apex Court in the case of Uttar Pradesh Pollution Control Board Vs. Bhupendra Kumar Modi, reported in 2009(2) SCC 147 submitted that the impugned complaint cannot be quashed on the grounds, which are set out by the petitioners. Relying upon the affidavit filed before this Court, it was submitted that undertaking was given by the petitioner Firm, wherein petitioner Nos.1 and 3 were signatory and therefore, it is not believable that petitioner Nos.1 and 3 have resigned as partners of accused No.1-Firm. It was therefore, submitted that the petition is misconceived and has disputed question of facts arise, this Court may dismiss the same.
9. Ms.Moxa Thakkar, learned counsel for respondent No.2-State has adopted the arguments made by Mr.Meena, learned counsel for respondent No.1-Board and has opposed this application.
Before considering the submissions made by learned counsel for the respective parties, on bare perusal of the impugned complaint, it appears that the same is filed by authorized officer of respondent No.1-Board on 16.03.1991 before the Court of learned Magistrate at Gondal. It is stated in the complaint that the petitioners along with other persons are partners and accused No.8 is the Manager of accused No.1-Firm. It is alleged that on 16.11.1990, when the Deputy Engineer along with other officers of the Board conducted inspection of the premises of Industrial unit of accused No.1-Firm and at that time, accused No.8-Manager was present and it was found that water effluent was being discharged in total defiance to the provisions of the Act and on basis of the said inspection report, the petitioners have been arraigned as accused in the impugned complaint on the ground that they are partners of accused No.1-Firm.
11. It may further be noted that except the bare fact that the petitioners are partners of the said Firm, there are no averments, much less any specific averment to the effect that the petitioners were engaged in day-to-day affairs and management of accused No.1-Firm. The complaint further indicates that on the date on which, the inspection was carried out by Inspecting Team of respondent No.1-Board, original accused No.8 Manager was present. It is further alleged that as no consent was obtained by accused No.1-Firm, Criminal Case being Criminal Case No.628 of 1986 was also lodged before the learned Judicial Magistrate First Class, Gondal and the same is pending. In context of the said complaint, even though undertaking was given by the Firm as well as its partners, the same is not adhered.
12. Considering the complaint and version of the complaint as far as present petitioners are concerned, except the fact that they are the partners, nothing is alleged. The petitioners have specifically averred on basis of the documents that petitioner Nos.1 and 3 have retired from accused No.1-Firm w.e.f. 08.04.1987, whereas petitioner No.2 is only sleeping partner and stays at U.S.A and she is entered the partnership Firm on 19.10.1987.
13. It is also brought on record that by communication dated 28.01.1998, accused No.1-Firm did inform the officers of respondent No.1 that present petitioner No.1 has retired from the Firm. It may further be noted that as averred in the complaint that, criminal complaint was lodged being Criminal Case No.628 of 1986 before the Court of learned Judicial Magistrate First Class, Gondal. It may further be noted that in order to ascertain as to the status of the said complaint, this Court has called for the details from the concerned Court and as per the report submitted by the learned Principal District Judge, Rajkot, it has been revealed that Criminal Case No.628 of 1986 is disposed of and the accused i.e. present petitioner No.1 and the partners of accused No.1-Firm were acquitted vide judgment and order dated 19.02.1998.
14. At this juncture, it would be appropriate to refer to the judgment of the Hon ble Apex Court in the case of Anita Malhotra (supra), wherein the question of vicariously liability of Directors of the Company is considered. The Hon'ble Apex Court has observed thus:-
7. Accused No.1 is a Company incorporated under the Companies Act, 1956 and in the complaint it was stated that accused Nos.2 and 3 are its Directors. Insofar as the roles of A-2 and A-3 are concerned, it was stated in the compliant that they are the Directors of the Company and are responsible for the conduct of the business and also responsible for day to day affairs of the Company. It was further stated that all the accused persons, who were in charge of and were responsible to the Company for the conduct of its business at the time the offence was committed, shall be deemed to the guilty of the offence.
22. This Court has repeatedly held that in case of a Director, the complaint should specifically spell out how and in what manner the Director was in charge of or was responsible to the accused Company for conduct of its business and mere bald statement that he or she was in charge of and was responsible to the Company for conduct of its business is not sufficient.(Vide National Small Industries Corporation Ltd. Vs. Harmeet Singh Paintal.) In the case on hand, particularly, in para 4 of the complaint, except the mere bald and cursory statement with regard to the appellant, the complainant has not specified her role in the day-to-day affairs of the Company. We have verified the averments as regards to the same and were agree with the contention of Mr.Akhil Sibal that except reproduction of the statutory requirements, the complainant has not specified or elaborated the role of the appellant in the day-to-day affairs of the Company. On this ground also, the appellant is entitled to succeed.
The Hon'ble Apex Court in the case of National Small Industries Corporation (supra) while considering the vicarious liability of Directors, in paragraph No.25 has observed thus:-
25. From the above discussion, the following principles emerge :
(i) The primary responsibility is on the complainant to make specific averments as are required under the law in the complaint so as to make the accused vicariously liable. For fastening the criminal liability, there is no presumption that every Director knows about the transaction.
(ii) Section 141 does not make all the Directors liable for the offence. The criminal liability can be fastened only on those who, at the time of the commission of the offence, were in charge of and were responsible for the conduct of the business of the Company.
(iii) Vicarious liability can be inferred against a Company registered or incorporated under the Companies Act, 1956 only if the requisite statements, which are required to be averred in the complaint/petition, are made so as to make accused therein vicariously liable for offence committed by Company along with averments in the petition containing that accused were in-charge of and responsible for the business of the Company and by virtue of their position they are liable to be proceeded with.
(iv) Vicarious liability on the part of a person must be pleaded and proved and not inferred.
(v) If accused is Managing Director or Joint Managing Director then it is not necessary to make specific averment in the complaint and by virtue of their position they are liable to be proceeded with.
(vi) If accused is a Director or an Officer of a Company who signed the cheques on behalf of the Company then also it is not necessary to make specific averment in complaint.
The person sought to be made liable should be in-charge of and responsible for the conduct of the business of the Company at the relevant time. This has to be averred as a fact as there is no deemed liability of a Director in such cases.
This Court in the case of Shri Moosa Raza Vs. State of Gujarat & Anr., reported in 2009(2) GLH 200, has examined identical issue and has observed thus:-
8. Having heard the learned Counsels for the parties and having considered their rival submissions in light of the statutory provisions as well as the decided case law on the subject, the Court is of the view that there is no averment in the complaint which shows the deemed involvement of the petitioner in the day to day affairs or business transactions of the company. Section 16(1) of the Act makes it clear that where the offence was committed by every person who at the time of offence committed was directly incharge or was responsible to the company for the conduct of the business of the company. If one reads the complaint and takes into consideration the averments made in the complaint, it is abundantly clear that the ingredients of Section 16(1) are not found in the complaint and simply because the petitioner was a Director of the company, he could not be presumed to be incharge of the affairs of the company. This is not the requirement of Section 16(1). A positive averment should have been made in the complaint to hold the petitioner liable.
9. Apart from this, the facts clearly reveal that at the time when the offence was committed, the petitioner was not the Director of the Company. In the complaint, it is specifically stated that the period under consideration was the period from 09.11.2005 to 11.11.2005. Admittedly the petitioner was not the Director during this period. Form 32 is placed on record which shows that the petitioner has tendered his resignation on 13.05.2005 and Form 32 was filed with the Registrar of Companies on 09.07.2005. As per the complaint, the Environment Engineer, Vigilance Dept. of the Board visited the company premises on 09.11.2005 to 11.11.2005 and formed prima facie opinion that the company has committed breach of provisions of Environmental laws. Complaint was, thereafter, filed in 2006. Thus, at the time of commission offence for which complaint was filed, the petitioner was not a Director.
10. The legal position is also very clear on this aspect. In the case of Nalin Thakore and Others (supra), the Hon'ble Supreme Court has clearly held that the issue of summons to the appellants was without any application of mind as nothing was said in the complaint or in the statement recorded by the Vth Joint Judicial Magistrate before issue of summons that the offence was committed with the consent or connivance of or was attributable to any negligence on the part of the appellants. The Court further held that sub-section (2) of Section 47 requires that 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 negligence 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. There being no allegation as regards the requirement of sub-section (2) of Section 47, the Vth Joint Judicial Magistrate committed an error in issuing summons.
11. In the case of State of Haryana Vs. Brij Lal Mittal and Others (supra), the Hon'ble Supreme Court has held that the vicarious liability of a person for being prosecuted for an offence committed under the Act by a company arises if at the material time he was in charge of and was also responsible to the company for the conduct of its business. Simply because a person is a Director of the company it does not necessarily mean that he fulfills both the above requirements so as to make him liable. Conversely without being a director a person can be in charge of and responsible to the company for the conduct of its business. In the case before the Hon'ble Supreme Court, except a bald statement in the complaint that the respondents were directors of the manufacturer Company, there is no other allegation to indicate, even prima facie, that they were in charge of the company and also responsible to the company for the conduct of its business. Therefore, the complaint was liable to be quashed.
15. In the case of Nicosulf Industries and Exports Private Limited Vs. State of Gujarat 2002 (2) GLR 1580, this Court has held that from Section 47(1) of the Act, it is clear that alongwith the company a person who has in-charge of the company and was responsible to the company for the conduct of the business of the company shall be liable for the offence committed by the company. This vicarious criminal liability can be fastened only when it is proved by the prosecution that the revisionist no.2 was in-charge of the company and was responsible to the company for the conduct of the business of the company. He was only one director and there were two other directors who were acquitted by the lower Appellate Court on the ground that the ingredients of Section 47(1) of the Act could not be established against those two directors. However the initial burden lay upon the prosecution to prove that the revisionist no.2 was in-charge of the company and was responsible to the company for the conduct of the business of the company. The Court further held that the Director cannot be said to be responsible to the company for the conduct of the business of the company. In absence of evidence, the revisionist no.2 was not required to prove that the offence was committed without his knowledge or that he exercised all due diligence to prevent the commission of such an offence as contained in proviso to Section 47(1) of the Act.
15. Considering the submissions as well as judgments cited, it clearly borne out from the complaint that no specific role is attributed to the petitioners and hence, they cannot be held vicariously liable for the alleged offence. There is nothing in the complaint, which goes to show that the petitioners were in active and day-to-day affairs of the Firm, hence, as per the principles enunciated by the Hon'ble Apex Court as well as this Court, the petitioners cannot be saddled with the criminal liability. In addition to this petitioner Nos.1 and 3 have resigned in the year 1987, whereas inspection of the Industrial Unit of original accused No.1-Firm was undertaken on 16.11.1990 on basis of which impugned complaint is filed, and therefore on the date on which the inspection was carried out, petitioner Nos.1 and 3 were not even the partners of accused No.1-Firm and therefore, they cannot be held liable for day-to- day affairs of the Firm. Similarly, petitioner No.2 who is a sleeping partner cannot be held to be vicariously liable.
16. Reliance placed for upon the earlier case, as observed above is already disposed of and original accused No.1.-Firm and its partners, who were accused in the said compliant have already been acquitted by the Competent Court vide judgment and order dated 19.02.1998 and therefore, even on that ground, the petitioners cannot be held vicariously liable. It is however made clear that present petition is filed by original accused Nos.6, 7 and 4 and the observations made in the judgment would apply to only the petitioners herein and the trial Court shall proceed with other accused in accordance with law. Even, at the cost of repetition, it is observed that the observations made in this judgment judgment and order shall apply only to the petitioners and the same shall not in anyway prejudice the rights and contentions of the complainant to proceed with other accused in accordance with law.
17. Considering the averments made in the application, contentions raised by learned counsel for the parties and also considering the ratio laid down by the Hon'ble Apex Court as well as this Court, it appears that to continue criminal proceedings against the petitioners would be unnecessary harassment to the petitioners. The same would amount to abuse of process of law and Court. Hence, to secure the ends of justice, the impugned complaint deserves to be quashed and set aside in exercise of inherent jurisdiction under Section 482 of the Code of Criminal Procedure, 1973 qua present petitioners.
18. For the reasons stated hereinabove, the present application is allowed. The impugned complaint being Criminal Case No.273 of 1991 filed by respondent No.1 against the petitioners being original accused Nos.6, 7 and 4 is hereby quashed. Rule is made absolute to the aforesaid extent.
(R.M.CHHAYA, J.) Suchit Page 15 of 15