U.P.
Pollution Control Board Vs. Modi Distillery & Ors [1987] INSC 201 (6 August
1987)
SEN,
A.P. (J) SEN, A.P. (J) NATRAJAN, S. (J) CITATION: 1988 AIR 1128 1987 SCR (3)
798 1987 SCC (3) 684 JT 1987 (3) 221 1987 SCALE (2)208
ACT:
Water
(Prevention and Control of Pollution) Act, 1974:
Ss.
25, 26, 44 & 47--Company--Discharge of trade effluents without consent of
the Board--Commission of offence under the Act--Officials of the Company
whether guilty of offence----Vicarious responsibility.
Practice
and Procedure: Prevention and Control of Pollution-Launching of
prosecution--Need for drafting complaints with circumspection and without any
technical flaw.
HEADNOTE:
The
respondent-distillery, an industrial unit of M/s. Modi Industries Ltd., at Modi
Nagar manufacturing industrial alcohol has been discharging its highly noxious
and polluted trade effluents into the river through a local drain. It applied
to the Pollution Control Board under ss. 25(1) and 26 of the Act on March 27,
1981 for consent of the Board to discharge its trade effluents into the stream.
The Board found the application incomplete in many respects, and called upon
the respondents to rectify the discrepancies. As there was no response from the
respondents, the appellant Board refused to grant the consent prayed for in the
public interest and thereafter issued notice under s. 20 of the Act directing
the Company to furnish certain information regarding the particulars and names
of the Managing Director, Directors and other persons responsible for the
conduct of the Company. This was followed by various reminders.
Finding
no response from the respondents, the Board on October 21, 1983 lodged a
complaint against the respondents under s. 44 of the Act in the Court of the
Chief Judicial Magistrate, Gaziabad. Instead of launching a prosecution against
M/s. Modi Industries Ltd., the Board impleaded the industrial unit as
respondent No. 1 and the Chairman. Vice- Chairman, Managing Director and
members of the Board of Directors of the Company as respondent Nos. 2 to 11.
The Judicial Magistrate directed the issue of process.
799
The respondents preferred a revision under s. 397 of the Code of Criminal
Procedure, 1973 before the High Court in which an application was filed under
s. 482 of the Code for quashing the proceedings. The Single Judge of the High
Court quashed the proceedings on the ground that there could be no vicarious
liability saddled on the Chairman, Vice-Chairman, Managing Director and other
members of the Board of Directors of the Company under s. 47 of the Act unless
there was a prosecution of the Company.
Allowing
the appeal,
HELD:
A combined reading of the provisions contained in sub ss. (1) and (2) of s. 47
of the Water (Prevention and Control of Pollution) Act, 1974 makes it apparent
that the officials of the Company owning the respondent industrial unit could
be prosecuted as having been in charge of and responsible to the Company for
the business of that unit and could be deemed to be guilty of the offence with
which they were charged. [804DE] The industrial unit owned by the Company was
discharging its trade effluents into the river prior to the commencement of the
Act. It was, therefore, mandatory for the Company to make an application to the
Board under s. 25(2) read with s.
26
of the Act for grant of consent for the discharge of its trade effluents into
the stream. The application made by the industrial unit having been found
incomplete in many respects was rejected by the Board in public interest.
There- after the Company which did not have proper arrangements for treatment
of the highly polluted trade effluents discharged by it, had been in spite of
repeated letters from the Board intentionally and deliberately avoiding
compliance with the requirements of ss. 25(1) and 26 rendering themselves
punishable under s. 44 of the Act. The Chairman. Vice-Chairman, Managing
Director and members of the Board of Directors of the Company in such capacity
were in-charge of and responsible for the conduct of the business of the
Company and were, therefore, deemed to be guilty of the said offence and liable
to be proceeded against and punished under s. 47 of the Act. [805H-806F] The
vicarious liability of these officials of the Company is to be viewed not in
isolation but in the conspectus of facts and events and not in vacuum. The
technical flaw in the complaint lodged by the appellant Board had occurred due
to the recalcitrant attitude of the industrial unit, which in spite of more
than one notice being issued had deliberately failed to furnish information
called for regarding the particulars and 800 names of the Managing Director,
Directors and other persons responsible for the conduct of the Company. Having
willfully failed to furnish the requisite information to the Board, it is not
open to the respondents 2 to 11 to seek the Court's assistance to derive
advantage from the lapse committed by their own industrial unit. Furthermore,
the legal infirmity is of such a nature which could be easily cured by having
the matter remitted to the trial court with a direction to call upon the
appellant to make the formal amendments to the averments in the complaint so as
to make the controlling company of the industrial unit figure as the concerned
accused. [805BC, 804G, EF, H-805A] The Board and its legal advisors should have
drafted the complaint with greater circumspection not to leave any technical
flaw which would invalidate the initiation of the prosecution allowing a large
business house to escape the consequences of the breaches committed by it of
the provisions of the Act with impunity. [805GH]
Criminal
Appellate Jurisdiction: Criminal Appeal No. 415 of 1986.
From
the Judgment and Order dated 16.5. 1984 of the Allahabad High Court in Crl.
Rev. No. 2330 of 1983.
R.N.
Trivedi, Additional Advocate General (U.P.) Mrs. S. Dikshit and C.B. Singh for
the Appellant.
Ram
Jethmalani, Rajinder Sachhar, and D.N. Mishra for the Respondents.
The
Judgment of the Court was delivered by SEN, J. This appeal by special leave is
directed against the judgment and order of the High Court of Allahabad dated
May 16, 1984 setting aside in its revisional jurisdiction an order of the Chief
Judicial Magistrate, Gaziabad dated November 3, 1983 directing the issue of
process against the respondents on a complaint filed by the appellant under
section 44 of the Water (Prevention and Control of Pollu- tion) Act, 1974. The
issue involved is whether the Chair- man, ViceChairman, Managing Director and
members of the Board of Directors of Messrs Modi Industries Limited, the
Company owning the industrial unit called Messrs Modi Dis- tillery could be
proceeded against on a complaint against the said industrial unit. A learned
Single Judge (K.C. Agarwal, J.) following the decision of this Court in State
(Delhi 801 Admn.) v. LK. Nangia & Anr.,[1980] 1 SCC 258 interpreting a
similar provision contained in sub-s. (4) of s. 17 of the Prevention of Food
Adulteration Act, 1954 had held that there was no sufficient ground against the
respondents inasmuch as the allegations made in the complaint do not constitute
an offence punishable under section 44 for the admitted contravention of ss.
25(1) and 26 read with s. 47 of the Act. The question essentially turns upon
the rule of construction to be adopted in s. 47.
The
facts of the case are these. Messrs Modi Industries Limited is an existing
company under the Companies Act, 1956. It is a large business organisation
having diversified business activities. Prior to the commencement of the Act it
had established an industrial unit called Messrs Modi Distillery at Modi Nagar,
Gaziabad engaged in the business of manufacture and sale of industrial alcohol.
During the process of manufacture of such industrial alcohol, the said
industrial unit discharges its highly noxious and polluted trade effluents into
the Kali River through the Kadrabad Drain which is a stream within the meaning
of s. 2(j) of the Act and thereby causes continuous pollution of the said
stream without the consent of the Board and therefore it falls within the
purview of s. 26. Under the provisions of s. 26, as amended, it has been made
mandatory for every existing industry to obtain the consent of the Board for
discharging its trade effluent into a stream or well or sewer or on land. The
last date for submission of such application seeking the consent of the Board
by an existing industry had been extended upto December 31, 1981. In accordance
with the procedure laid down under ss. 25(1) and 26 of the Act, the Company was
required to submit an application for consent of the Board in the prescribed
form along with the prescribed consent fee and the particulars. Instead of the
Company its industrial unit, namely, Messrs Modi Distillery on March 27, 1981
applied to the Board for grant of consent to discharge its trade effluents into
the stream.
The
aforesaid application was scrutinised by the Board and found incomplete in many
respects. The Board accordingly by its letter dated April 29, 1981 informed the
said industrial unit with regard to the discrepancies and the particulars
wanting. There was no response from the respondents nor did they rectify the
discrepancies pointed out or furnish the particulars required. The Board
accordingly by its letter dated July 30, 1981 refused to grant the consent
prayed for in the public interest since the application was found incomplete in
many respects and also because the said industrial unit did not have proper
arrangements for treatment of its highly polluted trade effluents. Thereafter,
the Board by its letter dated June 30, 1982 issued a notice under s.
20
of the Act 802 directing the Company to furnish certain information regarding
the particulars and names of the Managing Director, Directors and other persons
responsible for the conduct of the Company, but the respondents did not furnish
the information called for. This was followed by two subsequent letters of the
Board dated February 21, 1983 and June 9, 1983 drawing the attention of the
respondents that they were deliberately violating the provisions of the Act and
thereby rendering themselves liable to be punished under s. 44 for
contravention of the provisions of ss. 25(1) and 26. On October 21, 1983 the
Board lodged a complaint against the respondents under s. 44 of the Act in the
Court of the Chief Judicial Magistrate, Gaziabad. Unfortunately, the complaint
was inartistically drafted. It was averred in paragraph 2 that Messrs Modi
Distillery i.e. the industrial unit was a company within the meaning of s. 47
of the Act, that it had been knowingly and willfully discharging its highly
noxious and polluted trade effluents into the Kali River which is a stream
within the meaning of s. 2(j) of the Act through the Kadrabad Drain and thereby
causing continuous pollution of the said stream. There were eleven persons
arrayed as accused. Instead of launching a prosecution against Messrs Modi
Industries Limited, the Board impleaded its industrial unit Messrs Modi
Distillery as respondent no. 1 while respondents nos.' 2-11 were the Chairman,
Vice-Chairman, Managing Director and members of the Board of Directors of
Messrs Modi Industries Limited i.e. the Company owning the industrial unit.
It
appears that the respondents did not appear before the learned Chief Judicial
Magistrate in response to the notice issued to them. The learned Magistrate after
recording the statement of S.M. Pandey, Legal Assistant of the Board directed
the issue of process to the respondents.
Aggrieved,
respondents nos. 2, 3 and 4, namely, K.M. Modi, K.K. Modi and M.L. Modi, the
Chairman, Vice-Chairman and Managing Director respectively of Messrs Modi
Industries Limited preferred a revision before the High Court under s. 397 of
the Code of Criminal Procedure, 1973. Two of the other accused, namely, S.C.
Trikha and Raghunath Rai, the nominated members of the Board of Directors of
the Company also filed an application before the High Court under s. 482 of the
Code for quashing the proceedings. As already stated, a learned Single Judge
invoking the revisional jurisdiction of the High Court has quashed the
proceedings on the ground that there could be no vicarious liability saddled on
the Chairman, Vice Chairman, Managing Director and other members of the Board
of Directors of the Company under s. 47 of the Act unless there was a
prosecution of the Company i.e. Messrs Modi Industries Limited. He 803 held
that the complaint suffers from the serious legal infirmity and in the Circumstances
to allow the proceedings to continue would amount to an abuse of the process of
the Court.
The
question that arises in the appeal is whether the Chairman, Vice-Chairman,
Managing Director and members of the Board of Directors are liable to be
proceeded against under s. 47 of the Act in the absence of a prosecution of the
Company owning the said industrial unit. S. 47 insofar as material reads as follows:
"47.
Offences by companies--(1) Where an offence under this Act has been committed
by a company every person who at the time the offence was committed was in
charge of, and was responsible to the company for the con- duct, 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.
Provided
that nothing contained in this sub-section shall render any such person liable
to any punishment provided in this Act if he proves that the offence was
committed without his knowledge or that he exercised all due diligence to
prevent the commission of such offence.
(2)
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 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." 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 804 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 sub-s. (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.
On
a combined reading of the provisions contained in sub-ss. (1) and (2), we have
no doubt whatever that the Chairman, Vice Chairman, Managing Director and
members of the Board of Directors of Messrs Modi Industries Limited, the
Company owning the industrial unit Messrs Modi Distillery could be prosecuted
as having been in charge of and responsible to the company, for the business of
the indus- trial unit Messrs Modi Distillery owned by it and could be deemed to
be guilty of the offence with which they are charged. The learned Single Judge
has failed to bear in mind that this situation has been brought about by the
industrial unit viz. Messrs Modi Distillery of Messrs Modi Industries Limited
because in spite of more than one notice being issued by the Board, the unit of
Messrs Modi Distillery deliberately failed to furnish the information called
for regarding the particulars and names of the Managing Director, Directors and
other persons responsible for the conduct of the Company. Having willfully
failed to furnish the requisite information to the Board, it is now not open to
the Chairman, Vice-Chairman, Managing Director and other members of the Board
of Directors to seek the Court's assistance to derive advantage from the lapse
committed by their own industrial unit. The learned Single Judge has focused
his attention only on the technical flaw in the complaint and has failed to
comprehend that the flaw had occurred due to the recalcitrant attitude of
Messrs Modi Distillery and furthermore the infirmity is one which could be
easily removed by having the matter remitted to the Chief Judicial Magistrate
with a direction to call upon the appellant to make the formal amendments to
the averments contained in paragraph 2 of the complaint so as to make the
controlling company of the industrial unit figure as the concerned accused in
the complaint.
All
that has to be done is the making of a formal application for amendment by the
appellant for leave to amend by substituting the name of Messrs Modi Industries
Limited, the Company owning the industrial unit, in place of Messrs Modi
Distillery. Although as a pure proposition of law in the abstract the learned
Single Judge's view that there can be no vicarious liability of the Chairman,
Vice-Chairman, Managing Director and members of the Board of Directors under
sub-s. (1) or (2) of s. 47 of the Act unless there was a prosecution against
Messrs Modi Industries Limited, the Company owning the industrial trait, can be
termed as correct, the objection raised by the petitioners before the High
Court ought to have been viewed not in isolation but in the conspectus of facts
and events and not in vacuum. We have already pointed out that the technical
flaw in the complaint is attributable to the failure of the industrial unit to
furnish the requisite information called for by the Board. Furthermore, the
legal infirmity is of such a nature which could be easily cured. Another
circumstance which brings out the narrow perspective of the learned Single
Judge is his failure to appreciate the fact that the averment in paragraph 2
has to be construed in the light of the averments contained in paragraphs 17,
18 and 19 which are to the effect that the Chairman, Vice-Chairman, Managing
Director and members of the Board of Directors were also liable for the alleged
offence committed by the Company.
It
is regrettable that although Parliament enacted the Water (Prevention and
Control of Pollution) Act, 1974 to meet the urgent need for introducing a
comprehensive legislation with its established unitary agencies in the Centre
and the States to provide for the prevention. abatement and control of pollution
of rivers and streams, for maintaining or restoring wholesomeness of water
courses and for control- ling the existing and new discharges of domestic and
industrial wastes, which is a matter of grave national concern, the manner in
which some of the Boards are functioning leaves much to be desired. This is an
instance where due to the sheer negligence on the part of the legal advisors in
drafting the complaint a large business house is allowed to escape the
consequences of the breaches committed by it of the provisions of the Act with
impunity, It was expected that the Board and its legal advisors should have
drafted the complaint with greater circumspection not to leave any technical
flaw which would invalidate the initiation of the prosecution allowing the
respondents to escape the consequences of the breaches committed by them of the
provisions of the Act with impunity. As already stated, prior to the
commencement 806 of the Act the Company owned an industrial unit styled as
Messrs Modi Distillery which was discharging its trade effluents into the Kali
River through the Kadrabad Drain and therefore the matter fell within the ambit
of s. 26 of the Act. S. 26 provides that where immediately before the commencement
of the Act any person was discharging any sewage or trade effluent into a
stream, the provisions of s. 25 shall, so far as may be, apply to such person
as they apply in relation to a person referred to in that section. S. 25(1)
creates an absolute prohibition against bringing into use any new or altered
outlet for the discharge of sewage or trade' effluent into a stream without the
consent of the Board. On a combined reading of ss. 25(1) and 26 it was
mandatory for the Company viz. Messrs Modi Industries Limited to make an
application to the Board under sub-s. (2) of s. 25 read with s. Z6 in the
prescribed form containing the prescribed particulars for grant of consent for
the discharge of its trade effluents into the said stream, subject to such
conditions as it may impose. Along with the com- plaint the appellant has
placed on record several documents showing that the rejection of the
application was in the public interest as it was incomplete in many respects.
These documents also reveal that the Company did not have proper arrangements
for treatment of the highly polluted trade effluents discharged by it and
although the appellant repeatedly by its letter required the Company to obtain
the consent of the Board, the Company was intentionally and deliberately
avoiding compliance of the requirements of ss. 25(1) and 26 of the Act. The
contravention of these provisions is an offence punishable under s. 44. The
other ten persons arrayed by name as accused in the complaint are Respondents
nos. 2-11, the Chairman, Vice-Chairman, Managing Director and members of the
Board of Directors of Messrs Modi Industries Limited. It cannot be doubted that
in such capacity they were in charge of and responsible for the conduct of the
business of the Company and were therefore deemed to be guilty of the said offence
and liable to be proceeded against and punished under s. 47 of the Act. It
would be a travesty of justice if the big business house of Messrs Modi
Industries Limited is allowed to defeat the prosecution launched and avoid facing
the trial on a technical flaw which is not incurable for their alleged
deliberate and willful breach of the provisions contained in ss. 25(1) and 26
made punishable under s. 44 read with s. 47 of the Act.
Faced
with the difficulty of refuting the gravamen of the offence set out in the
complaint, Shri Ram Jethmalani, learned counsel appearing for the respondents
drew our attention to the counter affidavit of Virendra Prasad, Manager (Personnel
& Administration), Modi Distillery dated January 13, 1986 and the two
supplementary 807 affidavits dated August 25, 1986 and November 17, 1986
tending to show that Messrs Modi Industries Limited, the company owning the
industrial unit, have taken effective steps to set up an effluents treatment
plant by entering into an agreement dated December 23, 1985 with Messrs Chemical
Consultants & Engineers, Ahmad Nagar who would set it up in collaboration
with Sulzer Bros. Limited, Switzerland by employment of the technical knowhow
which would be able to recover methane gas upto 70% and also bring down BOD
reduction upto 90%. Further, it is averred that the company sought and obtained
the approval of the Board subject to a time schedule for erection and
installation of the plant by the end of June 1987. It is also averred that
since the Government of India has turned down the application of the
respondents for subsidy for installation of the said plant insofar as the year
1985-86 was concerned, they are trying other sources of finance and that in the
meanwhile pending the installation and commissioning of the plant based on the
Sulzer's process are treating the effluents by alternative methods in order to
reduce the extent of BOD discharge. They are diluting the effluents by mixing
fresh water to the extent of 13 to 15 times the amount of effluent discharged
in order to reduce the extent of pollution. In view of the subsequent events
the learned counsel submits that this was a fit case for dropping the
proceedings. The averments made by the respondents in the various affidavits
have been controverter by the affidavit-in-rejoinder sworn by Chandra Bhal
Singh, Law Officer of the appellant-Board showing that there is little or no
progress in the matter of establishment of the effluents treatment plant. We
need not enter into this controversy. These are all matters to be dealt with by
the learned Chief Judicial Magistrate.
The
result therefore is that the appeal succeeds and is allowed. The judgment and
order passed by the High Court are set aside and that of the learned Chief
Judicial Magistrate directing issue of process to the respondents are restored.
The
learned Magistrate shall proceed with the trial as expeditiously as possible in
accordance with law.
P.S.S.
Appeal allowed.
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