The High Court
Case Details
IN THE HIGH COURT OF ORISSA AT CUTTACK CRLMP No. 317 of 2014, W.P.(Crl.) No.837 of 2013, CRLMP No. 38 of 2014, CRLMP No. 40 of 2014, CRLMP No. 43 of 2014, CRLMP No. 44 of 2014, CRLMP No. 45 of 2014, CRLMP No. 47 of 2014 CRLMP No. 52 of 2014, CRLMP No. 53 of 2014, CRLMC No. 3462 of 2014, WP(Crl.) No. 1478 of 2013, CRLMC No. 4558 of 2014, CRLMP No. 162 of 2014, CRLMC No. 3672 of 2014, CRLMC No. 4875 of 2014, CRLMP No. 104 of 2014 & CRLMP No. 105 of 2014 Applications under Articles 226 and 227 of the Constitution of India and Section 482 of Cr.P.C. CRLMP No. 317 of 2014 Ashutosh Mohanty & others ...… Petitioners --------------- State of Odisha and others ...…. Opp.Parties -Versus- W.P. (Crl.) No. 837 of 2013 M.D. Rustagi & others Versus- …….. Petitioners State of Odisha and others ...…. Opp.Parties CRLMP No. 38 of 2014 Ashutosh Mohanty & others ...…. Petitioners -Versus- State of Odisha and others ...….. Opp.Parties Page 1 of 31 CRLMP No. 40 of 2014 Asotosh Mohanty @ A. Mohanty @ Ashutosh Mohanty & others ...… Petitioners -Versus- State of Odisha and others ...…. Opp. Parties CRLMP No. 43 of 2014 Asotosh Mohanty @ A. Mohanty @ Ashutosh Mohanty & others ...…. Petitioners -Versus- State of Odisha and others ...…. Opp. Parties CRLMP No. 44 of 2014 Asotosh Mohanty @ A. Mohanty @ Ashutosh Mohanty & others ...…. Petitioners -Versus- State of Odisha and others ...…. Opp. Parties CRLMP No. 45 of 2014 Asotosh Mohanty@ A. Mohanty @ Ashutosh Mohanty & others -Versus- ...….. Petitioners State of Odisha and others ...…. Opp. Parties CRLMP No. 47 of 2014 Asotosh Mohanty@ A. Mohanty @ Ashutosh Mohanty & others -Versus- ...….. Petitioners State of Odisha and others ...…. Opp. Parties CRLMP No. 52 of 2014 Asutosh Mohanty @ A. Mohanty @ Ashutosh Mohanty & others ....… Petitioners -Versus- Page 2 of 31 State of Odisha and others ...…. Opp. Parties CRLMP No. 53 of 2014 D.K. Singh @ Deo Kumar Singh ...… Petitioner -Versus- State of Odisha and others ...…. Opp. Parties CRLMC No. 3462 of 2014 Sidhartha @ Siddhartha Mohanty and others ...….. Petitioners -Versus- State of Odisha and others ...…. Opp. Parties W.P.(Crl.) No. 1478 of 2013 Ramji Lal Bathwal @ R.L. Bathwal and others ...… Petitioners -Versus- State of Odisha and others ...…. Opp. Parties
Legal Reasoning
CRLMC No. 4558 of 2014 Sri Mahesh Raheja ...… Petitioner -Versus- State of Odisha and others ...…. Opp. Parties CRLMP No. 162 of 2014 Hridya Nand Singh ...… Petitioner -Versus- State of Odisha and others ...…. Opp. Parties CRLMC No. 3672 of 2014 Rajivi @ Rajib Lochan Mohanty ...… Petitioner -Versus- State of Odisha and others ...…. Opp. Parties Page 3 of 31 CRLMC No. 4875 of 2014 Rajib Lochan Mohanty and ors. ...… Petitioner -Versus- State of Odisha and others ...…. Opp. Parties CRLMP No. 104 of 2014 Mala Roy ...… Petitioner -Versus- State of Odisha and others ...…. Opp. Parties CRLMP No. 105 of 2014 Sri Awadhesh B. Singh ...… Petitioner -Versus- State of Odisha and others ...…. Opp. Parties Advocate(s) appeared in this case:- _________________________________________________________ For Petitioners : Mr. Sanjit Mohanty, Sr. Advocate with M/s. S.P. Panda, R.R. Swain, & I.A. Acharya, Advocates For Opp. Parties : Mr. P.K. Parhi, DSGI with Central Govt. Counsels _________________________________________________________ CORAM: JUSTICE SASHIKANTA MISHRA JUDGMENT 16th February, 2023 SASHIKANTA MISHRA, J. In this batch of applications filed under Articles 226 and 227 of the Constitution of India, Page 4 of 31 and Section 482 of Cr.P.C. the facts and points of law involved being the same they were heard together and are being disposed of by this common judgment. All these petitioners are implicated in criminal cases instituted against them under Section 15 of the Environment Protection Act, 1986. The relevant particulars of the cases are stated in a tabular form below: 1 Sl. No. 2 3 CASE NO. COMPLAINT PETITION 4 ORDER OF CONGNIZANCE & ISSUANCE OF SUMMONS 1 2 3 4 5 CRLMP No.317/2014 2(c) c Case No.10/2014 05.03.2014 WP(CRL) No.837/2013 2(c)c Case No.37/2013 25.02.2013 CRLMP No.38/2014 2(c)c case No.54/2013 27.12.2013 CRLMP No.40/2014 2(c)c Case No.62/2013 27.12.2013 CRLMP No.43/2014 2(c)c Case No.63/2013 27.12.2013 6 CRLMP No.44/2014 2(c)c Case No.50/2013 27.12.2013 7 CRLMP No.45/2014 2(c)c Case No.64/2013 27.12.2013 8 CRLMP No.47/2014 2(c)c Case No.51/2013 27.12.2013 9 CRLMP No.52/2014 2(c)c Case No.03/2014 15.01.2014 5 6 ACCUSED Ashutosh Mohanty & 3 ors Directors of Feegrade & Co. Pvt. Ltd. M.D. Rustagi & 4 Ors Directors of Rungta Sons (P) Ltd. Ashutosh Mohanty & 3 ors Directors of Rungta Sons (P) Ltd. Ashutosh Mohanty & 3 ors Directors of Rungta Mines Ltd. Ashutosh Mohanty & 4 ors Directors of Rungta Sons (P) Ltd. Ashutosh Mohanty & 3 ors Director of M/s. Bonai Ind.Co Ltd Ashutosh Mohanty & 3 ors Directors of M/s. Rungta Mines Ltd. Ashutosh Mohanty & 3 ors. Directors of Feegrade & Co. Pvt. Ltd. Ashutosh Mohanty & 3 ors Director of M/s. Bonai Ind.Co. Ltd. MINE /COMPANY - LESSEE Sarkunda Iron & Manganese Mines of Feegrade & Co Pvt. Ltd. Oraghat Iron Mines of Rungta Sons (P) Ltd Sanindpur Iron & Bauxite Mines of Rungta Sons(P) Ltd. Kolmonga Mn Mines of Rungata Mines Ltd. Kusumdihi- Komando Bauxite & Mn Mines of Rungta Sons(P) Ltd. Nadidihi Iron & Manganese Mines of M/s. Bonai Ind.Co. Ltd. Kanther-Koira Manganese Mines of M/s. Rungata Mines of Ltd. Nadidihi Iron & Manganese Mines of Feegrade & Co. Pvt. Ltd. Teherai Iron & Manganese Mines of M/s. Bonai Ind.Co. Ltd. Page 5 of 31 10 CRLMP No.53/2014 2(c)c Case No.03/2014 15.01.2014 11 CRLMC No.3462/2014 2(c)c Case No.18/2014 12.03.2014 12 WP (Crl) No. 1478 of 2015 2(c)c Case No.29/2013 25.02.2013 13. CRLMC No.4558/2014 2(c)C Case No.18/2013 09.12.2013 14. CRLMP No.162/2014 2(c)CC No.122/2013 31.07.2013 D.K. Sing (Impleaded as a Director of M/s. Bonai Ind. Co. Ltd. (whereas the said accused has never been a Director of M/s. Bonai Ind. Co Ltd) Sidhartha Mohanty & 2 ors, i.e., the Managing Director, Director& Mines Manger of BC Mohanty & Sons (P) Ltd. Ramji Lal Bathwal & 3 ors, i.e., Directors of M/s. Penguin Traders Ltd. Mahesh Raheja Senior General Manager of JSPL. HN Singh (General Manager) & Sadananda Rana (Dy. General Manager) of M/s. Sarda Mines Pvt. Ltd. Teherai Iron & Manganese Mines of M/s. Bonai Ind.Co. Ltd. Kamarda Chromite Mines of BC Mohanty & Sons (P) Ltd. Raikela & Tantra Mines of M/s. Penguin Traders Ltd. TRB Mines of JSPL Thakurani Iron Ore Mines of M/s. Sarda Mines Pvt.Ltd. Apart from the aforesaid cases, the following table shows the cases registered against the partners/officers of different partnership firms. SI. No. CASE NO. COMPLAINT PETITION ORDER OF COGNIZANCE & ISSUANCE OF SUMMONS 1 2. CRLMC No. 3672/2014 2(C) C Case No.2/2014 15.01.2014 CRLMC No. 4875 /2014 2(C)C Case No. 59/2013 24.12.2013 3 CRLMP No. 104/2014 2(C) C.C. No. 57 of 2012 05.06.2012 4. CRLMP No. 105 of 2014 2(C) CC No. 57/2012 05.06.2012 ACCUSED Rajib Lochan Mohanty Partner in M/s. MG Mohanty Partnership Firm RL Mohanty & 3 others Partners in M/s. MG Mohanty Partnership Firm Mala Roy, Partner of M/s. Mala Roy Partnership Firm MINE/PARTNERSHIP FIRM-LESSEE Gonua Iron & Mn mines of M/s. MG Mohanty Partnership Firm Patabeda Iron Mines of M/s. MG Mohanty Partnership Firm Jalahuri Iron & Mn. Ore Mines of M/s. Mala Roy Partnership Firm Awdhesh B. Singh General Manager of M/s. Mala Roy Partnership Firm Jalahuri, Iron & Mn. Ore Mines of M/s. Mala Roy Partnership Firm The explanation to Sub-Section(2) of Section 16 of the Environment (Protection) Act, 1986 reads as follows: Page 6 of 31 “Explanation.—For section,— the purposes of this (a) “company” means any body corporate, and includes a firm or other association of individuals; and (b) “director”, in relation to a firm, means a partner in the firm” Thus, it is evident that the same principle of law as applies to a company would also be applicable for the above referred partnership firms. Notwithstanding the fact that the number of cases as mentioned in the two tables given hereinbefore as 18, yet the facts and law involved being identical, the facts of only two cases, namely, CRLMP No. 317 of 2014 and CRLMP No. 3672 of 2014 are referred to in this judgment for brevity. CRLMP No. 317 of 2014 2. The petitioners are said to be Directors of M/s. Feegrade & Company Pvt. Ltd., who seek to challenge the initiation of criminal proceedings against them being 2(c)CC Case No. 10 of 2014 in the file of learned S.D.J.M., Bonai, Sundargarh as also the order dated 05.03.2014 passed in the said case whereby cognizance of the offence under Section 15 of the Page 7 of 31 Environment (Protection) Act, 1986 ( in short ‘the Act, 1986’) was taken and the petitioners were summoned to appear. 3. The complaint was filed by the Government of India, Ministry of Environment and Forest Department being represented through the Collector, Sundargarh alleging violation of the provisions of the Act, 1986 and thereby, for prosecution of the accused persons. It was alleged that the petitioner-accused persons are the true owners of Sarkunda Iron & Manganese Mines of M/s. Feegrade & Co. Pvt. Ltd. located in Lahunipada Tahasil of Sundargarh district and that the said mining project had undertaken production during the years 2007-08 to 2009- 10 without obtaining the requisite environmental clearance from the Ministry as required under Environmental Impact Assessment (EIA) Notification 2006, which is a mandatory requirement to operate the mines. The above being in violation of the provisions of the Act, the petitioners are thus liable to be prosecuted under Section 15 of the Act, 1986. By order dated 05.03.2014, learned S.D.J.M. Bonai took cognizance of the alleged Page 8 of 31 offence and summoned the petitioners to appear. As already stated, the said order is impugned in the present application. 4. It has been averred in the writ petition
Decision
(CRLMP) that the impugned order is, ex-facie, contrary to law and liable to be quashed inasmuch as, the petitioners are merely Directors of the Company and therefore, cannot be made vicariously liable for any offence allegedly committed by the Company, particularly when the company itself has not been arraigned as accused. Moreover, Section 16 of the Act, 1986 provides that only the person who was directly in-charge of, and responsible to the company for the conduct of its 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. It is further stated that the complaint in question was filed without calling for any show cause. Even otherwise, there was no violation of the EIA Notification, 1994 and in any case, the said notification stood superseded by EIA Notification, 2006 as per which the existing lessees were permitted to obtain Page 9 of 31 environmental clearance by 30.06.2007. Since the Company applied for environmental clearance within the stipulated date, there cannot be said to have been any violation. It is also stated that the Sarkunda Iron and Manganese Mines is a very old mines working since long and had neither started nor enhanced its production of lease area on or after 27.01.1994. 5. The Deputy Director, Mines, Koira, district Sundargarh (opposite party no.3) has filed a counter affidavit. It is stated in the counter that the lessee, namely Feegrade and Company (P) Ltd. having its lease at Sarkunda under Koira Mining Circle for iron ore and manganese over an area of 393.565 hec. violated the restrictions imposed by the competent authority as specified in letters dated 05.02.2014 and 13.02.2014. It is further stated that the mining lease was in operation during the period from 2007-08 to 2009-10 without having any environmental clearance after the EIA Notification came in force, i.e., 27.01.1994. Referring to the circulars dated 12.12.2012 and 27.06.2013 of the Ministry, it is stated that under the EIA Notification, 1994 Page 10 of 31 mining projects of major minerals of more than 5 hectares of lease area which have started or increased production on or after 27.01.1994 and have not obtained the environmental clearance under the EIA Notification 1994 shall do so at the time of renewal of their lease. It is also stated that subsequently by circular dated 21.11.2006 of the Ministry it was stated that the projects which did not require EIA clearance under EIA Notification, 1994 and now require the same under EIA Notification, 2006 shall have to obtain environmental clearance from the relevant authority by 30.06.2007 as otherwise they would be liable to legal action under Section 15 of the Act, 1986. On such basis it is stated that there was violation of the provisions of the Act and the petitioners being the Directors are looking after the day to day affairs of the Company and hence, are liable to be prosecuted for violation of the statutory provision. 6. The petitioners have filed rejoinder to the counter filed by the opposite party no.3. While reiterating the averments made in the writ application, it is stated that no show cause notice was issued before filing of the Page 11 of 31 complaint and in the absence of the Company, the petitioners cannot be made vicariously liable for the alleged offence. Further, the complaint is challenged for want of any averment that the petitioners were directly in- charge of the Company. CRLMC No. 3672 of 2014. 7. In this case, the petitioner is said to be a partner of M/s. MG Mohanty Partnership Firm, who seeks to challenge the initiation of criminal proceedings against him being 2(c)CC Case No. 02 of 2014 in the file of learned S.D.J.M., Bonai, Sundargarh as also the order dated 15.01.2014 passed in the said case whereby cognizance of the offence under Section 15 of the Act, 1986 was taken and the petitioner was summoned to appear. 8. The complaint was filed by the Government of India, Ministry of Environment and Forest Department being represented through the Collector, Sundargarh alleging violation of the provisions of the Act, 1986 and thereby, for prosecution of the accused persons. It was alleged that the petitioner-accused is the true owner of Gonua Iron & Manganese Mines of MG Mohanty located in Page 12 of 31 village Gonua under Koira Tahsil of Sundargarh district and that the said mining project had undertaken production during the years 1993-94 to 1999-2000 without obtaining the requisite environmental clearance from the Ministry as required under Environmental Impact Assessment (EIA) Notification 2006, which is a mandatory provision to operate the mines. The above being in violation of the provisions of the Act, the petitioner is thus liable to be prosecuted under Section 15 of the Act, 1986. By order dated 15.01.2014, learned S.D.J.M. Bonai took cognizance of the alleged offence and summoned the petitioner to appear. As already stated, the said order is impugned in the present application. 9. It has been averred in the petition (CRLMC) filed under Section 482 Cr.P.C. that the impugned order is, ex-facie, contrary to law and liable to be quashed inasmuch as, the petitioner is merely a partner of the firm and is no way liable for the alleged offence. 10. Heard Mr. Sanjit Mohanty, learned Senior Counsel and Mr. J.K. Das, learned Senior Counsel along with Mr. Ipsit Acharya, learned counsel for the petitioners Page 13 of 31 and Mr. P.K. Parhi, learned DSGI with Mr. S.B. Panda, learned CGC for the Union of India. 11. Assailing the initiation of the proceeding as well as the impugned order, Mr. Mohanty, learned Senior Counsel has contended that in the absence of the Company as an accused, the petitioners being the Directors and Partners cannot be proceeded against because no vicarious liability can be saddled on them. Secondly, the complaint does not contain any averment whatsoever to show as to how the petitioners are liable for the alleged offence. Mr. Mohanty has relied upon several judgments of the Apex Court to buttress his contentions, all of which would be referred to at the appropriate stage. On such basis, it is contended that the impugned order shows complete non-application of mind by the court below and that continuance of the further proceedings would amount to an abuse of the process of the Court. 12. Per contra, Mr. P.K. Parhi, learned DSGI has contended that as per Section 2(60) of the Companies Act, 2013, a Director of the Company can be prosecuted as being in-charge of the affairs of the Company. It is further Page 14 of 31 contended that the petitioners were directly in-charge of the affairs of the Company and had knowingly violated the mandatory provisions of the Act, 1986 by not obtaining prior environment clearance under the EIA Notification, 1994. Therefore, learned court below has rightly taken cognizance of the alleged offence and issued summons to the petitioners. 13. In order to appreciate the rival contentions noted above, it would be proper to first refer to the complaint petition in 2(c)CC Case No. 10 of 2014, copy of which has been enclosed as Annexure-1 to the writ application. Paragraph-2 of the complaint mentions the names of the four petitioners with their designation as Directors of Sarkund Iron & Manganese Mines of M/s. Feegrade & Co. Pvt. Ltd. Paragraph-3 mentions as follows: “3. The date, time and place of occurrence:- The Sarkund Iron & Manganese Mines of M/s. Feegrade & Co. Pvt. Ltd. Koira, District- Sundargarh had enhanced Iron and Manganese Ore from 2007-08 to 2009-10 without obtaining the requisite prior environmental clearance from the Ministry as was required under Environmental Impact Assessment (EIA) Notification 2006. ( Emphasis supplied) Page 15 of 31 Paragraph-5 mentions the nature of offence with section of statute, which is as follows: “ Violation of the provision was given at the Police Station and if so, the action taken thereon :- Not applicable.” Under the heading ‘Facts of the case’ under paragraph-8, it is stated that the mining project had undertaken production from 2007-08 to 2009-10 without obtaining the requisite prior environmental clearance from the Ministry as required under Environmental Impact Assessment (EIA) Notification 2006, which is a mandatory provision to operate the mines. 14. It has been argued at length that the allegation being as described above it is the company/ firm itself which ought to have been proceeded against being the principal offender but not the petitioners, who are its Directors or Partners, as the case may be. 15. Reference has been made to Section 15 and 16 of the Act, 1986, both of which are quoted hereinbelow: “15. Penalty for contravention of the provisions of the Act and the rules, orders and directions.—(1) Whoever fails to comply with or contravenes any of the provisions of this Page 16 of 31 Act, or the rules made or orders or directions issued thereunder, shall, in respect of each such failure or contravention, be punishable with imprisonment for a term which may extend to five years or with fine which may extend to one lakh rupees, or with both, and in case the failure or contravention continues, with additional fine which may extend to five thousand rupees for failure or every day during which such contravention continues after the conviction for the first such failure or contravention. (2) If the failure or contravention referred to in sub-section (1) continues beyond a period of one year after the date of conviction, the offender shall be punishable with imprisonment for a term which may extend to seven years. 16. Offences by companies.—(1) Where any offence under this Act has been committed by a company, every person who, at the time the offence was committed, was directly in charge 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 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 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, the manager, secretary or other officer of company, such director, manager, secretary or other officer shall also deemed to be guilty of that offence and shall be liable to be proceeded against accordingly. Explanation.—For the purposes of this section,— (a) “company” means any body corporate, and firm or other association of includes a punished and Page 17 of 31 individuals; and (b) “director”, in relation to a firm, means a partner in the firm. [ Emphasis supplied] 16. Referring to the language employed in Section 16, learned Senior Counsel, Mr. Mohanty has strongly argued that unless it is prima facie shown that the person proceeded against was directly in-charge of and was responsible to the Company for the conduct of its business, a prosecution would not lie. Secondly, by the use of the expression ‘as well as the Company’, it is evident that the Company itself has to be arraigned as an accused along with the person directly in-charge of its affairs. This, according to Mr. Mohanty, entails impletion of the Company as an accused as also of the need of specific averments being taken in the complaint petition showing as to how the person proceeded against was responsible for the affairs of the Company and as such, committed the offence. Since it is a penal provision, it has to be construed strictly. 17. Mr. Mohanty has relied upon several decisions. In the case of Anita Hada v. Godfather Page 18 of 31 Travels & Tours Pvt. Ltd. reported in AIR 2012 SC 2795, it was held as under: “43. In view of our aforesaid analysis, we arrive at the irresistible conclusion that for maintaining the the Act, prosecution under Section 141 of is arraigning of a company as an accused imperative. The other categories of offenders can only be brought in the drag-net on the touchstone of vicarious liability as the same has been stipulated in the provision itself. We say so on the basis of the ratio laid down in C.V. Parekh [(AIR 1971 SC 447] which is a three-Judge Bench decision………..” [Emphasis supplied] Undoubtedly, the cited judgment was rendered in relation to Section 141 of the Negotiable Instruments Act, which reads as follows: “141 Offences by companies. — (1) If the person committing an offence under section 138 is a 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, 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 person liable to punishment if he proves that the offence was committed without his knowledge, or that he had exercised all due diligence to prevent the commission of such offence: 22 [Provided further that where a person is nominated as a Director of a company by virtue of his holding any office or employment in the Central Government or State Government or a financial corporation owned or controlled by the Central Government or the State Government, as the case may be, he shall not be liable for prosecution under this Chapter.] Page 19 of 31 (2) Notwithstanding anything contained in sub- section (1), where any 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. Explanation.— For the purposes of this section,— (a) “company” means any body corporate and includes a firm or other association of individuals; and (b) “director”, in relation to a firm, means a partner in the firm.” 18. Evidently, the provision under Section 16 of the Act, 1986 is in parimateria with the provision under Section 141 of the NI Act with the added rider that the person concerned must be directly in-charge of the affairs of the Company. It is the settled position of law when the words of a statute are clear, plain or unambiguous, the Courts are bound to give effect to that meaning irrespective of consequences. Reference in this regard may be had to the decision of the Apex Court in the Case of Nelson Motis vs. Union of India, reported in AIR 1992 SC 1981. It is also well settled that the words of a statute are first understood in their natural, ordinary or popular sense and phrases and sentences are construed according Page 20 of 31 to their grammatical meaning, unless that leads to some absurdity or unless there is something in the context, or in the object of the statute to suggest the contrary. The decision of the Apex Court in the case of State of Himachal Pradesh vs. Pawan Kumar, reported in AIR 2005 SC 2265 may be referred to in this regard. There is also no dispute with regard to the proposition that penal statutes are required to be given strict construction. 19. According to Oxford Advanced Learner’s Dictionary (New 9th Edition), the word ‘directly’ means in a direct line or manner. The Black Law Dictionary (7th Edition) defines the word ‘directly’ as (1) in a state forward manner, (2) in a straight line or course, (3) immediately. Therefore, understood in the context of the expression ‘directly in charge’ used in Section 16 of the Act, 1986, the word ‘directly’ would mean the main person who looks after the affairs of the Company. In other words, such a person’s involvement in the affairs of the Company is treated as direct or much more than its other functionaries as he is ultimately responsible for its affairs. At this stage a reference may also be made to the object of Page 21 of 31 the statue itself as reflected in the Statement of Objects and Reasons. The Act as indicated in the preamble is the offshoot of the decision taken at the United Nations Conference on Human Environment held at Stockholm in June, 1972, in which India participated, to take appropriate steps for the protection and improvement of human environment. The Statement of Objects and Reasons is quoted hereinbelow for immediate reference. in food chains, growing “Statement of Objects and Reasons.- Concern over the State of environment has grown, the world over since the sixties. The decline in environmental quality has been evidenced by increasing pollution, loss of vegetal cover and biological diversity, excessive concentrations of harmful chemicals in the ambient atmosphere risks of and environmental accidents and threats to life support systems. The world community’s resolve to protect and enhance the environmental quality found expression in the decisions taken at the United Nations Conference on the Human Environment held in Stockholm in June, 1972. the Government of Conference the environmental concerns. While several measures have been taken for environmental protection both before and after the Conference, the need for a general legislation further to implement the the Conference has been decisions increasingly evident. India Participated strongly voiced and in of (2) Although there are existing laws dealing directly or indirectly, with several environmental matters, it is necessary to have a general legislation for environmental protection. Existing laws generally types of pollution or on specific categories of hazardous focus on specific Page 22 of 31 substances, substances. Some major areas of major environmental hazards. There are inadequate linkages in handling matters of industrial and environmental safety. Control mechanisms to guard against slow, insidious build up of new hazardous chemicals, in the environment al are weak. Because of a multiply of regulatory agencies, there is need for an authority which can assume for studying, planning and the implementing of long-term environmental safety and to give direction to, and co-ordinate a system of speedy and adequate response to emergency situations threatening environment. requirements lead role especially (3) In view of what has been stated above, there is urgent need for the enactment of a general legislation on environmental protection which, inter alia, should enable co-ordination of activities of the various regulatory agencies, creation of an authority or authorities with adequate powers for environmental protection, regulation of discharge of environmental pollutants hazardous handling substances, speedy response in the event of and accidents, deterrent punishment to those who endanger human environment, safety and health. environment threatening and of [Emphasis supplied] Section-15 provides punishment of imprisonment for a term which may extend to five years or with fine which may extend to 1 lakh rupees or with both and in case the failure or contravention continues, with additional fine which may extend to five thousand rupees for every day during which such failure or contravention Page 23 of 31 continues after the conviction for the first such failure or contravention. Sub-Section (2) of Section 15 provides for enhanced punishment with imprisonment for a term which may extend to seven years if the contravention continues beyond a period of one year after the date of conviction. Thus, the very object of the Act is to provide deterrent punishment to those who endanger human environment, safety and health. In such view of the matter, there can be no second opinion that the words of the statute have to be strictly construed. 20. Such being the position of law, it is only natural that in order to launch a prosecution under Section 15 of the Act the requirement of making specific averment to show as to how the person proceeded against was responsible for the alleged violation cannot in any manner be done away with. Viewed differently, it has to be ex facie shown in the complaint petition itself through appropriate averments that the person sought to be implicated was directly in charge of the affairs of the Company. Thus, the principle laid down in Anita Hada (supra) would apply to the case at hand in full force and Page 24 of 31 this Court therefore, finds considerable force in the contentions advanced by learned Senior Counsel as referred above. 21. Coming to Section 16 of the Act, 1986, it is seen that not only the person directly in-charge of the affairs of the Company would be liable for prosecution in case of contravention of any provision of the Act but also the Company. Sub-Section(2) of Section 16 reads as follows: “(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 deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly.” Therefore, if the Company is sought to be prosecuted, then it has also to be shown that the offence was committed with the consent or connivance etc. on the part of any of its functionaries. What the complainant has done in the instant case is, the Directors/ Partners have been attempted to be made vicariously liable for the Page 25 of 31 offence allegedly committed by the Company/Firm, firstly, without arraigning the Company/Firm as an accused and secondly, without even remotely stating as to how the petitioners were responsible for the alleged violation. This is obviously contrary to the requirement of the statute referred above. 22. In the case of Dayle De’ Souza v. Government of India, reported in AIR 2021 SC 5626, it was held as under: and that the provision “22. However, subsequent decisions of this Court have emphasised imposes vicarious liability by way of deeming fiction which presupposes and requires the commission of the offence by the company itself as it is a separate juristic entity. Therefore, unless the company as a principal accused has committed the offence, the persons mentioned in sub-section (1) would not be prosecuted. Section liable 141(1) Negotiable extends vicarious criminal liability to the officers of a company by deeming fiction, which arises only when the offence is committed by the company itself and not otherwise. Overruling Sheoratan in Aneeta Hada v. Agarwal and Anil Hada, Godfather Travels and Tours Private Limited, a 3- judge bench of this court expounding on the the vicarious Negotiable Instruments Act, has held: liability under Section 141 of Instruments Act, cannot be xx xx xx xx xx xx Page 26 of 31 27. In terms of the ratio above, a company being a juristic person cannot be imprisoned, but it can be subjected to a fine, which in itself is a punishment. Every punishment has adverse consequences, and therefore, prosecution is mandatory. The exception would possibly be when the company itself has ceased to exist or cannot be prosecuted due to a statutory bar. However, such exceptions are of no relevance in the present case. Thus, the present prosecution must fail for this reason as well.” company the of 23. Further in SMS Pharmaceuticals Ltd. V. Neeta Bhalla & Anr. reported in (2005) 8 SCC 89, the apex court held as follows: “15. Cases have arisen under other Acts where similar provisions are contained creating vicarious liability for officers of a company in cases where primary liability is that of a company. State of Karnataka v. Pratap Chand [(1981) 2 SCC 335 : 1981 SCC (Cri) 453] was a case under the Drugs and Cosmetics Act, 1940. Section 34 contains a similar provision making every person in charge of and responsible to the company for the conduct of its business liable for offence committed by a company. It was held that a person liable for criminal action under that provision should be a person in overall control of the day-to-day affairs of the company or a firm. This was a case of a partner in a firm and it was held that a partner who was not in such overall control of the firm could not be held liable. In Municipal Corpn. of Delhi v. Ram Kishan Rohtagi [(1983) 1 SCC 1 : 1983 SCC (Cri) 115] the case was under the Prevention of Food Adulteration Act. It was first noticed that under Section 482 of the Criminal Procedure Code in a complaint, the order of a Magistrate issuing process against the accused can be quashed or set aside in a case where the allegation made in the complaint or the statements of the witnesses recorded in support of the same taken at their face value make out absolutely no case against the accused or the complaint does not disclose the essential ingredients of an offence Page 27 of 31 which are arrived at against the accused. This emphasises the need for proper averments in a complaint before a person can be tried for the offence alleged in the complaint. 18. To sum up, there is almost unanimous judicial opinion that necessary averments ought to be contained in a complaint before a person can be subjected to criminal process. A liability under Section 141 of the Act is sought to be fastened vicariously on a person connected with a company, the principal accused being the company itself. It is a departure from the rule in criminal law against vicarious liability. A clear case should be spelled out in the complaint against the person sought to be made liable. Section 141 of the Act contains the requirements for making a person liable under the said provision. That the respondent falls within the parameters of Section 141 has to be spelled out. A complaint has to be examined by the Magistrate in the first instance on the basis of averments contained therein. If the Magistrate is satisfied that there are averments which bring the case within Section 141, he would issue the process. We have seen that merely being described as a director in a company is not sufficient to satisfy the requirement of Section 141. Even a non-director can be liable under Section 141 of the Act. The averments in the complaint would also serve the purpose that the person sought to be made liable would know what is the case which is alleged against him. This will enable him to meet the case at the trial.” 24. Similarly in the case of National Small Industries Corpn. Ltd. Harmeet Singh Paintal, (2010) 3 SCC 330, it was held as under; “13. Section 141 is a penal provision creating vicarious liability, and which, as per settled law, must be strictly construed. It is therefore, not sufficient to make a bald cursory statement in a complaint that the Director (arrayed as an accused) is in charge of and responsible to the company for the conduct of the business of the company without anything more as to the role of Page 28 of 31 the Director. But the complaint should spell out as to how and in what manner Respondent 1 was in charge of or was responsible to the accused Company its for business. This is in consonance with strict interpretation of penal statutes, especially, where such statutes create vicarious liability. the conduct of 14. A company may have a number of Directors and to make any or all the Directors as accused in a complaint merely on the basis of a statement that they are in charge of and responsible for the conduct of the business of the is not a company without anything more sufficient or adequate the requirements under Section 141. fulfilment of 15. In a catena of decisions, this Court has held that for making Directors liable for the offences committed by the company under Section 141 of the Act, there must be specific averments against the Directors, showing as to how and in what manner the Directors were responsible for the conduct of the business of the company. 14. A company may have a number of Directors and to make any or all the Directors as accused in a complaint merely on the basis of a statement that they are in charge of and responsible for the conduct of the business of the is not a company without anything more sufficient or adequate the requirements under Section 141. fulfilment of 39. From the above discussion, the following principles emerge: is on responsibility the (i) The primary complainant to make specific averments as are required under the law in the complaint so as to make liable. For is no fastening the criminal presumption that every Director knows about the transaction. the accused vicariously liability, there (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 Page 29 of 31 were responsible for the conduct of the business of the company. xx xx xx (iv) Vicarious liability on the part of a person must be pleaded and proved and not inferred. xx xx xx (vii) 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.” 25. It has been argued that a criminal trial is a serious matter. Speaking on the effect of pendency of a criminal proceeding albeit in the context of the right to speedy trial, the Apex Court in the case of Abdul Rehman Antulay v. R.S. Nayak, (1992) 1 SCC 225 observed as under: “……….It needs no emphasis to say, the very fact of being accused of a crime is cause for concern. It affects the reputation and the standing of the person among his colleagues and in the society. It is a cause for worry and expense. ……….” 26. Thus, being arraigned as an accused in a criminal case is a matter that cannot be taken lightly and therefore, it is imperative for the concerned Court to apply its judicial mind even at the stage of taking cognizance and issuing process against someone. If the materials placed by the prosecution/complainant ex-facie do not Page 30 of 31 justify the issuance of process against the proposed accused, it would be a travesty of justice to do so. Viewed in the light of the principle of law stated above, there can be no manner of doubt that the impugned order is a product of non-application of mind both on facts as well as law and therefore, cannot be sustained. 27. For the foregoing reasons therefore, the applications are allowed. The Criminal proceedings and the impugned orders passed in each of the cases as referred in the table given at the beginning of the judgment are hereby quashed. ……..…………………….. Sashikanta Mishra, Judge Orissa High Court, Cuttack, The 16th February, 2023/ A.K. Rana, P.A. Page 31 of 31