Himachal Pradesh High Court
Jugal Kishor Sharma vs H.P. Pollution Control Board on 17 July, 2024
Author: Sandeep Sharma
Bench: Sandeep Sharma
IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA Cr.MMO No.668 of 2024 Date of Decision: 17.07.2024 .
_______________________________________________________ Jugal Kishor Sharma .......Petitioner Versus H.P. Pollution Control Board ... Respondent _______________________________________________________ Coram:
Hon'ble Mr. Justice Sandeep Sharma, Judge.
Whether approved for reporting? 1 For the Petitioner: Mr. R.L.Sood, Senior Advocate with Mr. Arjun Lal, Advocate.
For the Respondent: Mr. Dhiraj Thakur, Advocate.
_______________________________________________________ Sandeep Sharma, Judge(oral):
Being aggrieved and dissatisfied with order dated 30.04.2024 passed by learned Additional Chief Judicial Magistrate Nalagarh, District Solan, H.P., in case No.78 of 2021, whereby learned court below having taken note of the complaint filed by Junior Environment Engineer, Regional Office, H.P.State Pollution Control Board, Baddi, District Solan, H.P., under Sections 41, 43, 44 and 49 of the Water (Prevention and Control of Pollution)Act, 1974 and Sections 15, 16, 19 of the Environment (Protection) Act, 1986, issued summon to the petitioner, who is alleged to be Plant Head of M/s Winsome Textile Industries Limited, petitioner has approached this Court in the instant proceedings filed under Section 482 Cr.P.C, 1 Whether the reporters of the local papers may be allowed to see the judgment?::: Downloaded on - 23/07/2024 20:29:59 :::CIS 2
praying therein to quash and set-aside aforesaid summoning order as well as complaint filed by the respondent- H.P. State Pollution Control .
Board.
2. Precisely, the facts of the case, as emerge from the record are that the complaint has been filed by the respondent-
Board against the petitioner, who is Plant Head of Winsome Textiles Industries Ltd. It has been stated in the complaint that the textile unit has been established by the Company in the Baddi area, after grant of a valid Consent to Operate in its favour on 23.01.1987. The allegations in the complaint are to the effect that after establishment of a Common Effluent Treatment Plant (CETP), the Company was required to send its effluent to the CETP for treatment. It has been averred in the complaint that the inlet quality norms for the CETP were notified on 17.03.2018 and 26.12.2019. It has been alleged that even though for the period 25.07.2020 to 31.12.2020, the proceedings (including the validity of notification of 26.12.2019 are subjudice before the Hon'ble High Court in CWP No.414,416, 417 and 418 of 2021), but no action has been taken yet for the period 21.01.2021 to 30.06.2021. The complaint in question has been filed for the alleged violation qua the aforesaid period. It has been alleged that parameter relating to TDS/FDS, which has been prescribed in terms of the Notification of 26.12.2019, is not being met by the unit ::: Downloaded on - 23/07/2024 20:29:59 :::CIS 3 and, therefore, criminal proceedings in terms of the provisions of the Water Act have been initiated. The test reports have been filed with .
the Complaint i.e Annexure P-2. On the basis of the alleged non-
compliance of the parameter of TDS/FDS prescribed under notification 26.12.2019, the violation for the subsequent period has been termed as a fresh cause of action, entitling the respondent Board to file and maintain the complaint sought to be quashed, by way of the present petition.
3. After having noticed certain discrepancies and violations of various provisions contained under Water (Prevention and Control of Pollution)Act, 1974 and Sections 15, 16, 19 of the Environment (Protection) Act, 1986, Junior Environment Engineer H.P. State Pollution Control Board, Regional Office, Baddi, District Solan, H.P., filed complaint in the Court of learned Additional Chief Judicial Magistrate, Nalagarh, District Solan, H.P., in the month of August 2021 on the basis of office order dated 27.07.2021.
4. In nutshell, complainant, named hereinabove, alleged that as per analysis results, the samples of M/s Winsome Textile Industries Limited are not found satisfactory and as per sampling results, the parameters i.e. total Dissolved Solids (TDS) Chloride and Biological Oxygen demand (BOD) are above limit and are not meeting the inlet quality standard prescribed on 17.03.2018 and 26.12.2019.
::: Downloaded on - 23/07/2024 20:29:59 :::CIS 45. Having taken note of complaint as detailed hereinabove, learned Additional Chief Judicial Magistrate, Nalagarh issued process .
against the petitioner, who at that relevant time was working as Plant Head of M/s Winsome Textile Industries Limited. At this juncture, it would be pertinent to bring on record that other co-accused namely Satish Coomar Bagrodia , has already left for his heavenly abode on 5.3.2019 and copy of his death certificate has been placed on record as Annexure P-11
6.
r to Before reply to complaint, if any, could be filed by the accused named in the complaint, the petitioner approached this Court in the instant proceedings for quashing of the complaint as well as summoning order on the ground that since company i.e. M/s Winsome Textile limited has been not arrayed as an accused, petitioner, who is working in a managerial position, cannot be prosecuted. Besides above, it has been further claimed by the petitioner that complaint, sought to be quashed, is otherwise not maintainable as the same has been filed by Junior Environment Engineer, whereas as per Board's own decision same could be filed by Member Secretary, H.P. State Pollution Control Board.
7. Mr. Arjun Lal, learned counsel representing the petitioner while inviting attention of this Court to Section 47 of Water (Prevention and Control of Pollution) Act, contended that unless it is proved that ::: Downloaded on - 23/07/2024 20:29:59 :::CIS 5 offence was committed by the company with the consent and connivance of Director, Secretary, Manager and other officer of the .
company such Director, Manager, Secretary and other officers cannot be prosecuted. He submitted that till the time company is not arrayed as an accused, no prosecution can be launched against his Directors or other persons holding managerial position because at first instance it is required to be established on record that offences are committed by company and in commission of such offence company was consented/assisted by Directors, Manager, Secretary or other officers.
In support of his aforesaid contention, learned counsel for the petitioners invited attention of this Court to the judgment rendered by Hon'ble Apex Court in Aneeta Hada versus Godfather Travels and Tours Private Limited, (2012) 5 Supreme Court Cases 661. Though, aforesaid judgment directly relates to provision contained under Negotiable Instruments Act,1881 but since Section 47 of Water (Prevention and Control of Pollution) Act, is para-materia to Section 141 of Negotiable Instruments Act, same has application in the instant case. He also invited attention to the latest judgment passed by Hon'ble Apex Court in Dayle De' Souza versus Government of India, 2021 SCC Online SC 1012, wherein it has been reiterated that unless the company, which is an accused of committing principle offence is not arrayed as an party, Directors and other persons ::: Downloaded on - 23/07/2024 20:29:59 :::CIS 6 holding the managerial position of the company cannot be prosecuted. While inviting attention to Section 33-A of the Act, .
Learned counsel representing the petitioners contended that power to give directions vest in Board, not in Environment Engineer, who has issued show cause notice in the instant case.
8. Pursuant to notice issued in the instant proceedings, Mr. Dhiraj Thakur, Advocate has appeared for the respondent-Board and has supported the filing of the complaint and issuance of summoning order dated 30.04.2024.
9. Mr. Dhiraj Thakur, learned counsel for the respondent-
Board while refuting aforesaid submission made by learned counsel representing the petitioner, contended that defect as has been pointed out in the complaint is curable and as such, merely on account of non-impleadment of company, prosecution launched against petitioners cannot be ordered to be quashed and set-aside. In support of his aforesaid contention, he placed reliance upon the judgment passed by Hon'ble Apex Court in U.P. Pollution Control Board versus Messrs Modi Distillery and others, (1987) 3 Supreme Court Cases, 684. While inviting attention of this Court to judgment passed by Hon'ble Apex Court in Aneeta Hada case(supra), Learned counsel representing the respondent-Board vehemently argued that judgment rendered by Hon'ble Apex Court in U.P. ::: Downloaded on - 23/07/2024 20:29:59 :::CIS 7 Pollution Control Board versus Messrs Modi Distillery and others has been not overruled, rather has been upheld and as such, same .
has application in the case at hand.
10. Before ascertaining the correctness of rival contentions made by learned counsel for the parties, this Court deems it fit to take note of Section 33-A and Section 47 Water (Prevention and Control of Pollution) Act hereinbelow:-
[33A. Power to give directions.--Notwithstanding anything contained in any other law, but subject to the provisions of this Act, and to any directions that the Central Government may give in this behalf, a Board may, in the exercise of its powers and performance of its functions under this Act, issue any directions in writing to any person, officer or authority, and such person, officer or authority shall be bound to comply with such directions.
Explanation.--For the avoidance of doubts, it is hereby declared that the power to issue directions under this section includes the power to direct--
(a) the closure, prohibition or regulation of any industry, operation or process; or
(b) the stoppage or regulation of supply of electricity, water or any other service.]
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 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, manager, secretary or other officer of the company, such director, manager, secretary or other officer shall also be deemed to ::: Downloaded on - 23/07/2024 20:29:59 :::CIS 8 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.
11. Bare perusal of Section 33-A of the Act, clearly reveals that power to give directions under this Act only lies with the Board i.e. H.P. State Pollution Control Board, meaning thereby, action, if any, for violation of various provisions of law contained under the Act can be taken by Board.
Though, Sh. Dhiraj Thakur, learned counsel representing the respondent-
Board vehemently argued that Junior Environment Engineer is/was competent to initiate action against the petitioners for their having allegedly violated the various provisions contained under the Act, but this Court is not persuaded to agree with his aforesaid contention. Learned counsel for the respondent-Board has not been able to show on record any document suggestive of the fact that Junior Environment Engineer was ever delegated power to initiate proceedings against the polluting companies for their having allegedly violated various provisions contained under the Act, but even otherwise reply to the petition filed by the respondent in CWP No.417 of 2021, titled Winsome Textile Limited versus The State of Himachal Pradesh and others (Annexure P-9) clearly reveals that Pollution Control Board in its 39th Board meeting held on 10.06.1996 vide item No.39.8 delegated the powers to the Member Secretary to issue notices/directions under Water Act, 1974 and Air Act, 1981. Relevant para of reply filed in the aforesaid case is reproduced hereinbelow:-
::: Downloaded on - 23/07/2024 20:29:59 :::CIS 9"L-M. Contents of para L-M are denied. As already submitted in paras supra the Hon'ble NGT vide dated 18.6.2020 had passed directions to the State Board to close polluting activities and recover compensation from the polluting industries. Accordingly, impugned .
directions dated 1.1.2021 were issued to the petitioner unit for non-conforming to their norms for prescribed limits. It is further denied that directions issued by the respondent No.3 have been issued beyond the scope of powers and duties. As the State Board in its 39th Board meeting held on 10.6.1996 vide item No.39.8 had delegated powers to the Member Secretary to issue notices/directions under Water Act, 1974 and Air Act, 1981."
12. Though, learned counsel representing the respondent-
Board argued that aforesaid reply was filed in other litigation and as such, has no bearing in the instant case, but he has been not able to dispute that Pollution Control Board in its 39th Board meeting held on 10.06.1996 had taken decision in general not in particular case, meaning thereby as per aforesaid decision power to issue notices/directions under Water Act 1974 and Air Act, 1981 lies with the Member Secretary.
However, in the instant case, neither show cause notice nor complaint ever came to be issued/instituted by Member Secretary, rather by Senior/Junior Environment Engineer and as such, complaint as well as prosecution initiated thereupon is not sustainable in the eye of law.
13. At this stage, learned counsel representing the respondent-Board invited attention of this Court to Section 49 of the Act, which reads as under:-
49. Cognizance of offences.--1[(1) No court shall take cognizance of any offence under this Act except on a complaint made by--
(a) a Board or any officer authorised in this behalf by it; or ::: Downloaded on - 23/07/2024 20:29:59 :::CIS 10
(b) any person who has given notice of not less than sixty days, in the manner prescribed, of the alleged offence and of his intention to make a complaint, to the Board or officer authorised as aforesaid, and no court inferior to that of a Metropolitan Magistrate or .
a Judicial Magistrate of the first class shall try any offence punishable under this Act.
2[2) Where a complaint has been made under clause
(b) of sub-section (1), the Board shall, on demand by such person, make available the relevant reports in its possession to that person:
Provided that the Board may refuse to make any such report available to such person if the same is, in its opinion, against the public interest.] 3[(3)] Notwithstanding anything contained in section 4[29 of the Code of Criminal Procedure, 1973 (2 of 1974)], it shall be lawful for any 4[Judicial Magistrate of the first class or for any Metropolitan Magistrate] to pass a sentence of imprisonment for a term exceeding two years or of fine exceeding two thousand rupees on any person convicted of an offence punishable under this Act.
14. While placing heavy reliance on aforesaid provision of law, learned counsel representing the respondent-Board attempted to carve out a case that any authorized officer can institute proceedings.
However, as has been taken note hereinabove, neither there is any notification nor any executive order available on the file suggestive of the fact that Junior Environment Engineer is /was competent/authorized by the Board to institute proceedings against petitioners for their having allegedly violated various provisions contained under the Act. Moreover, as has been taken note hereinabove, Board has already decided to delegate power to issue direction to Member Secretary of Pollution Control Board.
::: Downloaded on - 23/07/2024 20:29:59 :::CIS 1115. Similarly, careful perusal of Section 47 of the Water Act, especially Section 47(2) clearly provides that wherein offence under .
this Act is committed by the company and it is proved that 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. If the aforesaid provisions of law is read in its entirety, it clearly suggests that to institute/launch criminal prosecution against director, manager or other officer of the company, it is incumbent to first prove offence, if any, committed by the company and for that purpose company is necessarily required to be impleaded/arrayed as an accused.
16. In the instant case, close security of complaint sought to be quashed nowhere suggest that respondent-Board arrayed company i.e. M/s Winsome Textile Limited as an accused. Till the time, it is not established on record that company has violated the various provisions of the Act, it is not understood how and on what basis prosecution can be launched against its director, manager and other officers of the company.
17. Hon'ble Apex Court in Aneeta Hada case (supra) while dealing with provisions contained in Section 141 of the Negotiable ::: Downloaded on - 23/07/2024 20:29:59 :::CIS 12 Instruments Act, which is para-materia to section 47 of Water Act, categorically held that company is a juristic person and concept of .
corporate criminal liability is attracted to a corporation and company and it is so luminescent from the language employed under Section 141 of the Act. Hon'ble Apex Court further held that director or any person of the company cannot be prosecuted without impleadment of the company. While returning aforesaid finding, Hon'ble Apex Court overruled its earlier judgment given in Aneeta Hada vs. Indian Acrylic Limited (2000)1 SCC 1, wherein it was held that director or any officer can be prosecuted without company as an accused. While passing aforesaid judgment, Hon'ble Apex Court also took note of its earlier judgment rendered in U.P. Pollution Control Board versus Messrs Modi Distillery and others, (1987) 3 Supreme Court Cases, 684, which is otherwise heavily relied upon by learned counsel for the respondent-Board in the instant case.
18. Though, Hon'ble Apex Court did not overrule the finding given in the aforesaid case i.e. U.P. Pollution Control Board versus Messrs Modi Distillery and others, wherein on account of certain technical flaw company in that case was permitted to cure the defect by amending the name of the company from Messrs Modi Distillery to Modi Industries Limited, but categorically recorded in subsequent judgment that decision in Modi Distillery(supra)has to be treated to be ::: Downloaded on - 23/07/2024 20:29:59 :::CIS 13 restricted to its own facts as has been explained in the instant judgment. Though, Sh. Dhiraj Thakur, learned counsel representing .
the respondent-Board vehemently argued that since judgment rendered by Hon'ble Apex Court in Modi Distillery case (supra) has not been overruled by the Hon'ble Apex Court in its Aneeta Hada case (supra), it has application in the case at hand as such, no illegality can be said to have been committed by complainant while launching prosecution against the petitioner without there being impleadment of the company as an accused. However, as has been taken note hereinabove, this is not the correct interpretation of the judgment rendered by the Hon'ble Apex Court in Aneeta Hada case (supra) because in Aneeta Hada case, Hon'ble Apex Court though concurred with its earlier judgment given in Modi Distillery but categorically ruled that decision in Modi Distillery has to be restricted strictly to its own facts and as such, same cannot be treated as precedent.
19. At this stage, it would be profitable to reproduce para Nos. 51 to 59 of the judgment rendered by Hon'ble Apex Court in Aneeta Hada case(supra) hereinbelow:-
"51. We have already opined that the decision in Sheoratan Agarwal (supra) runs counter to the ratio laid down in the case of C.V. Parekh (supra) which is by a larger Bench and hence, is a binding precedent. On the aforesaid ratiocination, the decision in Anil Hada (supra) has to be treated as not laying down the correct law as far as it states that the director or any other officer ::: Downloaded on - 23/07/2024 20:29:59 :::CIS 14 can be prosecuted without impleadment of the company. Needless to emphasize, the matter would stand on a different footing where there is some legal impediment and the doctrine .
of lex non cogit ad impossibilia gets attracted.
52. At this juncture, we may usefully refer to the decision in U.P. Pollution Control Board v. M/s. Modi Distillery and others[43]. In the said case, the company was not arraigned as an accused and, on that score, the High Court quashed the proceeding against the others. A two-Judge Bench of this Court observed as follows: (SCC p.690, para 6).
"6.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 Messers Modi Industries Limited, the Company owning the industrial unit, 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."
Be it noted, the two-Judge Bench has correctly stated that there can be no vicarious liability unless there is a prosecution against the company owning the industrial unit but, regard being had to the factual matrix, namely, the technical fault on the part of the company to furnish the requisite information called for by the Board, directed for making a formal amendment by the applicant and substitute the name of the owning industrial unit. It is worth noting that in the said case, M/s. Modi distilleries was arrayed as a party instead of M/s Modi Industries Limited. Thus, it was a defective complaint which was curable but, a pregnant one, the law laid down as regards the primary liability of the company without which no vicarious liability can be imposed has been appositely stated.
::: Downloaded on - 23/07/2024 20:29:59 :::CIS 1553. It is to be borne in mind that Section 141 of the Act is concerned with the offences by the company. It makes the other persons vicariously liable for commission of an offence on the part of the company. As has been stated by us earlier, the vicarious liability gets attracted when the condition .
precedent laid down in Section 141 of the Act stands satisfied. There can be no dispute that as the liability is penal in nature, a strict construction of the provision would be necessitous and, in a way, the warrant.
54. In this context, we may usefully refer to Section 263 of Francis Bennion's Statutory Interpretation where it is stated as follows: -
"A principle of statutory interpretation embodies the policy of the law, which is in turn based on public policy. The court presumes, unless the contrary intention appears, that the legislator intended to conform to this legal policy. A principle of statutory interpretation can therefore be described as a principle of legal policy formulated as a guide to legislative intention".
(emphasis supplied)
55. It will be seemly to quote a passage from Maxwell's The Interpretation of Statutes (12th Edition) : -
"The strict construction of penal statutes seems to manifest itself in four ways: in the requirement of express language for the creation of an offence; in interpreting strictly words setting out the elements of an offence; in requiring the fulfilment to the letter of statutory conditions precedent to the infliction of punishment; and in insisting on the strict observance of technical provisions concerning criminal procedure and jurisdiction."
56. We have referred to the aforesaid passages only to highlight that there has to be strict observance of the provisions regard being had to the legislative intendment because it deals with penal provisions and a penalty is not to be imposed affecting the rights of persons whether juristic entities or individuals, unless they are arrayed as accused. It is to be kept in mind that the power of punishment is vested in the legislature and that is absolute in Section 141 of the Act which clearly speaks of commission of offence by the company. The learned counsel for the respondents have vehemently urged that the use of the term "as well as" in the Section is of immense significance and, in its tentacle, it brings in the company as well as the director and/or other officers who are responsible for the acts of the company and, therefore, a prosecution against the directors or other officers is tenable even if the company is not arraigned as an ::: Downloaded on - 23/07/2024 20:29:59 :::CIS 16 accused. The words "as well as" have to be understood in the context.
57. In Reserve Bank of India v. Peerless General Finance and Investment Co. Ltd. and others[44] it has been laid down .
that the entire statute must be first read as a whole, then section by section, clause by clause, phrase by phrase and word by word. The same principle has been reiterated in Deewan Singh and others v. Rajendra Prasad Ardevi and others[45] and Sarabjit Rick Singh v. Union of India[46].
58. Applying the doctrine of strict construction, we are of the considered opinion that commission of offence by the company is an express condition precedent to attract the vicarious liability of others. Thus, the words "as well as the company" appearing in the Section make it absolutely unmistakably clear that when the company can be prosecuted, then only the persons mentioned in the other categories could be vicariously liable for the offence subject to the averments in the petition and proof thereof. One cannot be oblivious of the fact that the company is a juristic person and it has its own respectability. If a finding is recorded against it, it would create a concavity in its reputation. There can be situations when the corporate reputation is affected when a director is indicted.
59. In view of our aforesaid analysis, we arrive at the irresistible conclusion that for maintaining the prosecution under Section 141 of the Act, arraigning of a company as an accused is imperative. The other categories of offenders can only be brought in the dragnet 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 (supra) which is a three-Judge Bench decision. Thus, the view expressed in Sheoratan Agarwal (supra) does not correctly lay down the law and, accordingly, is hereby overruled. The decision in Anil Hada (supra) is overruled with the qualifier as stated in paragraph 51. The decision in Modi Distilleries (supra) has to be treated to be restricted to its own facts as has been explained by us hereinabove".
20. Subsequent to aforesaid judgment Hon'ble Apex Court in Dayle De' Souza case(supra) again reiterated that directors and other officers of the company cannot be prosecuted without there being any impleadment of the company. At this stage, it would be ::: Downloaded on - 23/07/2024 20:29:59 :::CIS 17 profitable to reproduce para-27 of the aforesaid judgment hereinbelow:-
.
"27. However, subsequent decisions of this Court have emphasised that the provision 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 liable and cannot be prosecuted. Section 141(1) of the Negotiable Instruments Act, 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 Agarwal and Anil Hada, in Aneeta Hada v. Godfather Travels and Tours Private Limited,12 a 3-judge bench of this court expounding on the vicarious liability under Section 141 of the Negotiable Instruments Act, has held:
"51. We have already opined that the decision in Sheoratan Agarwal runs counter to the ratio laid down in C.V. Parekh which is by a larger Bench and hence, is a binding precedent. On the aforesaid ratiocination, the decision in Anil Hada has to be treated as not laying down the correct law as far as it states that the Director or any other officer can be prosecuted without impleadment of the company. Needless to emphasise, the matter would stand on a different footing where there is some legal impediment and the doctrine of lex non cogit ad impossibilia gets attracted.
xx xx xx
59. In view of our aforesaid analysis, we arrive at the irresistible conclusion that for maintaining the prosecution under Section 141 of the Act, arraigning of a company as an accused is 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 which is a three-Judge Bench decision. Thus, the view expressed in Sheoratan Agarwal does not correctly lay down the law and, accordingly, is hereby overruled. The decision in Anil Hada is overruled with the qualifier as stated in para 51. The decision in Modi Distillery has to be treated ::: Downloaded on - 23/07/2024 20:29:59 :::CIS 18 to be restricted to its own facts as has been explained by us hereinabove."
21. It is quite apparent from the aforesaid exposition of law .
that till the time company is not arrayed as an accused, its officers be it directors, Secretary and other persons holding managerial position cannot be prosecuted, rather before launching prosecution against the directors of the company, it is incumbent upon complainant to prove violation, if any, of various provisions of the Act against the company and it is also obligatory on the part of the complainant to establish on record that its directors and other officers of the company aided and consented with the company in the commission of offence.
Since in the case at hand company i.e. M/s Winsome Textile Limited has not been arrayed as an accused and complaint has not been filed by competent person, which in the case at hand was Board or member secretary, complaint as well as prosecution launched thereupon is not sustainable in the eye of law. Since complaint is not instituted by competent person, very foundation of the case goes.
Once foundation goes, super structure standing upon the same also bounds to fall.
22. Consequently, in view of the above, this Court finds merit in the present petition and accordingly same is allowed. Order dated 30.04.2024 passed by learned Additional Chief Judicial Magistrate ::: Downloaded on - 23/07/2024 20:29:59 :::CIS 19 Nalagarh, District Solan, H.P., in case No.78 of 2021 is quashed and set-aside as also the proceedings consequential to the aforesaid .
order. The other legal issues raised in the petition have not been dealt with and shall remain open to be urged by both the parties, if required and desired. Pending applications, if any, are disposed of. Interim directions, if any, also stand vacated.
(Sandeep Sharma),
Judge
17th July, 2024
(shankar) r
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