Manu Anand Vs. Madhya Pradesh Pollution Control Board [Madhya Pradesh High Court, 20-06-2016]

Water (Prevention and Control of Pollution), Act, 1974 – Section 47 – Offence by Company – person in- charge and responsible for the conduct of the affairs of a company – The liability upon any person apart from the persons mentioned in section 47(1) of the Act can be fastened only when the complaint contains express allegation of presence of ingredients of element of consent, connivance or neglect on the part of Director, Manager, Secretary or other officer of the company.


HIGH COURT OF MADHYA PRADESH BENCH AT GWALIOR

SB: SHEEL NAGU, J

20/6/2016

Misc. Cri.C. No.13107/15)

Manu Anand Managing Director Vs. Madhya Pradesh Pollution Control Board

Shri Surendra Singh, Senior Advocate with Shri Saurabh Agrawal, Advocate for the petitioner.

Shri Harish Dixit, Advocate for the respondent/Pollution Control Board.

SHEEL NAGU, J. –

1. Inherent powers of this court under Section 482 of Cr.P.C. are invoked for quashment of criminal complaint alleging offences under

# Sections 43, 44 and 49 of Water (Prevention and Control of Pollution), Act, 1974

(for brevity the Act), cognizance of which has been taken by order dated 3/7/2015 (Annexure-P/2) passed in Cri. Case No. 434/15 by JMFC Gohad, district Bhind (M.P.) against the petitioner,who happens to be the Managing Director of the Cadbury India Ltd. (now known as Mondelez India Foods Private Limited), which is a company registered under the Companies Act having its headquarters at Mumbai and factory at Malanpur Industrial Area, district Bhind.

2. The respondents by the complaint in question alleged offences punishable under Sections 43,44 and 49 of the Act on the allegation of contravention of sections 24,25 and 26 of the Act of exuding untreated industrial effluent. The court of competent criminal jurisdiction has taken cognizance by issuing summons against three persons including the petitioner herein, impleaded as accused of the said complaint.

2.1 Pertinently, other two accused impleaded in the complaint were Company itself and one Jai Kumar Nair, Vice President of the said company.

3. Shri Surendra Singh, learned Senior Advocate alongwith Shri Saurabh Agrawal, counsel for the petitioner has raised singular ground of challenge to the said complaint by contending that the petitioner being Managing Director of the said company was not the person in day-to-day control of the affairs of the factory of the company from where the industrial effluent is alleged to have been discharged. In continuation, it is alleged that when one of the accused namely Jai Kumar Nair, Vice President of the said company had been appointed as Factory Manager w.e.f. 1/4/2014 by resolution vide Annexure-P/7 of the Board of Directors of the said company dated 23/5/2014 then, there was neither any occasion nor any lawful authority with the respondents to implead the petitioner as an accused in the complaint. In support of his submission, learned counsel placed reliance on the decisions in the cases of

# Pepsico India Holdings (P) Ltd. v. Food Inspector & another (2011) 1 SCC 176

(para 50),

# Girdhari Lal Gupta v. D.H. Mehta & Another, AIR 1971 SC 2162

(para 6) and

# Puja Ravinder Devidasani v. State of Maharashtra & another, AIR 2015 SC 675

(paras 18, 19 and 20).

3.1 Shri Harish Dixit, learned counsel for the respondent on the other hand contends that the petitioner being Managing Director of the company was very much in charge and responsible for day- to-day affairs of the company and its business and therefore he cannot wriggle out of the clutches of section 47 by shifting liability to any other person.

4. Learned counsel for the rival parties are head.

5. In the present case, the factual matrix discloses that the incident is said to have taken place on 14/8/14. The impugned complaint, Annexure-P/1, filed by the respondent describes the said company in para 1 followed by para 2 containing the factum that the company was issued environmental clearance under sections 25 and 26 of the said Act vide letter dated 22/8/2013 subject to fulfillment of two conditions mentioned therein. Thereafter para 3 describes facts which gave rise to the cause of action to the effect that on 14/8/2014 the employees of Water Pollution Control Board on inspection found industrial untreated effluent flowing from the drains and also detected food oil and polluted water including chemicals in the tank, which impelled the inspecting team to take samples and send them to laboratory for examination. Paras 4 and 5 relate to chemical examination by the laboratory which found the effluents to be polluted. Finally, para 7 of the complaint alleges that in view of above cause of action, offence under sections 43, 44 and 49 of the Act has been committed by the accused-petitioner which is endorsed by the prayer to the JMFC to punish the accused.

5.1 Noticeably, there is not even a whisper in the complaint that the alleged offence has been committed with the consent or connivance and/or due to neglect of the Director, Manager and Secretary or any other persons of the company.

5.2 At this stage, it would be appropriate to reproduce the provisions of section 47 of the Act as under:-

# 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 the 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 for 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 be guilty of that offence and shall be liable to be proceeded against and punished accordingly.”

5.3 Bare reading of section 47(1) of the Act indicates that the person who is in charge of and responsible to the company for the conduct of the business of the company, as well as company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against for the contravention of the provision of the said Act. The said section carves out an exception by way of proviso that the said person mentioned in Section 47(1) shall not be liable to be proceeded against if he is able to establish that the offence was committed without his knowledge or that the same was committed despite the said person exercising due diligence to prevent the offence.

5.4 Sub-section (2) of section 47 qualifies sub-section (1) by employing a non-obstinate clause providing that the penal provision nonetheless shall be attracted if consent, connivance or neglect is attributed to the Director, Manager, Secretary or any other officer of the company

5.5 In the instant case, the company by its resolution dated 23/5/14 (Annexure-P/7) has appointed Mr. Jai Kumar Nair as Factory Manager w.e.f. 1/4/14 and has expressly conferred upon said Shri Jai Kumar Nair inter alia the powers to comply with provisions of different enactments including the provisions of the Act. The relevant portion of the said resolution dated 23/5/14, Annexure-P/7 is reproduced below:-

“AN EXTRACT OF THE MINUTES OF THE MEETING OF THE BOARD OF DIRECTORS OF MONDELEZ INDIA FOODS LIMITED (FORMERLY CADBURY INDIA LIMITED) HELD ON FRIDAY, 23RD MAY, 2014 AT BOARD ROOM, CADBURY HOUSE, BHULABHAI DESAI ROAD, MUMBAI 400 026.

Appointment of Factory Manager for Malanpur Factory:

“RESOLVED THAT in supersession to all earlier resolutio, Mr. Jai Kumar Nair is hereby appointed as Factory Manager for the Malanpur Factory effective 1 st April 2014.

RESOLVED FURTHER THAT without prejudice to the generality of the Powers of Attorney granted or to be granted to the Factory Manager in respect of the Malanpur Factory (“Factory”), the Factory Manager is hereby expressly conferred with the following powers in respect of the Factory:

(i) The power to comply with various provisions of the Factories Act, the

Environmental (Protection) Act, the Water (Prevention and Control of Pollution) Act, the Water (Prevention and Control of Pollution) Cess Act, the Air (Prevention and Control and Pollution) Act, the industrial Disputes Act and other State and Central Legislations, and the Rules framed thereunder, with regard to labour and factory administration and the products manufactured at the Factory;

(ii) to (xxxiv) ….. …….. ……

RESOLVED FURTHER THAT Mr. Jai Kumar Nair being the person who has the ultimate control over the affairs of the Factory shall continue to be in ultimate control over the affairs of the said Factory and as such shall continue to perform and discharge all duties, obligations and responsibilities under the Factories Act, 1948 and the Rules framed thereunder as amended to date and from time to time, in respect of the Factories under his charge and he is hereby authorized and vested with full powers to do all such acts, deeds, matters and things as may be necessary or expedient for the aforesaid purposes. “

5.6 From the above, it is crystal clear that Mr. Jai Kumar Nair w.e.f. 1/4/14 was in charge and in control of the day-to-day affairs of the factory belonging to the company.

5.7 The power vested upon Mr. Jai Kumar Nair was that of an “occupier” as defined in section 2(d) of the said Act. Section 2(d) being relevant is reproduced below:-

“2[(d) “occupier”, in relation to any factory or premises, means the person who has control over the affairs of the factory or the premises, and includes, in relation to any substance, the person in possession of the substance.”

5.8 The liability upon any person apart from the persons mentioned in section 47(1) of the Act can be fastened only when the complaint contains express allegation of presence of ingredients of element of consent, connivance or neglect on the part of Director, Manager, Secretary or other officer of the company. In the instant case, the impugned complaint in question is bereft of any such allegations against the petitioner who is Managing Director of the company. Moreover, the complaint further does not allege that the petitioner being Managing Director was in charge of day-to-day affairs of the factory/company in question.

5.9 Thus, arraying of the petitioner as an accused in the complaint is uncalled for and unlawful. This court in this respect draws support from the law laid down by the Apex Court in the case of Pepsi Food India Ltd. (supra) which in para 50 observed thus:

“50. As mentioned hereinbefore, the High Court erred in giving its own interpretation to the decision of this Court in S.M.S. Pharmaceuticals Ltd.’s case (supra), which was reiterated subsequently in several judgments, some of which have been indicated hereinabove, and relying instead on the decision of Rangachari’s case (supra), the facts of which were entirely different from the facts of this case. It is now well established that in a complaint against a Company and its Directors, the Complainant has to indicate in the complaint itself as to whether the Directors concerned were either in charge of or responsible to the Company for its day-to-day management, or whether they were responsible to the Company for the conduct of its business. A mere bald statement that a person was a Director of the Company against which certain allegations had been made is not sufficient to make such Director liable in the absence of any specific allegations regarding his role in the management of the Company.”

5.10 Further assistance can be drawn from the observations made by the Apex Court in para 6 in the case of Girdhari Lal Gupta (supra). Para 6 reads thus:-

# “6. What then does the expression “a person in- charge and responsible for the conduct of the affairs of a company mean” ?

It will be noticed that the word ‘company’ includes a firm or other association and the same test must apply to a director in-charge and a partner of a firm in-charge of a business. It seems to us that in the context a person ‘in-charge’ must mean that the person should be in over all control of the day to day business of the company or firm. This inference follows from the wording of Section 23C(2). It mentions director, who may be a party to the policy being followed by a company and yet not be in-charge of the business of the company. Further it mentions manager, who usually is in charge of the business but not in over-all-charge. Similarly the other officers may be in charge of only some part of business.”

5.11 Further inspiration may also be drawn from observations made in paras 18, 19 and 20 by the Apex court in the case of Puja Ravinder Devidasani (supra), which read thus:

“18. In

# Girdhari Lal Gupta Vs. D.H. Mehta & Anr. (1971) 3 SCC 189

this Court observed that a person ‘in charge of a business’ means that the person should be in overall control of the day to day business of the Company.

19. A Director of a Company is liable to be convicted for an offence committed by the Company if he/she was in charge of and was responsible to the Company for the conduct of its business or if it is proved that the offence was committed with the consent or connivance of, or was attributable to any negligence on the part of the Director concerned [See:

# State of Karnataka Vs. Pratap Chand & Ors. (1981) 2 SCC 335

20. In other words, the law laid down by this Court is that for making a Director of a Company liable for the offences committed by the Company under Section 141 of the N.I. Act, there must be specific averments against the Director showing as to how and in what manner the Director was responsible for the conduct of the business of the Company.”

6. From the above, it is evident that the petitioner who is Managing Director of the Factory as per allegation made in the complaint neither falls within the term “every person” mentioned in section 47(1) nor can be made an accused under Section 47(2)in the absence of any allegation of consent,connivance or neglect.

7. Before parting, it would not be out of place to mention that the prosecution is not remedy-less. It is always open to the prosecution to initiate proceedings under the Act against Mr. Jai Kumar Nair who being occupier has control over the affairs of the factory as per resolution, Annexure-P/7.

8. Consequently, the present petition is allowed. The impugned order dated 3/7/2015 passed in Cri. Case No. 434/15 by JMFC Gohad, district Bhind (M.P.) taking cognizance of the offence against the petitioner is quashed.

9. Copy of this order be sent to the concerning Court for information and compliance.

10. No cost.

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