Crl. Misc. No. M-11043 of 2009 1 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH (1) Crl. Misc. No. M-11043 of 2009 (O&M) Lalit Gulati and others ...Petitioners Versus State of Haryana and another ...Respondents (2) Crl. Misc. No. M-11044 of 2009 (O&M) Lalit Gulati and others ...Petitioners Versus State of Haryana and another ...Respondents (3) Crl. Misc. No. M-15096 of 2009 (O&M) Krishan Kumar Leekha ...Petitioner Versus State of Haryana and another ...Respondents (4) Crl. Misc. No. M-15313 of 2009 (O&M) Krishan Kumar Leekha ...Petitioner Versus State of Haryana and another ...Respondents (5) Crl. Misc. No. M-31450 of 2009 (O&M) Date of Decision: May 18th 2010 Lalit Gulati and others ...Petitioners Versus State of Haryana and another ...Respondents CORAM:- HON'BLE MR. JUSTICE GURDEV SINGH Crl. Misc. No. M-11043 of 2009 2 Present: Mr. Abhishek, Advocate, for the petitioners. Ms. Shalini Attri, DAG, Haryana. for respondent No.1. Mr. GC Gupta, Advocate for Mr. Arun Walia, Advocate, for respondent No.2. GURDEV SINGH, J. Vide this common order, the above noted petitions under Section 482 of the Criminal Procedure Code (hereinafter referred to as 'the Code'), for quashing of the complaints filed under Section 15 of the Environment (Protection) Act, 1986 (hereinafter referred to as 'the Act'), pending before the Special Environment Court, Faridabad, summoning orders, and all the consequent proceedings, are being decided. Though the complaints are different, yet all those complaints have been filed by the same complainant against these petitioners and others and common question of law is involved for deciding the same. The first petition has been filed for quashing of the Criminal Complaint No. 46 of 2008 dated 21.10.2008 (Annexure B) filed under Section 15 of the Act and the summoning order dated 11.11.2008 (Annexure A), the second petition has been filed for quashing of the Criminal Complaint No. 43 of 2008 dated 21.10.2008 (Annexure B) filed under Section 15 of the Act and the summoning order dated 11.11.2008 (Annexure A), the third petition has been filed for quashing of the Criminal Complaint No. 46 of 2008 dated 21.10.2008 (Annexure B) filed under Section 15 of the Act and the summoning order dated 11.11.2008 (Annexure A), the fourth petition has been filed for quashing of the Criminal Complaint No. 46 of 2008 dated 21.10.2008 (Annexure B) filed Crl. Misc. No. M-11043 of 2009 3 under Section 15 of the Act and the summoning order dated 11.11.2008 (Annexure A) and the fifth petition has been filed for quashing of the Criminal Complaint No. 19 of 2009 dated 1.1.2009 (Annexure P/2) filed under Section 15 of the Act and the summoning order dated 9.9.2009 (Annexure P/1). All complaints are pending before the Special Environment Court, Faridabad. The facts in common are that M/s JMD Ltd, which has been arrayed as accused No.1 in the complaints, is engaged in promoting and marketing and construction of commercial complexes of JMD Regent Arcade, Sector 28, M.G. Road, Gurgaon, JMD Galleria, Sohna Road, Gurgaon, JMD Regent Arcade, Sector 38, M.G. Road, Gurgaon, JMD Galleria, Sohna Road, Gurgaon and JMD Garden (Residential Complex), Sohna Road, Gurgaon, respectively. The Ministry of Environment and Forests, Government of India, New Delhi, issued a notification, which made it compulsory to obtain an environmental clearance before starting any such operation/project by the interested person or persons. Accused No.1 started construction of these projects without obtaining any such environmental clearance and raised the construction in violation of the notification and, as such, committed offence under Section 15 of the Act. Notices were given to them regarding that violation but they never tried to remove/stop that violation by taking environmental clearance. At the time of the commission of the offences, the present petitioners Lalit Gulati, Balraj Tanwar, Santosh Gadia, Mohinder Kumar Jain and Sunil Bedi, were directors of these companies and were in-charge and responsible persons for day to day functioning of these companies. All of them criminally conspired and in pursuance of that criminal conspiracy carried out projects in violation of the Crl. Misc. No. M-11043 of 2009 4 notification so issued by the Central Government. As the complaints were filed by the Public Servant in discharge of his official duties, so the petitioners and other accused were summoned to stand their trial for the offences under Section 15 of the Act, vide orders dated 11.11.2008 and 9.9.2009 respectively, without recording any preliminary evidence. In the petitions, it has been averred that the complainant concealed and suppressed material facts from the Court. The company M/s JMD Promoters Ltd., now known as JMD Ltd. (accused No.1), had applied for environmental clearance under the law applicable to the Ministry of Environment and Forests and such clearance was granted vide communication dated 8.1.2008. Licences for construction of the said complexes were issued by the Director, Town and Country Planning, Haryana, Chandigarh on 22.7.2005 in the name of the original owner with whom the accused No.1 entered into a collaboration for the construction of the complexes and building plans were got sanctioned. The documents annexed with the complaints, so as to show that the petitioners were directors of accused No.1 Company, are in fact, lists of subscribers to the Memorandum of Association of JMD Promotes Pvt. Ltd., which was converted into a public limited company by the name of JMD Promoters Ltd. in the year 2005 and lastly the name thereof was changed to JMD Ltd. in the year 2006. The lists of the subscribers so provided with the complaints were nothing but a historical incident and are of no significance. In fact, the petitioners had resigned from the Board of Directors way back in the year 1990 and have no relationship with this company. They cannot be said to be the directors incharge and responsible for the conduct of business Crl. Misc. No. M-11043 of 2009 5 of the company and, as such, they cannot be prosecuted. The institution of the complaints and continuation thereof against them is gross abuse of the process of the court. On notice of motion having been issued, reply was filed by respondent No.2/complainant. It has been stated therein that, as per notification issued by the Central Government, from 14.9.2006 no township and area development projects covering an area equal to or greater than 50 hectares and built up area equal to or greater than 20,000 square meters shall be commenced/undertaken in any part of India without taking environmental clearance from the Central Government in accordance with the procedure prescribed in the notification. The requirement of environmental clearance was mandatory before starting construction work or preparation of land by project management. Accused No.1 company and its Directors, including the petitioners, proceeded with their projects without obtaining such environmental clearance and thereby violated the mandatory provisions. The complaints were rightly filed against them. All the accused, including the petitioners, are directors of accused No.1 Company, as per the official record available with respondent No.2 and they are fully responsible for the day to today functioning of the company. Therefore, they are liable to be prosecuted alongwith other accused. The Court having found prima facie case against them correctly passed the summoning orders. The petitioners have not availed the alternative statutory remedy by filing criminal revision under Section 397 of the Code before the Session Court. Without availing that remedy, they filed the present petitions, which are not maintainable and are liable to be dismissed. I have learned counsel for both the sides. Crl. Misc. No. M-11043 of 2009 6 It was submitted by learned counsel for the petitioners that the petitioners ceased to be the directors of the accused company in the year 1990 and, as such, they cannot be prosecuted for the offences mentioned in the complaints. There is no specific averment in the complaints that the petitioners were also incharge of the company and were responsible for day to day business thereof. When such is the case, the complaints, summoning orders and the consequent proceedings are liable to be quashed qua these petitioners. On the other hand, it was submitted by learned counsel for respondent No.2 that, as per the records available with them, the petitioners were the directors of the accused No.1/Company. They were incharge of and were responsible for the conduct of the business of the Company and those facts were duly stated in the complaint. They are, therefore, liable for the acts of the accused company and are liable to be prosecuted. It was also argued that the petitioners had alternative remedy of filing the revision against the summoning orders as these orders are not interlocutory orders and, as such, the present petitions are not maintainable. In order to meet the last arguments raised by counsel for respondent No.2, learned counsel for the petitioners relied on Dhariwal Tobaco Products Ltd. and others versus State of Maharasthra and another 2009 (1) R.C.R. (Criminal) 677. It was held therein that an application under Section 482 of the Code for quashing the criminal proceedings cannot be dismissed only on the premises that an alternative remedy of filing the revision petition under Section 397 of the Code is available. Keeping in view the facts and circumstances of the present cases, it is not advisable to relegate the petitioners to have their remedy by way of filing the revision Crl. Misc. No. M-11043 of 2009 7 petition under Section 397 of the Code, merely on the ground that such alternative remedy was also available to them. Therefore, these petitions cannot be dismissed on that ground. Section 16 of the Act deals with the offences by the company and the same is re-produced below:- “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, 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.” Crl. Misc. No. M-11043 of 2009 8 It is the admitted case of both the sides that accused No.1 is a public limited company. Therefore, every person, who, at the time the offence was committed, was directly incharge of and was responsible to the company for the conduct of the business thereof, is deemed to be guilty for the offence and is liable to be proceeded against and punished accordingly. Similar provision regarding the prosecution of the persons directly incharge of and responsible of the company for the conduct of the business thereof is contained in Section 141 of the Negotiable Instruments Act, 1881. The question regarding vicarious liability of such person came up for consideration recently before the Hon'ble Supreme Court in National Small Industries Corporation Ltd. Versus Harmeet Singh Paintal and another 2010 (1) Apex Court Judgment 638. That was also a case relating to the prosecution of the company and its directors. It was held therein that a complaint has to be examined by the Magistrate in the first instance on the basis of the averments contained therein. If the Magistrate is satisfied that there are averments, which bring the case within Section 141, he would issue the process. It is necessary to specifically aver in the complaint that at the time the offence was committed, the accused was incharge of and responsible for the conduct of the business of the company. This averment is an essential requirement of Section 141 and has to be made in the complaint. Without this averment made in the complaint, the requirement of that section cannot be said to be satisfied. A director of the company cannot be deemed to be incharge of and responsible for the conduct of the company. For fastening the criminal liability, there is no presumption that every director knows about the transaction of the company. Section 141 does not make all the directors liable for the offence. Crl. Misc. No. M-11043 of 2009 9 The complaints have been annexed with these petitions. In para No. 7 thereof, it is mentioned that the present petitioners and the other accused are the directors and responsible for the day to today functioning of the company and controlling day to today affairs thereof. Similar averments have been made in para No. 8. It has nowhere been averred that they were incharge of and were responsible for the conduct of the business of the company at the time of commission of the offence. When there is no such averment in the complaint, it cannot be said that the petitioners committed the offence mentioned therein. That is one of the ground for quashing the complaints, summoning orders and the consequent proceedings. According to the petitioners, they ceased to be the directors of accused No.1/company in the year 1990. Certified copies of form 32 have been filed with these petitions, which are admissible under the Companies Act, 1956. As per this document, all these petitioners ceased to be the directors of the accused company in the year 1990. It has been averred by the petitioners that their names appeared amongst the names of the subscribers when the accused No.1/company was initially incorporated as a private limited company. That fact has not been denied by respondent No.2 in his reply. According to that respondent, the petitioners are also directors of the company as per record maintained by it. It is not mentioned in the reply as to which year that record relates. Respondent No.2 was required to make inquires, before the institution of the complaints, as to who were the directors of accused No.1/company and who were incharge and responsible for the conduct of the business thereof at the time the offence was committed. Without doing so, he impleaded the petitioners as accused on the ground that they were the directors of the company, though they ceased Crl. Misc. No. M-11043 of 2009 10 to be as such in the year 1990 i.e. much before the commission of the offence itself. In the National Small Industries Corporation (supra), Panta Harmeet Singh Paintal was no more director of the company when the cheques alleged in the complaints were signed. It was held therein that no liability can be fastened upon a person who ceased to be the director. In the present case also, after the petitioners ceased to be the directors of the company, no such criminal liability can be fastened upon them. That is the second ground for quashing the complaints, summoning orders and the consequent proceedings. In the result, these petitions are accepted. The above complaints, summoning orders dated 11.11.2008 and 9.9.2009 and consequent proceedings are ordered to be quashed. May 18th , 2010 (GURDEV SINGH ) prem JUDGE