-^-a-;Si-a8BS»,<s-: r» t-<: <?> nocw I'TI r>3 :3: ».. -i 1-1 tn® > 30 £ 9> 13e: Tf^ \V1 HI6HCOURT OF CHHATTIS6ARH AT BILASPUR Cr.M.P. No. 176 OF 2006 PETITI0NERS Vsrsus 1. J.P. Lath, Aged 58 year-s, Son of Late Shri 5.K. Lathi, V--35 a-6reen Park Main, New Delhi. 2. T.K. Baian, Aged 55 years, Son of Late Shri 5. Krishnan N.air', C-701, FCI Colony, Paschim Vihor, New Delhi. 3, S.K. fianguly, Aged 67 years, Son of Late Shri Hemlal Sanguly- B-37B, fiangotri Enclave, Alaknanda, New Deihi. 4. P.L. Nene, Aged 72 years, son of Shri Laxman Noine, 328, Indrapuri Colony, Indore. 5. S.K. Miitra, aged 73 year-s, son of. Late Shri M.N. Mitra, CJ-315, Sector-2, Salt Loke City, Kolkata. 6. C.S. Tiwary. Aged 67 years, Son of Tiwary- MEIL Marg, Mandir Rajpur (C.6.). 7. Sandeep Jajodia, aged 42 years, son of Shri M.K. Jajodio, 4 Bikaji Camo Place, New Delhi. Ail described as the Directors of M/s Monnet Ispat Pvt, Ltd. (Now known as Monnet Ispat And Energy Ltd.) having its registered office at and works at Vilage Kurud, Chand-Rakhuri Marg. Mandir Hasaud, Poiice Station Mandir Hasaud, DJsft. Raipur (C.6.) 1, Chhattisgarh Environment Conservotion Board, Raipur (C.6.) Through Officer, Shri B.P. Monnet -( Chhattisgar-h Environment Conservation Board. Regionai Office, New H.1.6. 9, 10, & 11, Totibandh, Raipur, District Raipur (C.6.) 2. The State of Chhattisgarh, through the Principal Secretary, Department of Housing and Environment. D.K.S. Bhaw/an. Msntralaya, 6.E. Road, Raipur [C&] 3. M/s Monnet Ispat Pvt. Ltd. (Now known as lAonnet Ispat And Energy Ltd.) having its registered office at and works at Viiage Kurud, Chand-Rakhuri AAarg, ftAandir Hasaud, Police Station AAandir Hasoud, Distt. Raipu". 4. Chief Engineer, (Raipur Region) Chhottisgarh State Eiectricity Board, 6udhiyar'i. Police Station, fiudhiyari, Raipur [C6] Present: &r. (Mrs.) Fouzia Mirza, Advocate for the appeilants. Mr. Sudhir Bajpcyee, Advocate for respondent No.l. Mr. 6.K. Beriwa!, Dy. Advocate freneral for respondent No.Z Ur. S.K. Tiwari, Advocate for respondent No.3. Mr. A.S. Seharwar, Advocate for respondent No.4. (Delivefed on 7T" August, 2007) 1) By this petition under Section 482 of Cr.P.C. the petitioners have impugned the issuance of summons against them by the learned Chief Judicial Magistrate, Raipur in Complaint Case No.3850/04 vide orders of Annexure P-3. ,—--_ 25Respondent No.l-CS Environment Conservation Board (for short 'the Board') filed a compiaint vide Annexure P-1 for taking cognizance under Sections 37 & 40 of the Air (Prevention and Controi of Pollution) Act, 1981 (for short 'the Act, 1981') read with Section 15 of the Environment Protection Act, 1986.(for short 'the Act, 1986') and Sectlon 34 of the Indian Penai Code against the petitioners herein alleging therein that petitioners No.l to 5 i!i 7 are the Directors of respondent No.3-Conipany, whereas, petitioner No.6 is the Executive CSirector of respondent No.S-Company. Accused persons without obtaining environmenta! clearance from the Environment & Forest Ministry, &ovt. of India has establishe.d the industry, which is in violation of Section 7 of the Act, 1986 and the some is punishable under Section 15 of the Act. 1986, Their act is also in violationof Sections 21 & 22 of the Act, 1981. Compioinant Board had given them notice under Section 31A of the Act, 1981 and had also requested respondent No.4 herein to disconnect the power suppiy to the industry, however, the directions issued by the Board were not complied with and thus all the accused persons have committed an offence which is punishable under the provisions of the Ac-t, 1981 and Section 15 of the Ac-t, 1986. 3) 6rievance of the petitioners is that learned Chief Judicial AAagistrate has issued summons against the petitioners mechanically without applying its mind. There is no specific allegation against the petitioners that they were directly in- charge of and were responsible to the company for the conduct of the business of company. No document hos been filed to show the involvement of the petitioners in the commission of the said offence and therefore, the summons issued against the petitioners deserves to be quashed, Reliance is placed on 1990 Cr.L.J. 1856 N.A. Palkivala and Bhopai, S.M.S. Pharitiaceuticals reported in (2005) 63 SCL 93 High Court rendered in fA.Cr.C Suresh 6oei and others Vs. Vs. Neeta as also order of this No.2786/05 between 4} In repiy to the instant petition it has been contended by the respondent No.l- Board that petitioner No.l herein is the President of the company, which is evident from th.e document of Annexure R-l, an application for grant of consent under Section 21 of the Act, 1981 in which the petitioner No.l has been described as the President of respondent No,3 company, the same is signed by him and in thesaid application the other petitioners herein have been described as fuil time birectors and therefore, issuonce of process against all the petitioners is proper as ali the Directors have got contro! over the company. The Dirsctors are in-charge of the work and ore responsible and therefore, iiable to be proceeded for the offence CQmmitted by them. It is for the accused persons to pr-ove that the offence committed without their knowledge, Respondent Board also requested respondent No.4 herein to disconnect the power suppiy to the industry, however, the directions issued by the respondent Board were not complied with and thus ali the accused persons have committed an offence which is punishable under the provisions of the Act, 1981 and Section 15 of the Act, 1986. 5) In the matter of N.A. Palkivala (supra) the prosecution of the Chairman and beputy Chairman of the company under Section 40 was quashed with an observation that they are not the persons directly in-charge of and responsible to the company for the conduct of its business as required under Section 40. Since there wos nothinq on record to connect them directiy with the business of the company present in that complaint, the prosecution was quashed. 6) In the matter of S.M.5. Pharmaceuticals (supra) the Hon'ble Supreme Court while dealing with the issuance of process under Section 141 of the Negotiabie Instruments Act, 1881 n Psra 9 held as under:- A perusal of the pr-ovisions of sections 291 to 293 of the Companies Act shows that what a board of directors is empowered to do in relation to a particular company depends upon the role and functions assigned to directors as per the memorandum and articles of association of the company. There is nothing which su99ests that simply by bejng a director in a company, one is supposed to dischsrge particular functions on behalf of a company. It happens that a person may be a direetor in a company but he msy not know anything about the day-to-day func+ioning of the company. As a director he may be attending meetings of the Board of Directors of the company where usuaily they decide policy matters and guide the course of.business of a company. It may be that a Board of Directors may appoint sub- committees consisting of one or two directors out of the Board of the company who may be made responsible for the day-to-day functions of the company. These are matters which form part of resolutions of the Board of Direc+ors of a cornpany. Nothin9 is orsl. What emerges from this is that the roie of a director in a company is a question of fact depending on the peculiar facts in each case. There is no universal rule that o director- of a company is in chargs of its everyday affairs. We have discussed sbout the position of a direc+or in a company in order to i!lustratg +he point that there is no magic as such in a particular word, be it director. manager or secretary. It all depends upon the respectivs roles assi9ned to the officers in a company. A company may have managers or seeretar-ies for different departments, which means, it msy have more thsn one manager or secretar-y. These officers may a!so be authorised to issue cheques under their signatures with respect to affairs of their respective departments. Will it be possible to pr'osecuts a secretary of Department B regarding a cheque issued by the secretary of Depar'tment A which is dishonoured? The secretary of Department B may not be knowing anything about issuance of the cheque in question. Therefore, mere use of a particular designation of an officer without more, may not be enou9h by way of an averment in a complaint. When the requirement in Section 141, whieh extends the liability to officers of a company, is that such s person should be in charge of and responsible to the company for conduct of business of the compahy, how can a person bs subjected to liability of criminal prosecution without it being averred in the complaint that he satisfies those requirements. Not every person connected with a company !S made liable under Section 141. Liability is cast on persons who may have somethin9 to do with the transaction complained of. A person who is in charge of and responsibie for conduct of business of c company would naturaily know why the cheque in question was issued snd why it got dishonoured. 7) In the matter of Suresh 6oel (supra) the Hon'bie Single Judge of this Court placing retiance on the ratio of law iaid down in the matter of SMS Pharmaceuticnls (supra) and considering the averments made in the complaint of that case quashed the criminal proceedings against the accused persons against whom necessary overments required under Section 40 of the i4ct was absent. However, liberty was reser.ved that if the complainant Board so chooses may file fresh complamt disclosing all those facts, which may fasten criminal liability agoinst the accused persons whose prosecution was quashed. 8) On the other hand learned counsel for respondent Board has reiterated the contention made in reply to the instant petition and detailed ih par-a 4 of this order. 9) I have heard learned counsel for the parties. 10)After perusa! of the ai!egations present in the compiaint as also the documents annexed with the complaint, the complainant for the reasons best known to it did not mention about the document of Annexure R-l in the complaint and the same is filed for t.he first time in this proceedings. Whether requirement under Section 40 of the Act, 1985 has been fulfiiled for the issuance of process to the accused persons is to be adjudged only on the basis of the allegations made in the complaint and the documents which have been nnnexed along with the compiaint. Since documents referred by the respondent Board In their rspiy was not available before the Chief Judiciat Magistrate, 7, \^ ^k 1:~./< ' therefore I am of the considered opinion that for the purposes of decidin9 this petition, the same cannot be looked into. ll)If we apply the requirernent of Section 40 of the Act, 1985 in the light of the principle of law laid down in the judgments cited above, we find that necessary averments required under Section 40 of the Act, 1985 jagainst petitioner No.l to 5 & 7 are missing in complaint. 12)In the result, the petition is partly'allowed. The petition preferred by petitioner No. 6- C.5. Tiwary, who is the Executive Director of the company arid admittedly WOuld be jn-charge of the company and responsible to the compiany for ( conductof its business and can be proceecled against, is hereby dismissed. Howeyer, issuance of process ugainst petitioner No.l to 5 <& 7 vide orders of Annexure P-3, without there being any specific averments in the complaint that they were in-charge of and responsible for- concluctof business of the company and without any docui^entary evidence to show their involvement in the conduct df the business of compdny and onlyon the basis of averment that they are the Directors, requirement of Section 40 cai|inot be said to be satisfied, deserves to be quashed and it is hereby quashed. 1-lowever, it shallbe open to the responden-t Board to file fresh complaint, disclosing dll necessary par-t-jculdrs, I:; : : : which may fasten the criminal liability against them, |f they so desire. —" \ • Sdl-- . ^ i DHIBENDRA MBHRA Judge