Case: KARNATAKA STATE POLLUTION CONTROL BOARD Vs. B. HEERA NAIK

the definition of Company in the Companies Act and it includes any body corporate. Paragraphs 12 and 13 of the judgment is as follows: 12. Then so far offence Under Section 138 of N.I. Act, it is apt to refer, at first, the provisions of Section 141. Section 141 of the Act 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; 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 Govt. or the State Govt., as the case may be, he shall not be liable for prosecution under this Chapter. (2)... Explanation: For the purpose of this section. (a) Company means any body corporate and includes a firm or other association of individuals; and (b) director, in relating to a firm, means a partner in the firm. 13. The Explanation (a) of the above section, therefore, is clear that the definition of Company as given therein is wider than the definition of Company in the Companies Act and it includes any body corporate. Section 5 of the Patna Municipal Corporation Act also shows that the Company is a body corporate. Therefore, there cannot be any doubt that Patna Municipal Corporation is a Company under the N.I. Act. The above is correct interpretation of Explanation (a) by the Patna High Court. The Explanation of Section 47 of Act, 1974 and the Explanation (a) to Section 141 of the Negotiable Instruments Act are pari materia. 29. We, thus, looking to the purpose and object of Act, 1974, are of the opinion that Section 47 can be resorted to for offences by body corporate and Karnataka State Pollution Control Board by filing a complaint before the Magistrate for taking cognizance of offence Under Section 49 did not commit an error. 30. There is one more aspect of the matter, which need to be noticed. Section 49 of the Act, 1974 deals with cognizance of offences, which is as follows: 49. Cognizance of offences.--(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 (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) 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) Notwithstanding anything contained in Section 29 of the Code of Criminal Procedure, 1973 (2 of 1974), it shall be lawful for any 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. 31. Section 49 embraces cognizance of all offences under the Act. Whether the offences are covered by Section 47 or 48 has no bearing on the power of the Court to take cognizance of an offence. Karnataka State Pollution Control Board has filed complaint for taking cognizance specifically referring to Section 49 of the Act, 1974. Thus, in event any offence is committed by anyone, its cognizance can be taken Under Section 49. We, however, reiterate that offences by a body corporate are to be covered by Section 47, since in event offences by body corporates are not covered by Section 47, the benefit of Section 47(1) proviso shall not be available to those body corporates, which cannot be the intention of the Legislature. We, thus, conclude that offences by body corporate like City Municipal Council are covered Under Section 49 treating it to be offence as by company as provided in Section 47. 32. We may also notice the judgment of this Court in Criminal Appeal No. 755 of 2010 - V.C. Chinnappa Goudar v. Karnataka State Pollution Control Board and Anr. decided on 10.03.2015, where the judgment of the Division Bench of the Karnataka High Court in V.C. Chinnappa Goudar (supra) had been affirmed. In the above case although this Court dismissed the appeal filed by the Appellant, who was also a Municipal Commissioner of the Municipal Council, for quashing of the complaint filed by the Karnataka State Pollution Control Board, but the ratio of the judgment is to the effect that sanction Under Section 197 Code of Criminal Procedure is not required for proceeding Under Section 49 of the Act, 1974. Although reference to Section 48 has been mentioned in the judgment of this Court but there is no further consideration with regard to Section 48. 33. In view of the foregoing discussions, we are of the view that High Court erred in quashing the complaint filed by Karnataka State Pollution Control Board against the Respondents.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]8. The High Court in the impugned judgment for coming to the conclusion that Commissioner of Municipal Council, Chief Officer or a Council cannot be termed as Head of the Department, has placed reliance on two earlier judgments of the High Court namely, (i) Criminal Petition No. 831 of 2007 dated 18.01.2012 and (ii) a Division Bench judgment of the High Court dated 30.10.2008 in Writ Petition (C) No. 30610 of 2008 - Sri V.C. Chinnappa Goudar v. Karnataka State Pollution Control Board9. We have gone through the judgment of the Division Bench of the Karnataka High Court in V.C. Chinnappa Goudar (supra), which was a writ petition filed by a Commissioner of City Municipal Council challenging the proceeding initiated by Karnataka State Pollution Control Board, the challenge in the writ petition was to quash the proceedings on the ground that action initiated against the Petitioner is without jurisdiction for want of previous sanction from the Government as per Section 197 Code of Criminal Procedure The Division Bench after considering the provisions of Act, 1974 and Code of Criminal Procedure came to conclusion that no previous sanction is required for initiating the legal action against such person by Board for offence contravening Section 48 of the Act, 1974 and the writ petition was accordingly dismissed. There was neither any discussion in the judgment that Commissioner of Municipal Council is not Head of the Department of any Department of Government nor there was any ratio to the above effect. Another judgment relied by High Court is the decision of the High Court in Criminal Petition No. 831 of 2007 - - Shri D.H. Raya v. Karnataka State Pollution Control Board, which is also brought on the record as Annexure P-11. The said judgment was also a petition Under Section 482 Code of Criminal Procedure filed by Chief Officer of a Town Municipal Council praying for quashing the complaint filed by Karnataka State Pollution Control Board for offence Under Section 25 of Act, 1974. The High Court relied on the earlier Division Bench judgment of this Court in Criminal Appeal No. - 755 of 2010 - V.C. Chinnappa Goudar (supra) and allowed the petition. There was neither any discussion in the judgment that Chief Officer is not the Head of the Department of any Department of Government nor there was any ratio to the above effect. Thus, the judgment of the High Court quashing the complaint was misplacedWhether an institution is a corporation or a Department of the Government has to be found out from the Scheme under which it has been created. One of the tests to find out as to whether an institution is a Corporation or a Department of the Government is to enquire whether the undertaking functions as a responsible independent organisation and not as part of any Department of the State. Second test would be to see whether it is endowed with the capacity to contract obligations and of suing and being sued. Further, the power to possess, use and change a seal is incidental to a corporation and a corporation aggregate can, as a general rule, only act or express its will by deed under its common seal. The Karnataka Municipalities Act, 1964 as noted above, provides for a Town and City Municipal Councils as a body corporate. The control of the State Government on the Municipality is provided in a separate chapter, i.e., Chapter XII. The Scheme of constitution of Municipal area and other provisions of Act, 1964 clearly indicate that Municipalities are not a Department of the Government16. We may also notice the constitutional provisions of Part IXA, the Municipalities inserted by Constitution (Seventy Fourth) Amendment Act, 1992. Article 243P Sub-clause (e) defines Municipality as an institution of self-Government constituted Under Article 243Q. The Constitution also envisages Municipality as a body of self-Government. The provisions of the Act, 1964 and Act, 1974 makes it clear that City Municipal Council cannot be treated as Department of the State Government20. In a Statute, the definition of an expression has to be found out in accordance with the context and Scheme of the enactment. The definition of company is contained in the Companies Act, 1956 in Section 3. The definition of company as contained in the Companies Act, 1956 is clearly not borrowed in the expression of company as used in Section 47 of Act, 1974. The company has been defined in Section 47 of Act, 1974 in a very wide and inclusive manner. Explanation states that company means any body corporate. Thus, all body corporates are included within the definition of company as per Section 47. There cannot be any dispute that City Municipal Council is a body corporate, which has been clearly provided Under Section 10 of Act, 1964 as noted above21. In Hakam Singh v. M/s. Gammon (India) Ltd.(1971) 1 SCC 286 , this Court while considering the Explanation II to Section 20 Code of Civil Procedure had held that use of word Corporation in Explanation II also includes the company. In paragraph 6, following has been laid down:6. The argument of counsel for the Appellant that the expression corporation in Explanation II includes only a statutory corporation and not a company registered under the Indian Companies Act is, in our judgment, without substance. The Code of Civil Procedure uses the expression corporation as meaning a legal person and includes a company registered under the Indian Companies Act. Order 29 of the Code of Civil Procedure deals with suits by or against a corporation and there is nothing in the Code of Civil Procedure that a corporation referred to Under Order 20 means only a statutory corporation and not a company registered under the Indian Companies ActFrom the above, it is clear that the meaning and definition of an expression used in an enactment has to be determined from the particular Statute. In Code of Civil Procedure, Explanation to Section 20, only word corporation was used, which was held to include a company also22. The expression company has been used in different statutes with different purpose and object. This Court as well as the High Courts had occasion to consider the meaning of company in reference to different Statutes28. Patna High Court in Criminal Misc. No. 7268 of 2005 - Arun Kumar Singh v. The State of Bihar and Ors. while noticing Section 141 specifically the Explanation held that the definition of Company as given therein is wider than the definition of Company in the Companies Act and it includes any body corporate. Paragraphs 12 and 13 of the judgment is as follows:12. Then so far offence Under Section 138 of N.I. Act, it is apt to refer, at first, the provisions of Section 141. Section 141 of the Act reads as follows:(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;Explanation: For the purpose of this section(a) Company means any body corporate and includes a firm or other association of individuals; and(b) director, in relating to a firm, means a partner in the firm13. The Explanation (a) of the above section, therefore, is clear that the definition of Company as given therein is wider than the definition of Company in the Companies Act and it includes any body corporate. Section 5 of the Patna Municipal Corporation Act also shows that the Company is a body corporate. Therefore, there cannot be any doubt that Patna Municipal Corporation is a Company under the N.I. ActThe above is correct interpretation of Explanation (a) by the Patna High Court. The Explanation of Section 47 of Act, 1974 and the Explanation (a) to Section 141 of the Negotiable Instruments Act are pari materia29. We, thus, looking to the purpose and object of Act, 1974, are of the opinion that Section 47 can be resorted to for offences by body corporate and Karnataka State Pollution Control Board by filing a complaint before the Magistrate for taking cognizance of offence Under Section 49 did not commit an error31. Section 49 embraces cognizance of all offences under the Act. Whether the offences are covered by Section 47 or 48 has no bearing on the power of the Court to take cognizance of an offence. Karnataka State Pollution Control Board has filed complaint for taking cognizance specifically referring to Section 49 of the Act, 1974. Thus, in event any offence is committed by anyone, its cognizance can be taken Under Section 49. We, however, reiterate that offences by a body corporate are to be covered by Section 47, since in event offences by body corporates are not covered by Section 47, the benefit of Section 47(1) proviso shall not be available to those body corporates, which cannot be the intention of the Legislature. We, thus, conclude that offences by body corporate like City Municipal Council are covered Under Section 49 treating it to be offence as by company as provided in Section 4732. We may also notice the judgment of this Court in Criminal Appeal No. 755 of 2010 - V.C. Chinnappa Goudar v. Karnataka State Pollution Control Board and Anr. decided on 10.03.2015, where the judgment of the Division Bench of the Karnataka High Court in V.C. Chinnappa Goudar (supra) had been affirmed. In the above case although this Court dismissed the appeal filed by the Appellant, who was also a Municipal Commissioner of the Municipal Council, for quashing of the complaint filed by the Karnataka State Pollution Control Board, but the ratio of the judgment is to the effect that sanction Under Section 197 Code of Criminal Procedure is not required for proceeding Under Section 49 of the Act, 1974. Although reference to Section 48 has been mentioned in the judgment of this Court but there is no further consideration with regard to Section 4833. In view of the foregoing discussions, we are of the view that High Court erred in quashing the complaint filed by Karnataka State Pollution Control Board against the Respondents.