IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 8TH DAY OF FEBRUARY, 2019 BEFORE THE HON’BLE MR.JUSTICE ARAVIND KUMAR CRIMINAL PETITION NO.4642/2017 BETWEEN:
1. M/S. STERLING DEVELOPERS PVT. LTD., HAVING ITS REGISTERED OFFICE AT NO. 8, CUBBON ROAD LEVEL 5, PRESITGE NEBULA OPP. INCOME TAX OFFICE BUILDING BANGALORE – 560 001 REPRESENTED BY ITS MANAGING DIRECTOR MR. VENKAT RAMANI SASTRI.
2. MR. VENKAT RAMANI SASTRI MANAGING DIRECTOR M/S. STERLING DEVELOPERS PVT. LTD., NO 8, CUBBON ROAD LEVEL 5, PRESTIGE NEBULA OPP. INCOME TAX OFFICE BUILDING BANGALORE – 560 001.
3. MRS. SHWETHA SASTRI DIRECTOR, M/S. STERLING DEVELOPERS PVT. LTD., NO 8, CUBBON ROAD LEVEL 5, PRESTIGE NEBULA OPP. INCOME TAX OFFICE BUILDING BANGALORE – 560 001.
4. MR. GOWRI SHANKAR SASTRI DIRECTOR, M/S. STERLING DEVELOPERS PVT. LTD., NO 8, CUBBON ROAD LEVEL 5, PRESTIGE NEBULA OPP. INCOME TAX OFFICE BUILDING BANGALORE – 560 001.
5. MR. KISHORE K. SHETTY SENIOR VICE PRESIDENT - CORPORATE AFFAIRS M/S. STERLING DEVELOPERS PVT. LTD., NO 8, CUBBON ROAD, LEVEL 5 PRESTIGE NEBULA OPP. INCOME TAX OFFICE BUILDING BANGALORE – 560 001.
6. MR. PADMESH P.A PROJECT IN-CHARGE M/S. STERLING DEVELOPERS PVT. LTD., NO 8, CUBBON ROAD LEVEL 5, PRESTIGE NEBULA OPP. INCOME TAX OFFICE BUILDING BANGALORE – 560 001.
... PETITIONERS (BY SRI. VIVEK HOLLA., ADVOCATE) AND:
STATE LEVEL ENVIRONMENT IMPACT ASSESSMENT AUTHORITY (CONSTITUTED BY CENTRAL GOVERNMENT UNDER SUB-SECTION (3) OF SECTION 3 OF THE ENVIRONMENT (PROTECTION) ACT, 1986) DEPARTMENT OF ECOLOGY & ENVIRONMENT ROOM NO. 709, 7TH FLOOR IV GATE, M.S. BUILDING DR. B.R. AMBEDKAR VEEDHI BANGALORE – 560 001 REPRESENTED BY SCIENTIFIC OFFICE GRADE - 1 SRI. H.K. ANANDA.
... RESPONDENT (BY SRI. D. NAGARAJ., ADVOCATE) THIS CRIMINAL PETITION IS FILED UNDER SECTION 482 CR.P.C PRAYING TO QUASH THE COMPLAINT IN C.C.NO.25125/2016 ON THE FILE OF THE VI ACMM, BANGALORE (ANNEXURE-A) AND ALSO SET ASIDE THE ORDERS DATED:27.06.2016, 28.10.2016 AND 30.05.2017 (ANNEXURE-B) TAKING COGNIZANCE OF THE OFFENCE AND DIRECTING ISSUE OF NON-BAILABLE WARRANT AGAINST THE PETITIONERS NO.2 TO 4 HEREIN.
THIS CRIMINAL PETITION COMING ON FOR ADMISSION THIS DAY, THE COURT MADE THE FOLLOWING:
O R D E R Heard Sri. Vivek Holla, learned counsel appearing for petitioners and Sri. D. Nagaraja, learned AGA appearing for respondent-State. Perused the records.
2. The only issue which arises for consideration in this petition is:
“Whether proceedings initiated against petitioners who have been arraigned as accused in C.C.No.25125/2016 for alleged violation of Section 15 of the Environment Protection Act, 1986, is to be continued or not?
3. A complaint under Section 200 of Cr.P.C. came to be filed by respondent before jurisdictional Magistrate alleging that first accused had made an online application on 13.08.2015 seeking environmental clearance from the authority for the purpose of construction of residential units in 7 blocks of Agara Village, Begur Hobli, Bangalore South Taluk. At the time of considering the application Committee found that construction had already been commenced without prior environmental clearance and same being in violation of notification issued by the Central Government in exercise of power conferred under sub- section (1) and clause (v) of sub-section (2) of Section 3 of Environment (Protection) Act, 1986 (for short ‘Act’) r/w clause (iii) of sub-rule (1) of Rule 5 of Environment (Protection) Rules, 1986, thereby had committed offence punishable under Section 15 of the Act. Hence, calling in question issuance of process as well as non bailable warrant to them on 30.05.2017, petitioners are before this Court.
4. It is the contention of Sri. Vivek Holla, learned counsel appearing for petitioners that learned Magistrate without application of judicious mind has proceeded to take cognizance of the offence that too against all the accused even without there being any material to show alleged act on the part of each accused. He would contend that by virtue of Section 16 of the Act under which a deemed liability is created on the Directors of the company would also be liable for being proceeded with and as such, complainant will have to specify and indicate the details of the role of Directors and by virtue of a omnibus statement alleged in the complaint against all Directors of the company, they cannot be prosecuted for the purported violation of the provisions of The Environment (Protection) Act. Hence, by relying upon following judgments he prays for quashing of said proceedings:
(i) (2007) 12 SCC 1: INDER MOHAN GOSWAMI AND ANOTHER vs. STATE OF UTTARANCHAL AND OTHERS (ii) 2012 (5) KAR.L.J. 449: SANJEEV R. KHANDELWAL vs. THE ENFORCEMENT OFFICER, EMPLOYEES PROVIDENT FUNDS, BELLARY (iii) ILR 2014 KAR 504: SRI. SUNPAL & OTHERS vs. STATE OF KARNATAKA, BY UPPARPET POLICE STATION (iv) (2010) 3 SCC 330: NATIONAL SMALL INDUSTRIES CORPORATION LIMITED vs. HARMEET SINGH PAINTAL AND ANOTHER (v) (2014) 4 SCC 282: G.N.VERMA vs. STATE OF JHARKHAND AND ANOTHER 5. Per contra, Sri. D. Nagaraja, learned AGA appearing for respondent-State would support the filing of complaint and process being issued to all the accused and contends that averments made in the complaint is sufficient enough to proceed against all of them. Hence, he prays for dismissal of the petition.
6. A reading of Section 16 of Environment (Protection) Act, 1986, would indicate that a person to be held vicariously liable under the Act, should be directly incharge of, and responsible for the conduct of business of such company. Averment made in the complaint would disclose that accused is a Director and was incharge and responsible for the conduct of business of the company which may be sufficient enough to issue summons. But if the accused is not one of the persons who falls under the category of “responsible to a company for the conduct of the business of the company”, then merely by stating that “he was incharge of the business of the company” or “he was incharge of the day to day management of the company” or “he was incharge of and was responsible for day to day management of the company”, such Director cannot be made vicariously liable under Section 16 of the Act. However, if the accused is the Managing Director or a Joint Managing Director, it is not necessary to make an averment in the complaint that he was incharge of and is responsible for the conduct of the business of the company. Averment to the effect that Mr.’X’ is the Managing Director of the company in the complaint when offence was committed would be sufficient, inasmuch as, under the Companies Act, Managing Director is said to be overall incharge and control of day to day administration of the company, unless there is any other contra material to the said effect. It is in this situation, proviso to sub- section (1) of Section 16 of the Act would provide succor to those persons, who are not liable to any punishment, to establish that offence committed if any was without their knowledge or they had exercised all due diligence to prevent commission of said offence. In fact, it is for the prosecution to prove that not only the person who was incharge of the affairs of company had committed an offence but also has to prove that with consent and knowledge of such accused, said act had been committed.
7. It is no doubt true that a bald or vague averment cannot be made as a ground to compel all the Directors of the company to answer the prosecution or to undergo the ordeal of trial. At the same time, if the substance of the allegations made in the complaint fulfill the requirement of Section 16 of the Act, complaint has to proceed and is required to be tried with. It has to be noticed that a hyper technical approach cannot be adopted so as to thrash the proceedings at the threshold itself for mere asking. In other words, complainant cannot be compelled to state at the stage of filing of the complaint to explain the role of such directors at micro level and an averment or allegation made at the macro level, which requires to be established during the course of trial, would suffice for issuing process. This provision namely, Section 16 of the Act creates a statutory presumption of the offence having been committed exposing such Managing Director, Director, Secretary or Officer of the company to criminal liability for committing the offence.
8. A reading of said provision would make it explicitly clear that a criminal liability has been fastened on those, who at the time of commission of offence were in charge and responsible for the conduct of the business of the firm. In case of a partnership firm, there may be sleeping partners and in some cases partner, director or wife of a managing director would also be there and in all such circumstances, the prosecution or the complainant cannot be heard to contend that even inspite they being in the know how of the day to day affairs of the company, yet would be liable for criminal prosecution.
9. Obligation of the complainant to prove that at the time when offence was committed, accused were incharge of and were responsible to the firm for conduct of business of the firm, would arise when the complainant makes necessary averments in the complaint and establishes this fact. It is in this background, averments made in the complaint acquires significance and keeping these aspects in mind, when the complaint in question is examined, it would disclose that accused No.3 is the daughter of accused No.2 and accused No.4 is brother of accused No.2. Except a bald allegation in the complaint that said persons are Directors of the company there is no substantial material placed along with the complaint so as to enable the jurisdictional Court to have ordered process to accused Nos.3 and 4. However, the fact remains that accused No.2 is the Managing Director and accused No.5 is the Senior Vice President, who is incharge of day-to-day affairs of the company and accused No.6 is the Project-in-charge as per the declaration made and there is also reference to this fact in the spot mahazar, which came to be conducted by the complainant itself before initiating the prosecution. Therefore, averment made in paragraph 14 of the complaint that they are responsible for day-to-day affairs of the company or directors incharge and responsible for the conduct and business of the company would suffice to proceed against them.
Hence, I proceed to pass the following:
ORDER (i) Criminal petition is allowed in part.
(ii) Proceedings pending against petitioners-3 and 4 - accused Nos.3 and 4 in C.C.No.25125/2016 pending on the file of VI Additional Chief Metropolitan Magistrate, Bengaluru stands quashed.
(iii) However, it is made clear that
accused Nos.1,2,5 & 6 shall proceed in accordance with law.
(iv) As seen from the records, even before summons could be served which was ordered at the initial stage and even before accused would appear, non-bailable warrants have been issued, for which no reasons are forthcoming from the order dated 30.05.2017. Hence, order dated 30.05.2017 for issuance of NBW to accused Nos.1 to 4 is set aside. It is made clear that in the event of accused Nos.1, 2, 5 & 6 fail to appear on the next date of hearing, learned Magistrate would be at liberty to issue fresh NBW.
SD/-
JUDGE DR/SP