Jharkhand High Court

T.V.Narendram vs The State Of Jharkhand on 28 September, 2021

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            IN THE HIGH COURT OF JHARKHAND, RANCHI
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Cr.M.P. No. 153 of 2014

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T.V.Narendram, son of Mr. K. Viswanath, working for gain as Managing Director, M/s Tata Steel Limited, having registered office at Bombay House, 24 Homi Mody Street, PO-Fort, PS-Fort, Town & District-Mumbai 400001 (Maharashtra), resident of 34, Straight Mile Road, Northern Town, Jamshedpur, PO and Police Station -Bistupur, Town Jamshedpur, District-East Singhbhum ..... Petitioner

-- Versus --

1.The State of Jharkhand

2.The Chief Inspector of Factories, Jharkhand, Doranda, PO and PS Doranda, District Ranchi ...... Opposite Parties

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CORAM: HON'BLE MR. JUSTICE SANJAY KUMAR DWIVEDI

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For the Petitioner :- Mr. Indrajit Sinha, Advocate For the State :- Mr. Santosh Kumar Shukla, Advocate

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4/28.09.2021 Heard Mr. Indrajit Sinha, the learned counsel appearing on

behalf of the petitioner and Mr. Santosh Kumar Shukla, the learned

counsel appearing on behalf of the respondent State.

2. This petition has been heard through Video Conferencing in

view of the guidelines of the High Court taking into account the situation

arising due to COVID-19 pandemic. None of the parties have complained

about any technical snag of audio-video and with their consent this

matter has been heard.

3. The petitioner has filed this petition for quashing the entire

criminal proceedings initiated against the petitioner in connection with C2

Case No.516 of 2013 including the order dated 16.12.2013 passed by

learned Judicial Magistrate 1st Class, Jamshedpur whereby cognizance

has been taken for the offences under section 15 of the Environment

(Protection) Act, 1986 against the petitioner, pending in the court of

learned Judicial Magistrate, 1st Class, Jamshedpur.

4. Mr. Indrajit Sinha, the learned counsel appearing on behalf

of the petitioner submits that letter dated 25.05.2005 contained in

Annexure-3 passed by Dy. Managing Director (Steel) to Chief Inspector of

Factories seeking approval of plan for new LD Gas Holder and by letter

dated 28.05.2005 as contained in Annexure-4 the Chief Inspector of

Factories approved the drawings. By letter dated 27.07.2005 addressed

by the Chief Safety and Ergonomics, Tata Steel to the Chief Inspector of

Factories regarding On-Site Emergency Plan and Disaster Control inside

the Works was submitted which was also approved by the Chief

Inspector of Factories vide letter No.82/P dated 29.05.2006. By letter

dated 26.04.2006, the Chief Inspector of Factories sought certain

information as per the proforma enclosed in the said letter. On

10.05.2006 the LD Gas Holder was commissioned. By letter dated

29.05.2006 which was addressed by the Deputy Managing Director

(Steel) to Chief Inspector of Factories submitted the requisite information

viz. status of implementation on various requirements under the

Manufacture, Storage and Import of Hazardous Chemicals Rules, 1989

and Chemical Accident (EPPRP) Rules, 1996. Both the rules are under

Environment Protection Act. By letter dated 29.12.2006, the Chief

Inspector of Factories approved the On-Site Emergency Plan and Disaster

Control inside the Works. By letter dated 03.07.2007 the Inspector of

Factories, Circle-1 sought certain clarification from the Deputy Managing

Director (Steel). By letter dated 10.07.2007 which was addressed by the

Chief Safety and Ergonomics to Inspector of Factories, Circle-I,

Jamshedpur furnished information which was required by letter dated

03.07.2007. The petitioner was inducted in the Board of M/s Tata Steel

on 15.11.2013. The Chief Inspector of Factories has inspected the

L.D.Gas Holder which was erected and installed between 2004-2005. A

show cause was issued against the company by letter dated 21.11.2013

which was replied by letter dated 03.12.2013. A show cause was issued

against the company on 10.12.2013 and on this background on

11.12.2013 a complaint case was filed in the court of learned Chief

Judicial Magistrate, Jamshedpur by the Chief Inspector of Factories and

by order dated 16.12.2013 cognizance has been taken against the

petitioner.

5. Mr. Indrajit Sinha, the learned counsel for the petitioner

submits that provisions of Rule 7(1) and 10 of the Manufacture, Storage

and Import of Hazardous Chemicals Rules, 1989 speaks of approval and

notification on site. He submits that for non-compliance of Rules 7 and

10, the punishment is prescribed under section 15 of Environment

Protection Act, 1986. He submits that the petitioner is Managing Director

of the Establishment of M/s Tata Steel Limited, within whose premises

the said incident had occurred. The petitioner has been named as the

sole accused in the said prosecution case, purportedly for being a person

who at the time of the alleged offence was committed was directly in

charge of and was responsible to the company for the conduct of the

business of the company. He submits that Section 16 of the Environment

Protection Act, 1986 has laid down certain criteria as to against whom

the proceeding can be initiated when the offence is committed by the

company. He submits that this is almost in the same line as has been

provided in Section 141 of the Negotiable Instruments Act and Contract

Labour (Regulation and Abolition) Act, 1970. He submits that the learned

Magistrate has taken cognizance on filled up form which shows that

there is no application of judicial mind. He further submits that the

company has not been made party in the case which is against the

mandate of Hon'ble Supreme Court as held in the case of "Aneeta Hada

v. Godfather Travels and Tours Private Limited", (2012) 5 SCC 661. He

further submits that recently the Hon'ble Supreme Court has considered

this aspect of the matter in the case of "Hindustan Unilever Limited v.

State of Madhya Pradesh", (2020) 10 SCC 751 and in paragraph no.23 of

the said judgment has observed as under:

"23. Clause (a) of sub-section (1) of Section 17 of the Act makes the person nominated to be in charge of and responsible to the company for the conduct of

business and the company shall be guilty of the offences under clause (b) of sub-section (1) of Section 17 of the Act. Therefore, there is no material distinction between Section 141 of the NI Act and Section 17 of the Act which makes the company as well as the nominated person to be held guilty of the offences and/or liable to be proceeded and punished accordingly. Clauses (a) and (b) are not in the alternative but conjoint. Therefore, in the absence of the company, the nominated person cannot be convicted or vice versa. Since the Company was not convicted by the trial court, we find that the finding of the High Court to revisit the judgment will be unfair to the appellant- nominated person who has been facing trial for more than last 30 years. Therefore, the order of remand to the trial court to fill up the lacuna is not a fair option exercised by the High Court as the failure of the trial court to convict the Company renders the entire conviction of the nominated person as unsustainable."

6. On this ground, he submits that no case is made out

against the petitioner and the prosecution is bad in law as the company

has not been made the party and the entire proceeding is required to be

quashed.

7. Mr. Santosh Kumar Shukla, the learned counsel appearing

on behalf of the respondent State tried to justify the complaint against

the petitioner by way of referring to paragraph no.13 of the complaint

and submits that there is allegation against the petitioner and there is no

illegality in the cognizance order. He submits that this case may be

dismissed.

8. In view of the above facts and considering the submissions

of the learned counsel appearing on behalf of the parties, prima facie, on

perusal of the cognizance order, it transpires that the learned Judicial

Magistrate has taken cognizance on a filled up form which shows that

there is non-application of judicial mind in taking cognizance. The

provision of Rule 7 and 10 of the Manufacture, Storage and Import of

Hazardous Chemicals Rules, 1989 stipulates as under:

"7. Approval and Notification of sites: An occupier shall not undertake any industrial activity unless he has been granted an approval for undertaking such an activity and has submitted a written report to the concerned Authority containing the particulars specified in Schedule 7 at least 3 months before commencing that activity or before such

shorter time as the concerned Authority may agree and for the purposes of this paragraph, an activity in which subsequently there is or is liable to a threshold quantity or more of an additional hazardous chemical shall be deemed to be a different activity and shall be notified accordingly.

10. Subject to the following paragraphs of this rule, an occupier shall not undertake any industrial activity to which this rule applies, unless he has prepared a safety report on that industrial activity containing the information specified in Schedule 8 and has sent a copy of that report to the concerned authority at least ninety days before commencing that activity."

9. Section 16 of Environment Protection Act, 1986 prescribes

as to who are the persons responsible for offence which is as under:

"16.Offences by companies -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 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.

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 nay 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. Explanation- For the purpose of this section,- "company" means any body corporate, and includes a firm or other association of individuals; and "director", in relation to a firm, means a partner in the firm."

10. Section 16(i) normally speaks that the person who is

directly in-charge of and is directly responsible for the conduct of the

business of the company shall be liable to be proceeded against and

punished accordingly. Penalty for contravention of the provisions of the

Act is prescribed in Section 15 of the Environment Protection Act, 1986.

In the case of "Aneeta Hada v. Godfather Travels and Tours Private

Limited", (2012) 5 SCC 661, the Hon'ble Supreme Court at paragraph

nos.38, 56, 58 and 59 has observed as under:

"38. From the aforesaid pronouncements, the principle that can be culled out is that it is the bounden duty of the court to ascertain for what purpose the legal fiction has been created. It is also the duty of the court to imagine the fiction with all real consequences and instances unless prohibited from doing so. That apart, the use of the term "deemed" has to be read in its context and further, the fullest logical purpose and import are to be understood. It is because in modern legislation, the term "deemed" has been used for manifold purposes. The object of the legislature has to be kept in mind.

56. We have referred to the aforesaid passages only to highlight that there has to be strict observance of the provisions regard being had to the legislative intendment because it deals with penal provisions and a penalty is not to be imposed affecting the rights of persons, whether juristic entities or individuals, unless they are arrayed as accused. It is to be kept in mind that the power of punishment is vested in the legislature and that is absolute in Section 141 of the Act which clearly speaks of commission of offence by the company. The learned counsel for the respondents have vehemently urged that the use of the term "as well as" in the section is of immense significance and, in its tentacle, it brings in the company as well as the Director and/or other officers who are responsible for the acts of the company and, therefore, a prosecution against the Directors or other officers is tenable even if the company is not arraigned as an accused. The words "as well as" have to be understood in the context.

58. Applying the doctrine of strict construction, we are of the considered opinion that commission of offence by the company is an express condition precedent to attract the vicarious liability of others. Thus, the words "as well as the company" appearing in the section make it absolutely unmistakably clear that when the company can be prosecuted, then only the persons mentioned in the other categories could be vicariously liable for the offence subject to the averments in the petition and proof thereof. One cannot be oblivious of the fact that the company is a juristic person and it has its own respectability. If a finding is recorded against it, it would create a concavity in its reputation. There can be situations when the corporate reputation is affected when a Director is indicted.

59. In view of our aforesaid analysis, we arrive at the irresistible conclusion that for maintaining the prosecution under Section 141 of the Act, arraigning of a company as an accused is imperative. The other categories of offenders can only be brought in the drag-net on the touchstone of vicarious liability as the same has been stipulated in the provision itself. We say so on the basis of the ratio laid down in C.V. Parekh which is a three-Judge Bench decision. Thus, the view expressed in Sheoratan Agarwal does not correctly

lay down the law and, accordingly, is hereby overruled. The decision in Anil Hada is overruled with the qualifier as stated in para 51. The decision in Modi Distillery has to be treated to be restricted to its own facts as has been explained by us hereinabove."

11. In the said judgment, the Hon'ble Supreme Court of India

was dealing with section 85 of the Information Technology Act, 2000,

wherein the provision was the same as has been arising in the case in

hand. The judgment of the Hon'ble Supreme Court in the case of

"Hindustan Unilever Limited v. State of Madhya Pradesh" (supra) is also

in favour of the petitioner. There is nothing in the complaint petition

which suggest that the petitioner has failed to discharge its obligation

under the provisions of Rule 7 and 10 of the Rules and be directly

responsible for such contravention to attract institution of proceedings in

terms of Section 16 of the Environment Protection Act, 1986. Section 16

of the said Act clearly states that the person to be tried for violation of

section 15 must have a direct involvement in the commission of the