Karnataka High Court

Karnataka State Pollution ... vs Sri.K.L Chandak on 16 January, 2021

Author: Ravi.V.Hosmani

          IN THE HIGH COURT OF KARNATAKA

                   DHARWAD BENCH

      DATED THIS THE 16 t h DAY OF JANUARY, 2021

                       BEFORE

       THE HON'BLE MR.JUSTICE RAVI V.HOSMANI


         CRIMINAL APPEAL No.100246 OF 2015


BETWEEN

KARNATAKA STATE POLLUTION CONTROL BOARD
REPD. BY ITS REGIONAL OFFICER,
SRI.GOPALAKRISHNA B. SANNATANGI
NOW SRI.M.N.YOGANAND S/O M.NARAYANA,
C014, B 5TH CROSS, NEAR KHB COLONY,
HABBUWADA, KARWAR-581306(UK)
                                     ...APPELLANT

(BY SRI.GURUDEV I. GACHCHINAMATH, ADV.)

AND

SRI.K.L CHANDAK
EXECUTIVE DIRECTOR
M/S THE WEST COAST PAPER MILLS LIMITED, BANGUR
NAGAR, DANDELI-584325
HALIYAL TALUK, DIST: U.K.

                                   ...RESPONDENT

(BY SRI.PRASHANT T. AREGULI, ADVOCATE)
                                    2




      THIS   CRIMINAL       APPEAL      IS   FILED       U/SEC.378      OF
CR.P.C.,     PRAYING       TO     SET    ASIDE          THE     IMPUGNED
JUDGMENT      DTD.30.7.2015        MADE      IN    C.C.       NO.651/2004
PASSED BY THE CIVIL JUDGE AND JMFC, DANDELI AND
PUNISH THE ACCUSED AS PRAYED FOR IN THE COMPLAINT
FOR   OFFENCE      U/S.    24,    25    P/U/S     43,    44    OF    WATER
(PREVENTION & CONTROL OF POLLUTION) ACT 1974.

      THIS   APPEAL       BEING    HEARD        AND     RESERVED       FOR
JUDGMENT      ON    25.11.2020,         THIS      DAY,    THE        COURT,
DELIVERED THE FOLLOWING:


                             JUDGMENT

Challenging the judgment dated 30.07.2015,

passed by the Civil Judge and JMFC, Dandeli in CC

No.651/2004 acquitting the accused for the offences

punishable under Sections 43 and 44 of the Water

(Prevention and Control Pollution) Act, 1974

(hereinafter referred to as 'the Act' for short), the

complainant Karnataka State Pollution Control Board

(hereinafter referred to as 'the Board' for short) is in

appeal.

2. Brief facts leading to this appeal are a

private complaint under Section 200 of Code of

Criminal Procedure, 1973 (hereinafter referred to as

'the Cr.P.C.' for short) was filed by the Regional

Officer - Deputy Environmental Officer, Karwar on

04.08.2004 stating that the complainant is a statutory

board constituted under Section 4 of the Act to

exercise the powers and perform the functions

conferred on it under the Act, through out the State of

Karnataka.

3. The accused is the Executive Director of M/s.

West Coast Paper Mills Ltd., located at Bangur Nagar,

Dandeli. The said Industry is manufacturing paper and

duplex board with a capacity of 85500 MTPA. The

Industry was permitted for discharge of trade

effluents of 64800 KLD, under a consent issued by the

Board. The consent expired on 30.06.2003. Even the

consent for establishment (CFE) dated 06.04.2002 for

modernization and expansion of production capacity

from 85500 MTPA to 163750 MTPA contained a

condition against increase in pollution load. The

industry was also issued with CFE to upgrade its

existing Effluent Treatment Plant (ETP) vide order

dated 20.12.2002. But when the industry was

inspected on 27.04.2003, and samples of discharge

collected were tested, analysis report indicated

discharge of effluents exceeding standards stipulated

by the Board. The biological oxygen demands (BOD)

was higher than prescribed. The Central Pollution

Control Board, Bengaluru also conducted in-depth

monitoring of Industry from 20.01.2003 to 21.01.2003

and submitted a report. The said report revealed

effluent discharge exceeding prescribed standards. A

show cause notice was issued on 05.05.2003 for

personal hearing. After personal hearing on

12.05.2003, time limit was extended upto end of

September 2003 to complete commissioning of

upgraded ETP. But, the analysis report of samples

collected on 18.06.2003 again revealed discharge of

effluents in excess of prescribed standards. One more

show cause notice was given. The industry had not

completed construction and commissioning of ETP

even as on date of subsequent inspection on

06.10.2003. The analysis report of the samples

collected on 06.10.2003 indicated suspended solids

exceeding standards stipulated by the Board. This

showed that the industry had failed to keep its

commitment of completing and commissioning the ETP

by 30.09.2003.

4. That the industry was inspected again on

25.05.2004 and 14.06.2004 in presence of Shri K.L.

Chandak, Executive Director by serving notice of

intention to inspect. The analysis of grab samples

collected in his presence indicated discharge of

effluents into Halamaddi Nala leading to Kali river

even after expiry of CFE and communication of order

refusing its extension. This act of accused was

offence under Sections 24, 25 read with Sections 43

and 44 of the Act. Therefore, the complaint was filed

with the following prayer;

a) The accused being Executive Director/s of the West Coast Paper Mills Ltd., located at Bangur Nagar, Dandeli-584 325, Haliyal taluka, U.K. District had committed offences under Sections 24, 25 and Punishable under Sections 43, 44 of Water (Preventions and Control of Pollution) Act, 1974 and hence the accused be summoned for the trial and accordingly for the above said offences, in the interest of justice.

5. After recording sworn statement of

complainant and taking cognizance summons was

issued to accused. Upon appearance, accused denied

the charges and sought trial. To prove the charges,

four witnesses were examined on behalf of

complainant as PW1 to PW4 and Exhibits P1 to P57

were marked. Thereafter, the incriminating material

was explained to accused which he denied and did not

offer any explanation. His statement was recorded

under Section 313 of Cr.P.C. No defence evidence

was led.

6. Based on above, trial Court framed following

points for its consideration:

"1. Whether the Complainant has proved beyond all reasonable doubt that M/s West Coast Paper Mills Ltd., Dandeli was discharging the trade effluent in enormous quantity than consented quantity into river Kali without adequate treatment polluting the river water which is violation of Section 24 of the Water (Prevention and Control Pollution) Act, 1974 and thereby the accused has committed the offence punishable under Section 44 of the Water (Prevention and Control Pollution) Act, 1974?

2. Whether the Complainant had proved beyond all reasonable doubt that M/s. West Coast Paper Mills Ltd., Dandeli was discharging the trade effluent into river Kali without previous consent of the Board which is violation of Section 25 of the Water (Prevention and Control Pollution) Act, 1974 and thereby, the accused has committed the offence under Section 45 of the Water (Prevention and Control Pollution) Act, 1974?

3. What order or sentence?"

7. After answering point Nos.1 and 2 in the

negative, the trial Court proceeded to acquit accused

of all offences alleged against him. Challenging

acquittal, complainant is in appeal.

8. Shri Gurudev I. Gachchinamath learned

counsel for appellant submitted that the Board had

established ingredients of offences alleged against

accused by examining witnesses and producing

documentary evidence. The same established that

industry was operating and releasing trade effluents

even after expiry of CFE, in excess of standards

prescribed by Board and failed to comply with its

directions to upgrade and commission ETP.

9. Learned counsel further submitted that Ex.P1

is the mahazar drawn after inspecting the industry on

27.04.2003. The mahazar is written and signed by

PW1. Likewise Ex.P4 mahazar was drawn on

18.06.2003; Ex.P5 on 06.10.2003; Ex.P6 on

25.05.2004; Ex.P7 on 14.06.2004 and Ex.P8 on

15.06.2004 respectively. Ex.P9 is the CFE dated

20.12.2002 containing directions for upgrading ETP.

The annexure to CFE contains the standards

prescribed by the Board regarding trade effluents.

10. Learned counsel submitted that the analysis

report at Ex.P21 indicated BOD level at 51 and COD of

451 which was far in excess of standards prescribed,

and same was communicated to accused in Ex.P22,

cautioning penal action in case of continued violation.

Learned counsel further drew attention of this Court

to Exs.P29 and P30, wherein accused acknowledged

receipt of notice of intention to inspect and collect

sample. The accused signed as Executive Director of

the Company. Thus, complainant established

commission of offences by accused.

11. On the other hand, Shri Padhmanabha

V.Mahale, learned senior counsel for Shri Prashant T.

Areguli, Advocate for respondent submitted that entire

allegations in the complaint were against the

company. But the accused, who is one of the

Executive Directors of the Company, has been

arraigned as accused without impleading the

Company. Hence, complaint was not maintainable

under Section 47(1) of the Act.

12. It was further submitted that complainant

has failed to produce notice of intention to collect the

sample mandated under sub-sections (3), (4) and (5)

of Section 21 of the Act. Without there being any

compliance with above provisions, the result of

analysis of samples would not be admissible in

evidence in any legal proceedings in view of Section

21(2). This was a fatal flaw in the prosecution case.

13. Learned senior counsel further submitted

that the analysis reports showing suspension of solids

in excess of prescribed standards pertain to samples

collected during rainy season when rain water would

naturally contain increased amount of suspended soil

contents. This was one of the circumstances that

created doubt about the prosecution case.

14. With regard to accusation that industry was

being run without valid consent, it was submitted that

the company had filed an application for consent on

07.04.2003 for the period 2003-2004. Section 25(7)

of the Act provides in case no order is communicated

on the application, within a period of four months, the

consent sought for is deemed to have been granted.

In the case on hand, complainant has stated that

order of rejection of application was passed on

13.07.2004, which is after period of four months.

Therefore, consent was deemed to have been granted,

hence, no offence was committed.

15. Referring to date of cause of action

mentioned in complaint as 15.06.2004 and

24.06.2004, learned counsel submitted that no

samples were collected on the said dates, no lab

reports were received and no mahazars conducted.

Therefore, cause of action for filing complaint was

imaginary and complaint did not merit consideration.

16. In support of his submission, learned senior

counsel relied upon following decisions:

(i) Managing Director, Castrol India Ltd., vs. State of Karnataka, reported in 2017 (18) SCC 275;

(ii) K.K Ahuja vs. V.K. Vora and another, reported in 2009 (10) SCC 48;

(iii) Sushil Sethi and another vs. State of Arunachal Pradesh and others reported in 2020 (3) SCC 240; and

(iv) Ramesh Babulal Doshi vs. State of Gujarat, reported in 1996 (9) SCC

225.

17. From the above, it is seen that the fact that

the company is running an industrial unit which

discharges trade effluents into river Kali is not in

dispute. It is further not in dispute that it had

obtained CFE from the Board and was carrying on

manufacturing activities. It is not in dispute that

complainant is having powers to inspect industrial

plants, collect samples and issue directions to abate

pollution. It is not in dispute that failure to comply

with provisions of the Act and directions issued would

constitute offences under the Act. The dispute is

regarding acceptability of analysis reports of grab

samples without proof of compliance with Sections 21

(3), (4) and (5) of the Act and maintainability of

complaint without arraigning company as an accused

and also non-compliance of directions issued by the

Board.

18. Since there is dispute with regard to

maintainability of complaint without arraigning the

company as an accused, a reference to the relevant

provision is necessary. Section 47 of the Act deals

with offences by companies. It reads as follows:

"47. Offences by companies.--

(1) Where an offence under this Act has been committed by 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 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. Explanation.-- For the purposes of this Section,--

(a) "Company" means any body corporate, and includes a firm or other association of individuals; and

(b) "Director" in relation to a firm means a partner in the firm."

19. Learned senior counsel relied upon decision

of Supreme Court in Managing Director Castrol

India Limited (supra) wherein referring to Section 74

of Standards of Weights and Measures Act, 1976,

Hon'ble Supreme Court held that without specific

averment in complaint about responsibility of

Managing Director or his being in-charge of business

of company and his connection to commission of any

acts constituting an offence and without arraying

company as accused, complaint was not maintainable

and quashed same. Further in Sunil Sethi and

another, examining initiation of criminal proceedings

against Managing Director or any officer of a company

it was held that it was essential to make requisite

allegations against such Director or Officer to

constitute vicarious liability. And where main

allegations are against company failure to make it a

party would be fatal and had quashed proceedings.

Further in K.K. Ahuja case (supra) the Hon'ble

Supreme Court, though was dealing with a complaint

for an offence under Section 141 of the Negotiable

Instruments Act, 1881, examining the provisions of

several other enactments containing pari materia

provisions held as follows:

"16. ... To put it differently, to be vicariously liable under sub-section (1) of Section 141, a person should fulfill the 'legal requirement' of being a person in law (under the statute governing companies) responsible to the company for the conduct of the business of the company and also fulfill the 'factual requirement' of being a person in charge of business of the company.

17. Therefore, the averment in a complaint that an accused is a director and that he is in charge of and is responsible to the company for the conduct of the business of the company, duly affirmed in the sworn statement, may be sufficient for the purpose of issuing summons to him. But if the accused is not one of the persons who falls under the category of 'persons who are responsible to the company for the conduct of the business of the company' (listed in para 14 above), then merely by stating that 'he was in charge of the business of the company' or by stating that 'he was in charge of the day to day management of the company' or by stating that he was in charge of, and was responsible to the company for the conduct of the business of the company', he cannot be made vicariously liable under Section 141 (1) of the Act.

18. It should, however, be kept in view that even an officer who was not in charge of and was responsible to the company for the conduct of the business of the company can be made liable under sub-section (2) of Section 141. For making a person liable under Section 141(2), the mechanical repetition of the requirements under Section 141(1) will be of no assistance, but there should be necessary averments in the complaint as to how and in what manner the accused was guilty of consent and connivance or negligence and therefore, responsible under sub-section (2) of section 141 of the Act."

20. In addition to the above requirement, the

complaint in the instant case suffers from another

fatal flaw, namely non-arraigning of the Company. The

three Judge Bench of Hon'ble Supreme Court in the

case of Aneeta Hada vs M/S Godfather Travels &

Tours reported in (2012) 5 SCC 661 held as follows:

"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." In similar terms, the Court further held:

"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."

21. The law laid down in the above decision is

also re-iterated in a recent decision in Himanshu

v. B. Shivamurthy, reported in (2019) 3 SCC 797.

Interestingly the provision is pari-materia with Section

47 of Act in this case. As there is failure on the part

of the complainant to arraign the Company as an

accused in the Complaint filed by it, the same has to

be held to be not maintainable. Consequently, for the

twin reasons namely failure to make specific

averments regarding specific acts of the accused

constituting offences under the Act and failure to

arraign the Company as accused, the instant

Complaint filed by Appellant is liable to be held as not

maintainable.

22. Apart from the above, the Complainant has

also submitted that the accused is guilty of

discharging trade effluents in excess of standards

prescribed by the Board. In order to establish the

same, the Complainant is relying upon the Spot

Mahazars and analysis reports of samples collected at

that time. The provision that governs collection of

samples is Section 21 of the Act. It reads as under:

"Section 21. Power to take samples of effluents and procedure to be followed in connection therewith. (1) A State Board or any officer empowered by it in this behalf shall have power to take for the purpose of analysis samples of water from any stream or well or samples of any sewage or trade effluent which is passing from any plant or vessel or from or over any place into any such stream or well.

(2) The result of any analysis of a sample of any sewage or trade effluent taken under

sub-section (1) shall not be admissible in evidence in any legal proceeding unless the provisions of sub-

sections (3), (4) and (5) are complied with.

(3) Subject to the provisions of sub-

sections (4) and (5), when a sample (composite or otherwise as may be warranted by the process used) of any sewage or trade effluent is taken for analysis under sub-section (1), the person taking the sample shall--

(a) serve on the person in charge of, or having control over, the plant or vessel or in occupation of the place (which person is hereinafter referred to as the occupier) or any agent of such occupier, a notice, then and there in such form as may be prescribed of his intention to have it so analysed;

(b) in the presence of the occupier or his agent, divide the sample into two parts;

(c) cause each part to be placed in a container which shall be marked and sealed and shall also be signed both by the person taking the sample and the occupier or his agent;

(d) send one container forthwith,--

(i) in a case where such sample is taken from any area situated in a Union territory, to the laboratory established or recognised by the Central Board under section 16; and

(ii) in any other case, to the laboratory established or recognised by the State Board under section 17;

(e) on the request of the occupier or his agent, send the second container,--

(i) in a case where such sample is taken from any area situated in a Union territory, to the laboratory established or specified under sub- section (1) of section 51; and

(ii) in any other case, to the laboratory established or specified under sub-section (1) of section 52.

[(4) When a sample of any sewage or trade affluent is taken for analysis under sub- section (1) and the person taking the sample serves on the occupier or his agent, a notice under clause (a) of sub-section (3) and the occupier or his agent wilfully absents himself, then,--

(a) the sample so taken shall be placed in a container which shall be marked and sealed and shall also be signed by the person taking the sample and the same shall be sent forthwith by such person for analysis to the laboratory referred to in sub-clause (i) or sub-clause (ii), as the case may be, of clause (e) of sub-

section (3) and such person shall inform the Government analyst appointed under sub- section (1) or sub-section (2), as the case may be, of section 53, in writing about the wilful absence of the occupier or his agent; and

(b) the cost incurred in getting such sample analysed shall be payable by the occupier or his agent and in case of default of such payment, the same shall be recoverable from the occupier or his agent, as the case may be, as an arrear of land revenue or of public demand:

Provided that no such recovery shall be made unless the occupier or, as the case may be, his agent has been given a reasonable opportunity of being heard in the matter.

(5) When a sample of any sewage or trade effluent is taken for analysis under sub- section (1) and the person taking the sample serves on the occupier or his agent a notice under clause (a) of sub-section (3) and the occupier or his agent who is present at the time of taking the sample does not make a request for dividing the sample into two parts as provided in clause (b) of sub-section (3), then, the sample so taken shall be placed in a container which shall be marked and sealed and shall also be signed by the person taking the sample and the same shall be sent forthwith by such person for analysis to the laboratory referred to in sub- clause (i) or sub-clause (ii), as the case may be, of clause (d) of sub-section (3)."

(emphasis supplied)

23. In view of the mandate under sub-section 2

of Section 21, without establishing compliance with

provisions of sub-sections (3), (4) and (5) of Section

21 of the Act, the report of any analysis of sample

collected would not be admissible in any legal

proceedings. From an examination of the exhibits, it is

seen that except Ex.P29, no other notice has been

issued and acknowledged by the accused. Ex.P29 is

issued notifying intention to collect samples on

14.06.2004. The corresponding analysis report is not

produced. However result of such analysis which is

referred in the letter dated 13.07.2004 is marked as -