Pankaj Lochan Mohanty vs State Of Odisha & Others
2023 Latest Caselaw 947 Ori

                 IN THE HIGH COURT OF ORISSA AT CUTTACK
AFR                       CRLMC No.3065 of 2014

        Pankaj Lochan Mohanty                   ....               Petitioner
                                   Mr.Sanjit Mohanty, Senior Advocate and
                                                 Mr. I. Acharya, Advocate


                                      -Versus-


        State of Odisha & Others                ....       Opposite Parties
                                             Mr. Pradip Kumar Rout, AGA
                                       Mr. Satyabrata Panda, Advocate for
                                                     Government of India

                   CORAM:
                   JUSTICE R.K. PATTANAIK

                     DATE OF JUDGMENT:30.01.2023


      1.

The petitioner by invoking inherent jurisdiction of this Court has questioned the legality and judicial propriety of the impugned order of cognizance under Section 15 of the Environment (Protection) Act, 1986 (hereinafter referred to as 'the Act') vide Annexure-2 and the entire criminal proceeding in 2(c)CC Case No.40 of 2013 pending in the file of learned S.D.J.M., Bonai on the grounds inter alia that the same is not tenable in law and hence, liable to be interferred with and quashed in the interest of justice.

2. The learned court below has taken cognizance of the alleged offence and summoned the petitioner in connection with 2(c)CC Case No.40 of 2013 filed alleging violation of the provisions of the said Act for having not obtained requisite environmental clearance from the Ministry of Environment and Forest (MoEF) during the period from 2000-01 to 2005-06. In fact, Government of Odisha has granted lease in respect of Iron and Manganese Mines in favour of M/s. M.G. Mohanty which had excess

Pankaj Lochan Mohanty Vrs. State of Odisha and Others

production over and above its capacity and the same was without having prior environmental clearance of the MoEF as was required under the Environmental Impact Assessment (EIA) Notification, 2006. With the above complaint received in 2(c)CC Case No.40 of 2013, the learned court below took cognizance of the offence under Section 15 of the Act and issued process to the petitioner, who a partner of M/s. M.G. Mohanty.

3. Heard Mr. Sanjit Mohanty, learned Senior Advocate assisted by Mr. I. Acharya, Advocate appearing for the petitioner, Mr. Rout learned AGA for the State-opposite party Nos.1 and 3 and Mr. S. Panda, learned counsel for Union of India-opposite party No.2.

4. As a matter of fact, the petitioner received a notice vide Annexure-3 from the Collector-cum-D.M., Sundargarh, namely, opposite party No.3 in Misc. Case No.66 of 2012 directing him to show-cause as to why he shall not be prosecuted and penalized under Section 15 of the Act for on account of the enhanced production without obtaining prior environmental clearance as required in term of EIA Notification of 2006. In response to the notice, a reply under Annexure-4 dated 28th November, 2012 was submitted. The precise allegation in the notice dated 4th October, 2012 under Annexure-3 is that the mining project enhanced the production capacity and continued to operate during the period in question without the prior environmental clearance. But after the reply received, the complaint was filed before the learned court below whereupon the order of cognizance vide Annexure-2 was passed. According to the petitioner, opposite party No.3 without considering the show-cause reply submitted, proceeded to institute the complaint, which is wholly without jurisdiction.

5. It has been pleaded by the petitioner that no offence is committed under the Act on the following grounds, such as, even by considering the complaint and other materials taken at their

Pankaj Lochan Mohanty Vrs. State of Odisha and Others

face value and accepted in its entirety do not prima facie constitute an offence and fulfill any of the ingredients of Section 15 of the Act which should be based on the premise that failure to comply or any violation did cause damage or adverse effect on environment due to excess raising of iron ore than the permitted quantity without environmental clearance; that such an offence cannot be attracted by mere enhancement in production as the statute recognizes an offence keeping in view the requirements of compliance and consequences thereof; and that apart, mens rea is a condition precedent which is conspicuously absent.

6. Mr. Mohanty, learned Senior Advocate appearing for the petitioner besides the aforesaid grounds pleaded confined his argument by agitating a very pertinent question regarding the sustainability of the proceeding on the ground that such a prosecution cannot be directed against the petitioner alone without the partnership firm being arrayed as it is a case of vicarious liability. It is contended that on a reading of Section 16 of the Act, if an offence under Section 15 thereof has been committed by the company which includes partnership firm, every person, who at the time the offence was committed was directly in-charge and responsible to the company or partnership firm, all shall be jointly and severally liable for it. While contending so, Explanation to Section 16 of the Act has been referred to so as to bring the partnership firm within the ambit of the liability. In other words, Mr. Mohanty, learned Senior Advocate submits that the partnership firm ought to have been a party impleaded since it is vicariously liable with all its partners as doctrine of strict construction demands that commission of an offence by the company or firm is a condition precedent to attract the liability and such provision is pari materia to Section 22-C of the Minimum Wages Act and Section 141 of the Negotiable Instrument Act with a striking dissimilarity in that

Pankaj Lochan Mohanty Vrs. State of Odisha and Others

Section 16 of the Act attracts liability vis-a-vis persons directly in charge of the affairs of business of the company or partnership firm. While advancing such an argument, Mr.Mohanty, learned Senior Advocate placed reliance on a decision of the Apex Court in Aneeta Hada Vrs. M/s. Godfather Travels and Tours Private Limited AIR 2012 SC 2794 to contend that the partnership firm has not been arrayed as an accused which is a statutory mandate in absence of which the criminal proceeding cannot be maintained. Secondly, it is contended that someone who is directly in charge of the affairs of the firm shall have to be proceeded with and in the present case, the petitioner is one of the partners and there is no averment in the complaint about him being in direct charge of the concerned firm. Furthermore, according to Mr. Mohanty, learned Senior Advocate, the prosecution could not have been initiated since there is no violation as has been alleged which is with reference to the EIA Notification of 2006 which was not in force to cover the alleged violation for a period commencing in 2000-01 and ending in 2005-06 prior to its introduction. With other grounds raised, it is submitted that the criminal proceeding cannot be sustained in law.

7. Mr. Rout, learned AGA, on the other hand, submits that the complaint is properly and validly constituted and the petitioner being the partner and looking after the affairs of the firm and for the alleged violation since there was enhanced production during the period rightly has been proceeded with due to violation of the EIA Notification of 2006 and hence, even in absence of the firm as an accused, the same is maintainable and not vitiated. Mr. Panda, learned counsel for the Union of India-opposite party No.2 would submit that the production was beyond the capacity and in gross violation of the said notification of 2006 and therefore, the complaint was filed and such an action should not

Pankaj Lochan Mohanty Vrs. State of Odisha and Others

be interferred with at its threshold on a technical ground and for the reason that the partnership firm is not arraigned as an additional accused.

8. Section 16 of the Act deals with the offences by the company and stipulates that a company and every person, who at the time the offence was committed was directly in charge and was responsible for the conduct of its business shall be deemed to be guilty of the offence and liable unless it is proved that such offence was committed without his knowledge and that he exercised due diligence to prevent the offence from being committed. In the Explanation appended to sub-section 2 thereof for the purpose of Section 16 of the Act, a 'company' means a body corporate and includes a firm or other association of individuals and a 'director' in relation to a firm shall mean a partner in the firm. So, Section 16 applies to a partnership firm as well and any such offence committed by it shall be visited with a criminal prosecution with vicarious liability. In Aneeta Hada (supra), the Apex Court while dealing with a matter related to a prosecution under Section 138 of the N.I. Act and referring to Section 141 of the said Act held and observed that the word deemed used applies to the company and the persons responsible for the acts of the company and it crystalizes the corporate and criminal liability of a person, who is in charge of the company. It has also been held therein that what averments should be required to make a person vicariously liable was dealt with in the case of SMS Pharmaceuticals Ltd. Vrs. Neeta Bhalla and Another (2005) 8 SCC 89, wherein, it has been observed that it primarily falls on the company and is extended to its officers and further proceeded to hold that normal rule in the cases involving criminal liability is against vicarious liability; that this normal rule subject to exception on account of specific provision being made in statutes extending liability to others; that Section 141 of the NI Act is an

Pankaj Lochan Mohanty Vrs. State of Odisha and Others

instance of specific provision, which in case an offence under Section 138 thereof is committed by a company extends criminal liability for dishonour of cheque to its officers; that Section 141 of the NI Act contains conditions which are to be satisfied before the liability can be extended to the officers of a company; that since the provision creates criminal liability, the conditions have to be strictly complied with; that the conditions are intended to ensure that a person, who is sought to be made vicariously liable for an offence of which the principal accused is the company, had a role to play in relation to the incriminating act and further that such person should know what is attributed to him to make him liable. In other words, persons who had nothing to do with the matter need not be roped in. A company being a juristic person, all its deeds and functions are result of acts of others. Therefore, officers of a company who are responsible for acts done in the name of the company are sought to be made personally liable for acts which result in criminal action being taken against the company. It makes every person who, at the time the offence was committed, was in-charge of and was directly responsible to the company or firm for the conduct of its business, liable for the offence. The proviso to sub-section (1) of Section 16 of the Act, however, prescribes an escape route for persons, who are able to prove that the offence was committed without their knowledge or had exercised due diligence to prevent commission of the offence. In Aneeta Hada case, the Apex Court concluded 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 and that 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 NI Act which clearly speaks of commission of offence by the company; that the

Pankaj Lochan Mohanty Vrs. State of Odisha and Others

words 'as well as' would have to be understood in that context; that in Reserve Bank of India Vrs. Peerless General Finance and Investment Co. Ltd. and others AIR 1987 SC 1023, it has been laid down that the entire statute must be first read as a whole, then section by section, clause by clause, phrase by phrase and word by word; that the same principle has been reiterated in Deewan Singh and others v. Rajendra Prasad Ardevi and others (2007) 10 SCC 528 and Sarabjit Rick Singh v. Union of India AIR 2008 SC (Supp) 368; that applying the doctrine of strict construction, commission of offence by the company is an express condition precedent to attract the vicarious liability of others; that the expression 'as well as the company' appearing in the Section makes it absolutely and unmistakably clear that when the company can be prosecuted, then only, the persons mentioned in the other categories could be held vicariously liable for the offence subject to the averments and proof thereof; that one cannot be oblivious of the fact that the company is a juristic person and it has its own respectability and if a finding is recorded against it, the same would create a concavity in its reputation. In Sharad Kumar Sanghi Vrs. Sangita Rane (2015) 12 SCC 781, the issue of vicarious liability was dealt with and referred to the decisions in Maksud Saiyed and SMS Pharmaceuticals(supra) and likewise held that when the company has not been arraigned as an accused, the criminal proceedings initiated against the Managing Director were not maintainable. Similar is the view expressed in Sanjeev Gupta Vrs. State Government of NCT of Delhi 2008 SCC OnLine Del 1424. In Prakash Chandra Tibrewal and others Vrs. The Regional Officer, Jharkhand State Pollution Control Board 2015 SCC OnLine Jhar 3292 after referring the decision of the Supreme Court in Aneeta Hada (supra) quashed the criminal proceeding in absence of the company as an accused. On a plain reading of the aforesaid judgments besides the decision of this Court in Orissa Mining Corporation Vrs. State of Odisha

Pankaj Lochan Mohanty Vrs. State of Odisha and Others

and others 2019(III) ILR-CUT 738, the inescapable conclusion is that where there is vicarious liability statutorily fastened, not only the person who is in charge of the business of the company or the firm as the case may be shall be liable for any offence but also the company itself which is the principal accused and such liability is by a deeming fiction created under law. Section 16 of the Act creates such liability and makes the person responsible as well as the company to be guilty of the offence committed and to be proceeded against and punished accordingly. As per the Explanation to sub-section 2 of Section 16 of the Act, a company includes a firm or other association of individuals and a Director to mean a partner of the firm. The expression 'every person...as well as the company' appearing in Section 16 of the Act brings within its fold the liability for the said person directly in charge of the company and it does not mean that either of the two may be prosecuted under Section 16 of the Act. Applying the doctrine of strict construction, it is contended that the commission of an offence by the company or a partnership firm is an express condition to attract vicarious liability of others which the Court is in agreement by looking at the intent and purpose of Section 16 of the Act. The company or the firm is the principal accused and along with it all such persons who are directly in charge of and responsible for the conduct of its business shall be combinedly liable for any offence committed. Unlike Section 141 of NI Act as it was in Aneeta Hada case, in an offence by a company punishable under Section 15 of the Act, the liability against any person responsible for the company's business must be directly in charge of it in order to sustain the criminal prosecution against him which should be averred and made visibly appear in the complaint. The rigour of law to fix liability on a person of a company or firm is far more stricter under the Act than Section 141 of the NI Act wherein the language does not envisage to be someone directly in charge and responsible for the conduct of the

Pankaj Lochan Mohanty Vrs. State of Odisha and Others

firm's business. On a bare perusal of the complaint, as in the present case, it is not made to appear as to if the petitioner to be directly in charge among the partners to run the business of the firm. In other words, to sustain a complaint, necessary averments are to be made to show that the person, who has been criminally prosecuted along with the company or the firm is in direct charge of and responsible for the conduct of its business. Furthermore, the firm has not been arraigned as an accused which as per the decisions in Aneeta Hada and other authorities referred hereto before is a requirement of law as it invites vicarious liability. Mr. Mohanty, learned Senior Advocate also placed reliance on a decision of the Apex Court in Dilip Hariramani Vrs. Bank of Baroda (2022) 7 SCALE 472 on the same point. In the aforesaid decision, the Supreme Court referred to the decisions in Aneeta Hada and Sharad Kumar Sanghi (supra) and reached at a similar conclusion. Without the specific allegations made against the petitioner even as a partner, it was contended that he cannot be held vicariously liable for the offence committed by the company and in that connection, one more decision in the case of Rabindranatha Bajpe Vrs. Mangalore Special Economic Zone Ltd. and others AIR 2021 SC 4587 has been cited. In the instant case, the complaint really does not contain any specific averment about the role and responsibility of the petitioner with the allegation as to in what manner he is responsible and whether to be directly in charge of the firm which in any case has not been arraigned as an accused along with him.

9. The further contention of Mr. Mohanty, learned Senior Advocate is that the EIA Notification dated 14th September, 2006 did not exist during the period of alleged violation and hence, the complaint on non-existing facts cannot be maintained inasmuch as no any such violation for the period in question could be the subject of said notification. It is claimed that the lessee complied

Pankaj Lochan Mohanty Vrs. State of Odisha and Others

the notification of 2006 and in view of the Circular dated 21st November 2006 issued under the said notification to apply for environmental clearance by 30th June, 2007 failing which it would be treated as a violation but duly applied for the environmental clearance for the enhanced production as on 8th February, 2006 and 24th October, 2006 pursuant to which it was granted on 9th January, 2007. In fact, the EIA Notification of 2006 was published on 14th September, 2006 by the MoEF framed in exercise of powers conferred under the Environment (Protection) Act in supersession of earlier notification of 1994. The notification of 2006 inter alia stated that on and from the date of its publication, the required construction of new projects or activities or expansion or modernization of existing projects or activities listed in the Schedule entailing capacity addition with change in process and or technology shall be undertaken in any part of India only after prior environmental clearance from the Central Government. The alleged period of 2000-01 to 2005-06 as according to the petitioner did come within the purview of the notification dated 27th January, 1994. It is claimed that pursuant to the EIA Notification of 2006, the project proponent obtained environmental clearance by order dated 9th January, 2007 on an application dated 8th February, 2006 with respect to enhancement in annual production.

10. Mr. Panda, learned counsel for opposite party No.2- Governemnt of India contends that in case it is held that the prosecution is not maintainable for the firm not being an accused, liberty should be granted to file a fresh complaint which has been vehemently objected to by Mr.Mohanty, learned Senior Advocate by contending that the Apex Court did not consider it and grant the permission in any of the cases but simply quashed the criminal proceedings. Such a contention is advanced by Mr. Panda referring to the decision in Odisha Mining Corporation (supra).

Pankaj Lochan Mohanty Vrs. State of Odisha and Others

The decision in U.P. Pollution Control Board Vrs. M/s. Modi Distillery and others AIR 1980 SC 1128 and S.R. Sukumar Vrs. S. Sunaad Raghuram (2015) 9 SCC 609 have been distinguished by Mr. Mohanty, learned Senior Advocate so as to contend that liberty should not be granted for filing a fresh complaint after a long delay of 17-22 years since the alleged period of offence besides for the reason that the opposite party was well aware that the lessee is a partnership firm but never arrayed it as an accused. Having considered and appreciated the rival contentions with reference to the citations relied on by both the sides, the Court is of the conclusion that in the peculiar facts and circumstances of the instant case, no such liberty should be granted to file a fresh complaint especially at this distant point of time.

11. Accordingly, it is ordered.

12. In the result, the CRLMC stands allowed. As a logical sequitur, the criminal proceeding in 2(c)CC Case No.40 of 2013 pending in the file of learned S.D.J.M., Bonai is hereby quashed for the reasons discussed herein above.

(R.K. Pattanaik) Judge

U.K.Sahoo