JUDGMENT K. C. Agarwal, J. 1. CRIMINAL Revision No. 2330 of 1983 has been filed by the three applicants challenging the order of the Chief Judicial Magistrate Ghaziabad issuing the process to these three persons and eight others against whom a complaint under Section 44 of the Water (Prevention of Control of Pollution) Act, 1974 (hereinafter referred to as 'the Act') has been filed by U. P. Pollution Control Board, Lucknow. This Board [has been constituted by a notification of the Government of U. P. dated 3rd February, 1975, in accordance with the provisions of sub-section of Section 4 of the Act. Subsequently, the Board constituted under the Act was given the name as U. P. Pollution Control Board (hereinafter referred to as 'the Board'), vide notification No. 2179/92-100-74, dated 13th July, 1982. 2. THE Act had been enacted by the Parliament to provide for the prevention and control of water pollution and the maintaining or restoring of wholesomeness of water for the establishment with a view to carrying out the purposes aforesaid, of Boards for the prevention and control of water pollution, for conferring on and assigning to such Boards powers and functions relating thereto and for matters connected therewith. This Act was passed in pursuance of Clause (1) of Article 252 of the Constitution under which a large number of States, includiing U. P., had authorised the Union Parliament to pass an Act for regulating matters aforesaid. On 21st October, 1983, the Board filed a complaint under Section 44 of the Act against eleven persons on the allegation that M/s. Modi Distillery, Modinagar, district Ghaziabad, which was a company within the meaning of Section 47 of the Act, had been discharging knowingly its noxious and polluting matter (effluents) into the stream Kail river through Kadrabad drain, which is a stream as defined in sub-section (j) of Section 2 of the Act and thereby causing continuous pollution of the said stream. The allegations made were that M/s. Modi Distillery, Modinagar, having not obtained the consent by applying under Section 25 of the Board for bringing into use any new or altered outlet for the discharge of its trade effluent into the stream, committed contravention of the said section. The further allegation was about the breach of Section 26 of the Act by not obtaining the consent for discharging its trade effluent into (the stream.
The further allegation was about the breach of Section 26 of the Act by not obtaining the consent for discharging its trade effluent into (the stream. The Board alleged that M/s. Modi Distillery was informed about the need of obtaining such a consent through letters, but the said company did not apply for the consent under Sections 25 (1) and 26 of the Act and it violated these provisions, on account of which it was liable to be punished under Section 47 of the Act. 3. SRI S. N. Pandey, who was the Legal Assistant of the Board, gave his statement under Section 200 of the Code of Criminal Procedure. After recording the statement of S. N. Pandey, Legal Assistant of the Board, the Chief Judicial Magistrate, Ghaziabad, directed for the issue of the process to the accused impleaded in the complaint as opposite parties nos.1 to 11. Against the issuance of the process, K. N. Modi, Chairman, Modi Industries Ltd, Modinagar, K. K. Modi, Vice Chairman, Modi Industries Ltd. Modinagar, and M. L. Modi, Managing Director, Modi Industries Limited, Modinagar, have filed the aforesaid revision and prayed for quashing of the order of the Chief Judicial Magistrate, dated 3-11-1983. The connected Criminal Miscellaneous Application No. 10187 of 1983 has been preferred under Section 482 CrPC for the relief of quashing the proceedings taken by the Board. This petition has been preferred by two of the Directors of M/s. Modi Distillery, Modinagar, who have been described as (1) S. C. Tirkha, Director, New Delhi, and (2) Shri Raghunath Rai, Director, for Chartered Accountants, New Delhi in the complaint filed under Section 44 by the Board. 4. THE main submission of the applicant's counsel in the aforesaid two cases is the same, hence they are being disposed of by means of a common judgment. The submission of the applicants of the two cases was that on the face of the complaint or the papers accompanying the same, no offence was committed, and. therefore, the entire proceedings initiated on the complaint of the Board was liable to be quashed. 5.
The submission of the applicants of the two cases was that on the face of the complaint or the papers accompanying the same, no offence was committed, and. therefore, the entire proceedings initiated on the complaint of the Board was liable to be quashed. 5. THE test for quashing the proceedings in the initial stages is that if, on the face of the complaint taking the allegations as they are without adding or substracting anything, no offence is made out then the High Court would be justified in quashing the proceedings in the exercise of its inherent jurisdiction See Delhi Municipality v. Ram Kishan, AIR 1983 SC 67 . 6. IN Sharda Prasad Sinha v. State of Bihar, AIR 1977 SC 1754 , Bhagwati, J. stated the law as below : "It is now settled law that where the allegations set out in the complaint or the charge sheet do not constitute any offence, it is competent to the High Court exercising its inherent jurisdiction under Section 482 of the Code of Criminal Procedure to quash the order passed by the Magistrate taking cognizance of the offence." Section 47 of the Act deals with offences by companies. Sub-section (1) of Section 47 of the Act provides that where an offence has been committed by a company, every person who at the time of 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. Under sub-section (2) of Section 47, where an offence 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 be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly.
The Explanation given for the purposes of this section is material and is being quoted below: "Explanation-For the purposes of this section- (a) " company " means any body corporate, and includes firm or other association of individuals ; and (b) " director " in relation to a firm means a partner in the firm." 7. IN the instant case, M/s. Modi Distillery, Modinagar, is being prosecuted in the capacity of a company and tit is mentioned in the complaint and the statement of S. N. Pandey, Legal Assistant, under Section 200 of the Code of Criminal Procedure. IN order to be a company under the definition, it is necessary that it should be a body corporate. The complaint although states in paragraph 2 that M/s. Modi Distillery, Modinagar, is a company, but if this assertion is read along with Annexures 1' and 2' attached to the complaint, it would be found that the complainant was not clear of the aforesaid fact inasmuch as from the description of M/s. Modi Distillery, given in these letters is as follows; "M/s. Modi Distillery, Prop. Modi INdustries Ltd., Modinagar-201204 Ghaziabad (U. P.) " 8. IF Modi Distillery itself is a company, there was absolutely no point in describing M/s. Modi Industries Limited as its proprietor. Learned counsel for the applicants admitted before me that M/s. Modi Distillery, Modinagar, is only a Unit of M/s. Modi Industries Limited, Modinagar. From the array of parties given in the application under Section 482 CrPC also it appears that Sri M. L. Modi is the Managing Director of M/s. Modi Industries Limited, Modinagar. M/s. Modi Industries Limited!, Modinagar, owns a number of Units, including Modi Distillery. K. N. Modi is the Chairman of all these Units. It was M/s. Modi Industries Limited, Modinagar, which was incorporated as a company under the Companies Act. A company, which is incorporated under the Companies Act, is given a Certificate of Incorporation, upon the issuance of the Certificate of Incorporation, the company becomes a body corporate or, in other words, a corporation. A Corporation is not, like a partnership or a family, a mere collection or aggregation of individuals. In the eyes of the law it is a person distinct from its members or shareholders, a metaphysical entity or a fiction of law, with legal but no physical existence.."- See Palmar's Company Law, Twenty First Edition, page 124. 9.
A Corporation is not, like a partnership or a family, a mere collection or aggregation of individuals. In the eyes of the law it is a person distinct from its members or shareholders, a metaphysical entity or a fiction of law, with legal but no physical existence.."- See Palmar's Company Law, Twenty First Edition, page 124. 9. THOUGH a company is a legal entity in the eye of the law, it cannot in the nature of things, act in its own person. It must act through human agency. Accordingly, the persons through whom it acts and does its business are usually termed " directors ". The term " director " has been defined in sub-section (13) of Section 2 of the Companies Act as including any person occupying the position of director, by whatever name called. Amongst the directors, one of them is elected as Managing Director, which term has been defined in sub-Sec. (26) of Sec. 2. This sub-section defines a Managing Director as meaning a director who by virtue of an agreement with the company or a resolution passed by the company in general meeting, by its Boa.nl of Directors, or by virtue of its Memorandum or its Articles, is entrusted with substantial powers of management, which should not otherwise be exercisable by him, and includes a director occupying the position of a Managing Director by whatever name called. 10. IN the instant case, the position thus boils down is that M/s. Modi Distillery, Modinagar, which has been claimed in paragraph 2 of the complaint, is not a company. It is only a Unit of M/s. Modi INdustries Limited. The description of the parties given in the revision discloses that M. L. Modi is the Managing Director of M/s. Modi INdustries Limited, Modinagar. Since a company has no body to be kicked and no soul to be damned, the director in-charge and responsible to the company for the conduct of the business at the time when the offence was committed can be held liable under section 47 of the Act, if the case is proved against the company. There is no averment in the complaint about the person who at the time the offence was committed was in-charge of, and was responsible to the business of the company. The filing of complaint as against eleven persons without knowing the truth and attempting to do so is regretable.
There is no averment in the complaint about the person who at the time the offence was committed was in-charge of, and was responsible to the business of the company. The filing of complaint as against eleven persons without knowing the truth and attempting to do so is regretable. To bring sub-section (2) of Section 47 into operation, it was necessary for the complainant to have asserted that the offence had been committed by the directors with the consent or connivance of, or was attributable to any neglect on their part. The complaint does not disclose anywhere that the offence for which the complaint had been lodged had been committed with the consent or connivance of the directors or the same was attributable to any neglect on their part. If individual employees have committed any offence, without the knowledge of the company, there is no reason why the company or its directors should be made an accused. 11. IN State v. I. K. Nagia, 1980 CrLJ 834 the Supreme Court was called upon to consider a similar provision made in section 17 of the Prevention of Food Adulteration Act. IN that connection, the Supreme Court observed : " IN case of a company prosecution the company along with its agent, that is, the person nominated under section 17 (2) as well as the sales manager can both be prosecuted under section 7 (i) read with section 16 (1) (a). Notwithstanding the nomination of a person responsible under section 17 (2), there can also be prosecution of any director, manager, secretary or other officer of the company under section 17 (4). But in such a case it is necessary for the prosecution to prove that the offence has been committed with the consent or connivance of, or is attributable to, any neglect on the part of such person. " 12. FOR what I have said above, I find that to permit the complaint to be tried on merits would only be an exercise in futility inasmuch as the allegations made in the same do not disclose any definite accusation against the applicants. To permit the proceeding to continue would amount to abuse of process of the Court. It will also involve expenditure of huge funds of a public body incorporated for a laudable object of preventing and controlling water pollution.
To permit the proceeding to continue would amount to abuse of process of the Court. It will also involve expenditure of huge funds of a public body incorporated for a laudable object of preventing and controlling water pollution. While laying down the ground on which proceedings could be quashed, the Supreme Court held in Smt. Nagawwa v. Veeranna Shivalingappa Konjalgi, AIR 1976 SC 1947 as follows : " Thus it may be safely held that in the following cases on an order of the Magistrate issuing process against the accused can be quashed or set aside : (1) Where the allegations made in the complaint or the statements of the witness recorded in support of the same taken at their face value make out absolutely no case against the accused or the complaint does not disclose the essential ingredient of an offence which is alleged against the accused ; (2) Where the allegations made in the complaint are patently absurd and inherently improbable so that no prudent person can ever reach a conclusion that there is sufficient ground for proceeding against the accused. (3) Where the discretion exercised by the Magistrate in issuing process is capricious and arbitrary having been based either on no evidence or on materials which are wholly irrelevant or inadmissible; and (4) Where the complaint suffers from fundamental legal defects, such as, want of sanction, or absence of a complaint by legally competent authority and the like. The cases mentioned by us are purely illustrative and provide sufficient guidelines to indicate contingencies where the High Court can quash proceedings. " 13. I have found above that M/s. Modi Industries Limited, of which M/s. Modi Distillery is a Unit, has not been prosecuted through its Managing Director who is Sri M. L. Modi. Sri K. N Modi is the Chairman of M/s. Modi Industries Limited, Modinagar. He is not the Managing Director of Modi Industries Limited. The frame of the complaint, therefore, is defective and, as such, the prosecution cannot proceed. So far as Directors are concerned, there is no averment that any act was committed by them that could make them liable.
Sri K. N Modi is the Chairman of M/s. Modi Industries Limited, Modinagar. He is not the Managing Director of Modi Industries Limited. The frame of the complaint, therefore, is defective and, as such, the prosecution cannot proceed. So far as Directors are concerned, there is no averment that any act was committed by them that could make them liable. Since the allegations set out in the complaint do not constitute any offence, it is a fit case for exercise of power under Section 482 of the Code of Criminal Procedure and quashing tie order of the Chief Judicial Magistrate, Ghaziabad, taking cognizance of the offence under section 204 CrPC. 14. FOR the reasons given above, the criminal revision as well as the Criminal Miscellaneous Application under section 482 CrPC both are allowed. The order of the Chief Judicial Magistrate dated 3-11-1983 as well as the entire proceedings in pursuance of the complaint dated 21st October, 1983, filed by the U. P. Pollution Control Board, Lucknow, under section 44 of the Water (Prevention of Control of Pollution) Act, 1974 are quashed. Revision and Application allowed.