Holding

The officials of a company who were in charge of and responsible to the company for its business can be deemed guilty and prosecuted under section 47 of the Water (Prevention and Control of Pollution) Act, 1974 even if the company itself is not separately prosecuted.

Summary

The Uttar Pradesh Pollution Control Board (the Board) refused consent to Modi Distillery's discharge of trade effluents into the Kali River because its application was incomplete and the unit lacked proper treatment facilities. After repeated notices, the Board lodged a complaint under section 44 of the Water (Prevention and Control of Pollution) Act, 1974, charging the distillery and the Chairman, Vice‑Chairman, Managing Director and other directors of Modi Industries Ltd. The High Court quashed the proceedings, holding that vicarious liability under section 47 could not be imposed without a prosecution of the company itself. On appeal, the Supreme Court read sections 47(1) and (2) together, concluding that the officials who were in charge of and responsible to the company could be deemed guilty of the offence even in the absence of a separate prosecution of the company. The Court noted that the technical flaw in the complaint arose from the unit's failure to furnish information and could be remedied by amending the complaint. Consequently, the Supreme Court set aside the High Court order, restored the magistrate's process, and allowed the appeal.

Issues considered

Whether the Chairman, Vice‑Chairman, Managing Director and directors of a company can be prosecuted under section 47 of the Water (Prevention and Control of Pollution) Act, 1974 without a separate prosecution of the company itself.
Whether the complaint filed by the Board was legally infirm due to a technical flaw and if such flaw could be cured by amendment.

Legislation cited

Code of Criminal Procedure, 1973s. 397, s. 482
Water (Prevention and Control of Pollution) Act, 1974s. 25, s. 26, s. 44, s. 47

Subjects

environmental lawwater pollutionvicarious liabilitycorporate offencesection 47trade effluentscriminal procedure

Judgment

A U.P. POLLUTION CONTROL BOARD
v.
MODI DISTILLERY & ORS.

AUGUST 6, 1987

B [A.P. SEN AND S. NATARAJAN, JJ.]

Water (Prevention and Control of Pollution) Act, 1974: Ss. 25,
26, 44 '& 47-Company-Discharge of trade effluents without consent
of the Board-Commission of offence under the Act-Officials of the
Company whether guilty of offence-Vicarious responsibility.
-
c
Practice and Procedure: Prevention and Control of Pollution-
Launching of prosecution-Need for drafting complaints with circum·
spection and without any technical flaw.

0
The respondent-distillery, an industrial unit of M/s. Modi
Industries Ltd., at Modi Nagar manufacturing Industrial alcohol has
been discharging its highly noxious and polluted trade effluents into the
river through a local drain. It applied to the Pollution Control Board
under ss. 25(1) and 26 of the Act on March 27, 1981 for consent of the
E Board to discharge its trade emuents into the stream. The Board found
the applkatlon Incomplete in many respects, and called upon the
respondents to rectify the discrepancies. As there was no response from
the respondents, the appellant Board refused to grant the consent
prayed for In the public interest and thereafter issued notice under s. 20
of the Act directing the Company to furnish certain information regard·
F Ing the particulars and names of the Managing Director, Directors and
other persons responsible for the conduct of the Company. This was
followed by various reminders.

Finding no response from the respondents, the Board on October
21, 1983 lodged a complaint against the respondents under s. 44 of the ~
G Act in the Court of the Chief Judicial Magistrate, Gaziabad. Instead of
launching a prosecution against M/s. Modi Industries Ltd., the Board
impleaded the Industrial unit as respondent No. 1 and the Chairman.
Vice-Chairman, Managing Director and members of the Board of
Directors of the Company as respondent Nos. 2 to 11. The Judicial
Magistrate directed the issue of process.
H
798
U.P. POLLUTION CONTROL BOARD v. MODI DISTILLERY 799
.-1·
The respondents preferred a revision under s. 397 of the Code of A
Criminal Procedure, 1973 before the High Court in which en applica·
tion was flied under s. 482 of the Code for quashing the proceedings.
The Single Judge of the High Court quashed the proceedings on the
ground that there could be no vicarious liability saddled on the
Chairman, Vice-Chairman, Managing Director and other members of
·~ the Board of Directors of the Company under s. 47 of the Act unless B
there was a prosecution of the Company.

Allowing the appeal,

- HELD: A combined reading of the provisions contained in sub-
ss. (1) and (2) of s. 47 of the Water (Prevention and Control of Pollo- C
tion) Act, 1974 makes it apparent that the officials of the Company
owning the respondent industrial unit could be prosecuted as having
been in charge of and responsible to the Company for the business of
that unit and could be deemed to be guilty of the offence with which they
were charged. [804DE]
D
The industrial unit owned by the Company was discharging its
trade emuents Into the river prior to the commencement of the Act. It
was, therefore, mandatory for the Company to make an application to
the Board under s. 25(2) read with s. 26 of the Act for grant of consent
for the discharge of Its trade emuents into the stream. The application
made by the industrial unit having been found incomplete in many E
_..- respects was rejected by the Board in public interest. Thereafter the
~ Company which did not have proper arrangements for treatment of the
highly polluted trade emuents discharged hy it, had been in spite of
y repeated letters from the Board Intentionally and deliberately avoiding
compliance with the requirements of ~. 2S(l) and 26 rendering
themselves punishable under s. 44 of the Act. The Chairman. Vice- F
Chairman, Mana11ing Director and members of the Board of Directors
of the Company In such capacity were incharge of and responsible for
the conduct of the business of the Company and were, therefore,
deemed to be guilty of the said offence and liable to be proceeded
against and punished under s. 47 of the Act. [80SH·806F]
G
~ The vicarious liability of these officials of the Company is to be
viewed not in isolation but in the conspectus of facts and events and not
in vacuum. The technical ftaw In the complaint lodpd by the appellant·
Board had occurred due to the recalcitrant attitude of the lndU1trial unit,
which in spite of more than one notice being luued had deliberately
failed to furnish information called for regarding the particulars and H
800 SUPREME COURT REPORTS [ 1987] 3 S.C.R.

A names of the Managing Director, Directors and other persons responsi- .,,_
hie for the conduct of the Company. Having wilfully failed to furnish
the requisite information to the Board, it is not open to the respondents
2 to 11 to seek the Court's assistance to derive advantage from the lapse
committed by their own industrial unit. Furthermore, the legal infir-
mity is of such a nature which could be easily cured by having the
B matter remitted to the trial court with a direction to call upon the 4
appellant to make the formal amendments to the averments in the com-
plaint so as to make the controlling company of the industrial unit
figure as the concerned accused. [80SBC, 804G, EF, H-80SA]

C
The Board and its legal advisors should have drafted the comp-
lain! with greater circumspection not to leave any technical flaw which
would invalidate the initiation of the prosecution allowing a large busi-
-
ness house to escape the consequences of the breaches committed by it
of the provisions of the Act with impunity. [80SGH]

CRIMINAL APPELLATE JURISDICTION: Criminal Appeal
D No. 415 of 1986.

From the Judgment and Order dated 16.5. 1984 of the Allahabad
High Court in Cr!. Rev. No. 2330 of 1983.

RN. Trivedi, Additional Advocate General (U.P.) Mrs. S. Dikshit
E and C.B. Singh for the Appellant.

Ram Jethmalani, Rajinder Sachhar, and D.N. Mishra for the-,.
Respondents.

The Judgment of the Court was delivered by
F
SEN, J. This appeal by special leave is directed against the judg-
ment and order of the High Court of Allahabad dated May 16, 1984
setting aside in its revisional jurisdiction an order of the Chief Judicial
Magistrate, Gaziabad dated November 3, 1983 directing the issue of
process against the respondents on a complaint filed by the appellant
G under section 44 of the Water (Prevention and Control of Pollution)"!<
Act, 1974. The issue involved is whether the Chairman, Vice.i
Chairman, Managing Director and members of the Board of Directors
of Messrs Modi Industries Limited, the Company owning the indust-
rial unit called Messrs Modi Distillery could be proceeded against on a
complaint against the said industrial unit. A learned Single Judge
H (K.C. Agarwal, J.) following the decision of this Court in State (Delhi
U.P. POLLUTION CONTROL BOARD v. MODI DISTILLERY [SEN, J.] 801

Admn.) v. I.K. Nangia & Anr., (1980] 1SCC258 interpreting a similar A
provision contained in sub-s. (4) of s. 17 of the Prevention of Food
Adulteration Act, 1954 had held that there was no sufficient ground
against the respondents inasmuch as the allegations made in the comp-
laint do not constitute an offence punishable under section 44 for the
admitted contravention of ss. 25( 1) and 26 read with s. 47 of the Act.
t The question essentially turns upon the rule of construction to be B
adopted ins. 47.

The facts of the case are these. Messrs Modi Industries Limited is
an existing company under the Companies Act, 1956. It is a large

- business organisation having diversified business activities. Prior to
the commencement of the Act it had established an industrial unit
called Messrs Modi Distillery at Modi Nagar, Gaziabad engaged in the
c
business of manufacture and sale of industrial alcohol. During the
process of manufacture of such industrial alcohol, the said industrial
unit discharges its highly noxious and polluted trade effluents into the
Kali River through the Kadrabad Drain which is a stream within the
meaning of s. 2(j) of the Act and thereby causes continuous pollution D
of the said stream without the consent of the Board and therefore it
falls within the purview of s. 26. Under the provisions of s. 26, as
amended, it has been made mandatory for every existing industry to
obtain the consent of the Board for discharging its trade effluent into a
stream or well or sewer or on land. The last date for submission of such
application seeking the consent of the Board by an existing industry E
had been extended upto December 31, 1981. In accordance with the
procedure laid down under ss. 25(1) and 26 of the Act, the Company
was required to submit an application for consent of the Board in the
prescribed form along with the prescribed consent fee and the particu-
lars. Instead of the Company its industrial unit, namely, Messrs Modi
Distillery on March 27, 1981 applied to the Board for grant of consent F
to discharge its trade effluents into the stream. The aforesaid applica-
tion was scrutinised by the Board and found incomplete in many
respects. The Board accordingly by its letter dated April 29, 198 I
informed the said industrial unit with regard to the discrepancies and
the particulars wanting. There was no response from the respondents
~ nor did they rectify the discrepancies pointed out or furnish the G
· particulars required. The Board accordingly by its letter dated July 30,
1981 refused to grant the consent prayed for in the public interest since
the application was found incomplete in many respects and also
because the said industrial unit did not have proper arrangements for
treatment of its highly polluted trade effluents. Thereafter, the Board
by its letter dated June 30, 1982 issued a notice under s. 20 of the Act H
802 SUPREME COURT REPORTS [1987] 3 S.C.R.

A directing the Company to furnish certain information regarding the
particulars and names of the Managing Director, Directors and other
persons responsible for the conduct of the Company, but the respon-
dents did not furnish the information called for. This was followed by
two subsequent letters of the Board dated February 21, 1983 and June
9, 1983 drawing the attention of the respondents that they were deli-
B berately violating the provisions of the Act and thereby rendering ·-t
themselves liable to be punished under s. 44 for contravention of the
provisions of ss. 25( 1) and 26. On October 21, 1983 the Board lodged a
complaint against the respondents under s. 44 of the Act in the Court
of the Chief Judicial Magistrate, Gaziabad. Unfortunately, the comp-

C
laint was inartistically drafted. It was averred in paragraph 2 that
Messrs Modi Distillery i.e. the industrial unit was a company within
the meaning of s. 47 of the Act, that it had been knowingly and wilfully
-
discharging its highly noxious and polluted trade effluents into the Kali
River which is a stream within the meaning of s. 2(j) of the Act
through the Kadrabad Drain and thereby causing continuous pollution
of the said stream. There were eleven persons arrayed as accused.
D Instead of launching a prosecution against Messrs Modi Industries
Limited, the Board impleaded its industrial unit Messrs Modi Distil-
lery as respondent no. I while respondents nos. 2-11 were the
Chairman, Vice-Chairman, Managing Director and members of the
Board of Directors of Messrs Modi Industries Limited i.e. the Com-
pany owning the industrial unit.
E
It appears that the respondents did not appear before the learned
Chief Judicial Magistrate in response to the notice issued to them. The
learned Magistrate after recording the statement of S.M. Pandey,
Legal Assjstant of the Board directed the issue of process to the
respondents. Aggrieved, respondents nos. 2, 3 and 4, namely, K.M.
F Modi, K.K. Modi and M.L. Modi, the Chairman, Vice-Chairman and
Managing Director respectively of Messrs Modi Industries Limited
preferred a revision before the High Court under s; 397 of the Code of
Criminal Procedure, 1973. Two of the other accused, namely, S.C.
Trikha and Raghunath Rai, the nominated members of the Board of
Directors of the Company also filed an application before the High
G Court under s. 482 of the Code for quashing the proceedings. As )..
already stated, a learned Single Judge invoking the revisional jurisdic-
tion of the High Court has quashed the proceedings on the ground that
there could be no vicarious liability saddled on the Chairman, Vice-
Chairman, Managing Director and other members of the Board of
Directors of the Company under s. 47 of the Act unless there was a
H prosecution of the Company i.e. Messrs Modi Industries Limited. He
U.P. POLLUTION CONTROL BOARD v. MODI DISTILLERY (SEN, J.] 803

held that the complaint suffers from the serious legal infirmity and in A
the circlfflistances, to allow the proceedings to continue would amount
to an abuse of the process of the Court.

The question that arises in the appeal is whether the Chairman,
Vice-Chairman, Managing Director and members of the ~oard of
t- Directors are liable to be proceeded against under s. 47 of the Act in B
the absence of a prosecution of the Company owning the said indust·
rial unit. S. 47 insofar as material 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 c
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 D
shall render any such person liable to any punishment
provided in this Act if he proves that the offence was com-
mitted without his knowledge or that he exercised all due
diligence to prevent the commission of such offence.

-,.- (2) Notwithstanding anything contained in sub- E
section (!),where an offence under this Act has been com-
mitted by a company and it is proved that the offence has
been committed with the consent or connivance of or, is
attributable to any neglet on the part of, any director,
manager, secretary or other officer of the company, such
director, manager, secretary or other officer shall also be F
deemed to be guilty of that offence and shall be liable to be
proceeded against and punished accordingly."
'
On a plain reading of sub-s. (!) of s. 47 of the Act, where an
~ offence has been committed by a company, every person who at the
· time of the commission of the offence was 'in charge of and responsible G
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.
Proviso to sub·s. ( 1) however engrafts an exception in the case of any
such person if he were to prove that the offence was committed with·
out his knowledge or that he exercised all due diligence to prevent the H
804 SUPREME COURT REPORTS [1987] 3 S.C.R.

A commission of such offence. It would be noticed that sub-s. ( 1) of s. 47
is much wider than sub-s. { 4) of s. 17 of the Prevention of Food Adult-
eration Act, 1954 which fell for consideration in-J.K. Nan!ffa's case.
Furthermore, proviso to sub-s. ( 1) shifts the burden on the delinquent
officer or servant of the company responsible for the commission of
the offence. The burden is on him to prove that he did not know of the
B offence or connived in it or that he had exercised all due diligence to -~
prevent the commission of such offence. The non-obstante clause in
sub-s. (2) expressly provides that notwithstanding anything contained
. in sub-s. ( 1), where an offence under the 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
C 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 liale to be proceeded against
and punished accordingly.

On a combined reading of the provisions contained in sub-ss. ( 1)
D and (2), we have no doubt whatever that the Chairman, Vice- ~
Chairman, Managing Director and members of the Board of Directors
of Messrs Modi Industries Limited, the Company owning the indust-
rial unit Messrs Modi Distillery could be prosecuted as having been in
charge of and responsible to the company, for the business of the
industrial unit Messrs Modi Distillery owned by it and could be
E deemed to be guilty of the offence with which they are charged. The
learned Single Judge has failed to bear in mind that this situation has .....,__
been brought about by the industrial unit viz. Messrs Modi Distillery
of Messrs Modi Industries Limited because in spite of more than one
notice being issued by the Board, the unit of Messrs Modi Distillery '-<
deliberately failed to furnish the information called for regarding the
F particulars and names of the Managing Director, Directors and other
persons responsible for the conduct of the Company. Having wilfully
failed to furnish the requisite information to the Board, it is now not
open to the Chairman, Vice-Chairman, Managing Director and other
members of the Board of Directors to seek the Court's assistance to
derive advantage from tl.e lapse committed by their own industrial
G unit. The learned Single Judge has focussed his attention only on the ~
technical flaw in the complaint and has failed to comprehend that the
flaw had occurred due to the recalcitrant attitude of Messrs Modi
Distillery and furthermore the infirmity is one which could be easily
removed by having the matter remitted to the Chief Judicial Magis-
trate with a direction to call upon the appellant to make the formal
H amendments to the averments contained in paragraph 2 of the comp-
U.P. POLLUTION CONTROL BOARD v. MODI DISTILLERY (SEN, J.] 805

laint"so as to make the controlling company of the industrial unit figure
A
as the concerned accused in the complaint. All that has to be done is
the making of a formal application for amendment by the appellant for
leave to amend by substituting the name of Messrs Modi Industries
Limited, the Company owning the industrial unit, in place of Messrs
Modi Distillery. Although as a pure proposition of Jaw in the abstract
t the learned Single Judge's view that there can be no vicarious liability B
of the Chairman, Vice-Chairman, Managing Director and members of
the Board of Directors under sub-s. ( l) or (2) of s. 47 of the Act unless
there was a prosecution against Messrs Modi Industries Limited, the
Company owning the industrial unit, can be termed as correct, the
- objection raised by the petitioners before the High Court ought to
have been viewed "1ot in isolation but in the conspectus of facts and
c
events and not in vacuum. We have already pointed out that the tech-
nical flaw in the complaint is attributable to the failure of the industrial
unit to furnish the requisite information called for by the Board.
Furthermore, the legal infirmity is of such a nature which could be
easily cured. Another circumstance which brings out the narrow pers-
pective of the learned Single Judge is his failure to appreciate the fact D
that the averment in paragraph 2 has to be construed in the light of the
averments contained in paragraphs 17, 18 and 19 which are to the
effect that the Chairman, Vice-Chairman, Managing Director and
members of the Board of Directors were also liable for the alleged
offence committed by the Company.
E
- ,.t It is regrettable that although Parliament enacted the Water
(Prevention and Control of Pollution) Act, 1974 to meet the urgent need
for introducing a comprehensive legislation with its established unitary
'r agencies in the Centre and the States to provide for the prevention,
abatement and control of pollution of rivers and streams, for maintain-
ing or restoring wholesomeness of water courses and for controlling F
the existing and new discharges of domestic and industrial wastes,
which is a matter of grave national concern, the manner in which some
of the Boards are functioning leaves much to be desired. This is an
instance where due to the sheer negligence on the part of the legal
J advisors in drafting the complaint a large business house is allowed to
~ escape the consequences of the breaches committed by it of the provi- G
sions of the Act with impunity. It was expected that the Board and its
legal advisors should have drafted the complaint with greater circum-
. spection not to leave any technical flaw which would invalidate the
initiation of the prosecution allowing the respondents to escape the
consequences of the breaches committed by them of the provisions of
the Act with impunity. As already stated, prior to the commencement H

T
806 SUPREME COURT REPORTS [1987] 3 S.C.R.
y
A of the Act the Company owned an industrial unit styled as Messrs
Modi Distiillery which was discharging its trade effluents into the Kali
River through the Kadrabad Drain and therefore the matter fell within
'the ambit of s. 26 of the Act. S. 26 provides that where immediately
before the commencement of the Act any person was discharging any
sewage or trade effluent into a stream, the provisions of s. 25 shall, so
B far as may be, apply to such person as they apply in relation to a person '
i
referred to in that section. S. 25( 1) creates ao absolute prohibition
against bringing into use any new or altered outlet for the discharge of ·-+'
sewage or trade effluent into a stream without the consent of the
Board. On a combined reading of ss. 25( 1) and 26 it was mandatory for

c
the Company viz. Messrs Modi Industries Limited to make an applica-
tion to the Board under sub-s. (2) of s. 25 read with s. 26 in the
prescribed form containing the prescribed particulars for grant of con- '/-,
-
sent for the discharge of its trade .>ffluents into the said stream, subject
to such conditions as it may impose. Along with the complaint the
appellant has placed on record several documents showing that the
rejection of the application was in the public interest as it was in comp-
D lete in many respects. These documents also reveal that the Company
did not have proper arrangements for treatment of the highly polluted
,,.
trade effluents discharged by it .and although the appellant repeatedly
by its letter required the Company to obtain the consent of the Board,
the Company was intentionally and deliberately avoiding compliance

...,__
of the requirements of ss. 25( 1) and 26 of the Act. The contravention
E of these provisions is an offence punishable under s. 44. The other ten
persons arrayed by name as accused in the complaint are respondents
nos. 2-11, the Chairman, Vice-Chairman, Managing Director and
members of the Board of Directors of Messrs Modi Industries Limited.
It cannot be doubted that in such capacity they were in charge of and '-..(
responsible for the conduct of the business of the Company and were
F therefore deemed to be guilty of the said offence and liable to be
proceeded against and punished under s. 47 of the Act. It would be a
travesty of justice if the big business house of Messrs Modi Industries
Limited is allowed to defeat the prosecution launched and avoid facing
the trial on a technical flaw which is not incurable for their alleged
deliberate and wilful breach of the provisions contained in ss. 25( I)
G and 26 made punishable under s. 44 read withs. 47 of the Act. ~··
'
Faced with the difficulty of refuting the gravamen of the offence
set out in the complaint, Shri Ram Jethmalani, learned counsel
appearing for the respondents drew our attention to the counter-
affidavit of Virendra Prasad, Manager (Personnel & Administration),
H Modi Distillery dated January 13, 1986 and the two supplementary
U.P. POLLUTION CONTROL BOARD v. MODIDISTILLERY (SEN, J.J 807

affidavits dated August 25, 1986 and November 17, 1986 tending to A
show that Messrs Modi Industries Limited, the company owning the
industrial unit, have taken effective steps to set up an effluents treat·
ment plant by entering into an agreement dated December 23, 1985
with Messrs Chemical Consultants & Engineers, Ah madnagar who
would set it up in collaboration with Sulzer Bros. Limited, Switzerland B
by employment of the technical knowhow which would be able to
recover methane gas upto 70% and also bring down BOD reduction
upto 90%. Further, it is averred that the company sought and obtained
the approval of the Board subject to a time schedule for erection and
installation of the plant by the end of June 1987. It is also averred that
since the Government of India has turned down the application of the
respondents for subsidy for installation of the said plant insofar as the C
year 1985-86 was concerned, they are trying other sources of finance
and that in the meanwhile pending the installation and commissioning
of the plant based on the Sulzer's process are treating the effluents by
alternative methods in order to reduce the extent of BOD discharge.
They are diluting the effluents by mixing fresh water to the extent of 13 D
to 15 times the amount of effluent discharged in order to reduce the
extent of pollution. In view of the subsequent events the learned
counsel submits that this was a fit case for dropping the proceedings.
The averments made by the respondents in the various affidavits have
been controverted by the affidavit-in-rejoinder sworn by Chandra
Bhal Singh, Law Officer of the appellant-Board showing that there is
little or no progress in the matter of establishment of the effluents E
treatment plant. We need not enter into this controversy. These are all
matters to be dealt with by the learned Chief Judicial Magistrate.

Th<' result therefore is that the appeal succeeds and is allowed.
The judgment and order passed by the High Court are set aside and
that of the learned Chief Judicial Magistrate directing issue of process F
to the respondents are restored. The learned Magistrate shall proceed
with the trial as expeditiously as possible in accordance with law.

P.S.S. Appeal allowed.