# M/S Upper Doad Sugar Mill & Ors v. State of U.P. & Anr

- **Citation:** (2019) 4 ILRA 74
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2019
- **Case number:** Crl. Misc. Application (U/S 482 Cr. P.C.) No. 1312 of 1992
- **Bench:** Sudhir Agarwal
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/m-s-upper-doad-sugar-mill-ors-v-state-of-u-p-anr-44947
- **Pages:** 8

## Headnote

A. Criminal Law - Water (Prevention and
Control of Pollution) Act, 1974 - Section
44 & 47 - Code of Criminal Procedure -
Section 482 - "offences by companies"-
Offence must have been committed by
company. Without making that company
an accused person, no offence could
have been committed- Sub-section (2) of
Section 47 by the directors. Every
director of company would not be
vicariously liable - A director of a
Company, who was not in-charge of and
not responsible for conduct of business
of company at the relevant time, will not
be liable for a criminal offence under the
provisions. The complainant has simply
reiterated language of Section 47(1)-
Applicants 6, 8 and 11 are only directors
and there is nothing to show that they
were
responsible
for
day
to
day
functioning or otherwise act of Company
concerned-Proceedings
against
them
quashed.

Application
u/s
482
Cr.P.C
partly
allowed. (E-3)

List of cases cited: -

## Text

74 INDIAN LAW REPORTS ALLAHABAD SERIES
manifestly, fails to prove the charge. In
such case also interference under Section
482 Cr.P.C. would be justified. I may
quote the relevant extract from the
judgment in R.P. Kapur (supra) on this
aspect as under:

"A third category of cases in which
the inherent jurisdiction of the High Court
can be successfully invoked may also
arise. In cases falling under this category
the allegations made against the accused
person do constitute an offence alleged
but there is either no legal evidence
adduced in support of the case or
evidence adduced clearly or manifestly
fails to prove the charge. In dealing with
this class of cases it is important to bear
in mind the distinction between a case
where there is no legal evidence or
where there is evidence which is
manifestly and clearly inconsistent with
the accusation made and cases where
there is legal evidence which on its
appreciation may or may not support the
accusation
in
question."
(emphasis
added)

48. In the present case, evidence under
Sections 200 and 202 Cr.P.C. recorded by
Court below does not prove the allegation
that statements alleged to have been made by
accused-applicants
were
made
and
newspaper report itself with regard to its
contents was inadmissible hence there is no
legal evidence.

49. Hence, here is a case where
accused persons have been summoned
without any "legal evidence" available
before Trial Court to support the charge it
comes within the category of gross abuse
of process. This Court is aware that in
considering whether evidence adduced is
a "legal evidence" or not, it will not go to
examine reliability of evidence but it is
only admissibility of evidence and the
factum,
whether
such
evidence
if
admissible supports the charge or not
which has to be seen by this Court and
that is what I have considered in this
matter and find that there was/ is no "legal
evidence" whatsoever, hence proceedings
initiated by Magistrate in the cases in
hand are patently illegal and amounts to
abuse of process of Court. Therefore, to
secure ends of justice interference of this
Court under Section 482 Cr.P.C. is
justified and called for.

50. In view thereof, both the
applications are allowed. Proceedings in
Complaint No. 447 of 1996 filed by
Respondent-2 in the Court of 9th
Additional Chief Judicial Magistrate,
Ghaziabad including Criminal Case No.
2234 of 1996 as also bailable warrant
dated 11.09.1996, are hereby quashed.
----------

(2019)12 ILR A74

ORIGINAL JURISDICTION
CRIMINAL SIDE
DATED: ALLAHABAD 22.04.2019

BEFORE
THE HON'BLE SUDHIR AGARWAL, J.

Crl. Misc. Application (U/S 482 Cr. P.C.) No.
1312 of 1992

M/S Upper Doad Sugar Mill & Ors.
 ...Applicants
Versus
State of U.P. & Anr. ...Opposite Parties

Counsel for the Applicants:
Sri G.S. Chaturvedi, Sri G.S. Hajela, Sri
Diptiman Singh, Sri P.N. Ojha

Counsel for the Opposite Parties:
4 All. M/s Upper Doad Sugar Mill & Ors. Vs. State of U.P. & Anr.
75
Sri H.N. Tripathi, A.G.A.

A. Criminal Law - Water (Prevention and
Control of Pollution) Act, 1974 - Section
44 & 47 - Code of Criminal Procedure -
Section 482 - "offences by companies"-
Offence must have been committed by
company. Without making that company
an accused person, no offence could
have been committed- Sub-section (2) of
Section 47 by the directors. Every
director of company would not be
vicariously liable - A director of a
Company, who was not in-charge of and
not responsible for conduct of business
of company at the relevant time, will not
be liable for a criminal offence under the
provisions. The complainant has simply
reiterated language of Section 47(1)-
Applicants 6, 8 and 11 are only directors
and there is nothing to show that they
were
responsible
for
day
to
day
functioning or otherwise act of Company
concerned-Proceedings
against
them
quashed.

Application
u/s
482
Cr.P.C
partly
allowed. (E-3)

List of cases cited: -

1. Delhi Municipality vs. Ram Kishan AIR 1983
SC 67

2. Megh Shyam Sharma & Ors. vs. St. of U.P.
& Ors. 1985 AWC 923

3. National Small Industries Corp. Ltd. vs.
Harmeet Singh Paintal and Anr., 2010 (3) SCC
330

4. S.M.S. Pharmaceuticals Ltd. vs. Neeta
Bhalla and Anr. (2005) 8 SCC 89

5. Sabitha Ramamurthy and Anr. vs. R.B.S.
Channabasavaradhya (2006) 10 SCC 581

6. N.K. Wahi vs. Shekhar Singh & Ors. (2007)
9 SCC 481

7. Ramrajsingh vs. St. of M.P. and Anr. (2009)
6 SCC 729
8. A.R.Radha Krishna vs. Dasari Deepthi &
Ors. AIR 2019 SC 2518

(Delivered by Hon'ble Sudhir Agarwal, J.)

1. Heard Sri Gopal Swaroop
Chatrvedi, Senior Advocate, assisted by
Sri Diptiman Singh, learned counsel for
applicants,
Sri
H.N.Tripathi,
learned
counsel for opposite party no.2, Sri Syed
Ali Murtza, learned A.G.A. for State of
U.P. and perused the record.

2. In para 4 of IInd Supplementary
Affidavit
dated
08.4.2019
filed
by
applicant, it is pointed out that applicants
3, 4, 5, 7, 9, 10, 12, 13 and 14 have
already
died
therefore,
proceedings
against them have already abated. Hence,
this application stands abated so far as
these applicants are concerned.

3. It is now alive only in respect of
applicants no.1, 2, 6, 8 and 11.

4.

Applicants
have
invoked
jurisdiction of this Court under Section
482 of Code of Criminal Procedure, 1973
(hereinafter referred to as "Cr.P.C.") with
the prayer to quash proceedings in Case
No. 74 of 1988 (U.P. Pollution Control
Board, Lucknow vs. M/s Upper Doab
Sugar Mills Shamli and others), under
Section 44 of Water (Prevention and
Control
of
Pollution)
Act,
1974
(hereinafter referred to as "Act, 1974")
pending in the Court of Special Judicial
Magistrate (Pollution), Lucknow.

5. A complaint was filed by U.P.
Pollution Control Board (hereinafter
referred to as "UPPCB") before Special
Court (Water and Air Pollution) of
Judicial Magistrate Ist Class, Lucknow
registered as Case No.74 of 1988
76 INDIAN LAW REPORTS ALLAHABAD SERIES
impleading two companies namely M/s
Upper Doab Sugar Mills Shamli and M/s
Sir Shadi Lal Enterprises, as opposite
parties 1 and 2 and Managing Directors
and
Directors
thereof
alleging
that
aforesaid Companies are discharging their
polluted trade effluent without obtaining
consent under Sections 25/26 of Act,
1974, therefore, have committed offences
punishable under Sections 44 read with 47
of Act, 1974.

6. The application mainly contains
allegations against Companies but in
respect of Directors etc., averments have
been made in paras 16, 18, 20, 21, 22 and
23 thereof. Magistrate took cognizance
whereupon this application has been filed
for quashing the said proceedings.

7. Before this Court, learned Senior
Counsel has confined his case in respect
of applicants 1, 2, 6, 8 and 11 since this
application has already abated in respect
of other applicants. However, during
course of argument, learned Senior
Counsel could not dispute that allegations
contained in application, if taken to be
true,
proceedings
initiated
against
applicants 1 and 2 may not be challenged
at this stage since it is difficult to hold
that proceedings initiated by UPPCB
against applicants 1 and 2 are prima facie
illegal,
if
allegations
contained
in
complaint on the face are taken to be true.
He, therefore, confined his submissions so
far as applicant 6 Hemantpat Singhania,
applicant 8 P.N.Mathur and applicant 11
Pradeep Narang are concerned.

8. He submitted that these Directors
are not at all in-charge and responsible for
functioning of Company and as per
information communicated to UPPCB
itself, Sri S.P.Dubey, Personal and
Factory Manager of Sugar Mill is
responsible for conduct of business of
Sugar Mill. Directors are residing at
different places and did not even visit
Company regularly hence they cannot be
responsible for day to day business.

9. By way of IInd Supplementary
Affidavit dated 08.4.2019, it has been
brought on record that applicant 6
Hemantpat Singhania is about 90 years of
age and bedridden. Similarly, applicant 8
Onke Agarwal is aged about 88 years of
age and depends on wheel-chair for
movement. Applicant 11 Pradeep Narang
has left the Company long back and his
whereabouts are not known.

10. It is also stated that Companies
were subsequently granted consent under
Act 1974 as well as Air (Prevention and
Control
of
Pollution)
Act,
1981
(hereinafter referred to as "Act, 1981")
and last consent given by UPPCB is on
11.01.2019,
which
is
effective
till
31.12.2019.

11. Sri Tripathi, learned counsel for
respondent -UPPCB, however, submitted
that
affluent
was
being
discharged
without any consent of Board and all the
Directors,
as
specifically
stated
in
application, were responsible for business
of Company, therefore, it cannot be said
that action taken by Magistrate against
applicants is bad in law and present
application deserves to be dismissed.

12. Section 47 of Act, 1974 deals
with "offences by companies" and the
same reads as under :

"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
4 All. M/s Upper Doad Sugar Mill & Ors. Vs. State of U.P. & Anr.
77
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."

13. Section 47 of Act, 1974 provides
that where an offence under Act, 1974 has
been committed by a Company then every
person, who at the time of commission of
offence was in charge of, and responsible
to the Company for conduct of business
as well as the company shall be deemed to
be guilty of offence. Meaning thereby, the
first condition is that offence must have
been committed by Company and where
an offence is committed by Company,
category of persons, who are stated
therein i.e. in charge of and was
responsible to the Company for conduct
of, the business of Company shall be
deemed to be guilty of offence, but, it
shall include Company also. Therefore,
offence must have been committed by
Company and without Company, no
offence could have been committed. Rest
of the persons of the category mentioned
in sub-section (2) of Section 47 are those
who are vicariously responsible.

14. Sub-section (2) of Section 47
shows that every Director of company
would not be vicariously liable and it is
confined only to such Director, who has
given consent or connivance of, and, due
to any act of negligence attributable to
him offence has been committed.

15. Use of word "such" in subsection (2) of Section 47 of Act, 1974
shows that an exception has been carved
out and every Director has not been made
responsible. It is clarified that under subsection (1), every person who at the time
of offence was committed, was in-charge
of, and was responsible to the company
for the conduct of the business of
company as well as company itself shall
be deemed to be guilty of offence.
Therefore, deeming clause is applicable in
respect of such person, who was in charge
of conduct of business of company and
responsible for the same purpose. Subsection (2) starts with non-obstante
clause. It is an exception to sub-section
(1) and says that only such Director
would be responsible with whose consent
or connivance or on account of whose
negligence, offence has been committed.
78 INDIAN LAW REPORTS ALLAHABAD SERIES

16. A similar provision existing in
Prevention of Food Adulteration Act,
1954 (hereinafter referred to as "Act,
1954") i.e. Section 17 came up for
consideration before Supreme Court in
Delhi Municipality vs. Ram Kishan
AIR 1983 SC 67. Court held that there
should be some material to show that
Director(s), who were not otherwise incharge or responsible for conduct of
business, are responsible due to their
consent or connivance or negligence and
it will not be suffice to mention language
of Section 47 of Act, 1974 to implicate all
the Directors of Company. There has to
be some facts and details to show their
consent, connivance and negligence. In
para 15 of judgment, Court held that so
far as Manager is concerned, by very
nature of his duties, he would be
responsible but so far as Directors are
concerned, there was not even a whisper
or
shred
of
evidence
apart
from
presumption
drawn
by
complainant,
which is not sufficient to hold a Director
vicariously liable.

17. A similar issue was considered
by this Court also in Megh Shyam
Sharma and others vs. State of U.P. and
others 1985 AWC 923 and in para 13,
this Court has said as under :

"So far as applicants 3 to 5 are
concerned, namely, Sri M.K. Tikmani,
R.K. Paliwal and M.M. Rajgarhia are
concerned, there are no averment of facts
against these Directors that they were
really incharge and responsible for the
conduct of the business or the offence has
been committed by their connivance,
neglect etc. Of course, a presumptive
statement
is
contained
in
certain
paragraphs of the complaint, but on the
authority of Delhi Municipality (supra)
that would not lead to any inference
regarding the ingredients of Section 47
of the Act and it can, therefore, be safely
held that the complaint does not disclose
a prima facie case against applicants 3 to
5 aforesaid."

 (emphasis added)

18. Similar provision namely
Section 141 of Negotiable Instruments
Act, 1881 (hereinafter referred to as "Act,
1881") has been considered in National
Small
Industries
Corp.
Ltd.
vs.
Harmeet Singh Paintal and Anr., 2010
(3) SCC 330. Court has said that every
person connected with company shall not
fall within the ambit of the provision.
Only those persons who were in-charge of
and responsible for the conduct of the
business of the company at the time of
commission of offence will be liable for
criminal action.

19. It follows from the fact that if a
Director of a Company, who was not in-
charge of and not responsible for conduct
of business of Company at the relevant
time, will not be liable for a criminal
offence under the provisions. The liability
arises from being in-charge of and
responsible for conduct of business of
Company at the relevant time when
offence was committed and not on the
basis of merely holding a designation or
office in a company.

20. Court in National Small
Industries Corporation Ltd. (supra)
said that Section 141 of Act, 1881 is a
penal
provision
creating
vicarious
liability, hence must be strictly construed.
It is therefore, not sufficient to make a
bald cursory statement in a complaint that
Director (arrayed as an accused) is in
charge of and responsible to Company for
4 All. M/s Upper Doad Sugar Mill & Ors. Vs. State of U.P. & Anr.
79
the conduct of the business of Company
without anything more as to the role of
Director. Court said that complaint should
spell out as to how and in what manner
such Director was in-charge of or was
responsible to the accused company for
conduct of its business. It further held :

"A company may have a number
of Directors and to make any or all the
Directors as accused in a complaint
merely on the basis of a statement that
they are in-charge of and responsible for
the conduct of the business of the
company without anything more is not a
sufficient or adequate fulfillment of the
requirements under Section 141. "

 (emphasis added)

21. A three judge bench of Supreme
Court in S.M.S. Pharmaceuticals Ltd.
vs. Neeta Bhalla and Anr. (2005) 8 SCC
89
considered
the
following
three
questions, referred to it :

"(a) whether for purposes of Section
141 of the Negotiable Instruments Act,
1881, it is sufficient if the substance of the
allegation read as a whole fulfill the
requirements of the said section and it is
not necessary to specifically state in the
complaint that the persons accused was in
charge of, or responsible for, the conduct
of the business of the company.

(b) whether a director of a
company would be deemed to be in
charge of, and responsible to, the
company for conduct of the business of
the company and, therefore, deemed to be
guilty of the offence unless he proves to
the contrary.

(c) even if it is held that specific
averments are necessary, whether in the
absence of such averments the signatory
of the cheque and or the Managing
Directors of Joint Managing Director
who admittedly would be in charge of the
company and responsible to the company
for conduct of its business could be
proceeded against."

22. Considering the above questions,
Court said that there is almost unanimous
judicial opinion that necessary averments
ought to be contained in a complaint
before a person can be subjected to
criminal process. Questions referred to the
Court were answered as under :

"(a)
It
is
necessary
to
specifically aver in a complaint under
Section 141 that at the time the offence
was committed, the person accused was in
charge of, and responsible for the conduct
of business of the company. This averment
is an essential requirement of Section 141
and has to be made in a complaint.
Without this averment being made in a
complaint, the requirements of Section
141 cannot be said to be satisfied.

(b) The answer to question
posed in sub-para (b) has to be in
negative. Merely being a director of a
company is not sufficient to make the
person liable under Section 141 of the
Act. A director in a company cannot be
deemed to be in charge of and responsible
to the company for conduct of its
business. The requirement of Section 141
is that the person sought to be made liable
should be in charge of and responsible for
the conduct of the business of the
company at the relevant time. This has to
be averred as a fact as there is no deemed
liability of a director in such cases.

(c) The answer to Question (c) has to
be in affirmative. The question notes that
the
Managing
Director
or
Joint
Managing Director would be admittedly
80 INDIAN LAW REPORTS ALLAHABAD SERIES
in charge of the company and responsible
to the company for conduct of its
business. When that is so, holders of such
positions in a company become liable
under Section 141 of the Act. By virtue of
the office they hold as Managing Director
or
Joint
Managing
Director, these
persons are in charge of and responsible
for the conduct of business of the
company. Therefore, they get covered
under Section 141. So far as signatory of
a cheque which is dishonoured is
concerned, he is clearly responsible for
the incriminating act and will be covered
under Sub-section (2) of Section 141."

23. In Sabitha Ramamurthy and
Anr. vs. R.B.S. Channabasavaradhya
(2006) 10 SCC 581 Court said :

 "It may be true that it is
not necessary for the complainant to
specifically reproduce the wordings of the
section but what is required is a clear
statement of fact so as to enable the court
to arrive at a prima facie opinion that the
accused are vicariously liable."

24. In N.K. Wahi vs. Shekhar
Singh and Ors. (2007) 9 SCC 481, Court
said :

"7. In order to bring application
of Section 138 the complaint must show:

1. That Cheque was issued;

2. The same was presented;

3.
It
was
dishonored
on
presentation;

4. A notice in terms of the
provisions was served on the person
sought to be made liable;

5. Despite service of notice,
neither any payment was made nor other
obligations, if any, were complied with
within fifteen days from the date of receipt
of the notice.

Section 141 of the Act in terms
postulates constructive liability of the
Directors of the company or other
persons responsible for its conduct or the
business of the company.

8. The only averment made so
far as the respondents are concerned,
reads as under:

Preliminary evidence had been
recorded and at that time also no specific
evidence on assertion was forthcoming.
Shri Wahi who appeared at that time only
stated that accused 2 to 12 are directors
and responsible officers of the company.
They are liable for the acts of the
company. In other words, there was no
averment or evidence that the present
petitioners
were
incharge
of
or
responsible to the company for the
conduct of the business of the company as
well as the company.

The accused Nos. 2 to 12 are the
Directors/persons
responsible
for
carrying out the business of the company
and the liability of the accused persons in
the present complaint is joint and
several."

25. The above view has been
reiterated and approved by a three judges
bench in Ramrajsingh vs. State of M.P.
and Anr. (2009) 6 SCC 729.

26. In A.R.Radha Krishna vs.
Dasari Deepthi and others AIR 2019
SC 2518 Court said that law requires that
complaint must contain specific averment
that Director was in-charge of, and
responsible for conduct of Company's
4 All. Sunpat & Ors. Vs. State of U.P. & Anr.
81
business at the time when offence was
committed. Court further said :

"The High Court, in deciding a
quashing petition Under Section 482,
Code of Criminal Procedure, must
consider whether the averment made in
the complaint is sufficient or if some
unimpeachable
evidence
has
been
brought on record which leads to the
conclusion that the Director could never
have been in charge of and responsible
for the conduct of the business of the
company at the relevant time. While the
role of a Director in a company is
ultimately a question of fact, and no
fixed formula can be fixed for the same,
the High Court must exercise its power
Under Section 482, Code of Criminal
Procedure when it is convinced, from the
material on record, that allowing the
proceedings to continue would be an
abuse of process of the Court."

(emphasis added)

27. In the light of exposition of law
discussed above and the facts of this case,
I find that the complainant has simply
reiterated language of Section 47(1) but
has not shown as to how Directors
residing elsewhere are in-charge of
company or responsible for conduct of
business on day to day basis and nothing
has been said that anything has been done
with their consent or there is any
connivance on their part or negligence. In
a mechanical manner, complainant has
implicated all the Directors of Company
and if proceedings against applicants 6, 8
and 11 are allowed to continue, in my
view, it would be abuse of process of
Court.

28. Looking to entirety of facts and
circumstances and also the fact that this
matter is pending for last 27 years before
this Court, and applicants 6, 8 and 11 are
only Directors and there is nothing to
show that they were responsible for day to
day functioning or otherwise act of
Company concerned, I find it in the
interest of justice to quash proceedings
against them but do not find any reason to
interfere so far as proceedings initiated
against applicants 1 and 2 are concerned.

29. Application is accordingly
partly allowed. Further proceedings of
Case No. 74 of 1988 (U.P. Pollution
Control Board, Lucknow vs. M/s Upper
Doab Sugar Mills Shamli and others),
under Section 44 of Act, 1974, pending in
the Court of Special Judicial Magistrate
(Pollution), Lucknow, so far as it relates
to applicants 6, 8 and 11 is hereby
quashed, but, the same would continue
against applicants 1 and 2.
----------

(2019)12 ILR A81

ORIGINAL JURISDICTION
CRIMINAL SIDE
DATED: ALLAHABAD 12.07.2019

BEFORE
THE HON'BLE RAJIV JOSHI, J.

Crl. Misc. Application (U/S 482 Cr. P.C.) No.
3160 of 2018

Sunpat & Ors. ...Applicants
Versus
State of U.P. & Anr. ...Opposite Parties

Counsel for the Applicants:
Sri Praveen Kumar Singh, Sri Anurag Bajpai

Counsel for the Opposite Parties:
A.G.A., Sri Moeez Uddin

A. Criminal Law - Indian Penal Code,
1860 - Section 406/420 - Code of