KARNATAKA STATE POLLUTION CONTROL versus B. HEERA NAIK & ORS. ETC. on 26 November 2019

[2019] 17 S.C.R. 305

KARNATAKA STATE POLLUTION CONTROL BOARD

v.

B. HEERA NAIK & ORS. ETC.

(Criminal Appeal Nos. 1734-1736 of 2019)

NOVEMBER 26, 2019

[ASHOK BHUSHAN AND M. R. SHAH, JJ.]

Water (Prevention and Control of Pollution) Act, 1974: s.10– Whether City Municipal Council is Department of Government– Held: The City Municipal Council is a Council, incorporatedunder s.10 of the Karnataka Municipalities Act, 1964 – City andTown Municipal Councils as per s.10 is “a body corporate” –Similarly, under the Karnataka Municipal Corporations Act, 1976,the Municipal Corporations are constituted as Corporation byvirtue of s.10 – The Municipal City Council and MunicipalCorporation, which have been created by State enactments arecontrolled by the Government, which bodies also receive financialassistance from the Government – It is well settled that MunicipalCorporations are instrumentality or agency of the Government –The question is whether City Municipal Council constituted underthe Municipalities Act can be treated as Department of Government– The first test to find out as to whether an institution is aCorporation or a Department of the Government is to enquirewhether the undertaking functions as a responsible independentorganisation and not as part of any Department of the State; thesecond test is whether it is endowed with the capacity to contractobligations and of suing and being sued – The Scheme ofconstitution of Municipal area and other provisions of Act, 1964clearly indicate that Municipalities are not a Department of theGovernment – The Constitution also envisages Municipality as abody of self-Government – Thus, the provisions of the Act, 1964and Act, 1974 makes it clear that City Municipal Council are notto be treated as Department of the State Government – KarnatakaMunicipalities Act, 1964 – Karnataka Municipal Corporations Act,1976 – Municipalities – Constitution of India – Art.243P.

Water (Prevention and Control of Pollution) Act, 1974: s.47,48 – Prosecution of Municipal Commissioner of City Municipal

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ACouncil and Chief Officer of City Municipal Council – When anoffence is committed by City Municipal Council or Corporation,whether they can be prosecuted under the Act, 1974 and what isthe procedure for initiating proceeding for prosecution of suchbodies – Held: s.47 contains a heading “offences by companies”– The definition of company is contained in the Companies Act,B1956 in s.3 – The definition of company as contained in theCompanies Act, 1956 is clearly not borrowed in the expression ofcompany as used in s.47 of Act, 1974 – The company has beendefined in s.47 of Act, 1974 in a very wide and inclusive manner– Explanation to s.47 states that “company” means “any bodyCcorporate” – Thus, all body corporates are included within thedefinition of company as per s.47 – There cannot be any disputethat City Municipal Council is a body corporate, which has beenclearly provided under s.10 of Act, 1964 – Looking at the purposeand object of the Act, s.47 can be resorted to for offences by bodycorporate – s.49 embraces cognizance of all offences under theDAct – Whether the offences are covered by ss.47 or 48 has nobearing on the power of the Court to take cognizance of an offence– Karnataka State Pollution Control Board filed complaint fortaking cognizance specifically referring to s.49 of the Act, 1974 –Thus, in event any offence is committed by anyone, its cognizanceEcan be taken under s.49 – However, offences by a body corporateare to be covered by s.47, since in event offences by bodycorporates are not covered by s.47, the benefit of s.47(1) provisoshall not be available to those body corporates, which cannot bethe intention of the Legislature – Thus, offences by body corporatelike City Municipal Council are covered under s.49 treating it toFbe offence as by company as provided in s.47 – Complaint againstMunicipal Commissioner of City Municipal Council and ChiefOfficer of City Municipal Council by appellant-Board wasmaintainable – Companies Act, 1956 – s.3.

Water (Prevention and Control of Pollution) Act, 1974:GLegislative intent of enactment – The Act, 1974 was enacted bythe Parliament to provide for the prevention and control of waterpollution and the maintaining or restoring of wholesomeness ofwater.

Municipalities: Duties of Municipal Council/Corporation –HHeld: City Municipal Council and City Municipal Corporation are created or incorporated by the State and entrusted with theMunicipal functions – One of the main functions entrusted to theCorporation is to ensure clean environment to the residents, tocontrol pollution in a Municipal area, which is one of the dutiesof the Municipal Council and the Corporation.

Allowing the appeals, the Court

HELD: 1.1 The Act, 1974 was enacted by the Parliamentto provide for the prevention and control of water pollution andthe maintaining or restoring of wholesomeness of water, for theestablishment, with a view to carrying out the purposes aforesaid,of Boards for the prevention and control of water pollution, forconferring on and assigning to such Boards powers and functionsrelating thereto and for matters connected therewith. [Para 7][313-H; 314-A-B]

Conclusion

1.2 Section 48 of the Act, 1974 is attracted where theoffence is committed by any Department of Government. Theprovisions of Act, 1974 as well as the Karnataka MunicipalitiesAct, 1964 have to be looked into to find out as to whetherCommissioner of City Municipal Council or Chief Officer of CityMunicipal Council constituted under the KarnatakaMunicipalities Act, 1964 can be treated to be the Head of theDepartment of any Department of Government. The CityMunicipal Council is a Council, incorporated under Section 10of the Karnataka Municipalities Act, 1964. City and TownMunicipal Councils as per Section 10 is “a body corporate”.Similarly, under the Karnataka Municipal Corporations Act,1976, the Municipal Corporations are constituted as Corporationby virtue of Section 10. The concept of creating body corporateand corporation to carry out the functions of the Government isa modern concept of the Government. The modern Governmentshave undertaken on themselves large functions touching the lifeof its citizens, inhabitants. The Scheme underlying theConstitution of India entrust and oblige the Governments tocarry out different functions for achieving the constitutionalobjectives to secure justice, liberty equality and fraternity. [Paras11, 12, 13] [316-E-G; 317-C-E]

1.3 The Municipal City Council and Municipal Corporation,which have been created by State enactments are controlled by A

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Athe Government, which bodies also receive financial assistancefrom the Government. It is well settled that MunicipalCorporations are instrumentality or agency of the Government.The question is whether City Municipal Council constitutedunder the Municipalities Act can be treated as Department ofGovernment. Under Act, 1974, the State Government has beenBdefined in Section 2(i). In constitution of the State Boards, theState Government nominates members of the local authoritiesfunctioning within the State, members to represent thecompanies or corporations owned, controlled or managed by theState Government as well as officials to represent thatCGovernment. [Para 14] [318-B-D]

2.1 The Scheme of the Act indicate that there are separatemembers to represent the Government in the Board, separatemembers to represent the local authorities functioning in theState and separate members to represent the companies orDcorporations owned, controlled or managed by the StateGovernment. The Government, local authorities and companiesor corporations owned, controlled or managed by the StateGovernment are all different expressions used in the Act.Whether an institution is a corporation or a Department of theGovernment has to be found out from the Scheme under whichEit has been created. One of the tests to find out as to whetheran institution is a Corporation or a Department of theGovernment is to enquire whether the undertaking functions asa responsible independent organisation and not as part of anyDepartment of the State. Second test would be to see whether it Fis endowed with the capacity to contract obligations and of suingand being sued. Further, the power to possess, use and changea seal is incidental to a corporation and a corporation aggregatecan, as a general rule, only act or express its will by deed underits common seal. The Karnataka Municipalities Act, 1964

provides for a Town and City Municipal Councils as a bodyGcorporate. The control of the State Government on theMunicipality is provided in a separate chapter, i.e., Chapter XII.The Scheme of constitution of Municipal area and otherprovisions of Act, 1964 clearly indicate that Municipalities arenot a Department of the Government. [Para 15] [319-G-H; 320-HA-D]

2.2 Article 243P sub-clause (e) defines “Municipality” asan institution of self- Government constituted under Article243Q. The Constitution also envisages Municipality as a bodyof self-Government. The provisions of the Act, 1964 and Act,1974 makes it clear that City Municipal Council cannot betreated as Department of the State Government. After havingfound that City Municipal Council is not Department of theGovernment – the question is whether they are immuned fromprosecution under Act, 1974. City Municipal Council and CityMunicipal Corporation are created or incorporated by the Stateand entrusted with the Municipal functions. One of the mainfunctions entrusted to the Corporation is to ensure cleanenvironment to the residents, to control pollution in a Municipalarea, which is one of the duties of the Municipal Council andthe Corporation. [Paras 16, 18] [320-E-F; 321-A]

When an offence is committed by City Municipal Councilor Corporation, whether they can be prosecuted under the Act,1974 and what is the procedure for initiating proceeding forprosecution of such `bodies?

3.1 Section 47 contains a heading “offences by companies”.Section 47(1) is similar to Section 48. The definition of companyis contained in the Companies Act, 1956 in Section 3. Thedefinition of company as contained in the Companies Act, 1956is clearly not borrowed in the expression of company as usedin Section 47 of Act, 1974. The company has been defined inSection 47 of Act, 1974 in a very wide and inclusive manner.Explanation states that “company” means “any body corporate”.Thus, all body corporates are included within the definition ofcompany as per Section 47. There cannot be any dispute thatCity Municipal Council is a body corporate, which has beenclearly provided under Section 10 of Act, 1964. [Paras 19, 20][321-C-E-G]

3.2 Section 47 can be resorted to for offences by bodycorporate and Karnataka State Pollution Control Board by filinga complaint before the Magistrate for taking cognizance ofoffence under Section 49 did not commit an error. Section 49embraces cognizance of all offences under the Act. Whether theoffences are covered by Section 47 or 48 has no bearing on the A

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Apower of the Court to take cognizance of an offence. KarnatakaState Pollution Control Board has filed complaint for takingcognizance specifically referring to Section 49 of the Act, 1974.Thus, in event any offence is committed by anyone, itscognizance can be taken under Section 49. However, offencesby a body corporate are to be covered by Section 47, since inBevent offences by body corporates are not covered by Section47, the benefit of Section 47(1) proviso shall not be available tothose body corporates, which cannot be the intention of theLegislature. Thus, offences by body corporate like CityMunicipal Council are covered under Section 49 treating it toCbe offence as by company as provided in Section 47. [Paras 29,31] [328-G-H; 329-G-H; 330-A]

V.C. Chinnappa Goudar v. Karnataka State PollutionControl Board & Anr. [2015] 3 SCR 652 ; Shri D.H.Raya v. Karnataka State Pollution Control BoardDCriminal Petition No.831 of 2007 – distinguished.Hakam Singh v. M/s. Gammon (India) Ltd., (1971) 1SCC 286 : [1971] 3 SCR 314 - relied on.

Ramana Dayaram Shetty v. International AirportAuthority of India and Others, (1979) 3 SCC 489 :E[1979] 3 SCR 1014 ; Subhash Chandra v. Gulab Baiand Others, (2016) 4 SCC 750 ; Ranjit NarayanHaksar v. Surendra Verma, 1995 MPLJ 21 ; AneetaHada v. Godfather Travels and Tours Private Limited,(2012) 5 SCC 661 : [2012] 5 SCR 503 ; Arun KumarSingh v. The State of Bihar and Ors. [2006] 2 SCRF1058 – referred to.

KARNATAKA STATE POLLUTION CONTROL BOARD v.B. HEERA NAIK & ORS. ETC.

CRIMINAL APPELLATE JURISDICTION : Criminal AppealNos. 1734-1736 of 2019.

From the Judgment and Order dated 16.02.2015 of the HighCourt of Karnataka at Bengaluru in Criminal Petition No. 2627 of 2012C/W Criminal Petition Nos. 1537 and 1010 of 2011.

S. J. Amith, Purushottam Sharma Tripathi, Mukesh Kumar Singh,

R. C. Prakash, Advs. for the Appellant.

The Judgment of the Court was delivered by ASHOK BHUSHAN, J.

1. These appeals raise an important question as to whetherCommissioner of City Municipal Council and Chief Officers of CityMunicipal Council can be prosecuted under Section 48 of the Water(Prevention and Control of Pollution) Act, 1974 (hereinafter referredto as “Act, 1974”). By these appeals, the Karnataka State PollutionControl Board has challenged the judgment of High Court of Karnatakadated 16.02.2015 by which applications under Section 482 Cr.P.C. filedby the respondents, who were working as Municipal Commissioner andChief Officers of Municipal Council, were allowed and the proceedinginitiated for their prosecution by appellant under the Act, 1974 has beenquashed.

2. The High Court vide impugned judgment dated 16.02.2015 hasallowed three separate applications under Section 482 Cr.P.C. beingCriminal Petition Nos.2627 of 2012, 1537 of 2011 and 1010 of 2011.All the three applications were filed on the basis of similar facts. It issufficient to refer to the facts in Criminal Petition No.2627 of 2012 filedin the High Court, for deciding these appeals.

3. The brief facts necessary to be noticed for deciding theseappeals are:- 3.1 The appellant Karnataka State Pollution Control Board is astatutory body established under Section 4 of the Act, 1974. The Boardis a body corporate having perpetuate succession and common seal.The Act, 1974 provides for special procedure for taking cognizance ofthe offence punishable under the Act, 1974.

3.2 First respondent to the appeal is Shri B. Heera Naik, whowas working as the Commissioner, City Municipal Council,Krishnarajapuram, Bangalore. The second respondent M.A. Baig and A

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Athe third respondent D.L. Narayan were also Ex-Commissioner of CityMunicipal Council, Krishnarajapuram, Bangalore.

3.3 The Karnataka State Pollution Control Board filed a complaintbeing C.C. No.1101 of 2006 in the Court of Metropolitan Magistrateat Bangalore praying for taking cognizance of the offence punishableBunder Sections 43 and 44 of the Act, 1974 against the accused personsand to punish them for the offences. In the complaint, the City MunicipalCouncil, Krishnarajapuram, Bangalore was impleaded as accused No.1and respondent No.2 was the Commissioner of the City MunicipalCouncil and respondent Nos. 3 to 7 were all Ex-Commissioners, whohad held the office of Commissioner from different periods fromC03.11.2004 till the date of filing of complaint. The complaint stated thatBoard had accorded a consent to the accused persons to dischargesewage effluent after treatment which was expired on 30.06.2006 andthereafter the same has not been renewed. One of the conditions ofthe said consent was that the accused persons should provide SewageDTreatment Plant within six months to treat sewage generated in the CityMunicipal Council Area which has not been done so far, nor any stepshave been taken in that regard, and on the other hand, the accusedpersons have continuously discharging the untreated sewage into thewater bodies like ponds, lakes, natural valleys. The Complaint statedthat non-obtaining of the consent after 30.06.2006, non-providing ofESewage Treatment Plant, Under Ground Drainage facility anddischarging the untreated sewage into the neighbouring water bodiesconstitute the violation of Section 25 of the Act, 1974, which ispunishable under Section 44 of the Act, 1974.

3.4 Similar complaints were filed by Karnataka State PollutionFControl Board with regard to the Town Municipal Council, Kengeri,Bangalore and the Chief Officer of the Town Municipal Council as wellas complaint against City Municipal Council, Rajarajeshwari Nagar,Mysore Road and its Commissioner.

3.5 The respondents to these appeals filed criminal petitions underGSection 482 Cr.P.C. praying to quash the entire proceeding initiatedby appellant for prosecution of the respondents under the Act, 1974.

3.6 The learned Single Judge of the High Court vide its judgmentdated 16.02.2015 allowed all the three applications filed under Section482 Cr.P.C. quashing the proceedings initiated by the appellant followingHan earlier judgment of Karnataka High Court dated 18.01.2012 in Criminal Petition No. 831 of 2007, which in turn had relied on a DivisionBench judgment of the Karnataka High Court in Writ Petition No. 30610of 2008. The Division Bench had held that Commissioner of MunicipalCouncil, Chief Officer or Council cannot be termed as Head of theDepartment and they cannot be prosecuted under Section 48 of theAct, 1974. Aggrieved against the judgment of the High Court, theseappeals have been filed.

4. We have heard the learned counsel for the appellant. Noneappeared for the respondents, though served.

5. Learned counsel for the appellant contends that theCorporation constituted under the Karnataka Municipal CorporationsAct, 1976 (hereinafter referred to as “Act, 1976”) and Municipalitiesconstituted under the Karnataka Municipalities Act, 1964 (hereinafterreferred to as “Act, 1964”) are entrusted with large number ofmunicipal functions and statutory duties. The provisions of the Act, 1974provide for penalties and procedure also and whosoever contravenesany of the provisions of the Act, 1974, is liable to be prosecuted. TheMunicipal Corporation and the Municipalities, who violate the provisionsof Act, 1974 are also liable to be prosecuted with. The Commissionerof the Municipal Corporation, the Municipal Council and the ChiefOfficers of the Municipal Council are Chief Executive Officers of therespective Corporation and Council and they being Head of theDepartment, being of the Corporation or the Council, are liable to beprosecuted with under Section 74. The High Court committed error inquashing the prosecution launched against Commissioner and ChiefOfficer by taking an erroneous view that they are not liable to beprosecuted they being not Head of Department.

6. Learned counsel relies on a judgment of this Court in CriminalAppeal No. 755 of 2010 – V.C. Chinnappa Goudar Vs. KarnatakaState Pollution Control Board & Anr. decided on 10.03.2015 bywhich the judgment of the High Court of Karnataka rejecting theapplications of Commissioner and Chief Commissioner challenging theirprosecution under the Act, 1974 was affirmed. He submits that HighCourt ought not to have quashed the proceeding in exercise of jurisdictionunder Section 482 Cr.P.C. which judgment deserves to be set aside.

7. Before we proceed to consider submissions of the appellant,it is useful to refer to certain provisions of the Act, 1974. The Act,1974 was enacted by the Parliament to provide for the prevention and AB

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Acontrol of water pollution and the maintaining or restoring ofwholesomeness of water, for the establishment, with a view to carryingout the purposes aforesaid, of Boards for the prevention and control ofwater pollution, for conferring on and assigning to such Boards powersand functions relating thereto and for matters connected therewith. InAct, 1974, the Central Board and State Boards are constituted byBnotification in the Official Gazette. Powers and functions of the Boardare provided in Chapter IV. Section 24 provides for prohibition on useof stream or well for disposal of polluting matter, etc. and Section 25provides for restrictions on new outlets and new discharges. Section26 contains provision regarding existing discharge of sewage or tradeCeffluent. Section 27 deals with refusal or withdrawal of consent byState Board. Chapter VII of the Act provides for penalties andprocedure. Section 41 enumerate circumstances and acts on whichany person can be prosecuted. Sections 43 to 46 deals with differentpenalties. Section 47 deals with offences by companies and Section48 deals with offences by Government Departments, which are relevant,Dare as follows:- “47. Offences by companies.—(1) Where an offence underthis Act has been committed by a company, every person whoat the time the offence was committed was in charge of, andwas responsible to the company for the conduct of, the businessEof the company, as well as the company, shall be deemed to beguilty of the offence and shall be liable to be proceeded againstand punished accordingly:

Provided that nothing contained in this sub-section shall renderany such person liable to any punishment provided in this Act ifFhe proves that the offence was committed without his knowledgeor that he exercised all due diligence to prevent the commissionof such offence.

(2) Notwithstanding anything contained in sub-section (1), wherean offence under this Act has been committed by a companyand it is proved that the offence has been committed with theconsent or connivance of, or is attributable to any neglect on thepart of, any director, manager, secretary or other officer of thecompany, such director, manager, secretary or other officer shallalso be deemed to be guilty of that offence and shall be liable tobe proceeded against and punished accordingly.

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Explanation.— For the purposes of this section- (a) “company” means any body corporate, and includes afirm or other association of individuals; and (b) “director” in relation to a firm means a partner in thefirm.

48. Offences by Government Departments.— Where anoffence under this Act has been committed by any Departmentof Government, the Head of the Department shall be deemed tobe guilty of the offence and shall be liable to be proceededagainst and punished accordingly:

Provided that nothing contained in this section shall render suchHead of the Department liable to any punishment if he provesthat the offence was committed without his knowledge or thathe exercised all due diligence to prevent the commission of suchoffence.

8. The High Court in the impugned judgment for coming to theconclusion that Commissioner of Municipal Council, Chief Officer or aCouncil cannot be termed as Head of the Department, has placedreliance on two earlier judgments of the High Court namely, (i) CriminalPetition No. 831 of 2007 dated 18.01.2012 and (ii) a Division Benchjudgment of the High Court dated 30.10.2008 in Writ Petition (C)No.30610 of 2008 – Sri V.C. Chinnappa Goudar Vs. KarnatakaState Pollution Control Board.

9. We have gone through the judgment of the Division Bench ofthe Karnataka High Court in V.C. Chinnappa Goudar (supra), whichwas a writ petition filed by a Commissioner of City Municipal Councilchallenging the proceeding initiated by Karnataka State Pollution ControlBoard, the challenge in the writ petition was to quash the proceedingson the ground that action initiated against the petitioner is withoutjurisdiction for want of previous sanction from the Government as perSection 197 Cr.P.C. The Division Bench after considering the provisionsof Act, 1974 and Criminal Procedure Code came to conclusion that noprevious sanction is required for initiating the legal action against suchperson by Board for offence contravening Section 48 of the Act, 1974and the writ petition was accordingly dismissed. There was neitherany discussion in the judgment that Commissioner of Municipal Councilis not Head of the Department of any Department of Government nor A

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Athere was any ratio to the above effect. Another judgment relied byHigh Court is the decision of the High Court in Criminal PetitionNo.831 of 2007 - – Shri D.H. Raya Vs. Karnataka State PollutionControl Board, which is also brought on the record as Annexure P-11. The said judgment was also a petition under Section 482 Cr.P.C.filed by Chief Officer of a Town Municipal Council praying for quashingBthe complaint filed by Karnataka State Pollution Control Board foroffence under Section 25 of Act, 1974. The High Court relied on theearlier Division Bench judgment of this Court in Criminal Appeal No.– 755 of 2010 - V.C. Chinnappa Goudar (supra) and allowed thepetition. There was neither any discussion in the judgment that ChiefCOfficer is not the Head of the Department of any Department ofGovernment nor there was any ratio to the above effect.Thus, the judgment of the High Court quashing the complaint wasmisplaced.

10. We now need to consider as to whether MunicipalDCommissioner of City Municipal Council or Chief Officer of CityMunicipal Council are Head of the Department of any Department ofGovernment, which was the supposed basis of the judgment of the HighCourt.

11. Section 48 of the Act, 1974 provides that “Where an offenceEunder the Act has been committed by any Department of Government,the Head of the Department shall be deemed to be guilty of the offenceand shall be liable to be proceeded against and punishedaccordingly……………”. The heading of the section is “Offences byGovernment Departments”. Section 48, thus, is attracted where theoffence is committed by any Department of Government. The questionFto be answered, thus, is as to whether Commissioner of City MunicipalCouncil or Chief Officer of City Municipal Council constituted underthe Karnataka Municipalities Act, 1964 can be treated to be the Headof the Department of any Department of Government. The provisionsof Act, 1974 as well as the Karnataka Municipalities Act, 1964 haveGto be looked into to find answer to the above question. The CityMunicipal Council is a Council, incorporated under Section 10 of theKarnataka Municipalities Act, 1964, which is as follows:- “10. Incorporation of city and town municipal councils.—(1) In every municipal area, there shall be a municipal council,Hand every such municipal council shall be a body corporate by the name of “the City Municipal Council of ........” or “the TownMunicipal Council of ........”, as the case may be, and shall haveperpetual succession and a common seal with power, subject tothe provisions of this Act, to acquire, hold and dispose of propertyand to contract and may by the said name sue and be suedthrough its Chief Officer or Municipal Commissioner.

(2) Save as otherwise provided in this Act, the municipalGovernment of a municipal area shall vest in the municipalcouncil.”

12. City and Town Municipal Councils as per Section 10 as quotedabove is “a body corporate”. Similarly, under the Karnataka MunicipalCorporations Act, 1976, the Municipal Corporations are constituted asCorporation by virtue of Section 10.

13. The concept of creating body corporate and corporation tocarry out the functions of the Government is a modern concept of theGovernment. The modern Governments have undertaken on themselveslarge functions touching the life of its citizens, inhabitants. The Schemeunderlying the Constitution of India entrust and oblige the Governmentsto carry out different functions for achieving the constitutional objectivesto secure justice, liberty equality and fraternity. This Court in RamanaDayaram Shetty Vs. International Airport Authority of India andOthers, (1979) 3 SCC 489 : AIR 1979 SC 1628 has noted necessityto forge a new instrumentality or administrative device to keep up withgovernmental functions. Following was laid down by this Court:- “Now, it is obvious that the Government which represents theexecutive authority of the State, may act through theinstrumentality or agency of natural persons or it may employthe instrumentality or agency of juridical persons to carry out itsfunctions. In the early days, when the Government had limitedfunctions, it could operate effectively through natural personsconstituting its civil service and they were found adequate todischarge governmental functions, which were of traditionalvintage. But as the tasks of the Government multiplied with theadvent of the welfare State, it began to be increasingly felt thatthe framework of civil service was not sufficient to handle thenew tasks which were often of specialised and highly technicalcharacter. The inadequacy of the civil service to deal with thesenew problems came to be realised and it became necessary to A

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Aforge a new instrumentality or administrative device for handlingthese new problems. It was in these circumstances and with aview to supplying this administrative need that the publiccorporation came into being as the third arm of the Government.”

14. The Municipal City Council and Municipal Corporation, whichBhave been created by State enactments are controlled by theGovernment, which bodies also receive financial assistance from theGovernment. It is well settled that Municipal Corporations areinstrumentality or agency of the Government. The question to beanswered as noted above is whether City Municipal Council constitutedunder the Municipalities Act can be treated as Department ofCGovernment. Under Act, 1974, the State Government has been definedin Section 2(i). In constitution of the State Boards, the StateGovernment nominates members of the local authorities functioningwithin the State, members to represent the companies or corporationsowned, controlled or managed by the State Government as well asDofficials to represent that Government. Section 4 of Act, 1974, whichdeals with the constitution of the State Boards is as follows:- “4. Constitution of State Boards (1) The State Governmentshall, with effect from such date as it may, by notification in theOfficial Gazette, appoint, constitute a State Pollution ControlEBoard, under such name as may be specified in the notification,to exercise the powers conferred on and perform the functionsassigned to that Board under this Act.

(2) A State Board shall consist of the following members, namely,- F(a) a Chairman, being, a person having special knowledgeor practical experience in respect of matters relating toenvironmental protection or a person having knowledgeand experience in administering institutions dealing withthe matters aforesaid, to be nominated by the StateGovernment:

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Provided that the Chairman may be either whole-timeor part-time as the State Government may think fit; (b) such number of officials, not exceeding five, to benominated by the State Government to represent thatHgovernment;

(c) such number of persons, not exceeding five, to benominated by the State Government from amongst themembers of the local authorities functioning within theState; (d) such number of non-officials, not exceeding three, to benominated by the State Government to represent theinterests of agriculture, fishery or industry or trade orany other interest which, in the opinion of the StateGovernment, ought to be represented; (e) two persons to represent the companies or corporationsowned, controlled or managed by the State Government,to be nominated by that government; (f) a full-time member-secretary, possessing qualifications,knowledge and experience of scientific, engineering ormanagement aspects of pollution control, to be appointedby the State Government.

(3) Every State Board shall be a body corporate with the namespecified by the State Government in the notification under sub-section (1), having perpetual succession and a common seal withpower, subject to the provisions of this Act, to acquire hold anddispose of property and to contract, and may, by the said name,sue or be sued.

(4) Notwithstanding anything contained in this section, no StateBoard shall be constituted for a Union Territory and in relationto a Union Territory, the Central Board shall exercise the powersand perform the functions of a State Board for that UnionTerritory:

Provided that in relation to any Union Territory the Central Boardmay delegate all or any of its powers and functions under thissub-section to such person or body of persons as the CentralGovernment may specify.”

15. The Scheme of the Act as delineated by above provisionindicate that there are separate members to represent the Governmentin the Board, separate members to represent the local authoritiesfunctioning in the State and separate members to represent thecompanies or corporations owned, controlled or managed by the State A

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AGovernment. The Government, local authorities and companies orcorporations owned, controlled or managed by the State Governmentare all different expressions used in the Act. Whether an institution isa corporation or a Department of the Government has to be found outfrom the Scheme under which it has been created. One of the teststo find out as to whether an institution is a Corporation or a DepartmentBof the Government is to enquire whether the undertaking functions asa responsible independent organisation and not as part of anyDepartment of the State. Second test would be to see whether it isendowed with the capacity to contract obligations and of suing and beingsued. Further, the power to possess, use and change a seal is incidentalCto a corporation and a corporation aggregate can, as a general rule,only act or express its will by deed under its common seal. TheKarnataka Municipalities Act, 1964 as noted above, provides for a Townand City Municipal Councils as a body corporate. The control of theState Government on the Municipality is provided in a separate chapter,i.e., Chapter XII. The Scheme of constitution of Municipal area andDother provisions of Act, 1964 clearly indicate that Municipalities are nota Department of the Government.

16. We may also notice the constitutional provisions of Part IXA,“the Municipalities” inserted by Constitution (Seventy Fourth)Amendment Act, 1992. Article 243P sub-clause (e) definesE“Municipality” as an institution of self-Government constituted underArticle 243Q. The Constitution also envisages Municipality as a bodyof self-Government. The provisions of the Act, 1964 and Act, 1974makes it clear that City Municipal Council cannot be treated asDepartment of the State Government. After having found that CityFMunicipal Council is not Department of the Government – whether theyare immuned from prosecution under Act, 1974 is the next question tobe answered.

17. Chapter VII of the Act, 1974 deals with penalties andprocedure. Section 41, which provides for punishment and penaltyGbegins with phrase “whoever fails to comply…………”. Similarly,Section 42, which deals with penalty for certain acts also begins withthe expression “whoever”. Similar expression is found in Sections 43,44 and 45A, which begins with the word “whoever”. The Act, 1974,thus, envisages conviction of any person, who contravenes and violatesHthe provisions of the Act.

18. City Municipal Council and City Municipal Corporation arecreated or incorporated by the State and entrusted with the Municipalfunctions. One of the main functions entrusted to the Corporation is toensure clean environment to the residents, to control pollution in aMunicipal area, which is one of the duties of the Municipal Council andthe Corporation.

19. When an offence is committed by City Municipal Council orCorporation, whether they can be prosecuted under the Act, 1974 andwhat is the procedure for initiating proceeding for prosecution of suchbodies? Section 47 of the Act, 1974 in this context is relevant. Section47 contains a heading “offences by companies”. Section 47(1) is similarto Section 48. Whether the expression “companies” as used in Section47 can include other corporate bodies including City Municipal Counciland Corporation? The answer is to be found in the Explanation toSection 47, which provides as follows:- “Explanation.— For the purposes of this section- (a) “company” means any body corporate, and includes afirm or other association of individuals; and (b) “director” in relation to a firm means a partner in thefirm.”

20. In a Statute, the definition of an expression has to be foundout in accordance with the context and Scheme of the enactment. Thedefinition of company is contained in the Companies Act, 1956 in Section3. The definition of company as contained in the Companies Act, 1956is clearly not borrowed in the expression of company as used in Section47 of Act, 1974. The company has been defined in Section 47 of Act,1974 in a very wide and inclusive manner. Explanation states that“company” means “any body corporate”. Thus, all body corporatesare included within the definition of company as per Section 47. Therecannot be any dispute that City Municipal Council is a body corporate,which has been clearly provided under Section 10 of Act, 1964 as notedabove.

21. In Hakam Singh Vs. M/s. Gammon (India) Ltd., (1971)1 SCC 286, this Court while considering the Explanation II to Section20 C.P.C. had held that use of word “Corporation” in Explanation IIalso includes the “company”. In paragraph 6, following has been laiddown:- A

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A“6. The argument of counsel for the appellant that the expression“corporation” in Explanation II includes only a statutorycorporation and not a company registered under the IndianCompanies Act is, in our judgment, without substance. The Codeof Civil Procedure uses the expression “corporation” as meaningBa legal person and includes a company registered under the IndianCompanies Act. Order 29 of the Code of Civil Procedure dealswith suits by or against a corporation and there is nothing in theCode of Civil Procedure that a corporation referred to underOrder 20 means only a statutory corporation and not a company registered under the Indian Companies Act.”C

From the above, it is clear that the meaning and definition of anexpression used in an enactment has to be determined from theparticular Statute. In C.P.C., Explanation to Section 20, only word“corporation” was used, which was held to include a “company” also.

D22. The expression “company” has been used in different statuteswith different purpose and object. This Court as well as the HighCourts had occasion to consider the meaning of company in referenceto different Statutes. We may notice some of the cases of this Courtas well as of the High Court in the above reference.

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23. In Subhash Chandra Vs. Gulab Bai and Others, (2016)4 SCC 750, the question as to whether within the meaning of Section23-J(ii) of M.P. Accommodation Control Act, 1961, the expression“company owned and controlled by the State Government” can heldto include a “corporation” came for consideration. This Court noted aFFull Bench judgment of M.P. High Court wherein it was held that retiredemployees of a Municipal Corporation will not be covered by Section23-J, whereas the Division Bench of M.P. High Court in RanjitNarayan Haksar Vs. Surendra Verma, 1995 MPLJ 21 held thatM.P. State Road Transport Corporation was a company owned andcontrolled by the State Government. Against the Division BenchGjudgment in Ranjit Narayan’s case, matter was taken in this Court byspecial leave petition, which was dismissed and this Court whiledismissing the special leave petition agreed with the Division Benchjudgment that word “company” in Section 23-J would include“corporation”. Paragraphs 2, 4 and 5 of the judgment is extractedHbelow:-

“2. The short question that falls for determination in these appealsis whether a retired Municipal Corporation employee can alsomaintain an application for eviction under Chapter III-A of theMadhya Pradesh Accommodation Control Act, 1961 and, inparticular, whether any such “retired employee” is an employeeof a “company owned or controlled by the State Government”within the meaning of Section 23-J(ii) of the Act aforementioned.A Full Bench of the High Court of Madhya Pradesh at Indorehas by a 2:1 decision (Gulab Bai V. Subhash Chandra, (2013) 3MPLJ 434) answered the said question in the negative anddeclared that “retired employees” of municipal corporation willnot be covered under Section 23-J(ii) of the Act to maintain anapplication for eviction under Chapter III-A thereof.

4. In Ranjit Narayan case a Division Bench of the High Courtof Madhya Pradesh was examining whether Madhya PradeshState Road Transport Corporation was a “company owned orcontrolled by the State Government” so as to entitle anyemployee who retired from its service to maintain an evictionpetition under Chapter III-A of the Madhya PradeshAccommodation Control Act, 1961. Answering the question inthe affirmative, the High Court held that keeping in view theobjects and reasons and the scheme of the Act, especially thescheme underlying Chapter III-A thereof, the expression“company owned or controlled by the State Government orthe Central Government” must be understood to include evenstatutory corporations like Madhya Pradesh State Road TransportCorporation established under the State Road Corporation Act.The High Court while saying so, approved the ratio in Vipin v.Ranajitnarayan, 1986 MPRCJ Note 11, while overruling thedecision in Sobhagyamal v. Prakash Pharmaceuticals, AIR1990 MP 345.

5. In a special leave petition filed against the said judgment andorder, this Court by a short order affirmed the reasoning and theview taken by the High Court. This Court observed:

“We agree with the view taken by the Division Bench thatthe word “company” in Section 23-J(ii) would include“corporation” created under the special statute which is ownedor controlled by the Central or the State Government. Hence,the SLP is dismissed.”

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A(Surendra Verma v. Ranjeet Narayan Haksar, 1995 Jab LJ460 (SC))

24. This Court in the above case noticing conflictingpronouncements referred the matter to a Larger Bench. The LargerBench judgment has been delivered on 22.01.2019 in Civil AppealBNo.1696 of 2016 – Subhash Chandra (D) Thr. LRs. Vs. GulabBai & Ors. Two questions, which were referred before the LargerBench has been noticed in paragraph 4 of the judgment, which is tothe following effect:- “4. Calling into question the entitlement of the landlord to availCof the special procedure under Chapter IIIA of the Act on theground that he is not a landlord within the meaning of the saidexpression as appearing in Section 23-J(ii) of the Act, a revisionpetition was filed before the High Court. The said revision ledto a reference to a Full Bench of the High court. Two learnedJudges of the High Court held that the appellant would not be aDlandlord within the meaning of Section 23-J(ii) of the Act.Aggrieved, the present appeal has been filed wherein two JudgesBench of this Court had referred the following questions for anauthoritative pronouncement:

(i) Whether the expansion of the word ‘company’ tostatutory Corporations by the Madhya Pradesh HighCourt in Ranjit Narayan Haksar vs. Surendra Verma,1995 MPLJ 21 has to be understood to be confined onlyto Corporations engaged in trading activities andstatutory Corporations including Municipal Corporationswould be outside the scope of the said expression“company” appearing in Section 23-J(ii) of the Act.

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(ii) If the answer to the above question is in the negative,whether the expression “company owned and controlledeither by the Central or State Government” appearingGin Section 23-J(ii) of the Act would require an expansiveand liberal interpretation to save the said provision frombeing declared to be unconstitutional on the touch-stoneof Article 14 of the Constitution of India.”

25. This Court after considering the object and purpose of M.P.HAccommodation Control Act, 1961, specially the object of Section 23- J(ii) held that although Section 23-J(ii) only used the word “company”,the said expression shall also include Municipal Corporations and theemployees of the Municipal Corporations cannot be denied the benefitof such beneficial provision. In paragraphs 5, 6 and 7 following hasbeen laid down:- “5. We have noticed the special procedure and the special forumavailable for the categories of landlords specified in Section 23-J of the Act. They include: retired Government servants; retiredservant of a company owned or controlled either by the Centralor State Government; a widow or a divorced wife; physicallyhandicapped person; a retired member of the defence service.The object of creating a special procedure and special forum byincorporating Chapter IIIA in the Act is to provide a moreefficacious and speedy remedy to a category of landlords toobtain speedy possession of the premises which he/she/they mayhave let out. The special category of landlords envisaged underSection 23-J of the Act are persons who have either retired fromGovernment service or defence service or company owned orcontrolled either by the Central or State Government or suchpersons who suffer from some kind of disadvantages like aphysically handicapped person or a widow or divorced wife. TheMadhya Pradesh High Court itself had expanded the meaningof the term ‘company’ appearing in Section 23- J(ii) of the Actby including within the ambit of the said expression the MadhyaPradesh State Road Transport Corporation. The said order ofthe Madhya Pradesh High has been affirmed by this Court bydismissing the Special Leave Petition against the said order.

6. If the object of Chapter IIIA of the Act is to provide a speedyremedy and a special forum for a category of persons who haveretired from service we do not see how the retired employeesof a Municipal Corporation can be legitimately excluded from theprovisions of Section 23-J(ii) of the Act. Doing so would beputting Section 23-J of the Act itself to jeopardy. The object ofthe Act being what has been noticed above, the classification ofretired persons by inclusion of one class i.e. Government serviceetc. and exclusion of another i.e. of Municipal Corporation, inour considered view, would render the provisions of Section 23-J(ii) constitutionally fragile.

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A7. We, therefore, are of the view that reading the provisions ofSection 23-J(ii) of the Act to include retired employees of theMunicipal Corporation would further the object behind theenactment of Chapter IIIA of the Act. We, therefore, hold thatthe appellant – landlord was fully entitled to avail of the specialBprocedure enjoined by Chapter IIIA of the Act and the decreeof eviction obtained by him cannot be faulted on the ground oflack of jurisdiction of the Tribunal/Forum which had decided thematter.”

26. In the above case, thus, although Section 23-J(ii) of the M.P.CAccommodation Control Act, 1961 used the expression “company” butit was held that it shall also include M.P. State Road TransportCorporation as well as Municipal Corporation.

27. In the Negotiable Instruments Act, 1881, Section 141 providesfor “offences by companies”. Section 141 also uses expression “aDcompany”. This Court had observed that concept of corporate criminalliability as contained in Section 141 is attracted to corporation and acompany. This Court in Aneeta Hada Vs. Godfather Travels andTours Private Limited, (2012) 5 SCC 661 while considering Section141 of Negotiable Instruments Act laid down following in paragraphs21 and 24:-E

“21. At this juncture, we may refer to Section 141 which dealswith offences by companies. As the spine of the controversy restson the said provision, it is reproduced below:

“141. Offences by companies.—(1) If the person committingFan offence under Section 138 is a company, every person who,at the time the offence was committed, was in charge of, andwas responsible to the company for the conduct of the businessof the company, as well as the company, shall be deemed tobe guilty of the offence and shall be liable to be proceededGagainst and punished accordingly:

Provided that nothing contained in this sub-section shall renderany person liable to punishment if he proves that the offencewas committed without his knowledge, or that he hadexercised all due diligence to prevent the commission of suchHoffence:

Provided further that where a person is nominated as aDirector of a company by virtue of his holding any office oremployment in the Central Government or State Governmentor a financial corporation owned or controlled by the CentralGovernment or the State Government, as the case may be,he shall not be liable for prosecution under this chapter.

(2) Notwithstanding anything contained in sub-section (1),where any offence under this Act has been committed by acompany and it is proved that the offence has been committedwith the consent or connivance of, or is attributable to, anyneglect on the part of, any Director, Manager, Secretary orother officer of the company, such Director, Manager,Secretary or other officer shall also be deemed to be guiltyof that offence and shall be liable to be proceeded againstand punished accordingly.”

24. Section 141 uses the term “person” and refers it to acompany. There is no trace of doubt that the company is a juristicperson. The concept of corporate criminal liability is attracted toa corporation and company and it is so luminescent from thelanguage employed under Section 141 of the Act. It is appositeto note that the present enactment is one where the companyitself and certain categories of officers in certain circumstancesare deemed to be guilty of the offence.”

28. Patna High Court in Criminal Misc. No. 7268 of 2005 -Arun Kumar Singh vs. The State of Bihar and Ors. while noticingSection 141 specifically the Explanation held that the definition ofCompany as given therein is wider than the definition of Company inthe Companies Act and it includes any body corporate. Paragraphs12 and 13 of the judgment is as follows:- “12. Then so far offence under Section 138 of N.I. Act, it is aptto refer, at first, the provisions of Section 141. Section 141 ofthe Act reads as follows:

141. Offences by companies.

(1) If the person committing an offence under Section 138 is acompany, every person who, at the time the offence wascommitted, was in charge of, and was responsible to the companyfor the conduct of the business of the company, as well as the AB

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company, shall be deemed to be guilty of the offence and shallbe liable to be proceeded against and punished accordingly:

Provided that nothing contained in this sub-section shall renderany person liable to punishment if he proves that the offence wascommitted without his knowledge, or that he had exercised alldue diligence to prevent the commission of such offence; B

Provided further that where a person is nominated as a Directorof a Company by virtue of his holding any office or employmentin the Central Government or State Government or a financialCorporation owned or controlled by the Central Govt. or the StateGovt., as the case may be, he shall not be liable for prosecutionunder this Chapter.

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(2) ...

Explanation: For the purpose of this section.

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(a) “Company” means any body corporate and includes afirm or other association of individuals; and (b) “director”, in relating to a firm, means a partner in thefirm.

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E13. The Explanation (a) of the above section, therefore, is clearthat the definition of Company as given therein is wider than thedefinition of Company in the Companies Act and it includes anybody corporate. Section 5 of the Patna Municipal CorporationAct also shows that the Company is a body corporate. Therefore,Fthere cannot be any doubt that Patna Municipal Corporation is aCompany under the N.I. Act.”

The above is correct interpretation of Explanation (a) by thePatna High Court. The Explanation of Section 47 of Act, 1974 andthe Explanation (a) to Section 141 of the Negotiable Instruments ActGare pari materia.

29. We, thus, looking to the purpose and object of Act, 1974, areof the opinion that Section 47 can be resorted to for offences by bodycorporate and Karnataka State Pollution Control Board by filing acomplaint before the Magistrate for taking cognizance of offence underHSection 49 did not commit an error.

30. There is one more aspect of the matter, which need to benoticed. Section 49 of the Act, 1974 deals with cognizance of offences,which is as follows:- “49. Cognizance of offences.—(1) No court shall takecognizance of any offence under this Act except on a complaintmade by- (a) a Board or any officer authorised in this behalf by it; or (b) any person who has given notice of not less than sixtydays, in the manner prescribed, of the alleged offenceand of his intention to make a complaint, to the Boardor officer authorised as aforesaid, and no court inferior to that of a Metropolitan Magistrate or aJudicial Magistrate of the first class shall try any offencepunishable under this Act.

(2) Where a complaint has been made under clause (b) of sub-section (1), the Board shall, on demand by such person, makeavailable the relevant reports in its possession to that person:

Provided that the Board may refuse to make any such reportavailable to such person if the same is in its opinion, against thepublic interest.

(3) Notwithstanding anything contained in section 29 of the Codeof Criminal Procedure, 1973 (2 of 1974), it shall be lawful forany Judicial Magistrate of the first class or for any MetropolitanMagistrate to pass a sentence of imprisonment for a termexceeding two years or of fine exceeding two thousand rupeeson any person convicted of an offence punishable under this Act.”

31. Section 49 embraces cognizance of all offences under theAct. Whether the offences are covered by Section 47 or 48 has nobearing on the power of the Court to take cognizance of an offence.Karnataka State Pollution Control Board has filed complaint for takingcognizance specifically referring to Section 49 of the Act, 1974. Thus,in event any offence is committed by anyone, its cognizance can betaken under Section 49. We, however, reiterate that offences by a bodycorporate are to be covered by Section 47, since in event offences bybody corporates are not covered by Section 47, the benefit of Section47(1) proviso shall not be available to those body corporates, which A

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Acannot be the intention of the Legislature. We, thus, conclude thatoffences by body corporate like City Municipal Council are coveredunder Section 49 treating it to be offence as by company as providedin Section 47.

32. We may also notice the judgment of this Court in CriminalBAppeal No. 755 of 2010 – V.C. Chinnappa Goudar Vs. KarnatakaState Pollution Control Board & Anr. decided on 10.03.2015, wherethe judgment of the Division Bench of the Karnataka High Court inV.C. Chinnappa Goudar (supra) had been affirmed. In the abovecase although this Court dismissed the appeal filed by the appellant,who was also a Municipal Commissioner of the Municipal Council, forCquashing of the complaint filed by the Karnataka State Pollution ControlBoard, but the ratio of the judgment is to the effect that sanction underSection 197 Cr.P.C. is not required for proceeding under Section 49 ofthe Act, 1974. Although reference to Section 48 has been mentionedin the judgment of this Court but there is no further consideration withDregard to Section 48.

33. In view of the foregoing discussions, we are of the view thatHigh Court erred in quashing the complaint filed by Karnataka StatePollution Control Board against the respondents.

34. In result, the judgment of the High Court is set aside. TheEapplications filed under Section 482 Cr.P.C. by the respondents standdismissed. The Magistrate/Metropolitan Magistrate may proceed withthe complaints in accordance with law.

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Devika Gujral

Appeals allowed.

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