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Md.Fasiuddin & Ors. v. State Of Bihar
Factual and Procedural Background
This opinion arises from prosecution reports alleging that TISCO (Tata Iron & Steel Company) was felling trees for mining purposes in the Noamundi protected forest. On the basis of a prosecution report, C/3 Case No. 83 of 1996 was instituted and cognizance was taken by the Chief Judicial Magistrate, Chaibasa by order dated 30.7.1996 for an offence under Section 33 of the Indian Forest Act against the petitioners, who were officials of TISCO.
It is admitted that TISCO was the lessee conducting mining operations in the protected forest. At the relevant time, TISCO had no temporary working permission from the Central Government (the permission had expired), yet mining operations continued and cases were instituted against TISCO's officials. TISCO filed writ petitions seeking to restrain the forest department; the High Court directed TISCO to approach the Central Government and dismissed the writ petition. TISCO approached the Central Government on 17.3.1998 and filed a Special Leave Petition (S.L.P.) in the Supreme Court. In SLA (Civil) No. 7054 of 1998 an order dated 24.4.1998 directed maintenance of status quo until the Central Government decided the matter. On 28.4.1998 the Central Government granted an extension of temporary working permission over already broken area for six months.
Procedurally, criminal proceedings were instituted against the petitioners in multiple cases (listed later in this opinion). The petitioners challenged the institution of proceedings on grounds relating to absence of specific allegations against them and the absence of statutory vicarious liability under the relevant provisions.
Legal Issues Presented
- Whether Section 33 of the Indian Forest Act imposes vicarious liability on company officials such that the petitioners can be held criminally liable merely because they were senior officials of TISCO.
- Whether prosecution under the Forest (Conservation) Act (identified in the record as Section 2 but actually implicating Sections 3-A and 3-B) can be sustained against the petitioners where prosecution reports lack specific allegations that they were "directly in charge of, and responsible to" the authority or company for conduct of business.
- Whether the criminal proceedings against the petitioners in the enumerated cases should be quashed for want of legally sustainable allegations of personal or statutory vicarious liability.
Arguments of the Parties
Petitioners' Arguments
- There is no specific allegation against the petitioners in any prosecution report; the allegations are directed only at TISCO (the company) for carrying out mining operations after expiry of temporary working permission.
- Section 33 of the Indian Forest Act and Section 2 of the Forest (Conservation) Act do not provide for vicarious liability; in absence of statutory provision the petitioners (being company officials) cannot be held vicariously liable for offences allegedly committed by TISCO.
- Counsel relied on the Supreme Court decision in S.K. Alagh v. State of Uttar Pradesh & Ors. ((2008) 5 SCC 662) to support the proposition that directors/managing directors cannot be held vicariously liable in the absence of an express statutory provision.
- Accordingly, initiation of proceedings against the petitioners was argued to be illegal and liable to be quashed.
Respondent-State's Arguments
- The respondent-State submitted there was no illegality in instituting proceedings against the petitioners, who were senior officials with control over company affairs.
- If mining operations were continued without valid permission from the Central Government, offences are made out against these petitioners given their managerial positions and control.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| S.K. Alagh v. State of Uttar Pradesh & Ors., (2008) 5 SCC 662 | Establishes that where a statute does not provide for vicarious liability, a director or employee cannot be held vicariously liable for an offence committed by the company; statutory provision is required for such a legal fiction. | The court relied on this authority to hold that Section 33 of the Indian Forest Act contains no vicarious liability provision and thus petitioners could not be held vicariously liable under that Section in absence of specific allegations. |
| Maharashtra State Electricity Distribution Company Ltd. & Anr. v. Datar Switchgear Ltd. & Ors., 2010 (10) SCC 479 | Reiterates the principle that vicarious liability must be specifically provided by statute; where a statute (in that case Sections 192 and 199 IPC read with Section 34) does not incorporate vicarious liability, complainant must aver the role of each accused. | The court cited this decision to reinforce that Section 33 of the Indian Forest Act does not impute vicarious liability and to require specific averments in complaints when alleging vicarious liability. |
| Central Bank of India v. Asian Global Limited & Others, (2010) 11 SCC 203 | Explains vicarious liability under the N.I. Act (Section 141) and emphasises that for prosecution of company directors under provisions imposing vicarious liability there must be clear, specific allegations that directors were in charge of and responsible for company business; mere directorship is insufficient. | The court applied the principles from this decision (and its precedents) to conclude that even though Section 3-B of the Forest (Conservation) Act provides for vicarious liability, prosecutions under that provision require specific allegations that the accused were directly in charge and responsible; such averments were absent here. |
| S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla, (2005) 8 SCC 89 | Sets out that merely being a director does not make a person liable for offences of a company; prosecution must contain specific and unambiguous allegations showing the directors were in charge and responsible for the company business. | The court invoked this precedent to support the requirement of clear specific allegations before launching prosecutions against company officials under statutory provisions that create vicarious liability. |
| N.K. Wahi v. Shekhar Singh, (2007) 9 SCC 481 | Reiterates that liability of directors for offences of a company requires clear allegations showing they were in charge and responsible; mere position alone is not enough. | The court cited this authority along with S.M.S. Pharmaceuticals to conclude that the prosecution reports' lack of specific averments as to the petitioners' roles precluded sustaining proceedings under provisions that impose vicarious liability. |
Court's Reasoning and Analysis
The court proceeded by examining the statutory language and the precedents cited to determine whether the petitioners could be criminally prosecuted on the basis of the prosecution reports.
- Section 33 of the Indian Forest Act: The court observed that Section 33 is a penal provision listing specific acts punishable (including felling any tree) but contains no provision for vicarious liability. The court held that, by plain reading, Section 33 does not impose vicarious liability on persons simply because they are officials of a company found to have committed the prohibited acts.
- Precedential support for the above conclusion: The court relied on S.K. Alagh and the Maharashtra Electricity Board decision which emphasise that the legal fiction of vicarious liability must be expressly provided in the statute; absent such provision, a director or managing director cannot be vicariously liable for the company's offences. The court excerpted and applied these observations to Section 33, concluding the cognizance taken under Section 33 against the petitioners was unsupported by law.
- Forest (Conservation) Act: The court noted that Section 2 of that Act (as referenced in the institution of proceedings) is not itself a penal provision; the penal provisions are Sections 3-A and 3-B. Section 3-B expressly provides for offences by authorities and persons directly in charge being deemed guilty (i.e., it contains a vicarious liability provision with a proviso that the person can escape liability by proving lack of knowledge or due diligence).
- Requirement of specific averments under vicarious-liability provisions: Notwithstanding that Section 3-B contains vicarious-liability language, the court explained (following Central Bank of India, S.M.S. Pharmaceuticals, and N.K. Wahi) that prosecution against directors or persons said to be vicariously liable must contain specific, clear and unambiguous allegations showing that the accused were "in charge of, and responsible to" the authority or company for conduct of its business. This safeguards against fishing expeditions and frivolous litigation.
- Application to the facts: The court found the prosecution reports made allegations only against TISCO and did not contain any specific averments as to what part the petitioners personally played, nor did they allege that the petitioners were directly in charge of and responsible to TISCO for conducting its business. Therefore, even where Section 3-B could potentially apply, the absence of such specific allegations meant the prosecutions could not be sustained against the petitioners.
- Conclusion from analysis: Because Section 33 contains no vicarious-liability provision and because the prosecutions under the Forest (Conservation) Act lacked the necessary specific averments required by the precedents interpreting statutory vicarious liability, the court concluded the institution of criminal proceedings against the petitioners was illegal and unsustainable.
Holding and Implications
HOLDING: The court held that initiation of criminal proceedings against the petitioners in the listed cases was "absolutely illegal and bad in the eyes of law" and accordingly quashed those proceedings. The court allowed the criminal miscellaneous applications filed by the petitioners.
The proceedings quashed by the court were:
- C/3 Case No. 15 of 1998 (Chief Judicial Magistrate, Chaibasa), including the order dated 27.4.1998 taking cognizance under Section 33 of the Indian Forest Act and Section 2 of the Forest (Conservation) Act;
- C/3 Case No. 16 of 1998 (Chief Judicial Magistrate, Chaibasa), including the order dated 28.4.1998 taking cognizance under Section 33(c) of the Indian Forest Act and Section 2(ii) of the Forest (Conservation) Act;
- C/3 Case No. 27 of 1999 (Chief Judicial Magistrate, Chaibasa), including the order dated 12.2.1999 taking cognizance under Section 33(c) of the Indian Forest Act and Sections 2(ii), 3-A and 3-B of the Forest (Conservation) Act;
- C/3 Case No. 83 of 1996 (then pending in the Court of Shri Ashok Kumar, Judicial Magistrate, Chaibasa), including the order dated 30.7.1996 taking cognizance under Section 33 of the Indian Forest Act.
Implications:
- Direct effect: The immediate consequence is that the criminal proceedings against the petitioners in the specified cases are quashed and the petitioners are relieved of those prosecutions.
- On precedent/new law: The court applied existing Supreme Court authorities to the facts; the opinion does not purport to lay down a new principle of law but applies established precedents (S.K. Alagh; Maharashtra Electricity Board decision; Central Bank of India; S.M.S. Pharmaceuticals; N.K. Wahi) to find the prosecutions unsustainable. No novel legal doctrine was announced.
Order delivered by H. C. Mishra, J., Jharkhand High Court, Ranchi on 7 May 2012.
, TISCO was found felling the trees for mining purpose in Noamundi protected forest. On the basis of the said prosecution report, C/3 Case No. 83 of 1996 was instituted and cognizance was taken by the learned Chief Judicial Magistrate, Chaibasa, by order dated 30.7.1996 for the offence under Section 33 of the Indian Forest Act against these petitioners, being the officials of the TISCO.
3. It is an admitted fact that TISCO was a lessee for carrying on the mining operations in the said protected forests. However, in the intervening period, as there was no temporary working permission by the Government of India, in favour of TISCO and mining operations were found to be continued by the TISCO, the cases were instituted against the officials of the TISCO, but in the prosecution reports, it is only mentioned that TISCO was found carrying out the mining operations, even though the temporary working permission had expired on the date of occurrence. It is stated in these applications that TISCO had filed writ petitions for restraining the forest department from interfering in the mining operations, wherein, the High Court had directed the TISCO to approach the Central Government and had dismissed the writ petition. TISCO had also approached the Central Government on 17.3.1998 and had also filed S.L.P. in the Supreme Court against the order passed by the High Court in the writ petition. It appears that in SLA (Civil ) No. 7054 of 1998, by order dated 24.4.1998, status quo was ordered to be maintained till the Central Government took any decision in the matter. The said order has been brought on record as Annexure 3 Srs. in the application. It also appears that on 28.4.1998, extension of the temporary working permission over already broken area was granted by the Central Government in favour of the TISCO for a period of six months.
4. Be that as it may. The only point that has been taken by the learned counsel for the petitioners, in these applications is that there is no specific allegation against these petitioners in any of the prosecution reports for committing any offence, rather the allegations are only against TISCO, on the basis of which the petitioners cannot be made vicariously liable for the offence alleged to be committed by the TISCO, only because at the relevant time the petitioners were the senior officials of the Company.
5. In this connection, learned counsel has pointed out that either in Section 33 of the Indian Forest Act, or in Section 2 of the Forest (Conservation) Act, there is no mention of any vicarious liability, and accordingly, the petitioners cannot be held vicariously liable for the offence, which was allegedly committed by the TISCO. In this connection, learned counsel has placed reliance upon a decision of the Supreme Court of India in S.K. Alagh Vs. State of Uttar Pradesh & Ors., reported in (2008) 5 SCC 662, wherein the Supreme Court considered the vicarious liability of the Managing Director and Directors of the Company for the offence under Sections 405, 406 IPC and held that in view of the fact that there is no provision of any vicarious liability under these Sections, the Director or the employee of the Company cannot be held to be vicariously liable for any offence committed by the Company itself. Learned counsel accordingly, submitted that in all the prosecution reports referred to above, the allegations have been made only against TISCO, as the Company was found involved in mining operations or otherwise, but there is no specific allegation against these petitioners. Accordingly, the petitioners, only being the officials of TISCO, cannot be held vicariously liable for the offence, if any, committed by TISCO. As such, the initiation of the proceedings against the petitioners is absolutely illegal and cannot be sustained in the eyes of law. Learned counsel accordingly, submitted that it is a fit case, wherein criminal proceedings against the petitioners be quashed.
6. Learned counsel for the respondent-State, on the other hand, has submitted that there is no illegality in institution of the criminal proceedings against the petitioners, who are admittedly the senior officials having control over the affairs of the Company and accordingly, if the mining operation was continued without there being any valid permission for the same by the Central Government, offences are clearly made out against these petitioners.
7. After having heard learned counsels for both the sides and upon going through the record, I find that though Section 33 of the Indian Forest Act is a penal provision, but there is no provision for any vicarious liability in the same. Section 33 of the Indian Forest Act reads as follows:-
"33. Penalties for acts in contravention of notification under Section 30 or rules under Section 32. - (1) Any person who commits any of the following offences, namely :-
quarries any stone, or burns any lime or charcoal; or collects, subjects to any manufacturing process, or removes any forest-produce;
(c) -------------------;
(d) -------------------;
(e) -------------------;
(f) fells any tree or drags any timber so as to damage any tree reserved as aforesaid;
(g) -------------------;
(h) ------------------;
Shall be punishable with imprisonment for a term which may extend to six months, or with fine which may extend to five hundred rupees, or with both.** ** ** ** "
8. Thus from the plain reading of section 33 of this act, it is apparent that there is no provision for any vicarious liability under this Section. In Maharashtra State Electricity Distribution Company Limited and Anr. Vs. Datar Switchgear Limited and Ors, as reported in 2010 (10) SCC 479, wherein, the Chairman of the Maharashtra State Electricity Board was made an accused for the offence under Sections 192 and199 read with Section 34 of the Indian Penal Code, the Supreme Court took note of its earlier decision in S.K. Alagh's case (supra), and has laid down, the law as follows:-
"30. It is trite law that wherever by a legal fiction the principle of vicarious liability is attracted and a person who is otherwise not personally involved in the commission of an offence is made liable for the same, it has to be specifically provided in the statute concerned. In our opinion, neither Section 192 IPC nor Section 199 IPC incorporate the principle of vicarious liability, and therefore, it was incumbent on the complainant to specifically aver the role of each of the accused in the complaint. It would be profitable to extract the following observations made in S.K.Alagh {( 2008)5 SCC 662 (p.667, para 19)}.
"19. As, admittedly, drafts were drawn in the name of the company even if the appellant was its Managing Director, he cannot be said to have committed an offence under Section 406 of the penal Code. If and when a statute contemplates creation of such a legal fiction, it provides specifically therefor. In absence of any provision laid down under the statute, a Director of a company or an employee cannot be held to be vicariously liable for any offence committed by the company itself."(Emphasis supplied).
9. Thus, so far as the cognizance against these petitioners of the offence under Section 33 of the Indian Forest Act is concerned, the case is fully covered by the aforementioned decisions of the Supreme Court, wherein, it has been specifically held that wherever legal fiction of the vicarious liability is directed against a person, who is otherwise not personally involved in the commission of the offence, is made liable for the same, it has to be specifically provided in the Statute concerned. In Section 33 of the Forest Act, there is no provision for any vicarious liability and accordingly, in absence of any specific averment / allegation against the petitioners in the prosecution reports, the institution of the cases against these petitioners under Section 33 of the Indian Forest Act and the cognizance taken against them under the said Act are absolutely illegal and the same cannot be sustained in the eyes of law.
10. So far the prosecution of the petitioners under the Forest (Conservation) Act is concerned, Section 2 of the Forest (Conservation) Act is not a penal provision, which merely makes provision for restriction on the dereservation of forest or use of the forest land for non-forest purpose. The penal provisions are Sections 3-A and 3-B of the said Act. Sections 3-B of this Act lays down the provision of vicarious liability of the persons directly in-charge and responsible to the authority committing offence. Sections 3-A and 3-B of the Forest (Conservation) Act, read as follows:-
"3-A. Penalty for contravention of the provisions of the Act.- Whoever contravenes or abets the contravention of any of the provisions of section 2, shall be punishable with simple imprisonment for a period which may extend to fifteen days.
3-B. Offences by authorities and Government departments.- (1) Where any offences under this Act has been committed-
(a) by any department of Government, the head of the department; or
(b) by any authority, every person, who at the time the offence was committed, was directly in charge, of and was responsible to, the authority for the conduct of the business of the authority as well as the authority; 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 the head of the department or any person referred to in clause (b), liable to any punishment 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 punishable under the Act has been committed by a department of Government or any authority referred to in clause (b) of sub-section (1) 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 officer, other than the head of the department, or in the case of any authority, any person other than the persons referred to in clause (b) of sub-section (1), such officer or persons shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly." (Emphasis supplied).
11. Thus, so far as cognizance taken under the provisions of Section 2 of the Forest (Conservation) Act is concerned, which should actually be Section 3-A read with Section 3-B of the said Act, there is provision under Section 3-B of this Act for vicarious liability stating that in case of offence committed by any authority, every person who at the time the offence was directly in charge, of and was responsible to, the authority for the conduct of business of the authority as well as the authority, shall be deemed to be guilty of the offences. Similar provision is there in section 141 of the n.i. act, which reads as follows:-
"141. Offences by companies . - (1) if the person committing an offence under section 138 is a company, every person who, at the time the offence was committed, was incharge 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 person liable to punishment if he proves that the offence was committed without his knowledge, or that he had exercised all due diligence to prevent the commission of such offence:
** ** ** (2) Notwithstanding anything contained in sub-section (1), where any 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.
12. The Supreme Court of India has considered the matter in Central Bank of India Vs. Asian Global Limited & Others, reported in (2010) 11 SCC 203, while deciding the vicarious liability of the directors of the company under the N.I. Act. Taking into consideration its earlier decisions in S.M.S. Pharmaceuticals Ltd. Vs. Neeta Bhalla, reported in (2005) 8 SCC 89, and in N.K.Wahi Vs. Shekhar Singh, reported in (2007) 9 SCC 481, the law has been laid down as follows:-
"17. The law as laid down in S.M.S. Pharmaceuticals Ltd. case has been consistently followed and as late as in 2007, this Court in N.K. Wahi case, while considering the question of vicarious liability of a Director of a company, reiterated the sentiments expressed in S.M.S. Pharmaceuticals Ltd. case that merely being a Director would not make a person liable for an offence that may have been committed by the company. For launching a prosecution against the Directors of a company under Section 138 read with Section 141 of the 1881 Act, there had to be a specific allegation in the complaint in regard to the part played by them in the transaction in question. It was also laid down that the allegations had to be clear and unambiguous showing that the Directors were in charge of and responsible for the business of the company. This was done to discourage frivolous litigation and to prevent abuse of the process of court and from embarking on a fishing expedition to try and unearth material against the Director concerned." (Emphasis supplied).
13. In the present case also, I find that there is similar provision of vicarious liability under Section 3-B of the Forest (Conservation) Act. However, the fact remains that in all cases, the petitioners have been made accused being the officials of the TISCO. The allegation has been leveled only against the TISCO for carrying out mining operations in absence of any valid permission for the same. There is no specific allegation at all in the prosecution reports against these petitioners as regards part played by them in the said mining operations, nor there is any statement that the petitioners were directly in charge of and were responsible to TISCO for the conduct of the business of TISCO, as well as TISCO. Accordingly, I find that the case of the petitioners is fully covered also by the decision of the Apex Court in the case of Central Bank of India (supra) and the prosecution of the petitioners for the offence under Section 3-A of the Forest (Conservation) Act as well, cannot be maintained in the eyes of law.
14. For the aforementioned reasons, I find and hold that initiation of the criminal proceedings against these petitioners in all the above mentioned cases are absolutely illegal and bad in the eyes of law and the same cannot be sustained. Accordingly, the proceedings against the petitioners in:-
(a) C/3 Case no. 15 of 1998, pending in the Court of Chief Judicial Magistrate, Chaibasa, including the order dated 27.4.1998 passed therein taking cognizance against these petitioners for the offence under Section 33 of the Indian Forest Act and Section 2 of the Forest (Conservation) Act;
(b) C/3 Case No. 16 of 1998, pending in the Court of Chief Judicial Magistrate, Chaibasa, including the order dated 28.4.1998 passed therein taking cognizance against these petitioners for the offence under Section 33 (c) of the Indian Forest Act and Section 2 (ii) of the Forest (Conservation) Act;
(c) C/3 Case no. 27 of 1999, pending in the Court of Chief Judicial Magistrate, Chaibasa, including the order dated 12.2.1999 passed therein taking cognizance against these petitioners for the offence under Section 33 (c) of the Indian Forest Act and Section 2 (ii), 3-A and 3-B of the Forest (Conservation) Act; and
(d) C/3 Case no. 83 of 1996, then pending in the Court of Shri Ashok Kumar, Judicial Magistrate, Chaibasa, including the order dated 30.7.1996 passed therein taking cognizance against these petitioners for the offence under Section 33 of the Indian Forest Act;
Are, hereby, quashed. All these criminal miscellaneous applications are, accordingly, allowed.
( H. C. Mishra, J.) Jharkhand High Court, Ranchi Dated the 7th of May, 2012 A.F.R./R.Kr.
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