P.M.D. Thackersey vs Assistant Collector of C. Ex.

By this petition the original accused No. 5 Shri P. M. D. Thakersey challenges the issue of process dated 11th March, 1986 on a complaint filed before the Chief Metropolitan Magistrate, Bombay on 28th February, 1986 by the Assistant Collector, Central Excise, Division G.I., Bombay-1. The learned Magistrate, called upon the present petitioner who was one of the 11 accused persons named in that complaint, to appear in person or by a pleader as the case may be before him to answer the change under Central Excise Act. The complainant had requested the learned Magistrate to deal with the petitioner and others under Sections 9(1)(b), 9(1)(bb), 9(1)(bbb), 9(1)(c), 9(1)(d) read with Section 9(1)(i) of the Central Excises and Salt Act, 1944, hereinafter called the said Act, which are made punishable u/s 9(1)(i) of the said Act.

The facts of the case briefly narrated would be that on 21st April, 1979 a hand cart belonging to the Company of accused No. 1 and carrying some yarn was intercepted as it was carrying the same without payment of necessary excise duty. Enquiries were made by the authorities concerned and that led to the adjudication proceedings before the Collector of Central Excise, Bombay, who was pleased to pass an order on 22nd May, 1985, holding the Company liable to pay excise duty and penalty and he also imposed penalty of Rs. 1000 on accused Nos. 1, 2 and 11 (but not accused No. 5) u/s 198(2) of the said Act.

It was in the year 1986 that the present complaint came to be filed. It was urged on behalf of the petitioner that there was no material mentioned in the complaint so far as the accused No. 5 is concerned, which would have justified the learned Magistrate in issuing the process against the petitioner. He made a referenced to two paras i.e. paras Nos. 18 and 22, which according to him also do not contain any material or allegations so far as the accused No. 5 is concerned. They, he submits, contain bald assertions that accused persons have committed offence punishable u/s 9(1)(b) of the said Act and in Para 22 it has been mentioned that accused Nos. 2 to 11 abetted accused No. 1 in the commission of the aforesaid offence and thereby committed offence punishable u/s 9(1)(c) of the said Act. It was his submission that these assertions do not justify issue of process at any rate against the present petitioner, who was accused No. 5 in the court below.

It was his submission that the alleged offence took place in the year 1979 and it was only by virtue of the amendment introduced in the year 1985 that a director of a company was made liable under the provisions of Section 9AA of the said Act. His submission therefore was that this section which renders a person who was not liable criminal in the year 1979, liable by virtue of the provision of Section 9AA introduced in the year 1985 and such retrospective interpretation of Section 9AA was impermissible.

It is lastly submitted by him that the petitioner though director in the year 1979 ceased to be the director of the company with effect from 11th December, 1981 and therefore on the date of the filing of the complaint he had no concern whatsoever with the company and therefore should have been exonerated the petitioner of the offence. In substance his submission is that it would be abuse of process of the court to allow this prosecution to continue so far as the petitioner accused No. 5 is concerned.

I have heard the learned Additional Public Prosecutor on behalf of the State. There is no appearance though served on behalf of the Central Excise Department.

In my view the submissions made on the behalf of the petitioner have got to be accepted. It is to be noted that the provisions of Section 9 of the said Act deals with any person committing any offence punishable under the said Act. It is not necessary to reproduce the said section. It is followed by Section 9A which makes the offence mentioned in Section 9 non-cognizable. The material section is Section 9AA to which a reference has been made by the learned counsel for the petitioner. It reads thus :

"9AA. (1) Where an offence under this Act has been committed by a company, every person who at the time to offence was committed was in charge of, and was responsible to, the company, for the conduct of the business of the company, as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly :

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 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."

This has been introduced on 27th December, 1985. It deals with the offence committed by a company and sub-section (1) states that where an offence under this Act has been committed by a company, every person who at the time the offence was committed, was in charge 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. So far as sub-section (1) is concerned therefore, a person who was incharge of and responsible to the company is rendered liable. On reading of the complaint it is found that accused Nos. 2, 8 and 11 are stated to be responsible to and in charge of the affairs of the Company, so far as the excise dealing is concerned. It does not mention that accused No. 5 was one of those persons and therefore, sub-section (1) of Section 9AA could not be attracted so far as he is concerned.

So far as the sub-section (2) is concerned it deals with the offence committed by the company and the liability of its directions. It speaks 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 convince 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. Therefore it is clear that there must be an allegation and proof in support of that allegation to show that the offence was committed with the consent or connivance of or is attributable to any neglect on the part of the present director-petitioner. In must say that there is nothing in the complaint and therefore there is no allegation made to that effect. That this section would be attracted.

It has to be noted in this connection that the petitioner had ceased to be a director of the company with effect from 11th December, 1981. There is no counter filed either by the Excise Department or by the State in that behalf and therefore, that uncontroverted statement on affidavit will have to be accepted. If that is so then on the date on which this Section 9AA was brought on the statute book rendering the director liable in certain circumstances, was not there when the offence was committed or when the Section 9AA was brought on the statute book. It would be therefore difficult to hold the petitioner guilty u/s 9 of the said Act by taking the aid of Section 9AA sub-section (2).

It is surely not possible to construe Section 9AA retrospectively because that would be against the normal value of interpretations, which would render of person who was not criminally liable on the date of the offence, liable.

On behalf of the State it was urged that the powers u/s 482 of the Code of Criminal Procedure and Article 227 of the Constitution are to be sparingly exercised. Authorities in support have been also brought to my notice. The learned counsel for the petitioner relied upon decision of this court delivered by Puranik, J. in Criminal Writ Petition No. 335 of 1986-S. S. Marathe v. G. G. Kamble & Ors. The point urged on behalf of the State has been dealt with following the same and other authority cited in support I hold that in this particular case it would be surely abuse of process of the court to allow the prosecution to continue as against petitioner-accused No. 5 for the offence alleged to have been committed by the company in the year 1979 and after the adjudication proceedings in the year 1985 exonerated him and when in particular he has ceased to be the director of the company in the year 1981 December 11. It has got to be therefore struck down and quashed.

Hence Rule made absolute.