Tainwala Engineering and Foundry Works and Others vs State of Bihar and Another

Loknath Prasad, J.—Cr. Misc. Nos. 1709/96 (R), 1710/96 (R), 1711/96 (R) and 1712/96 (R) were taken up together as common question of facts and law are involved and this common order will dispose of all these four applications which are u/s 482 of the Code of Criminal Procedure.

In all these four applications M/s. Tainwala Engineering and Foundry Works, a firm, is the Petitioner No. 1 and Nand Kishore Tainwala, a partner of the firm, is the Petitioner No. 2. Actually as against these Petitioners as many as four complaint cases bearing Complaint Case Nos. 16/92, 17/92, 18/92 and 19/92 were instituted for violation of the provisions of Section 194 of the Income Tax Act which is punishable u/s 276(b) of the Income Tax Act. In all these four cases the Special Judge, Economic Offences, Ranchi delivered the judgment on 24-1-1996 through which in all the complaint cases the Petitioners'' firm was fined Rs. 1 lakh and Petitioner No. 2, the partner was sentenced to imprisonment for three years and further he was fined a sum of Rs. 20,000/- in default to undergo R.I. for six months. Against all these conviction orders these two Petitioners preferred as many as four appeals bearing Cr. Appeal Nos. 11, 12, 13 and 14 of 1996 before Judicial Commissioner, Ranchi and the learned Judicial Commissioner vide Order dated 31-1-1996 admitted all these appeals, granted the Petitioner No. 2 bail during the pendency of the appeal but the prayer of the Petitioners so far as stay of the realisation of fine is concerned has been rejected. Being aggrieved by this portion of the order that is the refusal to stay the fine all these four Criminal Misc. applications were preferred u/s 482 of the Code of Criminal Procedure.

In the very outset the learned Counsel for the Petitioners submitted that the order of the Judicial Commissioner so far as refusal to stay the fine is concerned is non-application of the judicial mind in all fairness. These matters should have been considered in the broad guidelines in this regard and there was fair chance of the success of the Petitioners in the appeal because the offence if any, is technical in nature and only allegation that the Petitioners firm had not deducted the income tax on the interest to be payable to the other person though admittedly the income tax department was not put to any loss as the deemed tax had already been paid by those persons who are also Assessee. At the same time trial Court was vested with the power of a Magistrate u/s 11 of the Code of Criminal Procedure by the State Government, in that view of the matter, the trial Court being the Magistrate of 1st Class has no inherent jurisdiction to impose fine for more than Rs. 5,000/- and lastly the amount of fine is so heavy that it will cause considerable hardship and considering all these facts the Judicial Commissioner should have exercised his judicial discretion in favour of the Petitioners who are Appellants before him. On the other hand, learned Counsel appearing on behalf of Income Tax Department, Shri Devi Prasad submitted that now the matter is pending before the Judicial Commissioner and he has properly exercised his discretion in the appeal by refusing to grant stay and such matter can not be agitated in this Court more particularly in a quashing matter. However, on behalf of Petitioners reliance was placed on the authority of our own High Court that is C.W.J.C. No. 11333/93 (R) in which some guidelines were laid down regarding the exercise of judicial discretion so far as stay matter by the appellate authority is concerned by a Division Bench of our own High Court and Hon''ble K.S. Paripoonan, the then Chief Justice on behalf of the Bench observed that an appellate authority had a discretionary power to pass an interim order but should dispose of the matter judicially and reasonably. The guidelines as to how the discretion so vested in it should be exercised by the statutory authority have been laid down in innumerable decisions and one of the earliest decision under the Wealth Tax Act is in Aluminium Corporation of India Ltd. Vs. Mr. C. Balakrishnan and Others, at page 267 and has further quoted the observation of D.N. Sinha, J., which runs as follows:

...A judicial exercise of discretion involves a consideration of the facts and circumstances of the case in all its aspects. The difficulties involved in the issues raised in the case and the prospects of the appeal being successful is one such aspect. The position and economic circumstances of the Assessee is Anr. , if the officer feels that the stay would put the realisation of the amount in jeopardy that would be a cogent factor to be taken into consideration. The amount involved is also a relevant factor. If it is heavy amount, it should be presumed that immediate "payment" pending an appeal, in which there may be a reasonable chance of success, would constitute a hardship.... If any point is involved which requires an authoritative decision, that is to say a precedent that is a point in favour of granting a stay. Quick realisation of tax may be an administrative expediency, but by itself it constitutes no ground for refusing a stay. While determining such an application, the authority exercising discretion should not act in the role of a mere tax-gatherer.

It was also held in that very case that as the appellate authority has not applied its mind at all and simply refused to stay the matter so it was held that judicial discretion vested in the appellate authority has not been properly exercised and so the order of the appellate authority so far as refusal to stay the matter was set aside and again the matter was remitted back to the same authority for reconsideration and decision according to principle laid down in that case.

In view of principal laid down by the Division Bench of our own High Court in the instant case also it appears that the Petitioners raised substantial question of law in the appeal and claimed that there is fair chance of success and furthermore in all the four cases a tine of Rs. 1,20,000 was imposed, thus, there are no two opinions that heavy amount of fine was imposed and due to refusal of stay hardship may definitely be caused.

Considering all these facts and now it is a settled law that in an appeal the ad-interim orders are passed purely a judicial discretion which must be exercised according to well known laid down principle and in the instant case it appears that the learned Judicial Commissioner has not applied his judicial mind because in all the four appeals the prayer for stay was rejected without assigning any reason and non-consideration of the/plea advanced on behalf of the Petitioners.

Under the circumstances the concluding portion of the order passed in Cr. Appeal Nos. 11, 12, 13 and 14 of 1996 (R) so far as the prayer for stay of realisation of fine was rejected is hereby set aside and the case is again remitted back to the Judicial Commissioner, Ranchi for fresh consideration of the prayer for stay of realisation of fine and it is for the Judicial Commissioner to decide the matter in his own judicial discretion.

With these observations all these four cases are hereby disposed of.