Bombay High Court
Cadell Weaving Mills & Co. Pvt. Ltd. vs Asstt. Collr. Of C. Ex., Bombay on 21 October, 1975
JUDGMENT Dighe, J.
1. The petitioners, M/s. Cadell Weaving Mills Company Private Limited and it's Directors Bhagwandas and Omprakash, as petitioners Nos. 2 and 3, are praying in this petition for the quashing of the criminal proceedings in case No. 139/S of 1974 pending before the learned Metropolitan Magistrate, 5th Court, Dadar.
2. M/s. Cadell Weaving Mills Company Private Limited is dealing in manufacturing textiles at Prabhadevi, Bombay. There was a survey of powerloom units manufacturing cotton fabrics under Tariff item No. 191(IA) of the first schedule to the Central Excises and Salt Act, 1944. Prabhadevi premises were visited on 14-3-1973 and it was found that the petitioners were not holding Central Excise licence required by Section 6 of the Central Excises and Salt Act, 1944, and Rule 174 of the Central Excise Rules, 1944. Consequently grey cotton fabrics in certain lots came to be attached. Since there was an information that some of the fabrics manufactured at this unit were transferred to Andheri unit of the same company, that unit was visited by the concerned officers on 28th March 1973. According to the Excise Department, the petitioners were under an obligation to determine the duty and pay it before the goods were removed. Since that was not done, in the presence of panchas processed cotton fabrics came to be attached for non-payment of such duty. It was also the case of the Department that such manufacture, contrary to the provisions of the Act, continued from November 1972 till the respective seizures. Consequently a complaint was lodged in relation to the breaches under Section 9(a) and 9(b) of the Central Excises and Salt Act, 1944. This was filed on 17-10-1974, that is to say, much after six months from 14-3-1973 or 28-3-1973, the two dates on which the two units were visited by the Excise Officers.
3. On behalf of the petitioners, Mr. Saldhana contends that this filing of the complaint is beyond the statutory period provided by Section 40(2) of the Central Excises and Salt Act, 1944, and as such the complaint is invalid.
4. In this connection it will be relevant to note that Section 40, sub-section (2) came to be amended on 19-5-1973. Before the amendment, Section 40 of the Act in the two clauses ran as follows :-
"40. (1) No suit shall lie against the Central Government or against any officer of the Government in respect of any order passed in good faith or any act in good faith done or ordered to be done under this Act.
(2) No suit, prosecution, or other legal proceeding shall be instituted for anything done or ordered to be done under this Act after the expiration of six months from the accrual of the cause of action or from the date of the Act or order complained of."
After the amendment on 19-5-1973, the two clauses read as follows :
"(1) No suit, prosecution or other legal proceeding shall lie against the Central Government or any officer of the Central Government or a State Government for anything which is done, or intended to be done in good faith, in pursuance of this Act or any rule made thereunder.
(2) No proceeding, other than a suit, shall be commenced against the Central Government or any officer of the Central Government or a State Government for anything done or purported to have been done in pursuance of this Act or any rule made thereunder, without giving the Central Government or such officer a month's previous notice in writing of the intended proceeding and of the cause thereof or after the expiration of three months from the accrual of such cause."
5. A bare glance at these two provisions would show that before the amendment as well as after the amendment sub-section (1) undoubtedly related to the actions taken against the Central Government or any of the officers of the Government. After the amendment the words relating to the State Government or officers of the State Government are added. Sub-section (2) before the amendment was in general terms leading to a controversy Whether it was restricted to actions against the officers as contemplated in sub-section (1), or whether it was of general application so as to confer rights on all persons including the persons against whom a prosecution can be launched by the Department. After the amendment sub-section (2) is clearly made to read that the provision is in respect of proceeding or other actions against the State Government or the Central Government or the officers of the Government.
6. The Supreme Court had an occasion to decide the controversy on the language of sub-section (2) as it existed before the amendment on 19-5-1973. In the case of Public Prosecutor, Madras v. R. Raju, and Another, , the Supreme Court has laid down :
"The two sub-sections of Section 40 operate in different fields. The first sub-section contemplates bar of suits against the Central Government or against the officers by protecting them in respect of orders passed in good faith or acts done in good faith. Unlike sub-section (1) sub-section (2) which does not have any words of qualifications as to persons is applicable to any individual or person."
The Court has also further held in para 17 :
"The contention that sub-section (2) is confined only against the Government officers is not warranted by the words of the statute and is repelled by reference to other comparable statutes which have indicated in clear words when the statute contemplates bar of suits, proceedings or prosecution against Government servants only. Section 40(2) of the Act cannot be said to be confined in its operation only to Government servants. The sub-section is applicable to any person against whom suits or proceedings or prosecution shall lie for anything done or ordered to be done under the Act."
The para 25 or facts and in relation to the application of law enunciated, the observations of the Supreme court are as follows :
"Hence, where the complaint against the respondents was that they wanted to evade payment of duty by using and affixing out and torn banderols, books of account were not correctly maintained, there was shortage of banderol in stock and unbanderolled matches were found, these are all infraction of the provisions in respect of things done or ordered to be done under the Act and the various rules and a prosecution started after six months is barred by limitation under Section 40(2)."
7. Depending upon these observations Mr. Saldhana says that inspite of the amendment of 19-5-1973, since the action is instituted against the petitioners on 17-10-1974, it cannot be sustained because the period of six months has expired. In other words, although there is an amendment on 19-5-1973 which removes the bar for launching a prosecution against the defaulters providing a period of six months for taking action it is said that the petitioners would get benefit of the old provisions, and hence the complaint, which is filed on 17-10-1974, ought to be declared as invalid.
8. If the words of sub-section (2), as they now exist, in section 40 after the amendment on 19-5-1973, are looked into it would be clear that sub-section (2) now unmistakably applies to action against the State Government or the Central Government or its' officers. The words cannot be read to show that any benefit or any right or any bar of limitation is provided for launching a prosecution against the offenders. In comparison with the unamended section, therefore, it is clear that the bar which existed in sub-section (2) of Section 40 prior to 19-5-1973 now stands removed. On plain reading, therefore, there would be no hindrance to the launching of the prosecution, if that is done after 19-5-1973.
9. The question for consideration, however, would be whether by reason of the offence having been detected on 14-3-1973 or 28-3-1973 and the period of six months having elapsed before 17-10-1974, any right has accured to the petitioners to resist that prosecution.
10. In this connection, Mr. Saldhana relied upon the decision . C. Prashar and Another v. Vasantsen Dwarkadas and Others. In that case Section 34 of the Income-Tax Act, 1922, was amended in 1959 so that the period of eight years provided for issuing a notice was abolished and instead the words 'anytime' were instituted showing that such a notice can be issued without any period of limitation since the time of detection of the escaped income. As per the majority, judgment of Hidayatullah, Raghubar Dayal and Sarkar, JJ. "by the Amending Act of 1959, Parliament gave power to issue a notice at any time in all those cases in which the eight year period under the principal Act as it stood prior to the 1956 Amendment, had expired. The words "at any time" mean what they say. There is no special meaning to be attributed to them. "Anytime" this meant action to be taken without any limit of time. There is no reason to say that Section 4 applied only to notices issued after the 1956 Act came into force. Section 4 of the 1956 Act was retrospective not only up to 1956 but also covers the period between 1941 to 1956. "In that case the escaped income related to the year 1942-43 assessment year and the notice was issued on 30th April, 1954. It was held to be proper by the majority judgment, although the period of eight years had elapsed and that was because the words 'any time' were interpreted as giving retrospective effect to the act of issuing that notice.
11. We do not think that these observations would help Mr. Saldhana in the present case, nor is he relying upon them. However, Mr. Saldhana seeks to draw support from the principle enunciated by Justice Das in the dissenting Judgment at para 13. The relevant passage relied upon reads as follows :
"The proposition of law is settled beyond any doubt that although limitation is a procedural law and although it is open to the legislature to extend the period of limitation, an important right accrues to a party when the remedy against him is barred by the existing law of limitation, and a vested right cannot be affected except by express terms used by the statute or the clearest implication flowing therefrom."
It is difficult to see how in the present case Mr. Saldhana can secure any advantage out of these observations. The principle in these observation is also embodied in Section 6 of the General Clauses Act. In other words, if any vested right had accrued to a person that cannot be denied to him and no action could be taken so as to prejudice that right unless the amending statute is specific in negativing that right or making the action retrospective.
12. In this light if we look to the facts of our petition, it would appear that the case would have been naturally different, if the amendment had come into force after the expiry of six months from the date of detection of the offence viz. 14-3-1973 so far as Prabhadevi unit is concerned and 28-3-1973 so far as the other unit is concerned. After the expiry of six months, it could have been validly agitated on behalf of the petitioners that they had acquired an immunity from the prosecution. Although the Act is amended, that immunity is not affected and hence they could not at all be proceeded against for the breaches noticed in March 1973. Unfortunately, when the Act was amended on 19-5-1973 providing for the removal of bar of six months, the right, if any, of the present petitioners was in the process of accruing and in fact therefore, it cannot be said to be a right at all. They were exposed to the launching of a prosecution and since under the general principles for a criminal action there is no limitation and the prosecution can be taken recourse to any time, the action taken against them on 17-10-1974 does not appear to be illegal. In other words, without the amendment the bar, which could have been pleaded successfully after 14-9-1973 or 28-9-1973, vanished and there is nothing to prevent the Government Officers to take action against the petitioners.
13. No other question arises in the present proceeding nor was any other point discussed at the Bar. In the view, which we have taken the Criminal Application No. 357 of 1975 ought to be dismissed.
14. In view of this decision Mr. Saldhana says that he does not press Criminal Application No. 1242 of 1975 for return of the attached goods. He will make an appropriate application before the Magistrate, whenever the matter goes back to the Magistrate after the judgment which we have delivered. The learned Magistrate would undoubtedly deal with that application on merits if and when the same is presented to him. Consequently, Criminal Application No. 857 of 1975 stands dismissed and no orders are passed in Criminal Application No. 1242. Rule discharged.