Delhi District Court
Ors. vs . Income Tax Officer, B. Ward Varanasi ... on 1 July, 2010
1
IN THE COURT OF SH. DIG VINAY SINGH, ADDITIONAL CHIEF
METROPOLITAN MAGISTRATE (SPL. ACTS): CENTRAL: TIS HAZARI
COURTS, DELHI
CASE NOS.25/4 TO 27/4
UNIQUE ID NOS. 02401R0000321983; 02401R0000911983
AND 02401R0000901983
In re:
S.K. JAIN, .....COMPLAINANT
INCOME TAX OFFICER,
DISTT. V(6), NEW DELHI.
VS.
1. YASH TRADING CO. ........ACCUSED
KASABPURA, SADAR BAZAAR,
DELHI.
2. MOHD. SAEED
3. MOHD. ASHQIN
4. MOHD. SWALEEN
ALL A2 TO A4 R/O. M/S. YASH TRADING CO.
KASABPURA, SADAR BAZAAR, DELHI.
5. ABDUL RASHID, ACCOUNTANT
M/S. YASH TRADING CO.,
KASABPURA, SADAR BAZAAR, DELHI.
U/S. 277 & 278 OF INCOME TAX ACT, 1961 & U/S.193 & 196 OF IPC
DATE OF INSTITUTION OF CASE: 28.1.1983
CASE NOS.25 to 27/4
Page
1 of
23 k
2
DATE OF RESERVATION OF JUDGMENT: 28.5.2010
DATE OF PRONOUNCEMENT OF JUDGMENT: 01.7.2010
JUDGEMENT
(a) The serial no. of the case: 02401R0000321983, 02401R0000911983 & 02401R0000901983
(b) The date of commission of offence: _______
(c) The name of complainant: S.K. Jain, Income Tax Officer, District V(6), New Delhi.
(d) The name, parentage, residence: 1. Yash Trading Company, Of accused/LR. Kasabpura, Sadar Bazaar, Delhi.
2. Mohd. Saeed (abated)
3. Mohd. Ashqin (abated)
4. Mohd. Swaleen (abated) all A2 TO A4 R/o. M/S. Yash Trading Co., Kasabpura, Sadar Bazaar, Delhi.
5.Abdul Rashid, Accountant, R/o.
M/S. Yash Trading Co., Kasabpura, Sadar Bazaar, Delhi.
(e) The offence complained of/ proved: U/s.277 & 278B of Income Tax Act, 1961 & u/s. 193 & 196 of IPC.
(f) The plea of accused: Pleaded not guilty. (g) The final order: Acquitted. (h) The date of such order: 01.7.2010.
Brief statement of the reasons for the decision: CASE NOS.25 to 27/4 Page 2 of 23 k 3
1. These are three complaints filed by the Income Tax Officer against the above named five accused. Since all three complaint cases were tried together, evidence and other proceedings were recorded together and, common question of law and facts are involved in the three complaints, therefore, all the three complaints are being disposed of vide this common judgment. A copy of this judgment be placed in all the three complaint files.
2. Out of the five accused, the accused no.1 was a partnership firm at the relevant time and, accused nos.2 to 4 were claimed to be its partners and, the accused no.5 was claimed to be its Accountant. Besides the Accused no. 4, other three individuals have expired and, therefore, the present judgment is directed against him only, so far as individuals are concerned. It would be relevant to mention that, during the trial, nobody represented the partnership firm and although, there is no express order on record, but it appears that proceedings against the partnership firm was conducted in absentia in terms of section 305 Cr.P.C.
3. The complaints have been preferred for three Assessment years i.e. 1967 1968; 19701971 and; 19711972. It is claimed in the complaints that for these three assessment years, the Returns of Income was filed by the firm and during assessment proceedings, it was learnt by the Income Tax Officer that some amount claimed to have been paid by the firm to certain sellers, as credit purchases, were not true. All the returns were signed and CASE NOS.25 to 27/4 Page 3 of 23 k 4 verified by the deceased partner Mohd. Yasin only. Alongwith the returns, trading account, profit and loss account and balance sheet etc. were also filed. Returns were also accompanied by Form No.12, which is claimed to be signed by all the partners. The firm use to do business of sheep casing to Japan. When asked to produce, the accused failed to produce the sellers to whom various amounts were shown to have been paid. The Income Tax Officer issued summons to few such sellers, out of which one was found to be an employee of the firm and others were untraceable. However, out of those sellers, one Mohd. Yasin appeared before the Income Tax Officer during assessment proceedings and he was found to be too poor to do business with the firm. During assessment proceedings, certain vouchers which were filed were noticed to be having only one handwriting, with various cuttings and overwriting on them. 77 such vouchers were impounded and were sent to India Security Press, Nasik. A report was received from India Security Press, dated 24.1.1974, that the revenue stamps affixed on these 77 vouchers were issued after 22.5.1973, i.e. much after the relevant closing date of the accounting period in question. When the accused firm was confronted with this report, a stand was taken that the Accountant of the firm i.e. A5 prepared these vouchers as the original vouchers were lost and it was prepared without permission of the partners. During the assessment proceedings, the deceased partner Mohd. Yasin or the Accountant A5 only used to take part in the assessment proceedings. CASE NOS.25 to 27/4
Page 4 of 23 k 5
4. Accordingly, it is the case of complainant that a false verification was made in the income tax return, for these three assessment years, by the partnership firm (A1) and its three partners (A2 to A4) and, therefore, they are liable for offence u/s.277 of the Income Tax Act, 1961. Against A5, the Accountant of the firm, it is the case of complainant that he abetted and induced A1 to A4 to make and deliver such accounts/statements and, therefore, he was liable for the offence u/s.278 of the Income Tax Act, 1961. Complainant also claimed that the accused were liable for the offence u/s.193 & 196 of IPC also for fabricating false evidence and using them in the assessment proceedings.
5. On the complaint being filed, the accused were summoned and thereafter pre charge evidence was recorded. Thereafter, charge was framed against A1, A2 and A4 only, since by that time other accused had expired. The accused were charged for the offence u/s.277 of the Income Tax Act, 1961 and Section 193 & 196 of IPC, to which they claimed trial.
6. In support of its case, prosecution examined four witnesses.
7. PW1 S.K. Jain deposed that he filed the present complaint Exhibit P1 under his signatures, alongwith the necessary authorisation by Sh. S. Venugopalan, Exhibit P2. This witness also proved Form Nos.11, 11 A and 12, as Exhibit P3, P4 and P5, which were filed alongwith the returns. Admittedly, this witness did not make any assessment proceedings. CASE NOS.25 to 27/4
Page 5 of 23 k 6
8. PW2 Hari Meghani, deposed that on 19.8.1967, return for the assessment year 19671968 was filed on behalf of the firm signed and verified by one of its partner Mohd. Yasin, which was proved as Exhibit PW2/1. This return was accompanied by documents Exhibit P3 to P5. The witness deposed that original assessment order was passed by one S.K. Soni and the said assessment was set aside by the appellate authority of the Income Tax Department and, thereafter, he passed fresh assessment dated 22.3.1974, Exhibit PW2/2. He also proved the original assessment order passed by S.K. Soni as Exhibit PW2/3. The witness further deposed that assessment for all the three assessment years were taken up simultaneously and during the assessment proceedings for the assessment year 19711972, he requested the firm to produce eight suppliers/sellers to whom payment was claimed to have been made. The firm desired him to issue summons to four suppliers but summons sent to them were received back unserved vide envelopes Exhibit PW2/4 to PW2/7. Out of those sellers, one Mohd. Yasin appeared and gave his statement on 19.11.1973, Exhibit PW2/8. The witness came to a conclusion that this person was not in a position to sell the goods to the firm as claimed by the firm. During assessment proceedings, he also seized 77 vouchers, Exhibit PW2/9 to PW2/85, which were sent to Government of India Press, Nasik. This witness exhibited the report as Exhibit PW2/86. He deposed that when this report was confronted with the accused, the accused claimed that duplicate CASE NOS.25 to 27/4 Page 6 of 23 k 7 vouchers were prepared by their Accountant, without their knowledge. He proved the statement of the Accountant Abdul Rashid, recorded on 12.2.1974 and 19.2.1974 as Exhibit PW2/87 and PW2/88. The witness deposed that the Accountant could not give any satisfactory answer as to how signatures of sellers were obtained on the duplicate vouchers. The witness also proved his assessment order Exhibit PW2/89.
9. In the cross examination, this witness specifically stated that the accused present in the Court, namely Mohd. Swaleen never appeared before him during the assessment proceedings and he saw this accused for the first time in the Court only. The witness also specifically admitted that it was deceased Mohd. Yasin, who used to appear before him during the assessment proceedings alongwith the deceased Accountant accused, Abdul Rashid. The witness also admitted that he never saw the present accused signing or writing and, that deceased accused Mohd. Yasin used to conduct the day to day affairs of the firm. He also admitted that the alleged vouchers were tendered before him on 20.12.1973 by the deceased Accountant Abdul Rashid. When the witness was asked as to why the name of present accused Mohd. Swaleen was mentioned in the complaint, he claimed ignorance. The witness also admitted that the signatures on Exhibit P3 to P5 were not appended in his presence.
10. The complainant also examined Sh. S.K. Jain as PW3 again on 03.1.2001 and he also admitted that the present accused never appeared before him CASE NOS.25 to 27/4 Page 7 of 23 k 8 during assessment proceedings and he saw the accused for the first time in the Court.
11. The complainant examined PW4 Anwar Sadiq, who conducted inspection of the income tax file for the relevant assessment year, vide his inspection letter and power of attorney, Exhibit PW4/A and PW4/B.
12. Even this witness admitted that he was engaged by the deceased partner Mohd. Yasin only and no other partner from M/s. Yash Trading interacted with him and gave any instructions to him. He said that he cannot identify any other partner of M/s. Yash Trading Co. and that after inspection, he informed Mohd. Yasin only. He also claimed that Form No.12 was not signed in his presence, therefore, he is unable to identify the signatures. The witness categorically admitted that he was told by Mohd. Yasin that he was the partner responsible for the income tax matters of the firm. Accordingly, this witness supported the case of the accused more than the case of the complainant, although, he was a witness of the complainant. And despite his deposition in favour of the accused, the witness was not cross examined or reexamined by the complainant on these aspects.
13. The complainant lastly examined PW4 Deshraj Gulati (by mistake again numbered as PW4 instead of PW5). This witness Exhibited the report from Nasik Press as Exhibit PW4/A, PW4/B and PW4/C1 and he also he Exhibited the vouchers in question as Exhibit PW4/D1 to PW4/D77. CASE NOS.25 to 27/4
Page 8 of 23 k 9
14. The proving of report of Nasik by this witness was objected to by the accused as to the mode of proof. Admittedly, this witness did not sign the report of Nasik Press. Admittedly, this witness was not present, when this report was signed. It is not even the case of complainant that this witness was acquainted with the signatures of the person preparing the report. Therefore, the objections raised by the accused as to the mode of proof of this report is legally sustainable and the report of the Nasik Press cannot be said to be proved in accordance with law. For the same reasons the report of the Nasik Press cannot be said to be proved in accordance with law in the testimony of PW2. The report of the Nasik Press has to be accordingly excluded.
15. All the incriminating evidence was put to the accused in his examination, in which he claimed that he was never a partner of M/s. Yash Trading Co. and, at the relevant time, he was a school going kid. He denied his signatures on Form Nos.11, 11A and 12 i.e. Exhibit P3,P4 and P5 respectively. He claimed ignorance about filing of returns by the deceased partner Mohd. Yasin and also claimed ignorance about the assessment proceedings. He claimed that it was Mohd. Yasin only, who used to look after the business of the firm and he had no concern with the firm. He claimed that he never appeared before the Income Tax Officer, nor the income tax returns were signed by him and that he did not give any false statement or evidence in any manner.
CASE NOS.25 to 27/4
Page 9 of 23 k 10
16. The accused examined four witnesses in his defence including himself, namely DW1 Jamaluddin, DW2 Mohd. Atiq, DW3 Abdul Hamid and DW4 as himself.
17. DW1, DW2 and DW3 deposed that they had business dealings with the partnership firm Yash Trading and, every time only Mohd. Yasin used to deal in the business and no one else dealt with them in the business.
18. DW1 also claimed that he never saw anybody else conducting business for Yash Trading and he cannot recognize the accused Mohd. Swaleen as he never saw him. He also claimed that after death of Mohd. Yasin, his business relationship with M/s. Yash Trading came to an end.
19. DW2 also deposed that he never saw the present accused in the godown of the firm and it was Yasin only, who was responsible for all the affairs and he used to receive payment from Yasin only.
20. To the same effect is the deposition of DW3 Abdul Hamid.
21. The accused while appearing as DW4, also categorically deposed that he was not a partner of Yash Trading and although Exhibit P3, P4 and P5 bears some signatures resembling his signatures, but he does not recollect signing these documents. He claimed that accused Mohd. Yasin, his brother, used to look after the affairs of the firm and was responsible for income tax formalities. He claimed that he had no role to play in the affairs of the firm and he neither participated in the affairs, nor he CASE NOS.25 to 27/4 Page 10 of 23 k 11 appeared before the Income Tax Authorities.
22. Nothing material could be brought out on record from the cross examination of these defence witnesses in order to show that the present accused was the partner of the firm or that he was in any way responsible for the affairs of the business of the firm.
23. I have heard Ld. Counsels for both the sides and have perused the record.
24. As mentioned above, the present accused has been charged for offence u/s.277 of the Income Tax Act, 1961 and Section 193 & 196 of IPC. The relevant assessment years in this case are 19671968, 19701971 and 1971 1972, i.e. prior to the amendment carried out in Section 277 of Income Tax Act, and prior to as it stands now. Prior to the amendment in this section, w.e.f. 01.10.1975, Section 277, read as under:
"False statement in declaration.
If a person makes a statement in any verification under this Act or under any rule made thereunder, or delivers an account or statement which is false, and which he either knows or believes to be false, or does not believe to be true, he shall be punishable with simple imprisonment which may extend to six months, or with fine which may extend to one thousand rupees, or with both".
25. A bare perusal of the Section, as it stood at the relevant time, would reveal that it is only that person, who makes a false statement in any verification or, who delivers an account or statement, which is false, and which he either knows or believes to be false, or does not believe to be true, such CASE NOS.25 to 27/4 Page 11 of 23 k 12 person can be punished. Admittedly, the present accused neither signed any of the three returns of income, nor verified them. Admittedly, those returns were signed and verified by the deceased partner Mohd. Yasin only. The present accused never appeared before the Income Tax Authorities during the assessment proceedings. It is an admitted case of the complainant that this accused was neither called, nor he himself appeared before the Income Tax Authorities during assessment proceedings. Admittedly, the present accused neither signed any of the vouchers or the accounts of income, nor verified them. In such circumstances, he cannot be held responsible for making any statement in any verification or for delivering any account or statement, which was false or which he knew or believed to false. There is not an iota of evidence on record to show that he in any manner was in league with deceased Mohd. Yasin in filing of such statements/returns etc. There is no evidence on record to show that he ever consented to filing of such documents, or, he even knew about filing of such returns/verifications.
26. It would be relevant to mention that at the time when the offence was committed in the present three complaints, there was no provision in the Income Tax Act for vicarious liability of a partner in such offences. Section 278B, as it stands now, covering offences by companies and its directors, which includes partnership firm and its partners, for their vicarious liabilities in cases where such partners are proved to be incharge CASE NOS.25 to 27/4 Page 12 of 23 k 13 of or responsible for the business of the firm, was not there in the statue book when the present offences were allegedly committed. In the present three complaints, the offences stood committed prior to the coming into force of Section 278B, which came to be incorporated w.e.f. 01.10.1975. Accordingly, the complainant cannot take shelter of this provision with retrospective effect. This provision has to be read prospectively and not retrospectively. It is provided in Article20 of The Constitution of India that no one can be punished for any offence under a law which was not in existence when the alleged offence was committed. In absence of any provision akin to Section 278B of Income Tax Act, 1961, there is no ground to inflict vicarious liability on the present accused, in the facts and circumstances of this case.
27. In this regard, reliance is also placed on the case of Rajender Prasad & Ors. Vs. Income Tax Officer, B. Ward Varanasi and Ors. 1983, Income Tax Reports, Vol. 144, Page 506. In that case also, it was held that it is the person making any statement or any verification or delivering an account or statement which is false, who has been made liable to punishment and this section does not create any vicarious liability on others. It was held in this case also that the provision of Section 278B, which was enacted in 1975, does not have any retrospective effect and since in that case the offence stood committed in 1973 i.e. prior to the coming into force of Section 278B, there could not be any vicarious CASE NOS.25 to 27/4 Page 13 of 23 k 14 liability. It was held that, at the relevant time, the only provision under which some other person besides the person making the statement, delivering or filing the account, could be held guilty, was u/s.278 of Income Tax Act, which provides punishment for abetting or inducing, in any manner the other person or persons, to make or deliver such account or statement etc.
28. In the present case before us, the present accused was neither charged for the said offence of Section 278, nor is there any evidence that he in any manner abetted or induced the deceased partner Mohd. Yasin to make such false statement on verification or in filing of false return or accounts etc.
29. In the case of Smt. Prem Lata Vs. Income Tax Officer, Central, Circle III, Amritsar, 1985 Income Tax Reports, Vol.151, page 723, it was held that when the return pertained to the assessment year prior to the insertion of Section 278B in the Income Tax Act, it cannot have ex post facto application. Same is the view of Division Bench of Hon'ble Punjab and Haryana High Court in the case of CIT Vs. Jagdish Lal Behl (1983)139 ITR, 622.
30. Therefore, u/s.277 of the Income Tax Act, 1961, it is only the person who does an act referred to in that section, who has been made liable for punishment and the present accused cannot be vicariously held liable for the acts of deceased partner Mohd. Yasin.
CASE NOS.25 to 27/4
Page 14 of 23 k 15
31. For the same reasoning, even the charge for the offence u/s.193 & 196 of IPC cannot stand against the present accused, as there is no evidence on record to show that the present accused in manner fabricated false evidence or gave false evidence or used such evidence knowing to be false. Complainant at best can claim that it was done by deceased Mohd. Yasin and, therefore, it was only he, who could be liable for these offences and not the present accused. In the Indian Penal Code also, there is no provision akin to Section 278B of the Income Tax Act, inflicting vicarious liability on others, be it the partnership firm or the other partners. In absence of any such provisions in the IPC also, the present accused cannot be vicariously held liable for the acts of Mohd. Yasin.
32. The complaint of the complainant is liable to fail on this sole ground, but let it be mentioned that, even otherwise, had there been any provision akin to Section 278B for the relevant assessment years, still the complainant has miserably failed to show that the present accused was in any manner responsible for the business of the partnership firm. The accused has placed reliance upon the case of Sushila Industries and others Vs. Deputy Commissioner of Income Tax, (1992)198 ITR page 332; SMS Pharmaceuticals Vs. Neeta Bhalla, AIR 2005 SC 3512. In these cases, it was held that in order to hold a partner liable under vicarious liability, it is necessary to show that such partner was incharge of the affairs of the firm or that he was conducting any business in any manner and in absence of CASE NOS.25 to 27/4 Page 15 of 23 k 16 the same, such partner cannot be held liable.
33. In Sushila Industries case, the income tax return was signed and verified by the managing partner, who alongwith the accountant was looking after the work of the firm. It was held that other partners were not liable merely because they are partners in the firm, in absence of any other material indicating that they were incharge of and responsible to the firm for the conduct of business of the firm.
34. Similarly, in the case of Jasbir Singh Vs. ITO (1987)168 ITR 770 (P&H), it was held that a partner who did not sign or verify the return and, there was no material to show that the said partner was incharge of the affairs of the firm or was conducting business of the firm, he was not liable to prosecuted u/s.277 of the Income Tax Act.
35. To the same effect in the judgment of Hon'ble Supreme Court in the case of Girdhari Lal Gupta, AIR 1971 SC 2162 , wherein it was held that 'incharge' means that the person should be in overall control of the day to day business of the company or the firm.
36. In the case of Shyam Sunder Vs. State of Haryana, AIR 1989 SC page 1982, it was held that penal provision must be strictly construed and there is no vicarious liability in criminal law unless the statute takes that also within its fold. It was also held in that case that as follows : CASE NOS.25 to 27/4
Page 16 of 23 k 17 "It is, therefore, necessary to add an emphatic note of caution in this regard. More often, it is common that some of the partners of a firm may not even be knowing of what is going on daytoday in the firm. There may be partners, better known as sleeping partners, who are not required to take part in the business of the firm. There may be ladies and minors who were admitted only to the benefits of partnership. They may not know anything about the business of the firm. It would be a travesty of justice to prosecute all the partners and ask them to prove under the proviso to subsection (1) that the offence was committed without their knowledge. It is significant to note that the obligation of the accused to prove under the proviso that the offence took place without his knowledge or that he exercised all due diligence to prevent such offence arises only when the prosecution establishes that the requisite condition mentioned in subsection (1) is established. The requisite condition is that the partner was responsible for carrying on the business and was, during the relevant time, in charge of the business. In the absence of any such proof, no partner could be convicted. We, therefore, reject the contention urged by counsel for the State".
37. Similarly, in the case of SMS Pharmaceuticals, it was held by Hon'ble Supreme Court that the liability of such a director/partner arises on account of conduct, act or omission on his part and not merely on account of holding an office or a position in a company/firm.
38. The complainant has not only failed to show that the present accused was so in charge of or responsible for the affairs of the firm but has also failed to even show that the present accused was a partner in the firm. The CASE NOS.25 to 27/4 Page 17 of 23 k 18 partnership deed has not been proved on record. The accused has categorically denied his signatures on Form Nos.11,11A and 12, Exhibit P3,P4 and P5. There is no admissible piece of evidence on record to show that the present accused signed any of these documents. Not only DW1, DW2 and DW3 but, also one of the witnesses of complainant himself has deposed that it was accused Mohd. Yasin only who was managing the business of the firm. Not an iota of evidence has come on record to show that the present accused was in any manner responsible for the day to day affairs of the business of the firm. Therefore, even on that count, the complaint fails.
39. Counsel for the complainant relied upon the case of M.R. Pratap Vs. V.M. Muttukrishnan, ITO (1992)3 SCC 384. The said case is distinguishable since in that case the person held liable was a Managing Director, who verified and signed the tax returns for the company which was found to be false and, it was held that Managing Partner being the principal officer of the company was liable, whereas in the present case, the present accused was not a Managing Partner of the firm. Similarly, reliance placed by the complainant in the case of M/s. Punjab Cloth Stores Vs. Commissioner of Income Tax, ILR 1978 II Delhi, page 157, is distinguishable as in that case, the controversy was whether the firm or association of persons and its partners could be separately assessed to the income tax or not. In the present case, the controversy is absolutely distinct. CASE NOS.25 to 27/4
Page 18 of 23 k 19
40. Accordingly, the complaint against the present accused Mohd. Swaleen is dismissed in all the three cases and he is acquitted of the charges in all the three cases.
41. For the same reasoning, the complaint does not stand against the partnership firm also, since at the relevant time, there was no provision in the Income Tax Act for punishment of a partnership firm such as the one incorporated in Section 278B of the Income Tax Act.
42. There is no such provision in IPC also for offences u/s.193 & 196 of IPC to hold a firm, guilty for those offences. So far as the offences under section 193 and 196 of the Indian Penal Code are concerned, there is no corresponding section in the Indian Penal Code, corresponding to section 278 B of The Income Tax Act, which provides that a company (or partnership firm) can also be proceeded against and punished along with its directors/partners, under the Indian Penal Code for the offences mentioned therein.
43. Section 2 of the Indian Penal Code provides that "Every person shall be liable to punishment under this Code and not otherwise for every act or omission contrary to the provisions thereof, of which he shall be guilty within India".
44. Section 11 of the Indian Penal Code describes word "person" to include any Company or Association, or body of persons, whether incorporated or CASE NOS.25 to 27/4 Page 19 of 23 k 20 not. The registered partnership firm, obviously is covered by the definition of word 'person'.
45. A plain reading of these two sections together would show that a company or a corporate body shall be liable for indictment for all kinds of offences. But there are several offences which could be committed only by an individual human being, for instance, murder, treason, bigamy, rape, perjury etc. A company which does not act by or for itself but acts through some agent or servant would obviously not be capable of commission of the aforesaid offences and would therefore, not be liable for indictment for such offences. The definition of 'person' in Section 11 of the Indian Penal Code is more or less on par with the definition of that word given in Section 3(42) of the (Central) General Clauses Act, 1897 which is in the following words :
"3(42) : "person" shall include any company or association or body of individuals whether incorporated or not".
However, that and the other definitions given in Section 3 of the (Central) General Clauses Act, are governed by the qualifying clause in the main section No. 3, "unless there is anything repugnant in the subject or context", but such a qualifying clause is not appended to the definitions given in the Indian Penal Code. Even so, it would be seen from the analogy of the reasoning in Kartick Chandra v. Harsha Mukhi Dasi AIR 1943 Cal 345 (FB) and Darbari Lal v. Dharam Wati, (S) AIR 1957 All 541 CASE NOS.25 to 27/4 Page 20 of 23 k 21 (FB) that the clause "unless there is anything repugnant in the subject or context" must always be understood to exist in the context of the definitions given in the Indian Penal Code also. There is nothing to the contrary which would exclude the application of the qualifying clause"
"unless there is anything repugnant in the subject or context." It would, therefore, have to be held that despite the generality of the definition of a "person" given in S. 11 of the Indian Penal Code, a corporate body of a company shall not be indictable for offences which can be committed only by a human individual. A company cannot be prosecuted for any offence involving as an essential ingredient "means rea". A company not being a natural person, cannot have a mind honest or otherwise, and that, consequently, though in certain circumstances it is civilly liable for the fraud of its officers, agents or servants, it is immune from criminal process. Included in these exceptions would be the cases in which, from its very nature, the offence cannot be committed by a corporation, as for example, perjury, an offence which cannot be vicariously committed, or bigamy, an offence which a limited company, not being a natural person cannot commit vicariously or otherwise. It can't be said that in every case where an agent of a limited company acting in its business commits a crime, the company is automatically to be held criminally responsible. A company aggregate cannot be guilty of any offences (such as bigamy or perjury) which by their very nature can only be committed by natural persons. A CASE NOS.25 to 27/4 Page 21 of 23 k 22 company can only commit crime by or through its agents, some of whom must themselves be responsible for the crime. It is a question of fact in each particular case whether the criminal act of its agent is the act of the company, and whether the agent's state of mind, intention, knowledge or belief can be imputed to the company. It depends on the nature of the charge, the position of the officer or agent relative to the company and the other relevant facts and circumstances of the case. Thus although section 11 of the Penal Code says that the word person includes a company or firm but there are certain offences which requires a kind of mens rea which cannot be said to be existing in the cases of juristic persons who do not have mind of their own to nurture such a mens rea. It would in fact depend on the facts of a case and the nature of offence whether a company or a juristic person can be proceeded against or not. In the case of fabricating false evidence or giving false evidence also such a mens rea is required which cannot be there in the case a company, it being a juristic person. These offences requires mens rea which cannot be alleged against a company or a partnership firm, which do not have any distinct mind of its own to nurture mens rea and, therefore, against the partnership firm, offences under section 193 and 196 of the Indian Penal Code cannot continue. In the absence of any corresponding section providing punishment to the company or the partnership firm in the Indian Penal Code, the partnership firm cannot be punished for the offences under CASE NOS.25 to 27/4 Page 22 of 23 k 23 section 193 and 196 of the Indian penal code.
46. Accordingly, the complaint against the firm also is dismissed in all the three cases and firm is also acquitted of the charges in all the three cases.
47. Net result is that both the surviving accused, are acquitted in all the three cases.
ANNOUNCED IN OPEN COURT ON 01st July 2010 (DIGVINAY SINGH) ADDITIONAL CHIEF METROPOLITAN MAGISTRATE SPECIAL ACTS, CENTRAL, TIS HAZARI COURTS DELHI CASE NOS.25 to 27/4 Page 23 of 23 k