2015 (4) TMI 1152 - HC - Central Excise

Court quashes FIR and related proceedings due to lack of vicarious liability, immunity under Central Excise Act, and insufficient evidence.

The court quashed the FIR (RC20(A)/2008-GNR) and all related proceedings, ruling that the petitioner was not vicariously liable under the IPC, had ... Offence punishable u/s 120B, 420, 467, 468, 471 and 511 of Indian Penal Code and u/s 15 of the Prevention of Corruption Act, 1988 - principle of vicarious liability - It is alleged in the FIR that said Shri Macwana intentionally and willfully concealed the fact that the unit had not commenced the commercial production in order to cause undue pecuniary advantage to the unit for availing the refund of the duty. Held that: - From the record, it appears that the petitioner is the Managing Director of the company. The company passed a resolution in its Board Meeting and decided to apply for getting excise benefit as per Notification dated 31.07.2001 and therefore the company submitted an application on 24.12.2005. However, from the record, it appears that before the registration of the FIR, an application seeking withdrawal of the benefit, which was sought under Notification dated 31.07.2001, was submitted by the company and therefore the company has not received any wrongful gain on the basis of its earlier application dated 24.12.2005 and therefore no pecuniary loss is caused to the Department. Thus, the ingredients of the alleged offence punishable u/s. 420 of IPC are not attracted. It is also clear from the record and more particularly from the order dated 19.09.2008 passed by the Chief Commissioner, Central Excise that when the Central Excise Department had initiated the proceedings under Section 9 of the Central Excise Act against the company and its officers with regard to the similar set of allegations made in the impugned FIR, the department compounded the offence and therefore the allegations made in the proceedings initiated under Central Excise Act have come to an end. Thus, when the company and its officers including the petitioner have compounded the offence, initiation of proceedings under the provisions of IPC for the same type of allegations cannot be permitted. There cannot be two different prosecutions for the same incident and petitioner cannot be prosecuted twice for the same offence even in different proceedings. Since there is no specific allegation in the FIR or in the chargesheet against the petitioner and merely because the petitioner was the Managing Director of the company, he has been implicated in the offence, the petitioner cannot be made vicariously liable for the act and/or omission on the part of the company for the offence punishable under the provisions of the IPC. The impugned FIR being RC20( A)/2008 – GNR and all proceedings initiated pursuant thereto are nothing but a gross abuse of the process of the Court and therefore in the interest of justice, the same are required to be quashed and set aside - petition allowed - decided in favor of petitioner. Issues Involved:1. Quashing of FIR and all proceedings initiated pursuant thereto.2. Vicarious liability of the petitioner under the Indian Penal Code.3. Applicability of the principle of double jeopardy.4. Compounding of offences under the Central Excise Act.5. Specific allegations and evidence against the petitioner.6. Immunity from prosecution following compounding of the offence.Detailed Analysis:1. Quashing of FIR and all proceedings initiated pursuant thereto:The petitioner sought to quash the FIR (RC20(A)/2008-GNR) and all proceedings initiated pursuant thereto, arguing that there was no evidence indicating his involvement in the alleged crime. The FIR was registered for offences under Sections 120B, 420, 467, 468, 471, and 511 of the Indian Penal Code (IPC) and Section 15 of the Prevention of Corruption Act, 1988. The petitioner contended that his name was not mentioned in the FIR and that he was falsely implicated merely because he was the Managing Director of the company.2. Vicarious liability of the petitioner under the Indian Penal Code:The petitioner argued that the principle of vicarious liability is not applicable under the IPC. The petitioner was not the Chairman of the company during the relevant period, and there were no specific allegations against him. The court agreed, noting that merely being a Managing Director does not automatically imply criminal liability without specific allegations and evidence.3. Applicability of the principle of double jeopardy:The petitioner argued that since the Central Excise Department had already compounded the offence under Section 9 of the Central Excise Act, the FIR for the same set of allegations could not be pursued. The court agreed, citing the principle of double jeopardy, which prevents a person from being prosecuted twice for the same offence. The court noted that the allegations in the FIR and the compounded offence were identical, and thus, the FIR could not be sustained.4. Compounding of offences under the Central Excise Act:The court observed that the Central Excise Department had initiated proceedings against the company and its officers, which were compounded by imposing a penalty. The court referenced the Supreme Court's decision in *Rajesh Kumar Sharma v. Union of India*, which highlighted that compounding of an offence prevents further litigation and grants immunity from prosecution. The court concluded that the petitioner, having compounded the offence, was immune from further prosecution under the IPC for the same allegations.5. Specific allegations and evidence against the petitioner:The court found that there were no specific allegations or evidence against the petitioner in the FIR or the chargesheet. The petitioner had not signed any documents, nor had he received any wrongful gain. The court referenced the Supreme Court's decision in *G.N. Verma v. State of Jharkhand*, which emphasized the need for specific allegations to establish vicarious liability. The court concluded that the FIR and chargesheet lacked specific allegations against the petitioner, and thus, the proceedings were not sustainable.6. Immunity from prosecution following compounding of the offence:The court relied on the Supreme Court's decision in *Hira Lal Hari Lal Bhagwati v. CBI*, which held that compounding of an offence under a special law grants immunity from prosecution for the same offence under the IPC. The court noted that the petitioner had been granted immunity following the compounding of the offence under the Central Excise Act, and thus, the FIR and chargesheet were quashed.Conclusion:The court quashed the FIR (RC20(A)/2008-GNR) and all proceedings initiated pursuant thereto, ruling that the petitioner was not vicariously liable under the IPC, was immune from prosecution following the compounding of the offence under the Central Excise Act, and that there were no specific allegations or evidence against him. The court emphasized the principle of double jeopardy and the need for specific allegations to establish criminal liability.