Threshold quashing of director complaints depends on prima facie material, while limitation can still bar prosecution.
Complaints against directors under the Income-tax Act cannot be quashed at the threshold where the pleadings disclose a prima facie case and the question whether the directors are principal officers or agents depends on evidence; process may issue and the prosecution may continue. The definition of "principal officer" extends beyond designated office-holders to persons connected with management or administration on whom notice is served. A complaint filed beyond the permissible limitation period is barred and cannot be sustained, so that proceeding is liable to be quashed.
Issues: (i) Whether complaints against directors could be quashed at the threshold on the ground that they were not principal officers or agents of the company and that the sanction/complaint disclosed no prima facie case. (ii) Whether the complaint in one matter was barred by limitation.
Issue (i): Whether complaints against directors could be quashed at the threshold on the ground that they were not principal officers or agents of the company and that the sanction/complaint disclosed no prima facie case.
Analysis: The definition of "principal officer" under the Income-tax Act includes not only specified officers but also any person connected with the management or administration upon whom notice is served; whether particular directors answered that description depended on evidence. The complaints themselves suggested that the directors were involved in the financial arrangements and in the deduction and utilisation of tax amounts, so the materials disclosed a prima facie case. The question whether the accused directors were principal officers or agents of the company could not be determined finally without evidence, and the Magistrate had jurisdiction to issue process. At the stage of quashing, it was premature to conclude that the proceedings could not continue.
Conclusion: The complaints could not be quashed on the ground that the accused directors were not principal officers or agents, and the proceedings were rightly allowed to continue against them.
Issue (ii): Whether the complaint in one matter was barred by limitation.
Analysis: On the dates appearing from the record, the complaint in one revision was instituted beyond the permissible period, and the bar of limitation was attracted.
Conclusion: The complaint in that matter was barred by limitation and was liable to be quashed.
Final Conclusion: The revisional challenges substantially failed, but one complaint was struck down as time-barred, leaving the prosecutions to continue only in the remaining matters.
Ratio Decidendi: At the stage of quashing, where the complaint discloses a prima facie case and the role of directors as principal officers or agents depends on evidence, the criminal proceedings should not be terminated before trial; however, a prosecution instituted beyond limitation cannot be sustained.
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