TaxTMI 
TaxTMI 
2011 (9) TMI 462
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..... M/s Office Machines Pvt. Ltd and others', qua the petitioner. 2. Briefly stated, facts relevant for the disposal of this petition are that respondent No.1 through Sh.S.N. Malhotra, Superintendent, Central Excise (Anti-Evasion) filed a complaint under Section 9 of the Central Excise and Salt Act, 1944(now known as Central Excise Act, 1944) alleging that the petitioner has indulged in evading Central Excise Duty amounting to Rs. 4,20,234,52 by clandestinely removing/selling the office Machiness. As per the allegations in the complaint, petitioner T.R. Bhagat was Director of M/s Office Machines Pvt. Ltd. As such, he is sought to be prosecuted vicariously for the offences punishable under Section 9(1)(a), 9(1)(b) and 9(1)(bb) of the C....
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....r the day-to-day affairs of the company and what duties and functions were being discharged by him so as to bring him within the ambit of Section 9AA of the Central Excise Act. Learned counsel argued that even in the pre-charge evidence, there is no specific averment to bring the case of the petitioner within the ambit of Section 9AA of the Central Excise Act to hold him vicariously responsible for the alleged offence of excise duty evasion committed by the accused company M/s Office Machines Pvt. Ltd. Thus, learned counsel for the petitioner has strongly urged for quashing of charge as well as complaint qua the petitioner. 6. Learned counsel for the respondent, on the contrary, has submitted that the complainant has made specific a....
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....fence. (2) Notwithstanding anything contained in sub-section (1), where an offence under this Act has been committed by a company and it is proved that the offence has been committed with the consent or connivance of, or is attributable to any neglect on the part of, any director, manager, secretary or other officer of the company, such director, manager, secretary or other officer shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly. Explanation : For the purposes of this section, - (a) "Company" means anybody corporate and includes a firm or other association of individuals; and (b) "Director" in relation to a firm means a partner in the firm....
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.... not fall within the ambit of the provision. It is only those persons who were in charge of and responsible for the conduct of business of the company at the time of commission of an offence, who will be liable for criminal action. It follows from this that if a director of a company who was not in charge of and was not responsible for the conduct of the business of the company at the relevant time, will not be liable under the provision. The liability arises from being in charge of and responsible for the conduct of business of the company at the relevant time when the offence was committed and not on the basis of merely holding a designation or office in a company. Conversely, a person not holding any office or designation in a company ma....
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.... in the absence of any averment or specific evidence the net result would be that complaint would not be entertainable." 11. Legal position which emerges from the aforesaid is that in order to rope in a Director of a company as accused of an offence under Section 138 N.I. Act vicariously with the aid of Section 141 N.I. Act, the complainant is not only required to make a specific allegation that the person concerned was the Director of the company but he is also required to make specific allegation of fact indicating as to how and in what manner the said Director was in-charge of and responsible for the conduct of business of the company. Since the language of Section 9AA(1) of Central Excise Act is exactly similar to Section 141 N.....
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....for day-to-day affairs of the business of the company. Even in the pre-charge evidence, the complainant has not led any evidence to explain as to what is the basis of the averment that the petitioner was responsible for the running of day-to-day business affairs of the company in his capacity as a Director. In absence of any specific allegation or evidence in this regard, I am of the considered view that requirement of Section 9AA(1) of the Central Excise Act to hold the petitioner vicariously liable for the offence committed by the company is not satisfied. Thus, I find it difficult to sustain the charge framed against the petitioner. 14. Section 9AA(2) of the Central Excise Act provides that notwithstanding Section 9AA(1) of the C....