TaxTMI 
TaxTMI 
2001 (8) TMI 1400
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....ons to the said two accused. A case was registered at CC No. 1227 of 1995. 2. In the very case CC No. 1227 of 1995 on 31-10-1995, respondent complainant filed before the said learned Magistrate, what he termed 'supplementary complaint' under Section 200 Cr.P.C. alleging commission of the very offences punishable under Sections 9(1) and 9AA of the Act, but this time, apart from the above said two accused as A-1 and A-2, respondent arrayed A-3 to A-24 several others connected with ITC in various capacities. That very day, i.e. on 31-10-1995, the order-sheet would disclose that the learned Magistrate heard the complainant's counsel, perused the supplementary complaint and the documents produced along with it, referred to the fact that cognizance had already been taken of the offences alleged in the said supplementary complaint, and then concluded that there were grounds to issue process to A-3 to A-24 mentioned in the supplementary complaint, and then directed issuing of summons to the said A-3 to A-24. This was done in the very CC No. 1227 of 1995. 3. The acts of omission and commission attributed to the accused in the main, as well as in the supplementary complaint, ....
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....to file what he calls 'supplementary complaint' and then bring in any other persons as accused. In a case like the one that was there before the learned Magistrate initiated under Section 200 Cr.P.C., the only course known to law to bring in as accused someone not there at the initial stage, would be by invoking Section 319 Cr.P.C. at the appropriate stage. Entertaining, by the learned Magistrate, of the supplementary complaint, therefore, is not legally sustainable. 6. The offence alleged, by its very nature, can be committed by the Company, namely. ITC. But, the petitioners in these two petitions are now sought, to be arrayed by taking aid of Section 9AA of the Act which reads thus : "9AA. Offences by companies. - (1) Where an offence under this Act has been committed by a company, every person who, at the time the offence was committed, was in charge of, and was responsible to, the company for the conduct of the business of the company, as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly : &....
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....antive law, it cannot have retrospective effect in the absence of any indication to that effect, express or implied, Sri Natarajan, learned Senior Counsel for the petitioner urges that the said Section 9AA brought in with effect from 27-12-1985 cannot be made applicable to the period concerned herein, namely the one commencing from 1-10-1975 to 28-2-1983. Sri Aravind Kumar, learned Senior Standing Counsel for the respondent, however would urge that since Section 9AA is only procedural, and it could have retrospective effect. 7. If Section 9AA is substantive law, creating an offence by itself, then, obviously same not having been made retrospective, the said provision, having come into force in December 1985, cannot be applied to the petitioners in respect of the period from 1-10-1975 to 28-2-1983, as that would be violative of Article 20(1) of the Constitution. On the other hand, if the said provision is only procedural, then, same would have retrospective effect, and there would be nothing wrong with application of the said provision in respect of the period prior to the coming into force of the said provision also. 8. If Section 9AA is only procedural and not subs....
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....oubt, the offence that sub-sections (1) and (2) of Section 9AA speak of is the offence with which the Company should first be guilty of. In this case, it is Section 9(1). But, then, it is because of sub-section (1) of Section 9AA that all those who, at the time the offence was committed, were in charge of and were responsible to the company for the conduct of the business of the company, would also deemed to be guilty of the offence of which the company is guilty and would be liable to be proceeded against and punished accordingly. What was therefore, an offence merely by the Company earlier is now made an offence by such persons also. It is no defence to say that if the offence was committed without their knowledge, or that they had exercised all due diligence to prevent the commission of such offence, they would escape the net. While prior to introduction of Section 9AA(1), mere knowledge of commission of the offence by the Company still could not make him guilty, after introduction of Section 9AA(1), if a person was in charge and was responsible to the Company for the conduct of the business of the Company at the time the offence was committed, then, mere knowledge of the commis....
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....e which was definitely innocent and had no legal consequence as the one brought in by Section 9AA it will be clearly hit by Article 20(1) of the Constitution of India." The Gujarat High Court further observes in Paragraphs 20, 21 and 22 thus : "20. Now, turning to Section 9AA, it is quite clear that the language used itself does not make it retrospective. In application 5/28 before the trial Court also, it has been categorically stated in Para 3 at page 113 that the bill which contained the said amending provision of section 9AA and others which eventually became, on passing, Act No. 79 of 1985, did not assign any reason for the amendment, nor did it indicate any object that was to be fulfilled by introducing the amendment including Section 9AA. Thus, the position is that, neither is there any indication by way of reasons and objects in the amending Act, nor is there anything in the language of Section 9AA which would warrant its retrospective operation. It is, therefore, clearly hit by Article 20(1) of the Constitution of India. "21. It can arguably be said that sub-section (1) of Section 9AA contains a proviso whereby lack of knowledge or exercise o....
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....ectors of the Company. The Bombay High Court said that under the Companies Act, the affairs of the company and the ultimate control of the company lies with the Board of Directors and neither the Board of Directors, nor the individual Director is liable to discharge the liabilities of the Company unless the statute so specifically provides. It was then that Rule 209A was sought to be pressed into service. This is what the High Court said in that regard : "Shri Desai, learned Counsel appearing on behalf of the Department, submitted that though the Company is legal entity, the functions of the Company are performed in accordance with the desire of the Board of Directors and the Executives and, therefore, the Board of Directors and the Executives are liable for payment of penalty. The submission is only required to be stated to be rejected. It is impossible to accept the claim that the penal liability can be enforced against a person in absence of specific provision under the Statute. Shri Desai then referred to the provisions of Rule 209A. The submission cannot be accepted for more than one reason. In the first instance, Rule 209A was enacted with effect from April 14, 1986.....
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....n would render any such person liable to any punishment if he proved that the offence was committed without his knowledge or that he had exercised all due diligence to prevent the commission of such offence. Sub-section (2) of Section 278B states that where an offence under the Act had been committed by a company and it was proved that the offence had been committed with the consent or, connivance of, or was 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 notwithstanding anything contained in sub-section (1). The Madras High Court in the above background, said thus : "Before the introduction of this section, a firm alone could have been proceeded against. Therefore, earlier to the introduction of section 278B, the partners could not be prosecuted, but the firm alone could be prosecuted. In case the partners were to be proceeded against in the absence of section 278B, there was no need for the Legislature to have introduced section 278B, as it ha....
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....n respect of two categories of persons referred to in sub-section (1) and sub-section (2) of Section 9AA, is apparent from the very wording of the section wherein a particular act of commission or omission is deemed to be an offence and is made punishable. The said Section 9AA is not made retrospective. Any attempt to apply the said provision in respect of the petitioners herein in respect of something they did or did not do during the period from 1-10-1975 to 28-2-1983, and at which time Section 9AA was not on the statute book, would be violative of Article 20(1) of the Constitution. Since the provision concerned is a substantive law, unless it is made retrospective, there is also no scope to apply it to what is done or not done during 1975-1983, since the provision itself came on the Statute Book in 1985. As already noticed, it is not provided to be retrospective. The argument that it is merely procedural and therefore should have retrospective effect, should fail. I am, therefore, of the opinion that, Section 9AA of the Act cannot be pressed into service as against the petitioners. 17. A Full Bench decision of the Patna High Court no doubt supports the submission that Sr....
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....for default in furnishing the return within September 20, 1961, penalty had to be levied under the provisions of Section 28 of the 1922 Act or Section 271(1)(a) of 1961 Act. If the 1922 Act had been applied, then, in the absence of a prescription of any particular rate or the minimum, it was open to the Tribunal to reduce the penalty in the manner it had done, and no objection could be raised to the reduction of the quantum of penalty. A prescribed rate of penalty for imposition under Section 271(1)(a) of the 1961 Act had been provided. The Supreme Court referred to what had been said earlier in Satwant Singh case (AIR 1960 SC 266) by the Constitutional Bench to the effect that what is prohibited under Article 20 of the Constitution was the imposition of a penalty greater than that which might have been inflicted under the law in force at the time of the commission of the offence, and that a law which provides that a minimum sentence of fine on conviction cannot be read as one which imposes a greater penalty than that which might have been inflicted under the law at the time of the commission of the offence where for such an offence there was no limit as to the extent of fine which....
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....hould be deemed to be only prospective. The Supreme Court held that the Amendment Act of 1964 was merely of a clarificatory or declaratory nature, and that, even in the absence of the words which were inserted by Amendment Act of 1964 in Section 15(2)(b), the only possible interpretation and meaning of the words "in the son or daughter of such female" could have reference to and cover the son or daughter of the husband of the female. The Supreme Court concluded that, in that view of the matter, there was no difficulty in attributing a retroactive intention to the Legislature when the Amendment Act of 1964 was enacted. The Supreme Court said that, if a statute is curative or merely declares the previous law, retroactive operation would be more rightly ascribed to it than the legislation which may prejudicially affect past rights and transactions. The Supreme Court concluded that the respondent therein, i.e., Smt. Jaikaur was entitled to exercise her right of pre-emption under the first paragraph of clause (b) of sub-section (2) of Section 15 even before the amendment made in 1964, and that, at any rate, whatever doubts that existed were removed by the Amendment Act of 1964 which mus....