S.A.Khan v. Union of India & Ors.

IN THE HIGH COURT OF JUDICATURE AT MADRASDATED 29 .09.2011CORAMTHE HONOURABLE MR.JUSTICE P.R.SHIVAKUMAR Crl.R.C.No.1256 of 2003S.A.Khan.. PetitionerVs.1.Union of India Rep. by Asst. Commissioner of Central Excise-Prosecution Chennai II Commissionarate Chennai2.M/s.Printwraps No.835, 35th Street Kotturpuram Chennai – 600 0803.S.Subash (since deceased) 10, Saraswathi Street Chennai – 600 034.. RespondentsPRAYER: Criminal Revision Case filed under section 397 r/w. 401Cr.P.C praying to call for the records in Crl.R.C.No.147 of 2002and set aside the order dated 23.07.2003 passed by the learnedAddl. Principal Sessions Judge, City Civil Court, Madras andthereby dismiss the petition filed by the first respondent hereindirecting the revision petitioner herein to represent thepartnership firm.For Petitioner:Mr.S.R.RajagopalFor Respondents:Mr.N.P.Kumar Spl. Public Prosecutor for R1R2 and R3 No appearance ORDERThis criminal revision case has been preferred against theorder of the learned Additional Principal Sessions Judge, Chennaidated 23.07.2003 made in Crl.R.C.No.147 of 2002 reversing the orderof the trial Judge, namely Additional Metropolitan Magistrate, https://hcservices.ecourts.gov.in/hcservices/ E.O.I dated 24.08.2001 made in M.P.No.2270 of 2000 inE.O.C.C.No.166 of 1997.2. The facts leading to the filing of the present criminalrevision in brief, are as follows:-(i) M/s.Printwraps, the second respondent herein/first accusedwas a partnership firm in which S.Subash, the third respondentherein/second accused and the petitioner in the present criminalrevision/third accused were the partners. Union of Indiarepresented by Assistant Commissioner of Central Excise, Chennai,the first respondent herein, preferred a criminal complaint on thefile of the Additional Metropolitan Magistrate, E.O.I, Egmore,Madras under Sections 9(1), 9(1)(b), 9(1)(bb), 11D of CentralExcise Act, 1944 r/w. Rules 49, 173F, 52A, 173E, 57F(2), 57A of theCentral Excise Rules, 1944 for their prosecution and punishment forthe offence of violation of the above said provisions of CentralExcise Act and Central Excise Rules.(ii) Though the partnership firm, namely M/s.Printwraps, wassought to be prosecuted by virtue of Section 9-AA of the CentralExcise Act, 1944. 57F(2), 57A of the Central Excise Rules, 1944,which equates a partnership firm with a company/corporation for thepurpose of prosecution under the Act. Respondent No.3 and therevision petitioner herein were arraigned as accused Nos.2 and 3respectively on the ground that they were not only partners on thedate of occurrence, but also were responsible for the conduct ofthe business of the second respondent firm. The complaint wastaken on file by the trial Court following the private complaintprocedure and was numbered as C.C.No.166 of 1997. Processes wereissued to the revision petitioner and Respondents 1 and 2 (Accused1 and 2). But it is not known whether the service was effected onthe firm, namely the second respondent herein / first accused. Theother two accused, namely revision petitioner and the RespondentNo.3 were served with summons and they entered appearance to defendthemselves. (iii) During the pendency of the case, the third respondent,namely S.Subash, who was described as Managing Partner of thepartnership firm, passed away and pursuant to the death of the saidSubash, the first respondent herein/complainant preferred amiscellaneous petition in M.P.No.2270 of 2000 in C.C.No.166 of 1997on the file of the trial Court praying for an order that therevision petitioner herein/3rd accused shall represent the firstaccused company (firm), as there was no other person to representthe firm and the above said Subash described as Managing Partnerhad passed away. The said miscellaneous petition was resisted byMr.S.A.Khan, the revision petitioner/3rd accused on the ground thathe had already retired from the partnership firm and hence, he was https://hcservices.ecourts.gov.in/hcservices/ not competent to represent the second respondent firm. It was hisfurther contention that as per Section 305 of Criminal ProcedureCode, the Corporation (here the Firm) may appoint a representativefor the purpose of inquiry or trial and that such a power availableto the Company (the firm in this case) cannot be used by theprosecution to force upon anybody, the duty to represent thecorporation (firm). (iv) The Additional Metropolitan Magistrate, E.O.I, afterhearing both sides, accepted the above said contention of therevision petitioner herein/3rd accused S.A.Khan and dismissedM.P.No.2270 of 2000 by an order dated 24.08.2001. As against thesaid order passed by the trial Judge, the first respondentherein/complainant preferred a revision before the learnedPrincipal Sessions Judge, Chennai in Crl.R.C.No.147 of 2002 underSection 397 Cr.P.C. The learned Principal Sessions Judge, Chennai,after hearing, allowed the revision by an order dated 23.07.2003,set aside the order passed by the trial Judge dated 24.08.2001,allowed M.P.No.2270 of 2000 and directed that the revisionpetitioner herein/3rd accused S.A.Khan shall represent the secondrespondent herein /1st accused in the criminal proceedingsinitiated against it in C.C.No.166 of 1997. Aggrieved by andchallenging the same and also questioning the correctness andlegality of the said order passed by the learned Principal SessionsJudge, Chennai in Crl.R.C.No.147 of 2002, the present revisionpetition has been filed by S.A.Khan, the third accused on variousgrounds set out in the memorandum of criminal revision case.3. The arguments advanced by Mr.S.R.Rajagopal, learned counselfor the petitioner and by Mr.N.P.Kumar, learned Special PublicProsecutor for the first respondent were heard. The materialsavailable on record were also perused.4. The short point that arises for consideration in thiscriminal revision case is "whether the learned Principal SessionsJudge has reversed the order of the learned trial Judge by anerroneous interpretation and misconstruction of the scope ofSection 305 Cr.P.C and hence, the order of the learned PrincipalSession Judge is liable to be interfered with by this Court inexercise of its revisional power?".5. Since the facts have already been narrated, it shall beunnecessary to again repeat. Suffice to state that the firstrespondent has launched prosecution for the offences of violationof Sections 9(1), 9(1)(b), 9(1)(bb), 11D of Central Excise Act,1944 and the Rules 49, 173F, 52A, 173E, 57F(2) and 57A of the Rulesframed thereunder, as referred to in the narration of the factsindicated supra, against 2nd respondent /M/s.Printwraps, which is a https://hcservices.ecourts.gov.in/hcservices/ partnership firm, S.Subash/3rd respondent, who is no more, in hiscapacity as Managing Partner of the second respondent firm andhence was accountable for the conduct of the business of the firmand S.A.Khan, the revision petitioner herein as an ex-partner, whowas also responsible for the conduct of the business of the firm atthe time of commission of the alleged offences and they had beenarraigned as Accused Nos.1, 2 and 3 respectively. AdmittedlyS.Subash, Accused No.2, after the filing of the complaint passedaway and is no more. Hence, the charge against him shall standabated. So far as the revision petitioner is concerned, he issought to be prosecuted for the alleged offence committed by thefirm, which is equated to a corporation by virtue of a specificprovision, namely Section 9-AA of the Central Excise Act. Forbetter appreciation the section is reproduced as under:-"9-AA.Offences by companies – (1) Where an offfenceunder this Act has been committed by a company, every personwho at the time the offence was committed was in charge of,and was responsible to, the company for the conduct of thebusiness of the company, as well as the company, shall bedeemed to be guilty of the offence and shall be liable to beproceeded against and punished accordingly.Provided that nothing contained in this sub-sectionshall render any such person liable to any punishmentprovided in this Act, if he proves that the offence wascommitted without his knowledge or that he had exercised alldue diligence to prevent the commission of such offence.(2) Notwithstanding anything contained in sub-section(1), where an offence under this Act has been committed by acompany and it is proved that the offence has been committedwith the consent or connivance of, or is attributable to anyneglect on the part of, any director, manager, secretary orother officer of the company, such director, manager,secretary or other officer shall also be deemed to be guiltyof that offence and shall be liable to be proceeded againstand punished accordingly.Explanation.-For the purposes of this Section, -(a) "company" means any body corporate and includes afirm or other association of individuals; and(b) "director" in relation to a firm means a partner inthe firm"6. The revision petitioner is being prosecuted as one of thepartners of the said firm on the date of alleged commission of theoffence, taking part in the conduct of the business and hence,responsible for the conduct of the business of the firm. He has nogrievance against the prosecution launched against him in his https://hcservices.ecourts.gov.in/hcservices/ personal capacity arraigning him as Accused No.3, in which case, heshall be having a right to contend that though he was a partner ofthe firm as on the date of alleged commission of the offence, hewas not the person responsible for the conduct of its business; orthat the alleged acts amounting to the alleged offences werecommitted without his knowledge or that he had exercised all duediligence to prevent the commission of the offence. He is preparedto face the prosecution as third accused in the criminal caseconcerned in this revision, namely E.O.C.C.No.166 of 1997 on thefile of Additional Metropolitan Magistrate, Egmore, Chennai. Butit is his contention that he, having retired from the partnershipfirm long before the launching of the prosecution, cannot beexpected to represent the first accused firm and the prosecutioncannot compel him to represent the first accused firm solely on theground that he was a partner of the firm as on the date of thealleged commission of offence, while he has been arraigned as a co-accused (A3) and is being prosecuted on the same ground.7. It is the further contention of the learned counsel for thepetitioner that the right to appoint a representative to representthe company (firm) in a criminal trial or inquiry is conferred onthe company/firm under Section 305 of the Code of Criminalprocedure and the prosecution cannot have anything to say that thecompany should appoint a person to represent it in the inquiry ortrial. It is the further contention of the learned counsel for theplaintiff that the right given to the Company/firm under Sub-clause(2) of Section 305 Cr.P.C cannot be interpreted to mean acorresponding right available to the prosecution to name a personto be the representative of the company or firm and compel him torepresent the company/firm in the enquiry. 8. The above said contention raised by the learned counsel forthe petitioner is clearly tenable and the same has to becountenanced. What sub-section (2) of Section 305 Cr.P.C says isthat where a Corporation (Firm in this case) is the accused personor one of the accused persons in an inquiry or trial, it mayappoint a representative for the purpose of the inquiry or trialand such appointment need not be under the seal of the Corporation(Firm in this case). The term used is "may" and not "shall"meaning that it is a right available to the Corporation/firm toappoint a representative to defend it in a criminal trial orinquiry. If the Corporation or Firm does not come forward toappoint a representative, the same doesn't mean that theprosecution can compel anybody to represent the Company (Firm).This shall be quite obvious if the entire Section 305 Cr.P.C isconsidered. For better appreciation the entire Section 305 Cr.P.Cis reproduced hereunder: https://hcservices.ecourts.gov.in/hcservices/ "305.Procedure when corporation or registered societyis an accused – (1) in this section "corporation" means anincorporated company or other body corporate, and includes asociety registered under the Societies Registration Act,1860 (21 of 1860).(2)Where a corporation is the accused persons or one ofthe accused persons in an inquiry or trial, it mayappoint a representative for the purpose of theinquiry or trial and such appointment need not beunder the seal of the corporation.(3)Where a representative of a corporation appears, anyrequirement of this Code that anything shall be donein the presence of the accused or shall be read orstated or explained to the accused, shall be construedas a requirement that that thing shall be done in thepresence of the representative or read or stated orexplained to the representative, and any requirementthat the accused shall be examined shall be construedas a requirement that the representative shall beexamined.(4)Where a representative of a corporation does notappear, any such requirement as is referred to in sub-section (3) shall not apply.(5)Where a statement in writing purporting to be signedby the managing director of the corporation or by anyperson (by whatever name called) having, or being oneof the persons having the management of the affairs ofthe corporation to the effect that the person named inthe statement has been appointed as the representativeof the corporation for the purposes of this section,is filed, the Court shall, unless the contrary isproved, presume that such person has been soappointed.(6)If a question arises as to whether any person,appearing as the representative of a corporation in aninquiry or trial before a Court is or is not suchrepresentative, the question shall be determined bythe Court."9. According to Sub-clause (3) of Section 305 Cr.P.C., if arepresentative of a Corporation/Company (Firm) appears on behalf ofthe Company, then a requirement of the Code that anything shall bedone in the presence of the accused or shall be read or stated orexplained to the accused, shall be construed as a requirement thatthe same shall be done in the presence of the representative orread, stated or explained to the representative. It also proceedsto state that any requirement for the examination of the accusedshall be construed as a requirement of examination of such https://hcservices.ecourts.gov.in/hcservices/ representative. Sub-section (3) contemplates voluntary appearanceof a representative of the Company/Firm. It does not mean thatanybody can be compelled by the prosecution or the Court torepresent the company/firm. Then a question will arise as to whatshall happen to the prosecution if nobody is appointed by thecompany/firm or nobody appears as a representative of thecompany/firm in the trial or inquiry in the criminal case beforethe Court. The answer is found in Sub-clause (4) which reads asfollows:"4. Where a representative of a corporation does notappear, any such requirement as is referred to in sub-section (3) shall not apply."Therefore, it is abundantly clear that if process was properlyserved on the Corporation/Company/firm and the corporation/company(firm) does not enter appearance through a representative, then therequirement that certain things are to be done in the presence ofthe accused, like framing of charges and examination of witnessesin the presence of the accused shall not be applicable. Similarly,the requirement of examination of the accused also shall not beapplicable. The only circumstance under which the Court can decidewhether a person is or is not a representative of theCorporation/company/society/firm is when a person appears asrepresentative of such body and a question arises as to whethersuch a person is or is not such a representative. Then only thequestion shall be determined by the Court. 10. As per Sub-clause (3) of the Section 305 Cr.P.C, whichreads as follows:- "(3) Where a representative of a corporation appears,any requirement of this Code that anything shall be donein the presence of the accused or shall be read or statedor explained to the accused, shall be construed as arequirement that that thing shall be done in the presenceof the representative or read or stated or explained tothe representative, and any requirement that the accusedshall be examined shall be construed as a requirementthat the representative shall be examined."The power conferred on the Court is to decide whether a person whoappears as a representative of the company/firm is or is not arepresentative of the company or firm. The said power cannot bestretched further to say that the Court has power to direct anyperson, which it considers to be a representative of the company,to appear on behalf of the company. 11. The learned trial Judge, namely Additional MetropolitanMagistrate, E.O.I, Egmore has arrived at a correct conclusion on aproper construction and proper interpretation of Section 305 Cr.P.C https://hcservices.ecourts.gov.in/hcservices/ and the learned Principal Sessions Judge, on an erroneousapplication and wrong interpretation of a provision of law, hasarrived at a wrong conclusion that a person can be compelled torepresent a Corporation/Company/Firm, which is arraigned as anaccused in an inquiry or trial before a criminal Court. On thatscore alone the order of the learned Principal Sessions Judge isliable to be interfered with and set aside.12. The impugned order of the learned Principal Sessions Judgeis challenged on another ground also. It is the contention of thelearned counsel for the revision petitioner that the questionwhether S.A.Khan/3rd accused, who was a partner of M/s.Printwraps,the second respondent herein as on the date of alleged commissionof the offence, was responsible for the conduct of the business ofthe firm has to be decided after trial, but the same has beenanswered in the affirmative by the learned Principal Sessions Judgeand that the same amounts to a pre-determination of a questionwhich is to be relegated to be decided at the conclusion of trial.Though the petitioner was a partner of the second respondent firmon the date of alleged commission of the offence, the prosecutionhas to prove that he was responsible to the company for the conductof its business in order to prove that he is also guilty of theoffences. Even in such cases, namely when the prosecution provesthat the petitioner was responsible to the company for its conductof business, a further defence is available to him to escapepunishment by proving that the offence was committed without hisknowledge or that he had exercised all due diligence to preventcommission of such offence. The learned Principal Sessions Judge,disregarding the said provision, simply carried away by the factthat the petitioner was a partner as on the date of the allegedcommission of the offence; that he could have had definite accessto the records of the partnership firm before his retirement. Themain issue, viz., "whether the petitioner shall be compelled torepresent the second respondent / partnership firm?" has beenforgotten and the learned Principal Sessions Judge proceeded on theassumption that there should be a person representing thecompany/partnership firm in a prosecution launched against it. Insuch process the learned Principal Sessions Judge has forgotten thefact that the Revision petitioner is being prosecuted as a co-accused along with the firm on the premise that he, as a partner atthe time of the occurrence, was responsible for the conduct of thebusiness of the firm on the date of alleged commission of theoffence; that a retired partner cannot represent the partnershipfirm after such retirement and that even in the worst case hecannot be compelled to represent the partnership firm.Admittedly, the petitioner retired from the secondrespondent/partnership firm in 1994 itself and in the complaintitself, while arraigning the petitioner as third accused, the https://hcservices.ecourts.gov.in/hcservices/ complainant has described him as ex-partner of the secondrespondent firm. Hence he cannot be compelled to represent thefirm in the criminal prosecution. On that score also the impugnedorder of the learned Principal Sessions Judge is liable to be setaside.13. Therefore, this Court comes to the conclusion that theorder passed by the learned Principal Sessions Judge reversing thewell considered order passed by the learned trial Judge, namelyAdditional Metropolitan Magistrate, E.O.I cannot be sustained inlaw. Accordingly, this Court sets aside the impugned order of thelearned Principal Sessions Judge, City Civil Court, Chennai dated23.08.2003 made in Crl.R.C.No.147 of 2002 in exercise of therevisional power of this Court under Section 397 Cr.P.C. 14. In the result, the present criminal revision petition isallowed and the order of the learned Principal Sessions Judge, CityCivil Court, Chennai dated 23.08.2003 made in Crl.R.C.No.147/2002is set aside. The order of the trial judge, namely Additional ChiefMetropolitan Magistrate, E.O.I., Egmore dated 24.08.2001 made inCrl.M.P.No.2270 of 2000 in C.C.No.166 of 1997 is restored andconfirmed. Crl.M.P.No.2270 of 2000 in C.C.No.166 of 1997 on thefile of the trial Court shall stand dismissed. Sd/- Asst.Registrar. /true copy/ Sub Asst.Registrar.gpaTo1. The Additional Principal Sessions JudgeCity Civil Court, Chennai2. do thro the Principal Sessions JudgeCity Civil Court, Chennai3. The Assistant Commissioner of Central Excise-Prosecution Union of India Chennai II Commissionerate Chennai-80 https://hcservices.ecourts.gov.in/hcservices/

4. The Special Public Prosecutor,High Court, Madras1 cc to Mr.S.R. Rajagopal, Advocate, Sr. 60960Crl.R.C.No.1256 of 2003SGL (CO)kk 18/10