Code of Criminal Procedure, 1973: s. 482 – Quashing of proceedings – M Company of which appellant is the Chairman and Managing Director, imported a car for which customs duty and road tax was paid – Thereafter, differential motor vehicle tax was demanded in respect of the said vehicle and the same was paid, and no Dues Certificate was also issued – FIR filed against appellant that he conspired with Regional Transport Officer to evade payment of road tax– Petition seeking quashing of proceedings– Dismissed by the High Court – On appeal, held: Criminal law cannot be set into motion as a matter of course – Summoning of an accused in a criminal case is a serious matter - Before summoning, the Magistrate has to record his satisfaction of a prima facie case against the Chairman, Managing Director or officer of a company in his/her own capacity – On facts, there is no whisper of how and in what manner the appellant abetted the commission of any offence – No document submitted in connection with the vehicle imported by M Company being fake or fabricated – Allegations in the FIR read with the chargesheet filed by the Lokayuktha Police only discloses short payment of road tax – There is only a vague, bald allegation of collusion and conspiracy to defraud the State of revenue, which is devoid of any material particulars – Thus, proceedings against the appellant are misconceived, harassive, in abuse of process of law and have been initiated without proper application of mind – Prevention of Corruption Act, 1988:ss. 13(1)(c), 13(1)(d), 13(2) – Penal Code – ss. 120B and 420.
Allowing the appeal , the Court
HELD: 1.1 The appellant is Chairman and Managing Director of the corporate entity, which purchased the vehicle in question. There is not a whisper in the chargesheet of the specific role played by the appellant or how he committed the offence of cheating. [Para 24][980-E-F]
1.2. Criminal law cannot be set into motion as a matter of course. Summoning of an accused in a criminal case is a serious matter. To set Criminal law into motion, the order of the Magistrate summoning the accused, must reflect that he has applied his mind to the facts of the case. Before the Magistrate issues summons to a Chairman, Managing Director, Director or any other official of the company, the Magistrate has to record his satisfaction of a prima facie case against him/her in his/her own capacity is sine qua non for initiation of criminal proceedings against a Chairman, Managing Director or officer of a company. It is well settled that no official of a company can be dragged into criminal proceedings only in his/her capacity as official of the company, without any specific role attributed to him/her in relation to the offence alleged against the company. [Para 25][980-F-H; 981-A]
1.3. Short payment of tax per se is not a criminal offence. The High Court ordinarily would exercise its jurisdiction under Section 482 Cr.P.C., if the allegations made in the FIR taken to be correct in entirety, do not make out any offence. When the allegations made in the FIR or evidence collected during investigation do not satisfy the ingredients of an offence, the superior Courts would not encourage harassment of a person in a Criminal Court. [Para 29][984-B-C]
Devendra v. State of U.P. (2009) 7 SCC 495 : [2009]
(7) SCR 872 – referred to.
1.4. In the instant case, the allegations in the FIR read with the chargesheet filed by the Lokayuktha Police only discloses short payment of road tax. There is only a vague, bald allegation of collusion and conspiracy to defraud the State of revenue, which is devoid of any material particulars. [Para 32][985-D-E]
1.5. The Appellant has not questioned initiation of criminal proceedings against any of the other accused persons. He has no intention of stalling proceedings against any person involved in smuggling cars or forging or fabricating documents or committing any other illegal activities. He has questioned the legality of initiation of proceedings against him for alleged short payment of road tax in respect of a vehicle owned by the company of which he is Chairman and Managing Director even though, the alleged deficit road tax had been paid by the company within one month of issuance of demand notice. [Para 37][987-C-D]
1.6. There is no whisper of how and in what manner the appellant has abetted the commission of any offence. It is nobody’s case that any document submitted in connection with the vehicle in question imported by M/s MSPL Limited is fake or fabricated. That is not the charge, so far as the appellant is concerned. It transpires that in case of some of the cars, the owners had declared the selling rates at the factory as the value of the car, and not the on road value which would be about three times the factory value. [Para 38][987-E-F]
1.7 The mere fact that demand notice may have been issued and the differential tax realized before institution of the private complaint is inconsequential. Either the charges disclose an offence of defrauding the State of revenue or the offence of defrauding the State of revenue not made out. The question is whether the materials on record disclose any criminal act on the part of these Appellants. The answer cannot but be in the negative. [Para 42][988-D-E]
1.8 It is submitted that the Company had paid full road tax as charged by the Motor Vehicles Authorities, on the basis of the actual invoice value of the car. No further amount was payable. However, when the RTO raised a notice of demand for Rs. 21 lakh odd in 2012, the company did not raise any dispute since the amount claimed was a small amount for the Company, which had a turnover of crores of rupees. [Para 44][988-G-H]
1.9 The proceedings against the appellant are misconceived, harassive, in abuse of process of law and have been initiated without proper application of mind. Further proceedings against the appellants in the Court below, shall remain stayed. [Para 45][989-A] S.V. Nandaraju and others Writ Petition No. 41103/2016 (GM-RES) dated 19th December, 2019; S.
Rajendran v. State of Karnataka & Others Criminal Petition No. 3087 of 2018; K.J. Kruruvilla v. State of Karnataka & Another Criminal Petition No. 344 of 2017; Ravindranatha Bajpe v. Mangalore Special Economic Zone Limited and Others 2021 SCC Online SC 806; Maksud Saiyed v. State of Gujarat (2008) 5 SCC 668 : [2007] (9) SCR 1113; State of Haryana v. Bhajan Lal (1992) Supp (1) SCC 335 : [1990] (3) Suppl. SCR 259; G. Sagar Suri & Another v. State of U.P. and Others (2000) 2 SCC 636 : [2000] (1) SCR 417; Joseph Salvaraj A. v. State of Gujarat and Others (2011) 7 SCC 59 : [2011] (8) SCR 815 - referred to.
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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