1991 (9) TMI 53 - HC - Income Tax

Summary

Issues:
1. Prosecution of the petitioner for alleged offences under various sections of the Indian Penal Code and Income Tax Act.
2. Petitioner's contention as a nominee-director and his liability in the case.
3. Interpretation of the Government order appointing the petitioner as a nominee-director.
4. Arguments regarding the petitioner's obligations and liabilities under section 30A of the Industrial Development Bank of India Act, 1964.
5. Consideration of evidence and allegations in the complaint against the petitioner.
6. Decision on whether to quash the pending prosecution against the petitioner.

Analysis:
1. The petitioner, as A-8 in a criminal case, was being prosecuted for alleged offences under various sections of the Indian Penal Code and Income Tax Act. The prosecution was based on allegations of conspiracy and abetment in fraudulent activities.

2. The petitioner contended that as a nominee-director, he should not be held liable on par with other directors due to his limited role and responsibilities. His argument was based on a Government order and his specific duties related to prompt payment of dues to the government.

3. The court considered the effect of the Government order appointing the petitioner as a nominee-director, emphasizing that the impact of this appointment should be assessed based on evidence presented during the trial. The court noted that the allegations did not solely target the petitioner as a nominee-director but also implicated him in the conspiracy and fraudulent activities.

4. The arguments regarding the petitioner's obligations and liabilities under section 30A of the Industrial Development Bank of India Act, 1964, were discussed. The court highlighted that the determination of liability under this section would require a thorough examination of the evidence presented during the trial.

5. The court emphasized the need to allow the prosecution to substantiate the allegations made in the complaint and provide an opportunity for the petitioner to present his contentions after the evidence is adduced before the trial Magistrate. The court found prima facie allegations against the petitioner, indicating that there were sufficient grounds to proceed with the trial.

6. Ultimately, the court dismissed the petitioner's plea to quash the pending prosecution, stating that no sufficient grounds were presented at that stage to halt the legal proceedings. The court emphasized the importance of evidence and the need to evaluate the petitioner's role and liabilities based on the facts presented during the trial.