2016 (10) TMI 434 - HC - Indian Laws

Compounding the offences - forgery of any documents - Held that - It is undisputed fact that Central Excise Act and Rules provides for compounding the offences so also section 320 of Cr.PC. It is also undisputed fact that once main offence is compounded then there is catana of judgments by Supreme Court that when the department has compounded the offences then there is no reason to continue the criminal proceedings more particularly when offences are either in the form of breach of rules or technical offences. In the present case though some documents are alleged to be forged practically there is no forgery of any documents. It is submitted by the petitioners that in fact an advance appreciation of work by the Company as per project report happens as per fixed schedule was disclosed. However for one reason or another if such time schedule could not be adhered to either during installation or during production it may not amount to committing offence of forgery since there is no means rea and practically there is no financial benefit accrued by any of the petitioners. It is held as under if the Court arrives at only opinion there is no evidence against the accused the Court shall not put accused to harassment by asking him to face a trial. In view of above facts and circumstances the revision applications are allowed. Thereby impugned order dated 20.01.2010 charge-sheet to proceed further against petitioners are hereby quashed and set aside which results into discharging the petitioners from the offences registered against them pursuant to complaint no. RC/20(A) /2008/GNR and charges leveled against them in CBI Special case No. 3/2010. Amongst the accused at present we are concerned with accused no. 3 as petitioner no. 2 in revision petition no. 594/2016 whereas accused no.5 as petitioner no. 2 in Revision petition no. 627/2016 accused no. 8 as petitioner no. 2 in Revision petition no. 627/2016 accused no. 9 as petitioner no. 3 in Revision petition no. 627/2016 whereas petitioner in revision petition no. 716/2016 is accused no. 1. Complaint is already quashed and accused no. 2 whereas it is abated so far as accused no. 14.

Summary

Issues Involved:
1. Validity of the FIR and charge-sheet against the petitioners.
2. Compounding of offences under the Central Excise Act.
3. Vicarious liability of the petitioners.
4. Applicability of legal precedents in quashing criminal proceedings.

Issue-wise Detailed Analysis:

1. Validity of the FIR and Charge-sheet Against the Petitioners:
The FIR was registered against the petitioners for alleged offences under Sections 120B, 420, 467, 468, 471, and 511 of the IPC and Section 15 of the Prevention of Corruption Act, 1988. The charge-sheet followed the FIR, accusing the petitioners of submitting false documents to claim excise duty exemptions. However, the court noted that the company had withdrawn its application for the excise benefit before the FIR was registered, resulting in no wrongful gain or pecuniary loss to the department. Thus, the ingredients of the alleged offence under Section 420 IPC were not attracted.

2. Compounding of Offences Under the Central Excise Act:
The Chief Commissioner of Central Excise compounded the offence under Section 9 of the Central Excise Act, granting immunity from prosecution to the company and its officers, including the petitioners. The court emphasized that the department had agreed to settle the dispute, and no financial benefit was obtained by the company or its officers. The compounding order included a payment of ?50,000 by each applicant, thus preventing further criminal proceedings.

3. Vicarious Liability of the Petitioners:
The court highlighted that there were no specific allegations against the petitioners in the FIR or charge-sheet. The petitioners were implicated merely because they were employees of the company. The court referred to the Supreme Court's rulings in "G.N. Verma v. State of Jharkhand & Anr." and "National Small Industries Corpn. Ltd. v. Harmeet Singh Paintal," which stated that vicarious liability cannot be presumed without specific allegations and roles being defined. The court concluded that the petitioners could not be held vicariously liable for the company's actions.

4. Applicability of Legal Precedents in Quashing Criminal Proceedings:
The court referenced several Supreme Court judgments, including "Rajesh Kumar Sharma v. Union of India & Ors." and "Hira Lal Hari Lal Bhagwati v. CBI, New Delhi," which supported the principle that once an offence is compounded, further criminal proceedings cannot be sustained. The court also cited "State of Maharashtra v. Priya Sharan Maharaj" and "State of MP v. S.B. Johari," which emphasized that at the stage of framing charges, the court must consider whether there is sufficient ground for proceeding against the accused. The court concluded that there was no sufficient ground for proceeding against the petitioners, as the company had not received any financial benefit and the offences were compounded.

Conclusion:
The court quashed the FIR and charge-sheet against the petitioners, stating that the continuation of criminal proceedings would be a gross abuse of the process of the court. The court held that the petitioners could not be prosecuted twice for the same offence, especially when the offences were compounded and no wrongful gain was established. The court made the rule absolute, discharging the petitioners from the offences registered against them.