1995 (6) TMI 31 - HC - Central Excise

Issues Involved:
1. Legality of the impugned order directing to frame charges under Sections 9(1)(bb), 9(1)(bbb), and 9(1)(ii) of the Central Excises and Salt Act.
2. Application of Section 9AA of the Central Excises and Salt Act regarding vicarious liability.
3. Examination of Sections 244, 245, and 246(1) of the Code of Criminal Procedure.
4. Evaluation of evidence and prima facie case for framing charges.
5. Abuse of the process of the Court.

Issue-wise Detailed Analysis:

1. Legality of the Impugned Order:
The main question for determination was whether the impugned order dated November 29, 1994, by the Special Judicial Magistrate directing to frame charges under Sections 9(1)(bb), 9(1)(bbb), and 9(1)(ii) of the Central Excises and Salt Act was sustainable in the eye of law. The court examined the necessary facts and found that the company had evaded or failed to pay Excise Duty amounting to Rs. 93,894.09, thus violating the specified sections of the Act. The prosecution was initiated after obtaining the necessary sanction, and a complaint was filed on September 29, 1989.

2. Application of Section 9AA of the Central Excises and Salt Act:
Section 9AA deals with offences committed by a company and establishes vicarious liability. The section states that every person who was in charge of and responsible for the conduct of the business of the company at the time the offence was committed, as well as the company itself, shall be deemed guilty of the offence. The proviso allows such a person to avoid punishment if they prove that the offence was committed without their knowledge or despite exercising due diligence. Sub-section (2) extends liability to directors, managers, secretaries, or other officers if the offence was committed with their consent, connivance, or due to their neglect.

3. Examination of Sections 244, 245, and 246(1) of the Code of Criminal Procedure:
The court examined the relevant sections of the Code of Criminal Procedure applicable to warrant cases instituted otherwise than on a police report. Section 244 mandates the Magistrate to hear the prosecution and take all evidence produced in support of the prosecution. Section 245 provides for the discharge of the accused if no case is made out. Section 246(1) requires the Magistrate to frame charges if there is ground for presuming that the accused has committed an offence.

4. Evaluation of Evidence and Prima Facie Case:
The court emphasized that at the pre-charge stage, the Magistrate must consider whether a prima facie case exists based on the evidence produced. The Magistrate is not required to meticulously consider the evidence but must apply a sincere and honest mind to determine if a prima facie case is made out. The evidence must be judiciously and honestly considered, not mechanically. The court cited various precedents, including Century Spinning & Manufacturing Co. Ltd. v. The State of Maharashtra and R.S. Nayak v. A.R. Antulay, to underline the necessity of a judicial mind in framing charges.

5. Abuse of the Process of the Court:
The court found that the prosecution had examined four witnesses at the pre-charge stage, out of which three did not incriminate the petitioner. Charges were framed based on the statement of PW 4, Shri B.L. Sharma, who had no personal knowledge of the facts and had merely filed the complaint based on authorization. The court concluded that the evidence did not prima facie prove the petitioner's involvement in the offence, and thus, no charge could be framed against him. Allowing the prosecution to continue would be an abuse of the process of the Court.

Conclusion:
The court allowed the petition, quashing the impugned order and all further proceedings against the petitioner. The court expressed distress over the prosecuting agency's lapses, which led to a serious case of excise duty evasion going unpunished. The prosecuting agency was urged to be more diligent in the future.

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