1968 (3) TMI 11 - HC - Central Excise

Whether the sons would be liable to pay the penalty imposed on them for the alleged acts of contravention by their father - Held, no

Summary

Issues:
1. Quashing of penalty order under Foreign Exchange Regulation Act, 1947.
2. Application of doctrine of vicarious liability in the case of legal representatives.
3. Interpretation of liability of legal representatives for contraventions by the deceased.

Analysis:
The judgment pertains to a partnership firm's writ petition challenging a penalty order imposed under the Foreign Exchange Regulation Act, 1947. The firm was penalized for contraventions related to restrictions on payments under section 5(1) of the Act. The department found the firm guilty based on incriminating documents seized during a search of the firm's premises. The firm argued that the transactions in question were with an independent entity, the Madurai Branch, and not in violation of the Act. The counsel contended that the sons, as legal representatives, should not be held liable for acts of contravention by their father, the original proprietor. The judgment delves into the application of the doctrine of vicarious liability in criminal law, emphasizing personal criminal responsibility and the necessity for penal responsibility to be imposed based on individual actions and guilty mind.

The court analyzed the provisions of the Act and highlighted that there was no statutory provision making legal representatives vicariously liable for contraventions committed by the deceased. The judgment emphasized that the sons, as successors to the father's estate, formed a partnership business distinct from the sole proprietorship concern. The court rejected the department's attempt to equate the businesses, emphasizing that the sons had no involvement in the contravening acts. The judgment cited legal principles and authorities to support the conclusion that vicarious liability should not be extended to the sons in this case, as they were not responsible for the alleged contraventions by their father.

Furthermore, the judgment referenced the absence of a specific provision in the Act regarding the liability of legal representatives for penalties. Drawing a parallel with the Income-tax Act, the court highlighted that legal representatives were made liable only after a specific amendment, which was not present in the Foreign Exchange Regulation Act. The judgment ultimately allowed the writ petition, quashing the penalty order imposed on the partnership firm. The court ruled in favor of the petitioners, emphasizing that the legal representatives should not be held accountable for the actions of the deceased proprietor under the Act.