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TMI Blog2010 (3) TMI 218X X X X Extracts X X X X X X X X Extracts X X X X ..... be vacated and the appeals were dismissed for noncompliance of the order dated 19th June, 2009 Held that: We are of the opinion that duty demand of the company cannot be recovered from the director in the absence of statutory provisions in the Central Excise Act, 1944 - So far as penalty is concerned, the same was not recoverable from the Company so long as the Company was under the umbrella of section 22 of the SICA. Consequently, the Tribunal was not justified in directing pre-deposit to the extent of 50% of the penalty in its impugned order dated 19th June, 2009. To that extent the impugned order is liable to be set aside being bad and illegal. – attachment order quashed and set-aside - 1012 OF 2010 - - - Dated:- 9-3-2010 - A.M.Set ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing for the petitioners urged that the petitioner No.1 is declared as sick company under the provisions of the Sick Industrial Companies Act, 1985 ('SICA' for short). The petitioner No.2 is the Director of petitioner No.1-Company. He submits that it was specifically submitted before the Tribunal that petitioner No.1 is declared as sick company under the orders of the B.I.F.R. as far back in the month of April, 1999 copy of which is produced at Exh.-B. 5. Mr. Sethna further submits that the rehabilitation scheme under section 17 of SICA after completion of enquiry under section 16 thereof is under preparation. In the wake of this factual matrix, the conditions stipulated in section 22 of SICA were very much applicable to the facts of the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ." 7. According to Mr. Sethna, the statutory provision which clearly applies to the case in hand, categorically bars any distress action against the properties of a sick company which would, inter alia, include attachment. In this view of the matter, in his submission, the attachment order passed by respondent No.1 is contrary to section 22 of the SICA and the same is liable to be quashed and set aside. In support of his submission he placed reliance on some of the judgment of the Apex Court in the case of Maharashtra Tubes Ltd. v. State Industrial Corporation and others, (1993) 2 SCC 144; Real Value Appliances Ltd. v. Canara Bank, (1998) 5 SCC 554; Rishabh Agro Industries v. PNB Capital, (2000) 5 SCC 15; Union of India v. Shree Synthetic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atutory provisions in the Central Excise Act, 1944." In the aforesaid view if the matter, Mr. Sethna strongly urged that the duty liability is not at all recoverable from the Director of the Company. 9. So far as the levy of penalty is concerned, Mr.Sethna urged that imposition of personal penalty on the Director is also not permissible under rule 26 of the Central Excise Rules, 2002 ('Central Excise Rules' for short). In his submission, penalty imposed is not under sub-rule (2) of rule 26 in the adjudication order. According to him, penalty imposed on the petitioner No.2 is under sub-rule (1) of rule 26, which is a subject matter of appeal pending before the Tribunal. According to him, penalty is not imposable on the Director of the Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... placed on the Apex Court judgment in the case of Dy.Commercial Tax Officer v. Corromandal Pharmaceuticals, AIR 1997 SC 2027 and on the Division Bench judgment of this Court in the case of Polymermann (Asia) P.Ltd. v. Union of India, (2006) 133 Comp.Cas 894 (Bom.) to which one of us (Daga, J) is party. 11. Mr. Desai also urged that proviso to sub-section (3) to section 22 of the SICA provides that a declaration made by the Board cannot have a life beyond a period of seven years. If that be so, provision of section 22 would not be applicable to the facts of the case in hand. 12. Mr. Desai, with respect to petitioner No.2, urged that the Director of the Company is well withing the net of rule 26 of the Central Excise Rules. He, thus, submi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Company, the petitioner No.2 herein in view of law laid down by this Court in the case of Satish D. Sanghavi (supra). 15. So far as direction against petitioner No.2 to pre-deposit 50% of the amount of penalty is concerned, reliance is placed by Mr.Sethna on rule 26 of the Central Excise Rules. Taking assistance of the judgment of this Court in the case of Ashokkumar Fulwadhya (supra), we have no hesitation to record finding that Mr.Sethna has also made out, prima facie; case for waiver of penalty on behalf of petitioner No.2 as the said contention has good amount of strength. Consequently, in totality the petitioner No.2 could not have been directed to predeposit either amount of duty or the penalty. 16. Having said so, the respondents c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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