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TMI Blog1981 (5) TMI 31X X X X Extracts X X X X X X X X Extracts X X X X ..... self-removal procedure. The firm which had its existence since the year 1960, came to be reconstituted on April 1, 1969, vide a partnership deed, copy of which is Annexure P-1 to the petition. Thereunder, five persons, namely, S/Shri Hira Lal Mehra, Hem Raj Kapur, Krishan Kumar Khanna, Arun Kumar Kapur and Smt. Nirmala Kapur, became partners. Shri Hira Lal Mehra became the managing partner of the partnership business. He had full powers to employ, dismiss or suspend any staff of the firm, and the general control, management and administration of the partnership business also vested in him. 3. In the month of September 1970, the Accountant General, Central Revenue, Delhi, inspected the record of the firm and observed that the petitioner had been committing forgery and defrauding the Government from central revenue by mutilating the figures of deposits in the copies of the treasury challans meant for their own office record and for the Range Office, which was sent along with the monthly personal ledger account statement. It came to the conclusion that during the period from March 1, 1969 to August 31, 1970, an amount of Rs. 46,695/- was less deposited and for the period of Septemb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lhi - respondent No. 1 was not satisfied either with the explanation submitted by the petitioner or its arguments and vide his order dated 19/20th February, 1975, copy of which is Annexure P-4 to the petition, imposed a penalty of Rs. 50,000/- on the petitioner concern, under Rule 173(Q) of the Act. The Central Board of Excise and Customs, New Delhi - respondent No. 2 dismissed the appeal of the petitioner on 23/24th April, 1979, copy of which is Annexure P-6 to the petition. The revision petition of the petitioner too was dismissed on March 21, 1980 (copy Annexure P-8) by the Union of India. The petitioner now claims that the show cause notice (Annexure P-2) and orders Annexures P-4, P-6 and P-8 are illegal, unsustainable in law and ultra vires of the Act, on the ground that the period of limitation as envisaged under Section 40(2) of the Act had expired and that the term 'legal proceedings' in the aforesaid section was wide enough to cover departmental proceedings. Another ground taken is that it was Shri Jawahar Lal Khanna, clerk of the firm, who had cheated the firm as well as the Government and since the loss had been made good by the petitioner-firm, it should be taken that i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sions of the Act and the Rules made thereunder, for anything done or ordered to be done under the Act. He also put to use a Full Bench decision of the Lahore High Court in Smt. Shukantla v. Peoples' Bank of Northern India Ltd. and another, A.I.R. 1941 Lahore 392, to convey that the expression 'legal proceedings' being coupled with 'suit' in that case meant proceedings ejusdem generis. In that case, the Full Bench of the Lahore High Court was required to interpret Section 171 of the Companies Act, where the expression "no suit or other legal proceedings" occurring in Section 171 of the Companies Act, 1913, was spelled out to mean proceedings ejusdem generis, that is to say, original proceedings in a Court of first instance, analogous to a suit, initiated by means of a petition similar to a plaint. However, the Federal Court in Governor General in Council v. Shiromani Sugar Mills Ltd., A.I.R. 1946 Federal Court 16, did not approve the view of the Full Bench in Smt. Shukantla's case (supra) as they held that no narrow construction should be placed upon the words "or other legal proceedings" in Section 171. The scheme of the Companies Act seems to have impelled them to take that view. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on'. Internal departmental proceedings initiated by the departmental officer and to be decided by a departmental authority would not, in our view, be a 'legal proceeding' which is covered by Section 40(2) of the Act. In common parlance, it would be a 'legal proceeding' but not of the kind envisaged by Section 40(2) of the Act. 11. Reliance was placed by the learned counsel for the petitioner on two decisions of the Andhra Pradesh High Court in M/s. Hyderabad Allwyn Metal Works Ltd., v. The Collector of Central Excise, Hyderabad, 1978 Tax. L.R. 1959 and B. Satya Naraina v. Union of India and others, (C.W.P. No. 2516 of 1974), wherein such departmental proceedings were held to be time barred in view of Section 40(2) of the Act. The former was a Single Bench case and reliance was placed therein on the later case, which was decided by a Division Bench. These were based on the decisions of the Supreme Court in R. Raju's case (supra). On the other hand, the learned counsel for the respondents, drew our attention to a decision of the Madhya Pradesh High Court in Universal Cables Ltd. Satna v. Union of India and others, 1977 Tax. L.R. 1825 = 1977 E.L.T. (J 92) (M.P.), wherein it has been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act with sound analysis and reasoning with which we are in respectful agreement as this is our own view. Thus, we have no hesitation in repelling the contention of the petitioner that the show cause notice issued to it was barred by time in view of Section 40(2) of the Act or the resultant orders of the respondents suffer from that infirmity. 13. So far as the next contention is concerned, Rule 225 of the Rules may advantageously be noted :- "225. Producer or manufacturer liable for removal of goods by (any person). - If any excisable goods are in contravention of any condition prescribed in these Rules, removed by (any person) from the place where they are produced, manufactured or warehoused, the producer or manufacturer or the licensee or keeper of the warehouse shall be held responsible for such removal, and shall be liable to be dealt with according to the provisions of the Act or the Rules as if he had removed the goods himself". This Rule like all other Rules draws sustenance from Section 38 of the Act. Section 38 of the Act provides the laying of the Rules before the Parliament. It is not disputed that the Rule met the approval of the Parliament. In Express Newspaper ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ective name of those individuals who constitute the firm. In other words, the firm name is merely an expression, only a compendious mode of designating the persons who have agreed to carry on business in partnership. It is true that the criminal prosecution was directed against the co-partners and the penalty proceedings have been directed against the firm. That could not make the slightest difference, as we have understood the concept of the firm (see in this connection Dulichand Laxminarayan v. Commissioner of Income-tax, Nagpur, (1956) 29 I.T.R. 535 . It is equally noteworthy that penalty proceedings are quasi criminal in nature and penalty will not ordinarily be imposed unless the party obliged either acted deliberately in defiance of law or was guilty of conduct contumacious or dishonest, or acted in conscious disregard of its obligation. Whether penalty should be imposed for failure to perform a statutory obligation is a matter of discretion of the authority to be exercised judicially and on a consideration of all the relevant circumstances [see in this connection Hindustan Steel Ltd. v. State of Orissa, (1972) 83 I.T.R. 26 and Commissioner of Income tax, West Bengal-I and an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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