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TMI Blog1997 (11) TMI 114X X X X Extracts X X X X X X X X Extracts X X X X ..... or Rs. 6,21,61,927/- towards reimbursement of interest on loan portion of the capital employed and wage revision arrears etc., that the first accused failed to include the reimbursement charges in the assessable value and thereby failed to pay duty on the same and that they had suppressed the facts of raising debit notes, and hence a show cause notice dated 19-6-1991 invoking the proviso to sub-section (1) of Section 11A of the Central Excises and Salt Act, 1944 was issued to the first accused as well as the second accused who is the Chairman and Managing Director of the first accused company. The allegation against the second accused was that she was responsible for the Management of the first accused company in a proper manner and that she had failed to observe the proper payment of Central Excise duty by the first accused company and was grossly negligent in this regard to stop various contraventions and violations of the Central Excise Rules and that there was continued evading of payment of duty deserving launching of the prosecution. Under such circumstances the accused were charged under Section 9(1) (b) and 9(1) (bb) of the Central Excises and Salt Act, 1944 read with the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made against the(iv) petitioner would necessarily require the grant of sanction. 6.Point No. (i) With reference to the: contention raised by the petitioner in the context of the directions of the Supreme Court, the Counsel refers to certain directions issued by the Supreme Court in Civil Appeal Nos. 2058-59 of 1988. The directions by the Supreme Court dated 11-10-1991 are as follows :- "We direct that the Government of India shall set up a Committee consisting representatives from the Ministry of Industry, the Bureau of Public Enterprises and the Ministry of Law, to monitor disputes between Ministry and Ministry of Government of India, Ministry and Public Sector Undertaking of the Government of India and Public Sector Undertakings in between themselves, to ensure that no litigation comes to Court or to a Tribunal without the matter having been first examined by the Committee and its clearance for litigation. Government may included a representative of the Ministry concerned in a specific case and one from the Ministry of Finance in the Committee. Senior Officers only should be nominated so that the Committee would (Emphasis supplied)function with status, control and disciplin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the complaint will show that the accused are sought to be proceeded under the penal provisions of the Central Excises and Salt Act, 1944. The allegation against the accused relate to the alleged suppression of accounts and facts resulting in loss of Excise Duty and gross negligence on the part of the second accused as well as the continued evasion of payment of duty which require launching of prosecution. I am inclined to hold that the context in which the directions of the Supreme Court as mentioned above have been made, has nothing to do with the nature of the proceedings now launched against the petitioner herein and hence the observations of the Supreme Court cannot stand in the way of the prosecution being continued. 7. Point No. (ii) : In support of her contention that the sanction would be necessary the petitioner would contend that she is a regular employee of the Central Government and her services have been placed at the disposal of the first accused and it was only the President of India who was the disciplinary authority and as such sanction under Section 197 Cr. P.C. is mandatory. Learned Counsel refers to the definition of public servant as contained in Clause ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was mandatory. 8. Learned Counsel refers to a decision of the Division Bench of the Andhra Pradesh High Court reported in 1963 M.L.J. (Crl.) 298 (Chief Executive Officer, Andhra Pradesh Road Transport Corporation, Hyderabad). In the said case, the Chief Executive Officer of the Andhra Pradesh State Road Corporation question his conviction for an offence under Section 123(1) of the Motor Vehicles Act for having allowed a bus belonging to the Corporation to run without a route permit. The question arose whether a sanction under Section 197 Cr. P.C. would be necessary and the Division Bench of the Andhra Pradesh High Court held that on the basis of the allegations against the accused, obtaining of a permit was an official act and that therefore, the omission to obtain the same was a derelication of duty referrable to the official functions of the accused and therefore, prior sanction of the State Government was necessary. However, in the said judgment, the question whether an employee of a Road Transport Corporation was entitled to seek the protection under Section 197 Cr.P.C. was not gone into. 9 Learned Counsel has also referred to the. judgment of the Andhra Pradesh High Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ision of the Supreme Court reported in 1981 Crl. L.J. 871 (S.S. Dhanoa v. Delhi Municipality). That was a case in which a civil servant working on deputation with a co-operative society (a member of the Indian Administrative Service), was prosecuted under Section 7 read with Section 16 of the Prevention of Food Adulteration Act, 1954. While considering the effect of Clause (12) of Section 21 I.P.C., the Supreme Court held that during his period of deputation he was not an officer in the service or pay of the Government, nor was he in the service of a local authority. In construing the words "Corporation" or a "Company" registered under the Companies Act, as occurring in Clause (12) of Section 21 of I.P.C., the Supreme Court held as follows in paragragh Nos. 9 and 10 of the judgment :- Corporation, in its"9. widest sense, may mean any association of individuals entitled to act as an individual. But that certainly is not the sense in which it is used here. Corporation established by or under an Act of Legislature can only mean a body corporate which owes its existence, and not merely its corporate status, to the Act, for example, a Municipality, Zilla Parishad or Gram Panchayat o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... conducted under the auspices of the Council towards the development of industries in the country are carried out in a responsible manner." Whatever has been said with regard to the Council of Scientific and Industrial Research, which was a society registered under the Societies Registration Act, equally applies to the Co-operative Stores Limited, which is a society registered under the Bombay Co-operative Societies Act, 1925. It is not a statutory body because it is not created by a statute. It is a body created by an act of a group of individuals in accordance with the provisions of a statute." 14.Therefore, according to the Supreme Court a Company, incorporated under the Companies Act, was not created under the Companies Act, but came into existence in accordance with the provisions of the Act and that there was a well marked distinction between a body created by a statute and a body which was governed in accordance with the provision of a statute. The Supreme Court has also taken note of the fact that the petitioner in the said case, while being employed as an officer of the society was not discharging any affairs of the Union within the meaning of Section 197 Cr. P.C. 15. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... above is clear to the effect that it is only in respect of Corporations or Organisations which are creatures of any statute alone could fall under Section 21(12) I.P.C. Even though in the said case, the Supreme Court was only concerned with an employee of a Co-operative Society, the Supreme Court has gone further to examine the implications of Section 21(12) I.P.C. and has categorically held that a Society or a Company not having a statutory character will not fall under Clause (12) of Section 21 I.P.C. The Supreme Court has specifically held that though the term "Corporation" was wide enough to include private corporations also, the expression must be given a narrow legal connotation in the context of Section 21(12) I.P.C. The judgments rendered by the Supreme Court are not only decisional between the parties, but also declaratory for the entire nation as provided under Article 141 of the Constitution of India, and therefore in view of the said judgment, the plea of the petitioner herein has to fail. 17.Point No. (iii) : In the context of the contention of the petitioner that it is only the company which could be liable for the offences committed and not its employees, the lea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to act in the discharge of her duties and that sanction would be necessary even in case of dereliction of duties as well. In support of his contention, learned Counsel has relied on the following judgments :- (i) AIR 1962 Bombay, 198 (Captain Shankarrao v. Burjor D. Engineer) AIR 1970 Bombay, 385 ((ii)N.K. Aher v. H.G. Vartak) (iii) AIR 1955 S.C. 287 (Shreekantiah Ramayya Munipalli v. State of Bombay) (iv) AIR 1955 S.C. 309 (Amrik Singh v. State of Pepsu) AIR 1956 S.C. 44 ((v)Matajog Dobey v. H.C. Bhari) (vi) AIR 1965 S.C. 588 (Somchand Sanghvi v. Bibhuti Bhusan Chakravarty) In all the above mentioned judgments, it is true that the Courts have held that for all offences arising out of discharge of the functions of a public servant, sanction would be necessary if the act was purported to be done in the exercise of a public duty as well as dereliction of duty and that the gravity of the offence was irrelevant. But as I have held that no sanction would be necessary under Section 197 Cr. P.C. as against the petitioner herein in view of the fact that she cannot be said to be a public servant within the scope of Section 21(12) I.P.C. discharging any affairs of the State wit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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