Ajay Home Product Limited And Anr. vs The State And Anr.
2007 Latest Caselaw 936 Del

JUDGMENT

Shiv Narayan Dhingra, J.

Page 1441

1. By this petition under Section 482 Cr.P.C., the petitioners have prayed for quashing of FIR NO.187 dated 16.7.2005 under Sections 406/420/471 of IPC, Section 50 of Delhi Sales Tax Act and Section 9 of Central Sales Tax Act, registered at Police Station Naraina.

2. Brief facts relevant for purpose of deciding this petition are that the petitioner No. 1 is a company and petitioner No. 2 is Managing Director of this company. The petitioner company has been manufacturing and dealing in consumer home products and filing sales tax returns in respect of Central Sales Tax and State Sale Tax. During survey of the petitioners returns, it was found that the petitioner reflected sales of consumer goods to the tune of Rs. 5,24,08,355/- as exempted sales to US Embassy against exemption certificates, during assessment years 2000-01 and sale of consumer goods worth Rs. 5.62 crores as exempted sale against exemption certificates during 2001-02. The petitioners submitted nine sales tax exemption certificates purportedly issued by US Embassy. During the course of investigation it was found that no exemption certificate was ever issued by US Embassy and no sale was made to US Embassy by the petitioners. The petitioners forged the exemption certificates purportedly issued by US Embassy to the following effect:

  SI.   STEC   DATED     FOR THE GOODS RECEIVED   AMOUNT (IN RS.)
                       DURING THE MONTH
      4919   11/04/02  APRIL 2001               1,84,50,000
2     4920   11/04/02  JULY, AUG.SEPT.2001      1,74,45,000
3     4921   11/04/02  OCTOBR NOVEMBER          2,03,65,000
                       DECEMBER 2001
                       TOTAL EXEPTION CLAIMED
                       DURING 2001-02          5,62,60,000
4     2763   10/04/01  MAY & JUNE 2000         17,68,850
5     2764   10/04/01  JULY, AUGUST            1,12,33,625
                       SEPTEMBER 2000
6     2766   10/04/01  JANUARY 2001            1,17,04,680
7     2765   10/04/01  OCTOBER NOVEMBER 2000   89,21,380
8     2768   10/04/01  MARCH 2001              88,64,780
9     2767   10/04/01  FEBRUARY 2001           99,04,940
                       TOTAL EXEMPTION
                       CLAIMED DURING 2000-01  5,23,98,255
                       GRAND TOTAL             10,86,58,255
 

Page 1442
 

3. The inquiry also revealed that the petitioners had collected Central Sales Tax at the rate of 4% from the buyers and despite collecting huge amount of tax from the buyers, did not deposit the same with the Sales Tax Department. The petitioners also caused wrongful loss of 6% of the local sales tax by submitting forged sales tax exemption certificates purportedly issued by US Embassy. The petitioners thus caused a wrongful loss to the tune of Rs. 2,64,12,216/- to the Public Exchequer. The above FIR was registered against the petitioners on 16.7.2005 under abovestated sections for these reasons.

4. The petitioners in this petition contended that the petitioner No. 2, being the managing director was mentally disturbed during the relevant period due to severe illness i.e. bone marrow cancer, of his wife, to which she scummed finally. During this period, the staff was managing the business and may have committed irregularities. The petitioner No. 2, due to mental disturbance, was not able to attend to the business affairs properly and was signing papers without verifying on blind faith of the staff. The Accountant, who used to pursue matters with sales tax department suddenly left the job and the petitioner came to know about the alleged offence only when petitioner received ex parte assessment orders. Thereafter, the petitioner company filed appeals and deposited various amounts totaling to Rs. 1.15 crores as directed by the Sales Tax Tribunal under Central Sales Tax and Rs. 73 lacs under local sales tax as directed by the Appellate Authorities. The appeals against the assessment orders were pending before the Additional Commissioner. It is not pleaded by the petitioners that actual sales were made to US Embassy or that forged exemption certificates were not used to seek tax exemption illegally.

5. The quashing of FIR is sought on the ground that the alleged offence committed by the petitioners was not covered under Sections 406/420/468 of Indian Penal Code. The offences, if any, were only under Delhi Sales Tax and Central Sales Tax. The petitioners' counsel drew my attention to Section 50 of the Delhi Sales Tax Act which describes the offence and penalties and submitted that the alleged offences committed by the petitioners, if any, were covered only under Section 50(1)(j) of the Delhi Sales Tax Act which reads as under:

50. Offences

(1) Whoever -

(a) xxxxxx

(b) xxxxxx

(c) xxxxxx

(d) xxxxx

(e) xxxxx

(f) xxxxxx

(g) xxxxxx

(h) xxxxxx

(i) xxxxxx

(j) knowingly maintains or produces incorrect accounts, registers or documents or knowingly furnishes incorrect information; or

Page 1443

(k) xxxxxx

(1) xxxxxx

(m) xxxxx

(n) xxxxx

(o) xxxxxx

(p) xxxxx

shall be punishable with rigorous imprisonment for a term which may extend to six months or with fine, or with both and where the offence is a continuing one, with a daily fine not exceeding two hundred rupees during the period of the continuance or the offence:

PROVIDED that no prosecution for an offence under this Act shall be instituted in respect of the same facts in respect of which a penalty has been imposed under Sub-section (6) of Section 20, Sub-section (6) of Section 23, Section 55, Section 56 or Section 57:

PROVIDED FURTHER that a person shall not be deemed to have committed an offence under Clause (b) if he had applied for registration under this Act in accordance with the provisions of Sub-section (2) of Section 14, or Sub-section (2) of Section 17, as the case may be.

(2 Notwithstanding anything contained in Sub-section (1), if any person commits an offence under Clause (a) or Clause (f) or Clause (j) or Clause (i) or Clause (m) or Clause (o) of that sub-section and the court is satisfied that the offence has been committed willfully, he shall be punishable with rigorous imprisonment for a term which may extend to six months and with fine, and where the offence is a continuing one, with a daily fine not exceeding three hundred rupees during the period of the continuance of the offence.

6. Section 10A and 11 of the Central Sales Tax Act, 1956 reads as under:

10A. Imposition of penalty in lieu of prosecution.- [(1)] If any person purchasing goods is guilty of an offence under Clause (b) or Clause (c) or Clause (d) of Section 10, the authority who granted to him or, as the case may be, is competent to grant to him a certificate of registration under this Act may, after giving him a reasonable opportunity of being heard, by order in writing, impose upon him by way of penalty a sum not exceeding one and a half times 7[ the tax which would have been levied under Sub-section (2) of Section 8 in respect of the sale to him of the goods, if the sale had been a sale falling within that sub-section]:

Provided that no prosecution for an offence under Section 10 shall be instituted in respect of the same facts on which a penalty has been imposed under this section.]

1(2)The penalty imposed upon any dealer under Sub-section (1) shall be collected by the Government of India in the manner provided in Sub-section (2) of Section 9-

(a) in the case of an offence falling under Clause (b) or Clause (d) of Section 10, in the State in which the person purchasing the goods obtained the form prescribed for the purposes of Clause (a) of Page 1444 Sub-section (4) of Section 8 in connection with the purchase of such goods;

(b) in the case of an offence falling under Clause (c) of Section 10, in the State in which the person purchasing the goods should have registered himself if the offence had not been committed]

11. Cognizance of offences. - (1) No court shall take cognizance of any offence punishable under this Act or the rules made there under except with the previous sanction of the Government within the local limits of whose jurisdiction the offence has been committed or of such officer of that Government as it may, by general or special order, specify in this behalf; and no court inferior to that of a presidency magistrate or a magistrate of the first class shall try any such offence.

7. It is argued that since the Central Sales Tax Act and Delhi Sales Tax Act were special laws, violations of the provisions of these Acts have been provided as offences under these two Acts and no FIR could be registered against the petitioners under the Indian Penal Code offences. Neither the investigation could have been made against the petitioners in view of Section 4(2) of Cr. P.C. which reads as under:

4.Trial of offences under the Indian Penal Code and other laws. (1) xxxxx (2) All offences under any other law shall be investigated, inquired into, tried, and otherwise dealt with according to the same provisions, but subject to any enactment for the time being in force regulating the manner or place of investigating, inquiring into, trying or otherwise dealing with such offences.

8. Learned Senior Counsel for the petitioners Mr. Dinesh Mathur argued that no prosecution can be instituted against the petitioner in view of the first proviso to Section 50 of the Delhi Sales Tax Act since the penalties have already been imposed for the alleged offences on the petitioners. He relied upon Section 56 of Delhi Sales Tax Act and submitted that the offences committed by the petitioners were covered under the provisions of Sections 50 of Delhi Sales Tax Act in respect of which penalties have been imposed. He also relied upon Section 26 of General Clauses Act and argued that wherein an Act and omission constitute two or more enactments then the offenders shall be liable to be prosecuted and punished under either or any of those enactments but shall not be liable to be punished for the same offence twice.

9. It is further argued that the offence under Sections 406/ 420/ 408/ 471 were not made out at all. There was no entrustment of property or any dominance over the property or any person whosoever or to the petitioners. Neither there was any inducement to any person or delivery of any kind of property or valuable security made to the petitioners and in absence of offence of cheating, the alleged offence of forgery for the purpose of cheating also fails. The charge under Section 471 of IPC was not maintainable as requisite knowledge for the offence was missing.

10. On the other hand, it is argued by State counsel that the petition should be dismissed because the petitioner did not approach the Court with clean Page 1445 hands. It is argued that the petitioner had earlier made an application for anticipatory bail and obtained relief against his arrest subject to participating in the investigation. Thereafter, the petitioner moved this petition for quashing and did not bring to the notice of the Court the interim order already passed and obtained another interim order. The State counsel produced the coy of the order passed by the Court in Bail Application No. 1809 of 2006 which is self-explanatory and reads as under:

19.10.2006

Present: Mr. D.C. Mathur, Sr. Advocate with Mr. Ajay Burman for the petitioner.

Mr. Pawan Sharma for the Respondent/State.

BAIL APPLN. 1809/2006

Mr. Mathur, the learned senior counsel appearing for the petitioner, submits that, in the meanwhile, the petitioner along with the company had filed a petition under Section 482 of the Code of Criminal Procedure, 1973, namely, CRL. M.C. 5830-31/2006 for quashing of the proceedings. That petition came up before another Bench of this Court on 14.9.2006 wehrein the said Bench was pleased to direct that, in the meantime, the petitioner be not arrested subject to his participating in the investigation as and when required. Apparently, the order passed by this Bench was not made available to the Bench which passed the order on 14.9.2006 inasmuch as the present petitioner was already enjoying interim protection by virtue of orders passed by this Court and there would have been no necessity for passing an order of not arresting the petitioner. In any event, since the matter is now before the other Bench and the learned Counsel for the petitioner submits that this application has become infructuous, I am dismissing the same as being having become infructuous.

dusty.

BADAR DURREZ AHMED

(JUDGE)

OCTOBER 19,2006.

11. It is submitted by learned Counsel for State that despite giving assurance to this Court that he shall join the investigation, the petitioner No. 2 did not join investigation although several opportunities were given to him. Neither the petitioner divulged true facts and did not furnish required documents and tried to mislead the investigating agency by submitting that one Mr. Sunil Bhalla, the then manager accounts of the company, had procured and filed all the nine forged sales tax exemption certificates. It is also submitted that contention of the petitioner has been found false. Mr. Sunil Bhalla has been contacted through e-mail and has stated that he was neither concerned nor related to any matters of accounts or sales tax directly and that he migrated to Canada on 9.5.01 vide passport No.B-5011018. The investigating agency went through the record of the Airport which confirmed that Mr. Sunil Kumar Bhalla had departed to Canada on 9th May, 2001 by Flight No.UA001. It is further submitted that no case of quashing of FIR was made out.

Page 1446

12. Learned Counsel for petitioners relied upon CIT v. Bhupen Champak Lal Dalal and Anr. 2001 SCC(Cri) 544 wherein the Supreme Court held as under:

3. The prosecution in criminal law and proceedings arising under the Act are, undoubtedly, independent proceedings and, therefore, there is no impediment in law for the criminal proceedings to proceed even during the pendency of the proceedings under the Act. However, a wholesome rule will have to be adopted in matters of this nature where courts have taken the view that when the conclusions arrived at by the Appellate Authorities have a relevance and bearing upon the conclusions to be reached in the case necessarily one authority will have to await the outcome of the other authority:

13. Learned Counsel for the petitioners further relied upon State of Haryana v. Bhajan Lal 1992 SCC 426 wherein the Supreme Court laid down the criteria and guidelines for quashing of proceedings and observed as under:

The following categories of cases can be stated by way of illustration wherein the extraordinary power under Article 226 or the inherent powers under Section 482 Cr.P.C. can be exercised by the High Court either to prevent abuse of the process of any court or otherwise to secure the ends of justice, though it may not be possible to lay down any precise, clearly defined and sufficiently channelized and inflexible guidelines or rigid formulae and to give an exhaustive list of myriad kinds of cases wehrein such power should be exercised:

(1)Where the allegations made in the first information report or the complaint, even if they are taken at their face value and accepted in their entirety do not prima facie constitute any offence or make out a case against the accused.

(2)Where the allegations in the first information report and other materials, if any, accompanying the FIR do not disclose a cognizable offence, justifying an investigation by police officers under Section 156(1) of the Code except under an order of a Magistrate within the purview of Section 155(2) of the Code.

(3)Where the uncontroverter allegations made in the FIR or complaint and the evidence collected in support of the same do not disclose the commission of any offence and make out a case against the accused.

(4)Where, the allegations in the FIR do not constitute a cognizable offence but constitute only a non-cognizable offence, no investigation is permitted by a police officer without an order of a Magistrate as contemplated under Section 155(2) of the Code.

(5)Where the allegations made in the FIR or complaint are so absurd and inherently improbable on the basis of which no prudent person can ever reach a just conclusion that there is sufficient ground for proceeding against the accused.

(6)Where there is an express legal bar engrafted in any of the provisions of the Code or the concerned Act (under which a criminal proceeding is instituted) to the institution and continuance of the proceedings and/or where there is a specific provision in the Code Page 1447 or the concerned Act, providing efficacious redress for the grievance of the aggrieved party.

(7)Where a criminal proceeding is manifestly attended with mala fide and/or where the proceeding is maliciously instituted with an ulterior motive for wreaking vengeance on the accused and with a view to spite him due to private and personal grudge.

14. Learned Counsel for the petitioners submits that the case of the petitioners was covered by the judgment of Supreme Court in Bhajan Lal's case (Supra) since there was a legal bar engrafted under Sales Tax Act and Central Sales Tax Act under Article 26 of General Clause Act against registration of an FIR under other provisions of IPC. He also submitted the it would amount to double jeopardy.

15. The Supreme Court had considered the scope of Section 26 of General Clause Act in State(NCT of Delhi) v. Navjot Sandhu Alias Afsan Guru and Ors. and observed as under:

255. The learned Counsel, apart from placing reliance on Section 56 of POTA, has also drawn our attention to Section 26 of the General Clauses Act and Section 71 IPC. His contention, though plausible it is, has not legal basis. We do not think that there is anything in Section 56 of POTA which supports his contention. That provision only ensures that the conspiracy to commit the terrorist act shall be punishable under POTA. As the appellant is being punished under that Section, irrespective of the liability to be punished under the other laws, Section 56 ceases to play its role. Then, we shall turn to Section 26 of the General Clauses Act, which lays down:

26. Where an act or omission constitutes an offence under two or more enactments, then the offender shall be liable to be prosecuted and punished under either or any of those enactments, but shall not be liable to be punished twice for the same offence.

It becomes at once clear that the emphasis is on the words same offence. It is now well settled that where there are two distinct offences made up of different ingredients, the bar under Section 26 of the General Clauses Act or for that matter, the embargo under Article 20 of the Constitution, has no application, though the offences may have some overlapping features. The crucial requirement of either Article 20 of the Constitution or Section 26 of the General Clauses Act is that the offences are the same or identical in all respects. It was clarified in State of Bihar v. Mural Ali Khan 'Through Section 26 in its opening words refers to the act or omission constituting an offence under two or more enactments, the emphasis is not on the facts alleged in the two complaints but rather on the ingredients which constitute the two offences with which a person is charged. This is made clear by the concluding portion of the section Page 1448 which refers to shall not be liable to be punished twice for the same offence.. If the offences are not the same but are distinct, the ban imposed by this provision also cannot be invoked.' The same set of facts, in conceivable cases, can constitute offences under two different laws. An act or an omission can amount to and constitute an offence under IPC and at the same time constitute an offence under any other law.

We accept the argument of the learned Counsel for the State Mr. Gopal Subramanium that offences under Section 302 IPC, Sections 3(2) and 3(3) of POTA are all distinct offences and a person can be charged, tried, convicted and punished for each of them severally. The analysis of these provisions show that the ingredients of these offences are substantially different and that an offence falling within the ambit of Section 3(1) may not be squarely covered by the offence under Section 300 IPC. The same set facts may constitute different offences. The case of State of M.P. v. Veereshwar Rao Agnihotry 1957 SCR 868 is illustrative of this principle. In that case, it was held that the offence of criminal misconduct punishable under Section 5(2) of the Prevention of Corruption Act is not identical in essence, import and content with an offence under Section 409 IPC. The bar to be punishment of the offender twice over for the same offence would arise only where the ingredients of both the offences are the same.

16. In view of law laid down by the Supreme Court, the argument of Mr. Mathur based on Section 26 of General Clauses Act has no force.

17. The argument of the learned Counsel for the petitioners that no offence under Section 409 was revealed from the facts is baseless argument. The petitioner No. 2 had collected Central Sales Tax from the customers @ 4% on the sales proceeds. The amount of this tax collected was public money which the petitioner was supposed to deposit with the Sales Tax Department as per law. The petitioners were thus holding the amount collected from buyers in trust and they were bound by law to deposit the same with the government. The petitioner misappropriated this money and did not deposit the money with the government. The offence is squarely covered under Section 405 of IPC which defines criminal breach of trust. The Illustration (e) of Section 405 IPC which reads as under:

(e) A, a revenue officer, is entrusted with public money and is either directed by law, or bound by a contract, express or implied, with the Government, to pay into a certain treasury all the public money which he holds. A dishonestly appropriates the money. A has committed criminal breach of trust.

18. I consider that all companies and employers and those persons who collect taxes under an obligation of tax laws are legally bound to deposit the same with income tax/sales tax departments. They hold money in trust and if they do not deposit the money with the concerned department as per law and misappropriate the money for their own use, offence of breach of trust is committed. Similarly, those employers who receive money from their employees against provident funds, ESI etc. hold this money in trust. This money belongs to the employees and it has to be deposited Page 1449 with the concerned department i.e. provident fund trust or ESI and if money is not deposited and is misappropriated, an offence under Section 406 IPC is made out.

19. Cheating is defined under Section 415 of IPC as under:

415. Cheating.- Whoever, by deceiving any person, fraudulently or dishonestly induces the person so deceived to deliver any property to any person, or to consent that any person shall retain any property, or intentionally induces the person so deceived to do or omit to do anything which he would not do or omit if he were not so deceived, and which act or omission causes or is likely to cause damage or harm to that person in body, mind, reputation or property, is said to cheat.

Explanation.- A dishonest concealment of facts is a deception within the meaning of this section.

(a) A, by falsely pretending to be in the Civil Service, intentionally deceives Z, and thus dishonestly induces Z to let him have on credit goods for which he does not mean to pay. A cheats.

(b) A, by putting a counterfeit mark on an article, intentionally deceives Z into a belief that this article was made by a certain celebrated manufacturer, and thus dishonestly induces Z to buy and pay for the article. A cheats.

20. It is quite apparent from the reading of above section that offence of cheating is constituted not only when a person is dishonestly induced to deliver any property, cheating is also constituted if a person is intentionally induced or deceived to do or omit to do something which he would not have done or omitted to do if he was not so deceived. By submitting forged exemption certificates, the petitioners ostensibly induced sales tax department not to charge local sales tax worth crores of rupees, which the department would have otherwise charged. The ingredients of cheating are thus clearly made out in this case. The ingredients of forgery are present because forged documents were prepared and submitted. The ingredients of Section 471 of IPC also exit.

21. The plea of the petitioners that the offences committed by the petitioners were covered under Section 50 of Delhi Sales Tax Act and Section 10 of Central Sales Tax exclusively and therefore there was a legal bar against registration of an FIR, must fail. As already noted, Sections 50(1)(j) is an offence in respect of maintaining or producing incorrect accounts registers and documents or intentionally furnishing incorrect information. Section 50(1)(j) thus covers manipulation of accounts to evade payment of true taxes. The maintenance of incorrect accounts may be done by not showing certain sales which had actually taken place so that less tax is to be paid. Maintaining of false and incorrect accounts and registers do not include the acts of collecting local sales tax or central sales tax from the customers and then misappropriating the same. Such act does not fall under maintaining of incorrect accounts but such act amounts to a clear fraud being played on the exchequer. The offence covered under Section 50(1)(j) is only in respect of the accounts that are deliberately manipulated to show less sales, local or Page 1450 interstate. Similarly, offence under Section 10 of Central Sales Tax Act do not cover the offence as disclosed in this case. The offences which are disclosed in this case are more severe and more heinous than the offences under above Sections of Central Sales Tax Act and Delhi Sales Tax Act. The offences which have been disclosed are clearly covered under Indian Penal Code. It may be there that in order to cover up the forgery and breach of trust, the petitioners had also committed offences under Delhi Sales Tax Act and Central Sales Tax Act and had made and maintained false accounts. Maintaining of false accounts and furnishing incorrect information after commission of breach of trust, cheating and forgery are two different aspects. The offences under the provisions of Delhi Sales Tax Act and Central Sales Tax Act were, it seems, consequent to the offences under Indian Penal Code which ostensibly were committed first.

22. I consider that it is not a case where the Court should quash the FIR. The petitioner had also played smart with the Court in not disclosing to the Court that he had been proceeding with different remedies. He had not been joining investigation. The plea of the petitioner that he was in miserable condition as his wife suffered from cancer, seems to be trading on the miseries of his wife. None of the employees of the petitioners would have been benefited by non payment of tax collected. The employees get salaries for doing their work. They do work as directed to them. It is not the case of the petitioner that he had employed commission agents for sales tax purposes who were to receive commission on taxes or amount not paid to the government. Moreover, the petitioner has not lodged any report against any of his employees for indulging into any forgery, misrepresentation, cheating etc. The sole beneficiary of this cheating and breach of trust were the petitioners who got enriched by crores of rupees. If the petitioner had been so engrossed due to illness of his wife, he would have no mind and time to give instructions to his employees how to manipulate and how not to pay the taxes. If he had been reposting faith in his employees all this would not have been possible, because employees had no personal interest in amassing wealth for the petitioners by illegal means. The petitioner tried to gain sympathy taking shelter of the illness of his wife after ostensibly indulging into forgery and breach of trust.

23. In view of my foregoing discussion, I find no force in the petition. The petition is a frivolous petition and is hereby dismissed with costs of Rs. 50,000/- to be paid in Delhi High Court Legal Services Committee. The observations made hereinabove shall have no bearing on the merits of the case.