Bombay Silk Mills Ltd. and Another vs Dayashanker, Assistant Collector and Another

D.C. Gheewala, J.—The present petitions are filed u/s 482 of the Code of Criminal Procedure, invoking inherent jurisdiction of this Court

and praying that the complaint bearing No. 3 of 1988 filed by the first respondent, the Assistant Collector of Customs, Bulsar, be quashed. The

said complaint is pending before the Additional Chief Judicial Magistrate, at Bulsar.

The prayer for quashing the complaint is advanced on the ground that the complaint tantamounts to an abuse of the process of the Court and the

complaint does not disclose any offence as alleged in the complaint. The three petitioners are original accused Nos. 7, 9 and 10 before the learned

Chief Judicial Magistrate.

The facts leading to the said complaint can be briefly summarised as under:

M/s. International Marketing of Delhi had procured advance licences for importing polyester filament. Ultimately it was found that the said

polyester filament was not utilised for the purpose for which it was imported and as such the accused named in the complaint had committed an

offence punishable u/s 135 of the Customs Act.

In the complaint, these three petitioners have been named as accused Nos. 7, 9 and 10. The accused No. 7 is M/s. Bombay Silk Mills, Bombay,

accused No. 9 is one Trikam Bhogilal Khatri and accused No. 10 is Balkrishna T. Rajgor. Accused Nos. 9 and 10 are employees of one Vaishali

Textiles, of which accused Hemant Vyas was a Director and he is also Managing Director of original accused No. 7 Bombay Silk Mills. Mr. K. S.

Nanavati, the learned Advocate for the petitioners assailed the complaint on numerous grounds and put forth two main grounds on which he

prayed that the complaint requires to be quashed qua the present petitioners.

Mr. Nanavati''s first contention was that the allegations made in the complaint do not suggest any breach of provisions of Chapter IV-A of

Customs Act. Chapter IV-A deals with detection of illegally imported goods and prevention of the disposal thereof. Mr. Nanavati''s second

contention was that these allegations made in the complaint qua accused Nos. 7, 9 and 10 do not amount to acts or omission constituting sale,

transport or storage of goods in disregard of provisions of Chapter IV-A.

As against this Mr. B.B. Naik, the learned Advocate appearing for the respondent No. 1 urged that while exercising powers u/s 482 of the

Criminal Procedure Code the High Court will not enter into meticulous thread-bare dissection of the complaint and the High Court would not be

concerned with the finding out as to whether on appreciation of evidence the complaint is likely to result in conviction or not. Mr. Naik, urged that

if there is prima facie triable case put forth in the complaint then the High Court would be slow in quashing the said complaint.

Numerous decisions were cited by both the sides in support of their contentions, but as the scope of the present inquiry is limited and falls within

a narrow campass reference to all the decisions in extenso is not necessary and this Court will only be concerned with finding out as to whether the

complaint, if allowed to proceed would tantamount to an abuse of the process of Court or as to whether there is sufficient material prima facie to

proceed against the petitioner accused irrespective of the fact as to whether ultimately on appreciation of evidence the complaint may result in

conviction or acquittal of the accused.

Mr. Nanavati''s main thrust was directed against the involvement of accused No. 7 i.e. Bombay Silk Mills Ltd. and Mr. Nanavati urged that

there must be an averment in the complaint that an officer of the Company who has been implicated in an offence has links with the Company and

is responsible for the conduct of the business of the Company. In the instant case it may be mentioned at the out set that against petitioner-

Balkrishna T. Rajgor and Trikamlal Bhogilal Khatri there are definite averments in the complaint and they do not appear to be associated with the

Bombay Silk Mills in any official capacity. However, Balkrishna Rajgor is a partner of Shri Ganesh Silk Mills and Trikamlal B. Khatri is also

concerned with the yarn business. Mr. Nanavati urged that Hemant Vyas whose petition for quashing the complaint was dismissed at the admission

stage, though he is Managing Director of the Company, namely, Bombay Silk Mills, and though T. Ramchandran who is another accused is an

Export Manager of the Bombay Silk Mills, they can be said to have acted in their individual capacity and not in any way as officer of the Bombay

Silk Mills. It must be noted that the Company functions through its officers and officers of the Company may act even outside their relation with the

Company as individuals on their own. If as an individual they have committed some offence then in all cases it may not be necessary to come to a

conclusion that they had acted in their official capacity as officers of the Company and in such cases the Company cannot be held responsible. This

would always depend upon the facts and circumstances of each case. In the instant case one Tandon of Delhi was holding the licence in question.

He met Hemant Vyas in the office of the Bombay Silk Mills. Another accused T. Ramchandran who is the Export Manager of the Bombay Silk

Mills went to Delhi and opened an account and got the goods cleared. Not only that but the notified register of goods is in the handwriting of T.

Ramchandran. Mr. Nanavaty argued that these accusations by themselves would not establish that either Shri Hemant Vyas or T. Ramchandran

had acted for and on behalf of the Bombay Silk Mills. Mr. Nanavaty''s contention was that the intention and acts of the individual officers cannot

be attributed to the Company unless there is something more to indicate that the officers were acting for and on behalf of the Company. The

Articles of Association or Memorandum of any limited Company would not include as its object an illegal act. The accusation made against the

Company is, therefore, to be judged from the surrounding circumstances and it appears that in the instant case the premises of the Bombay Silk

Mills were utilised for conducting all the negotiations for the alleged illegal acts amounting to offences and it will be significant to note that Mr.

Hemant Vyas till today continues to be the Managing Director of the Company. If the Managing Director and the Export Manaager who are high

officials of the Company utilised the premises of the Company for illegal acts, if the Export Manager went to Delhi from Bombay to open the

account and get cleared the illegal goods, and if Mahavir Chaudhari the main prosecution witness had collected the ''papers pertaining to this illegal

transaction from the premises of the Bombay Sills Mills then a strong presumption arises that whatever was done by the top officials of the

Company, namely, Bombay Silk Mills was done for and on behalf of the Company and as such it will be premature at this stage to quash the

complaint against the Company. Ultimately, on evidence the Company may be exonerated but for the present it does not appear that prosecuting

the Company would tantamount to an abuse of the process of the Court.

Referring to the numerous cases referred to by the learned Advocates appearing for the rival sides, it may be mentioned that my attention was

drawn to a case reported at 1988 Mh LJ 287 Mulchand v. Dayashanker where the Court held that complaint u/s 135 of Customs Act filed only

on basis of statement made u/s 108 by co-accused should be quashed in a petition u/s 482 of the Code of Criminal Procedure, 1973. As stated

above every case would depend upon the facts and circumstances of each case and in the instant case it cannot be said that the complaint is based

only on the statement of a co-accused. Again statement recorded under the provisions of the Customs Act would be admissible in evidence and as

such this decision will not help Mr. Nanavati.

Mr. Nanavati also drew my attention, to a case reported at 45 (1975) CompCas 16 Esso Standard Inc. v. Udharam Bhagwandas Japanwalla.

In the said case the Bombay High Court held that if the allegations in the complaint only disclosed a breach of contract, no mens rea could be

attributed to a Company and, under these circumstances the complaint was quashed. The ratio of the said decision would not be of any avail to the

petitioner inasmuch as in the instant case the allegations do not tantamount only to allegations suggesting the breach of contract but there are

definite allegations which go to allege mens rea. The decision, therefore, cannot be of any assistance to Mr. Nanavati.

Similarly in a case reported at Madhavrao Jiwajirao Scindia and Others Vs. Sambhajirao Chandrojirao Angre and Others, , the quashing of

the complaint by the High Court was upheld by the Supreme Court. However, in that case, the ingredients of a criminal offence were wanting, and

the High Court while quashing the complaint had justifiably taken into consideration the strained relationship between the parties. In the instant case

the ingredients are not wanting and there are no allegations that the respondent No. 1 was motivated by any vengeful attitude against the

petitioners.

Similarly in a case reported in 1988 Cri.L.J. 963 Smt. Paru Mrugesh Jaikrishna v. Assistant Collector of Customs), the learned single Judge of

the Bombay High Court while quashing the complaint held that the only material against the accused was confessional statement of co-accused and

even the said confessional statement was not making out a case under the Customs Act. As even the confessional statement was not making out

any case the High Court had no alternative but to quash the complaint. However it is not so in the present case.

Mr. Nanavati heavily relied upon a case reported at Vol. 14 Excise Customs Cases 36 Rajnikant Maganbhai Patel v. Assistant Collector of

Customs. In the said case the complaint was filed for violation of the Foreign Exchange Regulations and original accused No. 7 had challenged the

said complaint and had prayed that it should be quashed u/s 482 of Cri. Pro. Code. On the facts and circumastances of the said case the learned

single Judge of the Bombay High Court came to the conclusion that the circumstances alleged against the said petitioner even if taken at their

maximum face value would fall short of the most curtail element under which accused No. 7 was tagged with the involvement in the criminal

conspiracy. On the facts of the said case it was found that the said petitioner i.e. accused No. 7 had only limited knowledge regarding particular

transaction of purchase of foreign exchange by accused Nos. 5 and 6. The said petitioner as an employee was only asked to do some overt act of

watching the brief case or the suit case and attending to the phone call in the hotel room. He was, therefore, held not associated in the conspiracy

and the process was quashed against him. 1 fail to appreciate as to how in the instant case the observations made by the learned single Judge of

the Bombay High Court in the said case can be of any avail to any of the petitioners. The petitioner Nos. 9 and 10 in the present case were not

mere pegs. They had actively participated in various transactions. It, therefore, cannot be said that the case against them taken at its maximum face

value will not reveal that they were part and parcel of the conspiracy.

Mr. Nanavati also argued that in the instant case reference to Bombay Silk Mill is only descriptive and hence it cannot be held that the

Company is responsible for the act of any of its officers. In this behalf Mr. Nanavati relied upon a decision reported at 1971 (2) All ER 127 Tesco

Supermarkets Ltd v. Nattrass. In the said case a nationally known public company owned serveral hundred supermarkets. At one of these

supermarkets they displayed an advertisement regarding a particular brand of washing powder which advertisment said that on the particular

packet one shilling less was being charged. On account of the mistake of a Sales Girl the packets were displayed which were tagged with the

higher price. A customer was informed that no packets were in stock for sale at a lower price. Information was lodged with the authorities for an

offence punishable under Trade Description Act, 1968. The Courts below upheld the convication of the Company but on an appeal the House of

Lords held that:

In the case of a large-scale business, the owner, whether natural person or a limited Company, could not personally supervise the activities of all

his servants which might lead to the commission of an offence under the 1968 Act; it would therefore be consistent with the taking of reasonable

precautions and the exercise of due diligence to institute an effective system to avoid the commission of offences under which superior servants

were instructed to supervise inferiors servants whose acts might otherwise lead to the commission of an offence; this was not the delegation of the

duty to exercise due diligence but the performance of that duty; when the owner was a limited Company a failure to exercise due diligence on its

part would only occur where the failure was that of a director or senior manager in actual control of the Company''s operations who could be

identified with the controlling mind and will of the Company; whether the Company had exercised all due diligence was a question of fact but, if it

had done so, there was no rule that it was nevertheless liable for the act or default of one of its subordinate managers who was not identifiable with

the Company if that act or default consisted of a failure on the manager''s part properly to exercise supervisory functions over other servants of the

Company; the manager''s failure would, on the contrary, constitute an act or default of another persons, i.e. a person other than the Company.

The appeal filed by the Company was allowed by the House of Lords. Mr. Nanavati tried to press in service the above quoted observation.

However, the facts in the instant case are so different that the ratio of the said case can in no way be made applicable. In the instant case the top

officers of the Company were involved and premises of the Company were utilised by these top officers for conducting these nefarious activities.

Even papers pertaining to these transactions had been collected from the premises of the Company. Under the circumstances, it cannot be held

that the default was made by some subordinate person who was not identifiable with the Company and hence the ratio of this case would be of

little avail to Mr. Nanavati.

As against this Mr. Naik, drew my attention to a case reported at Smt. Nagawwa Vs. Veeranna Shivalingappa Konjalgi and Others, where

the Supreme Court summarised the instances where an order of Magistrate issuing process against the accused can be quashed and set aside. In

para 5 of the judgment the Supreme Court held as under:

(1) Where the allegations made in the complaint or the statement of the witnesses recorded in support of the same taken at their face value make

out absolutely no case against the accused or the complaint does not disclose the essential ingredients of an offence which is alleged against the

accused;

(2) Where the allegations made in the complaint are patently absurd and inherently improbable so that no prudent person can ever reach a

conclusion that there is sufficient ground for proceeding against the accused;

(3) Where the discretion exercised by the Magistrate in issuing process is capricious and arbitrary having been based either on no evidence or on

materials which are wholly irrelevant or inadmissible, and

(4) Where the complaint suffers from fundamental legal defects, such as, want of sanction, or absence of a complaint by legally competent authority

and the like.

As in the instant case according to Mr. Naik, none of the four categories are applicable, the process issued by the learned CJM does not require

to be quashed.

Similarly in a case reported at J.P. Sharma Vs. Vinod Kumar Jain and Others, the Supreme Court held that if taking all the allegations in the

complaint to be true without adding or subtracting anything, it cannot be said that no prima facie case for trial has been made out this Court would

not be justified in quashing the complaint u/s 482 of Cri. Pro. Code.

Similarly in a case reported at R.P. Kapur Vs. The State of Punjab, , the Supreme Court while dealing with the provisions Section 561-A

Cr.P.C. 1898 which is exactly identical with Section 482 of Cr.P.C. 1973 illustrated the categories of the cases where the inherent jurisdiction to

quash proceedings can and should be exercised. The Supreme Court held firstly that where it manifestly appears that there is a legal bar against the

institution or continuance of the criminal proceeding in respect of the offences alleged, secondly, whether the allegation in the FIR even if taken at

their face value do not constitute the offence as alleged and, thirdly whether the allegations were made against the accused do constitute an offence

alleged but there is either no legal evidence then only in those cases the process should be quashed. Mr. Naik urged that in the instant case the

allegations constitute an offence and there is prima facie case to go to the trial. )

Lastly, Mr. Naik drew my attention to a case reported at 1977 [XVIII] GLR 289 Union of India v. Kanchanlal Trikamlal and Ors. wherein

the learned single Judge (A.D. Desai, J.) held that mens rea is not a necessary ingredient in an offence under the Customs Act and the existence of

the criminal intention would be presumed, and burden is cast on the accused to displace the presumption. Relying upon this observation Mr. Naik

urged that to quash the process at a stage when even the evidence has not been adduced, in such type of cases where alleged offences have a

tendency to jeopardize the economic stability of the Company would nip the prosecution case in the bud. I can see the force in Mr. Naik''s

contention and as I have already held that there is sufficient evidence atleast for the case to be allowed to go to trial and as there are triable

allegations made against each of the petitioners, I feel that no case has been made out to quash the proceedings.

Regarding petitioner-accused No. 7 i.e. Bombay Silk Mills have already held above that the top officers of the Company had utilised the

premises of the Company for doing the alleged illegal acts, papers were collected from the premises of the Company and as such there is sufficient

ground to proceed against the Company as well. In view of the above discussion, the petitions are required to be dismissed and they are

accordingly dismissed. Rule is discharged and the interim relief is vacated in all the petitions.