Pioneer Engineering Corporation and others vs N. Jayakar, Asst. Commissioner of Income Tax

Rengasamy, J.—This petition is u/s 482 of the Code of Criminal Procedure to quash the proceedings, viz., E.O.C.C. No. 878 of 1991 on

the file of the Additional Chief Metropolitan Magistrate (E.O. II), Madras, against the petitioners. The first petitioner is the partnership firm, while

petitioners Nos. 2 to 6 are the partners. The respondent has filed a complaint against these petitioners alleging commission of the offences under

sections 120B, 34, 193, 196, 420 and 511, Indian Penal Code, and also sections 276C(1), 277 and 278B of the Income Tax Act. This petition

has been filed by the accused alleging that except the allegation in the complaint that all the accused conspired to commit the offences mentioned

above and they were in charge of the conduct of the business of the first accused, there is no basis for such allegations and there is also no record

to accept that accused Nos. 3 to 6 were actually in charge of the administration of the business and, therefore, the proceedings against them have

to be quashed.

Learned counsel for the petitioners, Mr. K. A. Panchapagesan, conceded that as the first accused being the partnership firm and the second

accused, the managing partner, has signed the Income Tax returns, the prosecution can proceed against A. 1 and A. 2 but the same has to be

quashed against the other petitioners for the reasons mentioned above. Learned counsel, Mr. K. Ramasamy, who is appearing for the respondent,

refers to the partnership deed in which every partner has been given a specific responsibility in the administration of the firm and according to him

from the responsibility allotted to each partner, it cannot be stated that any one of these partners can be treated as sleeping partner, and, therefore,

it has to be treated that all the partners are in charge of the first accused partnership firm. It is true that the partnership deed referred to now makes

it clear that each partner has got a specific role to play in the administration of the company and, therefore, they are in actual charge of the

administration of the firm. But learned counsel, Mr. K. A. Panchapagesan, relying upon the decision of the apex court in State of Karnataka Vs.

Pratap Chand and Others, would contend that the person in charge means the person who is in overall control of the day to day business of the

company or firm, and in this case, even if it is accepted that each partner was in control of certain branches for the purpose of the administration, it

will not amount to overall charge of the firm and, therefore, the proceedings against petitioners Nos. 3 to 6 cannot be allowed to continue. In this

case, not only for the mere reason that the partners are incharge of the conduct of the business of the first accused firm, but also for their

participation in the commission of the offences, the complaint has been launched against them. In the complaint paragraphs 13, 14 and 16, it is

specifically alleged that all the accused conspired to fabricate false evidence in the form of books of account referred to in paragraphs 8 and 9

containing false entries with a view to use them as genuine evidence in the Income Tax proceedings. It is also alleged in paragraph 14 that all the

accused for the purpose of using as genuine evidence in the Income Tax assessment proceedings, intentionally fabricated false books of account.

Therefore, there are specific allegations against all the accused for the participation in the commission of the offences alleged against them. At this

stage, the details of the evidence cannot be gathered against each and every accused, because the participation in the commission of the offences,

sometimes may be evident from the conduct of the parties, which can be made clear only at the time of the trial. Apart from the fact that they are in

charge of the conduct of the business, as it is alleged that they were also participants in the commission of the offence, I feel that the proceedings

cannot be quashed, because the participation can be brought to light at the time of the trial of the case. Hence, as I am not inclined to quash the

proceedings, the petitioners have to face the proceedings against them.

In the result, this criminal original petition is dismissed.