Ramswaroop and Others vs State and Another

L. Manoharan, J.—This application is u/s 439 of the Code of Criminal Procedure. The applicants four in number were arrested on 29.3.1996. They were produced before the Magistrate on 30.3.1996 who remanded them to judicial custody till 6.4.1996. It is submitted by Mr. Bhangde. Ld. Counsel that after 6.4.1996, as per an application for extension of remand, the ld. Magistrate extended the remand up to 16.4.1996. In the meanwhile it is submitted by the ld. Counsel for the applicants that an application for enlarging the applicants on bail was made, which application was rejected by the ld. J.M.F.C. Nagpur, whereupon the applicants moved the 6th Additional Sessions Judge, Nagpur, u/s 439 of the Code of Criminal Procedure for bail which application too was dismissed on 3.4.1996. It is thereafter that this application is moved before this Court.

On behalf of non-applicant No. 2 a reply has been filed. It was submitted by the ld. Counsel for the applicants, Mr. Dharmadhikari, that the applicants were forwarded to Police Station, Sadar, Nagpur, and an application for bail was filed before the Station House Officer though the same was not entertained. Later the applicants were produced before the Magistrate. The ld. Magistrate, as indicated earlier, remanded the applicants to judicial custody. The first point raised by Mr. Dharmadhikari is that the offence being non-cognizable u/s 9A of the Central Excises & Salt Act, 1944 (for short, "the Act"), Section 167 of the Code of Criminal Procedure (for short, "the Code"), has no application. Therefore, the order of remand is vitiated as the ld. Magistrate is not clothed with jurisdiction to pass an order remanding the applicants to judicial custody. The second point urged by the ld. Counsel is with due regard to the ambit and scope of Section 20 of the Act, the offence is a bailable offence, and therefore, rejection of the application for bail by both the ld. Magistrate as well as the Sessions Judge is illegal. Lastly, the ld. Counsel submitted that even assuming that Section 167 of the Code is applicable and the offence is non-bailable, the facts of the case are such that the applicants are entitled to be enlarged on bail atleast on conditions.

On the other hand, ld. Counsel for non-applicant No. 2 Mr. Bhangde, maintained in view of the fact that the remand application Annexure-A, estimates evasion of tax to the tune of rupees two crores and the offence is punishable with imprisonment for a term which may extend to seven years and fine u/s 9 of the Act, as per Schedule I, Part II of the Code the offence is non-bailable. According to him even assuming that the estimate is rough and the evasion is less, the offence disclosed being one punishable u/s 9 of the Act, the applicants are liable to be punished for a term up to three years, which again is non-bailable under Part II of Schedule I of the Criminal Procedure Code. The ld. Counsel also submitted that with due regard to Sections 18, 19, 20 and 21 of the Act, it is idle to contend that Section 167 of the Code has no application. According to Mr. Bhangde, the result of such an interpretation to the contrary will render the provision requiring the officer-in-charge of the Police Station or the Central Excise Officer duly authorised in that behalf to forward the arrested person to the Magistrate ineffective. If the Magistrate cannot exercise powers u/s 167 there will be no purpose for sending the prisoner to the Magistrate. Therefore, such an interpretation with due regard to the wording of the aforesaid section is not possible. Reliance was placed by the ld. Counsel on the decision in the case of Directorate of Enforcement Vs. Deepak Mahajan and another, in support of his contention that Section 167(1) of the Code will apply even where the arrest is made under the provisions of Special Act, like Central Excises & Salt Act, 1944.

In appreciating the rival contentions, it will be necessary to advert briefly to the facts which led to the arrest of these applicants. There are four concerns involved in this matter. The first one is Rajaram Steel Industries, of which applicant No. 1 is proprietor and applicant No. 4 is the Manager the other is Ramson''s Casting Pvt. Ltd., of which applicants 1 to 3 are Directors. These two concerns are said to be manufacturing concerns. M/s. Rajesh Agencies of which applicant No. 2 is the proprietor is said to be a trading concern and M/s. K. R. Steels of which applicant No. 4 is the proprietor is also stated to be a trading concern. According to non-applicant No. 2 on receipt of information that M/s. Rajaram Steel Industries is engaged in clandestine removal of manufactured goods without payment of excise duty, the Assistant Collector (Revenue) along with the preventive squad carried out search on the premises of M/s. Rajaram Steel Industries and M/s. Ramson''s Casting Pvt. Ltd., in September, 1995. On verification of the stock and stock register according to non-applicant No. 2 discrepancies were found which necessitated further probe, pursuant to which on closer scrutiny of the statements and records, it was felt that M/s. K. R. Steels is a dummy concern of the manufacturing concern through which the applicants passed the manufactured goods without payment of Central Excise duty. Annexure-A, remand application, gives substance of the data that was collected by the search and perusal of the records.

It is stated that in view of the aforesaid data, applicant No. 4 was questioned and his statement was recorded u/s 14 of the Act. According to non-applicant No. 2 the statement of the 4th applicant was recorded on 27.3.1996 wherein he stated that he is only a name sake proprietor of M/s. K. R. Steels and that he works under the directions of applicant No. 3. In view of the aforesaid statement he was required and he assured to produce documents and records of M/s. K. R. Steels on 29.3.1996. On 29.3.1996 the 4th applicant instead of producing the documents, as undertaken by him, produced a xerox copy of the panchanama alleged to have been drawn by M.I.D.C. police. The said panchanama purported to have been prepared as to the fire that broke out in the premises of M/s. K. R. Steels. Annexure-A would allege that on due enquiry by the 2nd non-applicant it was revealed that the whole affair was fictitious. Therefore, on satisfying that there was active effort to evade tax in violation of the Act as well as Rules thereunder, the applicants were arrested on 29.3.1996. In para 5 of the reply it is maintained that since the office of Central Excise does not have a detention cell, the applicants were sent to Sadar Police Station for custody.

Whereas, Mr. Dharmadhikari maintained that the applicants were forwarded u/s 19 of the Act, Mr. Bhangde would maintain that the Assistant Commissioner, who had the custody of the arrested applicant, though was competent as per Notification No. 102/57-CE, dated 7.12.1957 to forward the arrested persons to the Magistrate, the applicants were sent to the police station as there was no detention cell attached to the office of the Commissioner of Central Excise. Therefore, according to Mr. Bhangde, there was no occasion even for the applicants to present an application for bail before the Station House Officer of Sadar Police Station. In support of the argument, Mr. Bhangde relied on Annexure-A, remand application, which would show that as a matter of fact these applicants were produced before the ld. Magistrate by the Assistant Commissioner of Central Excise.

In the circumstance, the first question to be adverted to is, whether the offence is a bailable offence. u/s 2(a) of the Code bailable offence is defined to mean an offence which is shown as bailable in the first schedule, or which is made bailable by any other law for the time being in force, and "non-bailable offence" means any other offence. The allegations made against the applicants would attract offences described in Section 9(1)(b), (bb) and (bbb) of the Act and the section proceeds to state that if the duty leviable under the Act exceeds one lakh of rupees, the imprisonment shall be for a term which may extend to seven years and with fine, and in other cases the imprisonment shall be for a term which may extent to three years or with fine or with both. Here, the allegation as noted is that there was evasion of tax; and as per remand application the evasion is to be tune of two crores of rupees. As per the said allegation, the offence is punishable for a term up to seven years. If the duty leviable is less than one lakh rupees, as noted, the imprisonment can be for a term up to three years. Now it is necessary to see Part II, Schedule I of the Code. Clause (2) of Part II of Schedule I says if the offence is punishable with three years and not more than seven years, the offence is non-bailable. But the learned counsel for the applicants, Mr. Dharmadhikari, maintained that even as per Part II of Schedule I, the offence would attract only the third clause thereunder in which case the offence is a bailable offence. Argument of the learned counsel is that since the offence is punishable for a term which may extend only up to three years, the second clause of Part II of Schedule I will not be attracted. But the said argument fails to take into account the wording of clause (3) wherein description of punishment is : "punishable for less than three years or with fine only". When the term is up to three years, one cannot say that the term is for less than three years. Therefore, the offence cannot fall under 3rd clause of Part II of Schedule I of the Code. Consequently, as per clause II dealing with classification of offences as per other laws, i.e. laws other than in the Indian Penal Code, this offence is non-bailable.

Now, it is necessary to advert to Section 4(2) of the Code. Section 4(2) enjoins that 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. Therefore, if there are provisions in a special law concerning the manner or place of investigating, inquiring into, trying or otherwise dealing with the offence, the provisions of the Code may not be applicable. Naturally, therefore, the question is, whether there is provision in the Act concerning the character of the offence as to whether it is bailable or non-bailable. Admittedly, there is no express provision stating that the offence is either bailable or non-bailable. In the absence of express provision, therefore, normally the provisions of the Criminal Procedure Code must cover the field. But the learned counsel, Mr. Dharmadhikari, maintained that in view of Sections 19 and 20, there is a contrary provision at least by implication as to the character of the offence as bailable. Section 190 of the Act enjoins that a person when he is arrested under the provisions of the Act shall be forwarded without delay to the nearest Central Excise Officer empowered to send persons so arrested to a Magistrate, or, if there is no such Central Excise Officer within a reasonable distance, to the officer-in-charge of the nearest police station. Section 20 states, the officer-in-charge of a police station to whom any person is forwarded u/s 19 shall either admit him to bail to appear before the Magistrate having jurisdiction, or in default of bail forward him to custody to such Magistrate. The whole argument of Mr. Dharmadhikari rests on interpretation of Section 20. The argument is to the effect that if the offence is non-bailable no police officer could have been clothed with the power to admit the arrested person to bail. Therefore, according to the learned counsel, the offence is bailable. We have already noted that with due regard to the term of punishment as per Schedule II to Part I of the Code, this offence is non-bailable. The question, therefore, is, whether Section 20 could be interpreted in such a manner as to over ride the aforesaid express provision in the Code. As has already been noticed, there is no specific provision in the Act stating that the offence is bailable. There being a specific provision in the Code to the effect that the offence is non-bailable, in the context the provision of the Code should prevail over the local or special law in this regard, as the said provision in the Code is "a specific provision to the contrary" within the meaning of Section 5 of the Code.

The next point urged by the learned counsel, Mr. Dharmadhikari, is that Section 167(1) of the Code cannot have application and if Section 167(1) has no application the Magistrate will have no jurisdiction to remand the prisoner. In support of the argument, the learned counsel relied on Section 9A which enjoins that the offence u/s 9 shall be deemed to be non-cognizable within the meaning of the Code. According to the learned counsel, till the enquiry contemplated u/s 11A of the Act is completed and complaint is filed before the learned Magistrate, the learned Magistrate will not have any power to take cognizance and consequently he cannot remand the prisoner by invoking the jurisdiction u/s 167(1) of the Code. The character of the offence as cognizable or non-cognizable has got relevance only in deciding as to whether the Station House Officer is entitled to investigate the offence without the order of the Magistrate. If it is a non-cognizable offence the police cannot investigate and as per Section 155 of the Code the Police Officer has to make an entry as to the substance of the information in a book kept by the officer in the Form prescribed by the Government and refer the informant to the Magistrate. In the definition clause, Section 2(c) of the Code, cognizable offence is defined to be one, a case in which, a police officer may, in accordance with the 1st schedule or under any other law for the time being in force arrest without warrant, inasmuch as special provisions are provided under the Act for the arrest, search and disposal of the arrested person, the police cannot investigate the same matter in the context of Section 9A. But that will not have effect on the court taking cognizance .

Section 13 of the Act gives power to the Central Excise Officer duly empowered to arrest any person whom he has reason to believe to be liable to the punishment under this Act. There is no dispute that the person who effected arrest of the applicants was competent under the Act to arrest them. Arrest can be effected when such person has "reason to believe" that such person is liable for punishment under the Act.

Now coming to Section 21 also, when a person is forwarded u/s 19 of the Act to the Central Excise Officer empowered to send the arrested person to a Magistrate, he has to enquire into the charge against him and where the Central Excise Officer is of the opinion that there is sufficient evidence or reasonable ground of suspicion against the accused person he shall either admit him to bail to appear before Magistrate or forward him to such Magistrate. Thus, for the arrest as well as for forwarding the accused person, the Central Excise Officer need entertain an opinion that there is sufficient evidence or reasonable ground of suspicion against the accused person. As per Section 167(1) of the Code also when a person is arrested and detained in custody and the investigation cannot be completed within a period of 24 hours and there are grounds for believing that the accusation or information was well founded, the officer-in-charge of the police station should forthwith transmit to the nearest Magistrate a copy of the entry in the diary and forward the accused to the Magistrate and sub-section (2) thereof says that the Magistrate to whom the accused is forwarded, whether he has or has not jurisdiction to try the case, from time to time authorise the detention of the accused in such custody as such Magistrate thinks fit, for a term not exceeding fifteen days in the whole and the said section proceeds to state that if the Magistrate has no jurisdiction to try the case or commit it for trial, and considers that further detention is necessary, he can forward the accused to the Magistrate having jurisdiction. A combined reading of sections 19 and 21 of the Act along with Section 167(1) of the Code would show that there is a scheme and purpose for these sections. The ultimate authority to decide whether the accused is liable to be remanded on the materials collected is the Magistrate and the Magistrate gains jurisdiction for that purpose u/s 167(1) of the Code. Simply because the offence is under Special Act, that cannot take away the jurisdiction of the Magistrate u/s 167(1) and (2). In Directorate of Enforcement Vs. Deepak Mahajan and another, , the ''Supreme Court held that when a person arrested under a Special Act, like S. 35(1) of FERA or S. 104(1) of Customs Act is produced before a Magistrate under S. 35(2) or S. 104(2) thereof, the Magistrate has jurisdiction to authorise detention of that person u/s 167(2) of the Code. The learned counsel, Mr. Bhangde, as indicated earlier, relied on this decision in support of his contention that the said decision is an authority to show that the Magistrate has jurisdiction u/s 167(2) of the Code to authorise detention. The learned counsel, Mr. Dharmadhikari attempted to distinguish the said decision contending that Section 35(1) of the FERA is not the same as Sections 20 and 21 of the Act. The principle involved in the said decision undoubtedly will have application to matters arising under this Act also. When the statute enjoins that the arrested person has to be produced before the Magistrate pending investigation that by itself is sufficient to conclude that the Magistrate has to deal with him in accordance with law, and the law is Section 167 of the Code. To hold that Section 167 will have no application, will be equal to holding that when an accused is produced before the Magistrate under the provision of Special Act pending investigation he has to release him. That obviously cannot be the intention of the legislature. Therefore, the said argument of the learned counsel, Mr. Dharmadhikari, is not acceptable.

The last argument of the learned counsel, Mr. Dharmadhikari, is that even assuming that the offence is non-bailable and the Magistrate has got jurisdiction, still the applicants are entitled to be enlarged on bail at least on conditions., He highlighted the conduct of the applicants in their cooperating with the investigation ever after the search in September, 1995. According to the learned counsel, that by itself is a circumstance fore the Court to take a lenient view in considering whether the applicants are to be released on bail. The important aspect to be kept in view is, whether the releasing of the applicants on bail could affect the investigation. In considering the said aspect, the conduct of the accused and also their ability to obstruct the investigation are certainly factors to be taken into account. Elsewhere in this order, reference is made as to the occasion for questioning the 4th applicant. As per Annexure-A the statement of the fourth applicant was recorded u/s 14 of the Act wherein he stated that he is only a proprietor for name''s sake. At once it has to be remembered that the 4th applicant is the Manager of M/s Rajaram Steel Industries of which the 1st applicant is the proprietor, whereas M/s Rajaram Steel Industries is projected as manufacturing concern and M/s K. R. Steel as a proprietory concern. According to non-applicant No. 2, M/s K. R. Steel is a fictitious concern for facilitating evasion of excise duty. The opinion formed by the concerned authorities as to the culpability of the applicants cannot be said to be unrealistic or unfounded in face of the statement of the applicant. Adding to this, yet another aspect has to be borne in mind, that is, the 4th applicant though undertook to produce all the relevant documents by 29.3.1996, instead of producing the documents he produced the xerox copy of a panchanama in an attempt to show that the premises of M/s K. R. Steels got fire by accident and the whole records were burnt by fire. In the remand application, the non-applicant No. 2 would maintain that on spot inspection and enquiries it was revealed that the whole affair was fictitious. When understood in the context of other circumstances, to which advertence has already been made, the opinion of the concerned authorities cannot be said to be unfounded. These materials certainly will put the Court to caution in releasing such applicants on bail. Their ability in obstructing the investigation is prima facie demonstrated by the aforesaid conduct. Therefore, the prayer for releasing the applicants on bail cannot be favourably considered. The prayer has to be refused which, accordingly, is refused. The application fails and the same is dismissed.