Public Prosecutor, Madras v. R. Raju & Anr. Etc.

Judgment

PUBLIC PROSECUTOR, MADRAS R. RAJU & ANR. ETC. August 8, 1972 [S. M. S!KR!, C.J., A. N. RAY, P. JAGANMOHAN REDDY. K. K. MATHEW, JJ.] Central Excises and Sall Act, 1944, s. 40(2)-Bar of limitation on certain su1'ts1 proceedings, prcsecution..~•, ·when c.pplicable-Whether applies h case of Government servants onl,v-Whether nor applicable when acts complained of are malicious-Words "anything done or ordered to be done'' in section whether include acts in violation of t11e Act. Se~tion 40(2) of the Central Excises and Salt Act, 1944 provides that no smt prosecution or other legal proceeding shal•l be instituted or anythmg done or ordered to be done under the Act after the expiration of six months from the accrual of the cause of action or from the date of the act or order com;:ilained of. The respondents in the present appeals were prosecuted for violations of Central Excise Rules, punishable under s. 9(b) and (d) of the Act and also un<ler s.

420 read with section 511 of the Indian Penal Code and Section 109 of the Inuian Penal Code. The High Court found that ~he prosecution in both the cases was barred by the rule of limitation in section 40 of the Act because the prosecutions were instituted subsequent to the expi1y of sL'< months fror · the date of the nl!eged offences. In appeals before this Court by special leave it was contended on behalf of the·appellant that (i) the section applies only to government servants; (ii) the protection given to Government servants under the sectk>n is for actio~s done inadvertently or mistake[\l~ buu not for acts done de!._ berateh· and maliciously; and (iii) the words "anything done or ordered to be 0une" under this Act inthe secrion do not mean anv act in violation of the provi;ions of the Act. HELD :

( i l The provisions contained in section 40 of the Act show that the first sub-section speaks of bar of suits against the Central Government or any officer of the Central Government in respect of orders passed in good faith or net in good faith done or orderecl to be done. The second sub-section of section 40 provides bar of limitation of ·rime in respect of suits, pro·secutions or other legal proceedings without any qualifying words as to persons against whorn suit proceeding and prosecution shall be instituted. The contention of the appellant tha.t sub~section (2) is confined only against the Government officers is not warranted by the words of the statute and is repelled by reference to other comparable statutes which have indic~ateJ in clear words when the statute contemplates bar of suits, proceedings or prosecution against Government servants on1y.

The words in section 40(2) of the Act in the present case are of wide amplitude to apply to the prosecution which was commenced against respondents in the present case. [817H-818B] (ii) Tbe cpntention that "anything t:one" would not include a ~alicious act or an act done in bad faith could not be accepted. Sub..,ect1on (2) of section 40 does not introduce the test of good faith in relation to act done. Good faith is one of the aspects in section 40(1). The present appeals did not turn on sub-i;ection. (I) of sectfon 40. [8180-E] PUBLIC PROSECUTOR V. R. RAJU (Ray, ,/,) (iii) The decisions of this Court in the light of the definition of the 'word "act" in the General Clauses Act establish that non-compliance witll the provisions of the statute by omitting to do what the Act enjoins will be "anything done or ordered to be done" under the Act. The complaint against the respondents was that they wanted to evade payment of duty.

Evasion was by using and affixing cut and torn banderols, Books of account were not correctly maintained. There was shortage of ·vanderol in stocks: Unbanderolled matches were found. These were all infraction of the provisions in respect of things done or ordered to be done under the Act. [820B] The High Court was therefore right in its conciusion that the prosecu· lion was barred. by the provisions of section 40 of the Act. [821D] !';'tam Singh v. State of Haryana, [1971] 1 S.C.C. 653, Mau/ad Ahmad v. State of Uctar Pradesh, [1963] Supp, 2 S.C.R. 38, Sitaram v. State of Madhya Pradesh, [1962] Supp, 3 S.C.R. 21 and Amalgamated Electricity Co. v. Municipal Committee Ajmer, [1969] 1 S.C.R. 430, relied on and applied. CRIMINAL ,APPELLATE JURISDICTION : Criminal Appeals Nos. 194 and 195 of 1969. Appeals by special leave from the judgment and order date<l Nowmber 21, 1968 of the Madras High Court in Crimiµal Appeals Nos. 211 and 232 of 1966 and Criminal E.C. No. 16'43 of 1966.

Gobind D!ls and S. P. Nayar, for the appellant. M. S. Narasimhan, tor the respondents. The Judgment of the Court was delivered Ray, J, These 1!wo appeals are by special leave from the judgment dated 21 November, 1968 of the High Court at Madras dismissing the appeals filed by the appellant against the order of the Sub-Divisional Magistrate dated 30 November, 1965 and the order oi the Sessions Judge da1>~d 16 November, 1965 acouitting the respondents. The question which falls for consideration in these appeals is the interpretation of section 40 ( 2) of the Central Excises and Salt Act, 1944 hereinafter r.~ferrnd to for brevhy as the Section and the Act. The section is as follows :- "No st.it, prosecution or other legal proceedings shall be instituted for anything done or ordered to be done under the Act after the ·~xpiration of six months from the accrual of the cause of action or from the da'te of the act or order complained of"

The respondents in both the appeals were prosecuted for violation of rules 9, 53, 64, 67, 68, 70, 71, 66 and 226 of the Central Excise Rules punishable under seotion 9 (b) and ( d) of the Act and also under section 420 read with section 511 of the Indian Penal Code and section 109 of the Indian Penal Code. The High Court found that the proswtion in .both the cases was barred by the rule of limitation in section 40 of the Act. The acts complained of in Criminal Appeal No. 194 of 1969 occurred' on 25 July, 1964 and the complaint was filed on 18 May, 1965. In Criminal Appeal No. 195 of 1969 the aots complained of occurred on 20 June 1964 and the complaint was filed on 15 January, 1965. The appellant's contentions are three-fold. First, the section applies only to Government servants. Second, the words "anything done or ordered to be done under this Act" in the section do not mean any act in violation of the provisions of the Act.

Third, the protection given to Government servants under the section is for actions done inadvertently or mistakenly but not for acts done deliberately and maliciously. It was therefore said that the prosecution of the respondents was no within the mischief of •the section. The respondents' contention on the other hand is that the ~ection applies to prosecution of the respondeni:s for violation of the provisions of. the. Rules and the Act It is further said on behalf of the respondents that they were rightly acquitted bJY the High Court because the prosecution were instituted subsequent to the expiry of six months from the date of the alleged offences. In Criminal Appeal No. 194 of 1969 the complaint was filed on 18 May, 1965. The complaint was filed against accused No. 1 who was the licence" of Paulrai Match Works, Nallichatram and accused No. 2 whv was the accountant in the factory and who had assisted accused No. 1 in the manufacture of matches and maintenance of accounts and records of the factory.

The complaint against the accused who are respondents in this appeal was that on 25 July, 1964 the accused being proprietor and accountant respectively of Paulrai Match Works at Nallichatram were found to have affixed cut banderols and torn banderols to the matches· manufactured in the said Match Factory with a view to evade the payment of excise duty payable to the Government and that the accused also attempted to deprive the Central Government of Rs. 577.42 by their acts. The complaint against the accused was for violation of Rules 53, 64, 67, 68, 70, 71, 66 and 226 of the Central Excise Rules punishable under section 9 (b) and ( d) of tb.e Central Excises and Salt Act, 1944 and also under section 420 of the Indian Penal Code read with section 511 of the Indian Penal Code and section 109 of the Indian Penal Code. The further details of the complaint were that the register R.G.I. was not written out from 2 July, 1964 and R.G. 3 register was not correctly maintained.

There was also a shortage of 50 leaves of banderols in stock. l'UBLIC PROSECIJlOR V, R, RAJU (Ray, /,) In Criminal Appeal No. 195 of 1969 the complaint was against accused Np. 1 . the licencee of Meenachi Match Works and accused No. 2 husband of accused No. 1 who was running the factory and maintaining accounts. The complaint against the accused was 'that on 20 June, 1964 the Central Excise staff visited the factory and found tliat the factory was working at night. On inspection it was found that cut banderols instead of full banderols had been pasted on certain quantities of match boxes with a view to evade payment of excise duty in violation of rules 64, 68 and 70 of the Central Excise Rules.

The further allegations in the complaint were ithat on inspection of lorry despatches and clearances of the factory, it was found that during 1963-64 and 1964-65 upto 20 !une, 1964 the licence.e had actually cleared without entry in the official Central Exdse Records and without payment of duty a quantity of matches in excess of the quantity shown in the records. The complaint was that the accused had attempted to deprive the Central Government of Rs. 2437.50 being the Excise duty calculated at 1he standard rate. The accused were alleged to have committed violation of Ru!es 9, 53, 64, 66, 67, 68, 70 and 226 of the Central Excise Rules punishable under section 9 (b) and ( d) of the Central Excises and Salt Act. 1944 and also under section 420 of the Indian Penal Code read with sections 511 and 109 of the Indian Penal Code. In Criminal Appeal No. 194 of 1969 the Sub-Divisional Magistrate on 30 November, 1965 acquitted the accused of the charges and held that 'the bar of limitation under the section applied to 1he prosecution by the State.

The complaint was received in the Court of the Sub-Divisional Magistrate on 18 May, 1965. The inspection of factory by the Central Excise staff was on 25 July, 1964. The Sub-Divisional Magistrate therefore held that computing the period of six months from the date, the last date within which the complaint should ha,,e been laid would be 25 January, 1965. The State preferred an appeal to the High Court of Madras. The High Court held that the prosecution must fai\ as it was barred by. limitation. The present appeal is from the judgment of the High Court. In Criminal Appeal No. 195 of 1969 the Sub-Divisional Magistrate on 6 July, 1965 found the respondents guilty. The respondents preferred an appeal to the Sessions Comt at Ranianathapuram. The Sessions Judge on 16 November, 1965 set aside the conviction and sentence and acquitted the respondents.

The Sessiops Judge held that the bar of limitation under the section operaited against the State because the prosecution was commenced after the expiry of prescribed period of limitation. The State preferred an appeal to the High Court. The High [1973] l S.C.R. Court maintained the .jµdgment of 1the Sessions Judge. The ap· peal is from the decision of the High Court. Counsel on oohalf of the appellant contended that 1he pro· visions of the section did not apply to prosecution for offences· committed by individuals in contravention 6f the Act and the Rules made thereunder. It was said that the seotion was intended for prescribing limitation in respect of prosecution only against departmen1al officers or Government servants.

The section consists of two sub-sections. ~ firs1 subsection speaks of bar of suits against the Central Government or against any officer of the Government in respect of any order passed in good faith or any act in .good faith done or ordered to oo done under the Act. The second sub-section speaks of limrtation of suits, prosecution or other-legal proceeding for any· thing done or ordered to be done under the Act after 1he expiration of six months from the accrual of the cause of action or from the date of the act or order complained of. The two subsections operate indifferent fields. The first sub-section con1emplates bar of suits against the Central Government or against the officers by protecting them in respect of orders passed in good faith or acts done in good faith. It is manifest tha1 the second sub-seotion does not have any words of restriction or limitation of class of persons unlike sub-section ( 1). Sub-section (2) does not have any words of qualification as to persons.

Therefore, subsection (2) is applicable to any individual or person. Referano~ may be made to some statutes 1o indicate as to how the Legislature places bar againsit any class of person in respect of sui1s, proceedings, prosecutions for anything done or ordered to be qone under the relevant statute. Section 20 of the Medicinal and Toilet Preprations (Excise Duties) Act, 1955 (16 of 1955) containing two sub-sections is a type. The first sub-section there speake of bar of suits or other legal proceedings against the collecting Government or against any officers in respect of any order passed in .good faith or any action in go(>d faith done or ordered to be done under the Act.

The second sub-section there speaks of bar of suit, prosecution or other legal proceeding against the collecting Government or against any officer for anything done or ordered to be done under the Act after the expiration of six months from the accrual of the cause of action or from the.date of the act or order complained of. These provisions illusetrate the manner in which the legislature has by appropriate words placed bar of suits or prosecution or other legal procer-.dings only against the Government or any officer. There is no bar in that statute of suits, prosecutions against individuals. In the present case, sub-section (2) of R PUBLIC PRO.~ECUTOR v. ,R. RAJU (Ray, J.) section 40 of the Act does not contain any bar of suit, prosecution or legal proceeding by confining the same only to Government ~·,rvants. The Madras General Sales Tax Act, .1959 affords anothe·. illustration..

Section 50 of the Madras Act, 1959 enacts that no suit shaH be illS'tituted against the Government and no suit, prosecution' .or other proceeding shall be instituted against any officer or servant of the. Government in respect of any act done or purporting to be done Wider the Act unless the suit, prosecution or other proceeding is instituted wvthin six months from the date of that act complained of. The Madras General Sales Tax Act provides yet another instance of limitation for suits and prosecution against specified class of persons, namelj', Government and Government servants. The Bombay (District) Tobacco Act, 1953 deals in section 24.( 1) qf the Act with proteCltion of persons acting in good faith and limitation of suits and prosecutions against them. Limitation of suits and prosectl'l:ions in section 24(2) of too Bombay Act is provided by enacting that no suit shall -be instituted agaii'ist the.

Government and no prosecution or suit shall lie against any Tobacco Officer in -respect of anything done or alleged to have been done, in pursuance of the Act, unless the suit or prosecution has been instituted within four months from the date of the act complained of. The Bombay statute typifies in section 24 ( 2) limitati.>n of suit and prosecution by restriClting the operation of the provisions only against the Government and Tobacco Officers. The Madhya Pradesh Motor Vehicles (Taxation of Goods) Act, 1962 has comparable provisions in section 25 thereof by providing thal\, no suit or other proceeding shall be instituted against the State and no suit, prosecution or other proceeding shall be instituted agaiast any officer or servant of the Government in respect of any act done or purpoNing to be done under this Ac.t, unles the suit, prosecution or other proceeding is instituted within one year from the date of the act complained of.

These different statutes have been mentioned only to indicate that where the legislature intends to restrict the limitation of suits. proceedings __ or prosecutions against the Govermnent servants only the legislature has chosen proper words of limitation to ensure the restricted operation of the provisions of the statute. The provisions contained in section 40 of the Act in the present case show that the first sub-section speaks of bar of ~uits against the Central Government or any officer of th!( Government in"respect of orders passed in good faith or act !n good fait,h done or ordered to be done. The second sub-section of section 40 3-Lt72 Sup CI/73 (1973]1 S.C.R. provides bar of limitation of time in respect of suits, prosecutions or other legal proceedings without any qualifying words as to person against whom suit, proceeding and prosecution shall be instituted.

Th.e contention of. the appellant that sub-section (2) is confined only against the Government officers is not warranted by the words .9f the statute and is repelled by reference to other comparable statutes which have indicated in clear words when the statute contemplates bar of suits, proceedings or prosecution against Government servant only. The words in section 40(2) of the Act in the present case are of wide amplitude to apply to the prosecution which was commenced against the respondents in the present appeals. Section 40 ( 2) of the Act cann<Yt be said to be confied in i'ts operation only to Government servants. The sub-section is applicable to any person against whom suits or proceedings or prosecution shall lie for anything done or ordered 'to be done under the Act. The other contention on behalf of the appellant was that the words "anything done or ordered to be done" in the se~1ion would nat mean anything done in violation of the provisions of the Act.

It was also said that "anything done" would not include a malicious act or an act done in bad faith. Sub-section ( 2) of section 40 does not introduce the 'test of good faith in relation to act done. Good faith is one of the aspects in section 40(1). The present appeals do not turn on srb-section (1) of section 40. :Section 9 of the Act deals with offences and penalties. The offences mentioned in section 9 are mainly these. Evasion of payment of duty under the Act is an offence. Failure to supply any information required by Rules under the Act or supply of false information is also an offence. Contravention of provisions and of Rules under the Act is also an offence. Rules are made under section 37 of the Act. In the present case, the complaint was •that Rules 9, 53, 64, 67, 68, 70, 71, 66 and 226 were violated. Rule 9 speaks of time and manner of payment of duty.

No excisable goods shall be removed from any place where they are produced, unless ihe excise duty leviable thereon has · been paid at such place and in such manner as is prescribed in th·~se Rules. If excisable goods are in contravention of sub-rule ( l) of Rule Y removed from any place the manufacturer shall pay duty leviable on such goods and shall also be liable 1to a penalty. Rule 53 deals with daily stock account. Every manufacturer shall maintain a stock account in the proper form and is required to enrer in such account daily the weights, descriptions and rating of all excisable goods. Matches are dealt with in Rules 58 to 82. Rule 64 requires that each box or booklet of matches shall bea1 8 PUBLIC PROSECUTOR V. R. RAJU (Ray, J.) ban\ierol. Duty on matches is paid by affixing to each box or boOklei ll Government banderol of a value appropriate to the rate of duty. Rule 65 states that all banderols shall be procured from a Government Treasury.

Rule 66 provides that banderols are to be kept in a secured place and are to be periodically inspected. Rule 67 requires the manufacturer to maintain account of banderols purchased and used. Rule 68 deals with the manner of affixing banderols. Every banderol shall be so affixed that the words and figures on the banderol specifying the maximum nuber of matches covered by the banderol are legible. The box or booklet cannot be opened without tearing the banderol, and where it is affixed to a box, '111e ends of the banderol are covered by the factory's label. Rule 70 states that as soon as possible after matches are finished they shall be banderollcd and enclosed in packets and presented 'to the officers of the factory for assessment. Rule 71 deals with the method of packing. Rule 226 sets out •that the entry books, stock account and warehouse re~is­ ter should be maintaiw..,ci.

Reference to these rules is necessary to understand •the requirements of the Act and the violations committed by the respondents. The complaint in the presell't appeals against ·the respondents was that the stock and accounts were examined and the banderols affixed to the unit box were also examined. The .examination revealed that cut banderols have been affixed and full length torn banderols were affixed with a view to evade excise duty. Unbanderolled matches were also found in excess stock over and above the book value. The regisler was not correctly maintained. The complaint was that the respondents violated the provisions of the Rules. The respondents did not comply with the Rules. The word 'act' is defined in the General Clauses Act, 1897. The definition is as follows : "act" used with reference to an offence or a civil wrong, shall include a series of acts and words which refer to acts done extend also to ille11al ommissions".

The words "anything done or ordered to be done" under the Act in section 40 ( 2) of the Act were therefore contended by counsel for the respondents to extent to illegal ommissions and infraction of the requirements of the statute. In Pritam Singh v. State of Haryana(') a Police Officer was Prosecuted for offences under section 29 of the Police Act. Section 42 of the Police Act enacted that "prosecution against any person which may be lawfully ·brought for anything done or intended to be done under the provisions of the Act shall be commenced within three months after the act complained (I) 1197!1 I, S.C.C. 653. [1973] ! S.C.R of Shall have been committed and not otherwise." The apJ)ellan~ in that case was found absent from duty from the ~ohce. Lme a1 the time of roll-call. Prosecution of the appelllint IJ! Pritam Sin_gh's case (supra) was initiated for non-compliance with the reqmreme.nts to be on duty as required under the Police Act.

This was held to be prosecution for something done und~ the provisions of ·the Act. This Court in Maulud Ahmad v. State of Uttar Pradesh(') considered the case of prosecution of a head Constable. Section 42 of the Police Act was invoked as a bar to the prosecution in Mau/ud Ahmad's(') case (supra) the question was whether Chauhan abetted Maulud Ahmad in making false entries in the General Diary of Police St3tion Mailani and whether Maulud Ahmad made false entries in the General Diary of Police Station Mailani with the intention to save or knowing it likely that he would thereby save the offenders. from legal punishment. The Coul't in Maulud Ahmad's(') case (supra) said that if the appellant did not discharge his duty in keeping a regular diary he has committed an offence under section 29 of the Act. Sitaram v. State of Madhya Pradesh(') this Court t'""llllined a criminal trial in respect of the offence of filing false retums of sales ~ax.

Section 26 of the C.P. and Berar Sales Tax Act, 1947 provided inter alia, 1that no prosecution shall be instituted agai!lst any person in respect of anything· done or int.ended to bt. done under the Act unless the prosecution has been instituted within three months of the date of the act complained of. It was contended that the words "any person" showed the intention of the legislature to give protection to Government servants in regard to prosecution and not to persons other than Government servants. This Court did not accept that contention, because there were no words to restrict the meaning of the words "any person"' Furthermore this Court held that when the appellant in that case submitted returns he did so under the provisions of the Act. When he produced the accounts he did so under the provisions of the Act. The. fili,ng of the returns and the production of accounts could not be said to be outside the provisions of the Act.

These decisions in the light of the definition of the words 'act' in the General Clauses Act establish that non-compliance :with the provisiO!JS of the statute by omitting to do what the act enjoins will be anything done or ordered to be done under the Act. The complaint against the respondents was that they wanted to evade payment of duty. Evasion was by using and affixing ~ut and torn banderols .. Books of account were not correctly mamtained. There ·was shortage of banderol in sto.ck. Unbanderolled (I) [1963] Supp. 2 S.C.R. 38. (2) [1962] Supp. 3 S.C.R. 21. PUBLIC PROSECUTOR 11 .• R. RAJU (Ray, J.) 82 I matches were found. These are all infraction of the provision> in respect of things done or ordered to be done under the Act. In Amalgameted Electricity Co. v. Municipal Committee, Ajmer( 1 ) the meaning of 'omission' of a statutory dU'ty was explained by this Court. Hegde, J. speaking for the Court said "The omission in question must have a positive content in it.

In other words, the non-discharge of that duty must amount to an illegalny''. The positive aspect of omission in the present case is evasion of payment of duty. The provisions of the Act require proper affixing of banderols. Cut or torn banderols were used. Unbanderolled match boxes were found. These provisions abont use of banderols are for collection and pay· ment .of excise duty. The respondents did not pay the lawful dues which are Qcts ·to be done or ordered to be done under. the Act. The Hil!h Court was right in its conclusion that the prosecution was barred by the provisions of section 40 of the Act. The appeals therefore fail and are dismissed. G.C. Appeals dismissed. (1) fl969] l S.C.R. 430.