Crl.p/6577/2014 Of Sri. Kunnasagaran Chinniah v. The Income-Tax Department

1 IN THER HIGH COURT OF KARNATAKA AT BENGALURU DATLBD THIS THE [ST|]DAY OF OCTOBER 2015 BEEFEOR THE HON’BLE MRS.JUSTICE RATHNAKALA CRIMINAL PETITION NO.6577/2014 BETWEEN: SRI KUNNASAGARAN CHINNIAH.S/O SRI RIAKI CHINNIAH,AGED ABOUT 57 YEARS,RESIDING AT NO.12,COUNTRYSIDE GROVE,SINGAPORE — 789 967| ... PETITIONER| (BY SRI UDAYA HOLLA, SENIOR ADV. FORSRI ADITYA V BHAT &SRI SHRAVANTH ARYA TANDRA, ADVS.) AN D 1.THE INCOME-TAX DEPARTMENTBY INCOME TAX OFFICER (TDS)WARD NO.18(2) HMT BHAVAN,NO.59, BELLARY ROAD,BANGALORE - 560 023REPRESENTED BY ITS OFFICER.BY INCOME TAX OFFICER (TDS)WARD NO.18(2) HMT BHAVAN,NO.59, BELLARY ROAD,BANGALORE - 560 023REPRESENTED BY ITS OFFICER. 2ORFICK OF THR COMMISSIONER OFINCOME TAX (TDS).- FLOOR, HMT BHAVAN,INCOME TAX (TDS).- FLOOR, HMT BHAVAN, 2 NO.59, BELLARY ROAD,BANGALORE - 560 032. RESPONDENTS (BY SRI JEEVANJNEERALAGI, ADV.) THIS CRL.P IS FILED U/S.482 CR.P.C., PRAYING TO (A)|QUASH THE ORDER OF ISSUANCE OF NON BAILABLEWARRANT DATED 18.9.14 IN C.C.NO.210/13 (ANNEXURE-B)AND ALL BURTHER PROCKEBDINGS AGAINST THER PEHIPENDING BEFORE THE COURT OF ECONOMIC OFFENCES,BANGALORE AND EIC. THISCRIMINAL,PERTITIONCOMINGON|FOR|ADMISSION,THISDAY,THECOURTMATE.THEBFOLLOWING:-ORDER The petitioner herein is arraigned as accused No.5 in thecomplaint filed under Section 200 of Cr.P.C. by the firstrespondent / Income Tax Department in respect of the offences,punishable under Section 276B r/w. Section 278B of Income Tax, Act, 1961 (hereinafter referred to as (the Act’). 2. On presentation of the complaint, the learned Magistrate took cognizance of the offences leveled against accused Nos.1 to 7,registered the criminal case and issued summons against all theaccused persons. For non-appearance of the petitioner in response to the summons, non-bailable warrant was also ordered. The.petitioner is challenging the very order of taking cognizance, so alsothe consequential non-bailable warrant ordered against him. © 3. Sti Udaya Holla, learned Senior Counsel for the petitionersubmits that the petitioner herein is the non-executive Director ofthe Company by name M/s.Reid & Taylor (India) Limited. He is_nominated to the present Company by a Company / Indivest Pte.Limited, which has shares in M/s.Reid & Taylor. That being so, hehas no role to play either in administration or management controlof M/s.Reid & Taylor (India) Limited. The complainant in his_complaint has alleged that accused Nos.2 to 4 are the ManagingDirectors who have been treated as Principal Officers of theCompany and Executive Directors respectively and they have failed to remit TDS in respect of various payments made by the|Company. The complaint nowhere utters that the petitioner hereineither directly or indirectly is responsible for the omission alleged in|the complaint. In that view of the matter, the order of the learned | 4 Magistrate in taking cognizance against him is not legal and liable to,be quashed. 4. Learned Senior Counsel while emphasizing on Section278B(1) submits that it is only a person, who at the time of theoffence alleged to have committed, was in charge and responsiblefor the conduct of the business of the Company, who shall be|deemed to be guilty of the offence, liable for prosecution, theoffence alleged in the complaint and no offence 1s made out against:the petitioneris not attracted in this case and prays to quash theentire criminal prosecution against him may be quashed. 5. In reply, Sri Jeevan J.Neeralagi, learned Counsel for therespondents emphasizing on Section 278B(2), which reads thus: “Section 2/8B(2) : Notwithstanding anythingcontained in sub-section 91), where an offence under this Acthas been committed by a company and tt 1s proved that theoffence has been committed with the consent or connwance of,or is attributable to any neglect on the part of, any atrector,manager, secretary or other officer of the company, suchaurector, manager, secretary or other officer shall also be 5 5. In reply, Sri Jeevan J.Neeralagi, learned Counsel for therespondents emphasizing on Section 278B(2), which reads thus: “Section 2/8B(2) : Notwithstanding anythingcontained in sub-section 91), where an offence under this Acthas been committed by a company and tt 1s proved that theoffence has been committed with the consent or connwance of,or is attributable to any neglect on the part of, any atrector,manager, secretary or other officer of the company, suchaurector, manager, secretary or other officer shall also be 5 deemed to be guilty of that offence and shall be lable to beproceeded against andpunished accordingly.” submits that the petitioner herein admittedly, though not an.Executive or a Managing Director, was a non-Executive Director|and cannot shirk off his vicarious responsibility of omission|committed by the Company and he ts equally guilty of the offences|alleged along with the co-accused. 6. There is no dispute to the fact that the petitioner herein isa non-Executive Director of the Company. In the entire complaintthere is no averment to the effect as to how this petitioner was|involved directly or indirectly in the commission of the offences. 7. It is the established position of law that there is noconcept of vicarious liability under criminal jurisprudence, unless|the statute specifically prescribed for the same. Though Section278B of the Act contemplates such vicarious liability, the basic|requirement is, there must be specific allegation to that effect in thecomplaint which is lacking in the present case. In that view of the 6 matter, the prosecution against this petitioner is vitiated andinitiation of such proceedings is pure abuse of the process of law. | 8. Accordingly, the petition is allowed. The complaint so far petitioner 1s concerned, the cognizance taken against him vide Annexure ‘B7dated 30.11.2013 and the! consequential proceedings are quashed. In view of the disposal of the main petition, I.A.No.2/2014 is disposed of as 1t does not survive for consideration. Sd/-|JUDGE nv]