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Issues:
Quashing of proceedings in a complaint under sections 132 and 135(1)(a) of the Customs Act, 1962 against the petitioner. Analysis: 1. Vicarious Liability under Section 140 of the Customs Act: The petitioner sought quashing of proceedings based on the contention that she cannot be held vicariously liable under Section 140 of the Act for the company's offense, especially after being exonerated in the adjudication proceedings by the Commissioner of Customs. The department argued that the findings of the adjudication proceedings do not bar criminal prosecution, citing the case law precedent that departmental findings do not prevent prosecution. However, various legal precedents were cited to support the petitioner's argument that when a person has been exonerated in departmental proceedings, continuing the prosecution on the same allegations may not be justified. The court analyzed the specific averments against the petitioner and concluded that she was merely a Director without active participation in the business, as admitted by the department itself. The court emphasized that vicarious liability requires active involvement in the conduct of business, which was lacking in the petitioner's case. 2. Exoneration in Departmental Proceedings: The court extensively referred to legal precedents where exoneration in departmental inquiries led to the quashing of criminal proceedings. It highlighted the principle that if a person has been exonerated in departmental proceedings, continuing prosecution on the same allegations would be unjust. The court emphasized that the obligation to prove lack of knowledge or due diligence arises only when it is established that the accused was actively involved in the business. In this case, the court noted the lack of specific averments indicating the petitioner's active participation in the company's affairs, leading to the conclusion that she should not be held liable for the company's offenses. 3. Director's Role and Liability: The court delved into the petitioner's role as a Director and the distinction between being a sleeping Director and actively participating in the business. It highlighted that the petitioner's husband, as the Managing Director, had a more significant role in the company's operations. The court noted the department's admission that the petitioner started looking after the company's affairs only in 1996, after the alleged offenses took place. Citing legal precedents, the court emphasized that mere directorship does not automatically imply liability for the company's offenses, especially when there is no evidence of active involvement in the business. In conclusion, the court found that the petitioner's lack of active participation in the company's affairs, coupled with her exoneration in the departmental adjudication, warranted the quashing of criminal proceedings against her. The court exercised inherent powers under Section 482 of the Criminal Procedure Code to quash the proceedings initiated under sections 132 and 135(1)(a) of the Customs Act against the petitioner.
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