TMI Blog1975 (1) TMI 23X X X X Extracts X X X X X X X X Extracts X X X X ..... each conviction, in default to undergo simple imprisonment for two months under each conviction. It was directed that if accused I failed to pay the fine, accused 2 shall undergo the default sentence on behalf of accused . C.A. No. 481 of 1972 (C.C. No. 40180 of 1969) : In this case, accused 1 to 3 (appellants) were convicted under charges Nos. 1 and 3 to 5 under section 120-B, Indian Penal Code, section 277 of the Income-tax Act read with section 34, Indian Penal Code (two counts) and section 196 read with section 120-B, Indian Penal Code, respectively. Accused 1 to 3 were each sentenced to pay a fine of Rs. 1,000 in default to undergo simple imprisonment for two months for each of the convictions under charges Nos. 3 and 4. Under charge No. 5 accused 2 and 3 were each sentenced to undergo imprisonment till the rising of court and, in addition, accused 1 to 3 were each sentenced to pay a fine of Rs. 1,000, in default to undergo rigorous imprisonment for two months. No separate sentence was awarded under charge No. 1 for the offence of criminal conspiracy under section 120-B, Indian Penal Code. The appellants in C.As. Nos. 478 and 482 of 1972 are accused 1, A. D. Jayaveer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment year 1962-63, and the return has been signed by accused 2. Exhibit P-3 was accompanied by a special power of attorney, exhibit P-4, executed in favour of G. Natesan Co., Chartered Accountants, on behalf of accused 1 and its partners and in the statement of trading accounts, exhibit P-5, a sum of Rs. 55,995 was shown as business income for the period April 1, 1961, to March 31, 1962. This income has been allocated to the partners of accused 1 as per the allocation statement, exhibit P-7. In conformity with the allocation statement, accused 2 to 9 filed their individual returns of income, exhibits P-8 to P-15. P.W. 2, C. Subba Rao, the then Income-tax Officer, took up the assessment proceedings and conducted an investigation. He found as per cash book, exhibit P-16, and ledger, exhibit P-17, filed by accused 1 firm that the total purchases of betelnuts amounted to Rs. 6,50,559. The particulars of the purchases were furnished by the firm under the letter, exhibit P-18, and the working sheets, exhibit P-19. In the course of the investigation, P.W. 2 suspected the genuineness of the following five items of purchase under entries, exhibits P-19(a), (b), (c), (d) and (e) respe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the firm of P.W. 5 showed that their firm had imported only second quality Lunkat whole betelnuts and not the type of quality mentioned in the invoice, exhibit P-28, produced by the accused. The duplicate bill [exhibit P-32(a)] produced by P.W. 5 showed that the betelnuts had been sold to " Nataraja Trading Company ", Mount Road, Madras, on March 23, 1962, and not to the accused. Nataraja Trading Company appears to be a fictitious company and I will refer to this again when I discuss about this transaction with reference to the statement of the accused and the evidence given by P.W. 5. In respect of the fourth transaction under exhibit P-19(d), with one Panchanan Mullick, the accused produced the invoice, exhibit P-33. According to P.W. 2 the invoice was suspiciously made and it did not contain the usual details. No evidence has been let in to show that the alleged payment of Rs. 5,286.19 in cash on March 5, 1962, and the adjustment entry on March 27, 1962, of Rs. 5,380.93 towards trading expenses were true. P.W. 6, Poornachandran Mullick, a partner of the firm, denied having had transactions with the accused and he gave a statement to P.W. 2 to that effect under exhibit P-35. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o P-52, respectively. P.Ws. 10 to 13 stated before P.W. 2 that they merely introduced Calcutta parties to the accused, that they had no further participation in the business transactions between the parties and that no payments were made through them to the Calcutta parties. After the the enquiries, P.W. 2 was of the view that the returns in respect of those five items were false and that they have been submitted by the accused knowing them to be false and, therefore, added two sums of Rs. 10,987 and Rs. 11,034 representing payments to Ramkumar Ramnarayan and Indo-Foreign Agents (P.) Ltd., and also added a further sum of Rs. 74,450 on an estimate to take into account the business income of accused 1firm and passed an assessment order, exhibit P-56, in terms thereof. Against the said order, the accused preferred an appeal to the Appellate Assistant Commissioner of Income-tax and, subsequently, the accused made a request as per the letter, exhibit P-58, that there may be a settlement of all assessments, completed as well as pending. The accused agreed to a sum of Rs. 59,000 being added towards betelnut trade for the assessment year 1962-63. The offer was accepted and the Appell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nto account, five transactions as enumerated above were not genuine transactions, and even if there were such transactions, the amounts were boosted up. So far as the boosting of amounts is concerned, the learned counsel appearing for the accused appellants had pointed out that in similar transactions which were entered in the account books, such as exhibit P-19 and admitted to be genuine by the department, the amounts found in the suspicious transactions were more or less the same as those of the transactions admitted to be genuine. This argument, of course, deserves some consideration. It will be useful to note the general features in this case. It appears that excepting Ramkumar Ramnarayan, the other four parties held licences for the import of betelnuts and the Calcutta firms had parted with these licences for consideration to others. The appellant-firm which was importing betelnuts into this country had used some of the licences for clearing the goods at Nagapattinam Sea Port, but showing that such goods were imported in the name of the licence-holders preparing invoices in the names of the firms which held licences purporting to have been sold to the appellant-firm. The in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such an import in the name of Ramkumar Ramnarayan either on that date or in that year. The accused-appellants merely stated that they did not know anything about the firm of Ramkumar Ramnarayan and they acted only through the brokers, that the brokers gave the invoice, exhibit P-20, and that the goods were delivered by them at Nagapattinam. But, however, they are unable to say as to by what mode the goods were delivered to them. In exhibit P-17, the account book maintained by the accused-appellants, at page 101 (marked as exhibit P-21), the particulars of the transaction with Ramkumar Ramnarayan are given. As per the entry, a sum of Rs. 6,000 had been paid in cash to Ramkumar Ramnarayan on September 18, 1961, and on January 8, 1962, a further sum of Rs. 4,987.10 is shown to have been paid to Ramkumar Ramnarayan in cash through accused 5. There was no receipt or acknowledgment in respect of these amounts either from Ramkumar Ramnarayan or from the broker to whom the accused-appellants had paid the amounts. It is also not known as to why the amounts payable to Ramkumar Ramnarayan were split up into two parts and the payments were shown as though they were given on two occasions with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecution has let in evidence to show that the bill of entry, exhibit P-25, regarding the import of betelnuts covered under the licence in the name of M/s. Indo-Foreign Agents (P.) Ltd. was at the Calcutta Sea Port on or about August 19, 1961. It is the case of the prosecution that the goods covered under the licence in the name of M/s. Indo-Foreign Agents (P.) Ltd. were not cleared at Nagapattinam Port. P.W. 9, B. M. Purohit, the managing director of Indo-Foreign Agents (P.) Ltd., Calcutta, stated that the company had an import licence for importing Rs. 500 worth of betelnuts for the half year April 1, 1961, to September 30, 1961, and in pursuance of that licence, 13 bags of betelnuts were imported at Calcutta under bill of entry, exhibit P-25, and that all the 13 bags were sold to Tolsaria and Company at Calcutta on October 14, 1961, under invoice copy, exhibit P-26, for Rs. 5,525.16. P.W. 9 stated that his firm did not have any transaction with accused, that exhibit P-22, the invoice for Rs. 11,034.50, dated October 2, 1961, is a bogus one and that the invoice does not belong to his company. He also stated that the person who signed exhibit P-22 is not concerned with his firm. P.W ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (P.) Ltd. by the sales tax authorities at Madras would clearly suggest that there was a transaction between the said firm and the accused in respect of the purchase of betelnuts from the said firm under this item. Though at the outset, the contention appears to be attractive, yet it appears to my mind that since the accused have produced the invoice which, according to the prosecution is bogus, the sales tax authorities at Madras might have believed the invoice, exhibit P-22, and hence demanded sales tax from M/s. Indo-Foreign Agents (P.) Ltd. In any event, this possibility cannot be eliminated. When there is positive evidence that exhibit P-22 is a bogus invoice and P.W. 9 has never sold betelnuts covered under licence during that half year to the accused and, on the other hand, they had sold the goods to Messrs. Tolsaria and Company, I do not think that the contention of the learned counsel that there was a transaction between the accused and M/s. Indo-Foreign Agents (P.) Ltd. is true. I am, therefore, of the view that the return and verification in respect of this purchase by accused 1-firm are false. 3. M/s. Jagannath Prasad Agarwallah [exhibit P-19(c)] : In the return su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... given by P.W. 5, I am of the view that there must have been some transaction in respect of betelnuts between the firm of P.W. 5 and accused 1-firm. The goods covered under the licence were cleared at Nagapattinam Sea Port by accused 1-firm under bill of entry No. 160, dated January 8, 1972. This was submitted by the accused along with their letter sent to the Income-tax Officer. It appears that the introduction of a fictitious firm " Nataraja Trading Company, Madras " is, in my opinion, to suppress the actual transaction between the firm of P.W. 5 and accused 1-firm. It also appears to my mind that the firm of P.W. 5 and the accused must have agreed to introduce the fictitious firm. In respect of this transaction, it is also significant to note that P.W. 5 had paid the sales tax as demanded by the sales tax authorities at Madras. This would show that P.W. 5 sold the goods covered under the licence to a party in Madras. In all probability, accused 1-firm would have purchased the goods from the firm of P.W. 5 either personally or through brokers. Though the transaction between these two parties appears to be true, the amount mentioned in exhibit P-28 must be inflated as, as has al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he same was sold to Amritlal Company, Bombay, that they had another import licence for betelnuts but they gave it to a broker and that they had no information as to what the broker did with it. But, however, he would say that the broker must have cleared the goods and sold them. P.W. 6 admitted that his firm received a demand notice from the sales tax authorities of Madras State, but would say that though they had not effected any sales of imported betelnuts to Madras parties during the year 1961-62, they nevertheless paid the sales tax demanded of them because it was only about Rs. 200 and because they had effected sales during the previous years to Madras parties and they did not take the trouble of contesting the assessment or finding out for which year sales tax had been levied. The evidence of this witness does not appear to be wholly true. This witness would not even admit that he got some amount under the import licence. He would merely say that he gave it to the broker and he did not know what the broker did with it. This witness suppresses the truth. It is quite clear from the sales tax demanded from him (P.W. 6) that this transaction was effected between the firm of P.W. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es are not similar to exhibit P-37 and that they never had any transaction with the accused nor had they received any money under the invoice, exhibit P-37. Exhibit P-41, the invoice produced by P.W. 7, would show that they sold betelnuts to Nataraja Trading Company for Rs. 1,080, that they got a profit of only Rs. 583.88, and that they got the amount in cash through broker. Exhibit P-40, the bill of entry, shows that betelnuts were imported from Malaysia and they were cleared at Nagapattinam Sea Port by accused 1-firm as the Custom House agent for Messrs. Sen Brothers. Exhibit P-40 further shows that the value of the goods so imported was Rs. 530.70 for which amount the licence was granted in favour of Messrs. Sen Brothers. Exhibit P-40 further shows that Rs. 4,800.82 was paid as total duty. It, therefore, appears that a sum of Rs. 5,331.40 was actually paid at the time of clearance. The invoice would show that the accused purchased the quantity for Rs. 10,880.64, the difference being about Rs. 5,550. The prosecution would say that the amount inflated will be about Rs. 5,500. We have to take into consideration in this context that the accused must have paid some amount to Messr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lready noted that P.W. 7 had emphatically denied either having received the demand notice or having paid the sales tax. As admittedly there were transactions between the firm of P.W. 7 and a firm in Madras, though fictitious (Nataraja Trading Company), the assessment of sales tax must have been made in the name of Messrs. Sen Brothers and someone interested must have paid the sales tax as already pointed out by me, without Messrs. Sen Brothers knowing about it. Thus, I find that accused 1-firm had transactions with Messrs. Sen Brothers in respect of this item and the amount mentioned in the invoice has been inflated and, therefore, the return and verification submitted by accused 1-firm to the extent of the inflation must be false. In respect of those five transactions, the learned counsel appearing for the accused, Sri T. V. Ramanathan, as observed by me elsewhere, strongly relied upon the fact that similar quantities of betelnuts were purchased for similar sums as evidenced by exhibit P-19 and such transactions were accepted by the income-tax authorities and, therefore, contended that the submission of returns with similar amounts in respect of these transactions cannot be fal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it P-26, and, therefore, in respect of this transaction, there cannot be any doubt that the return submitted by the accused is false. I have no reason to doubt the genuineness of accounts maintained by Messrs. Indo-Foreign Agents (P.) Ltd. So far as the other transactions, namely, with Messrs. Jagannath Prasad Agarwallah, Messrs. Panchanan Mullick and Messrs. Sen Brothers are concerned, it appears that these firms had sold their licences for importing betelnuts to Madras parties. The goods in these cases were cleared at Nagapattinam Sea Port by the accused. The duty was paid by accused 1-firm for clearing the goods. It is possible that these three firms might not have entered the exact amount received by them as the sale of their licences was itself improper, if not illegal. Even assuming that the accounts maintained by these three firms were not wholly true, the accused cannot escape from the liability of having submitted returns, supported by fabricated invoices. I am, therefore, of the view that the return submitted by accused 1-firm in respect of these transactions are false. The learned counsel for the accused rightly contended that it was not enough to sustain the convi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed 3 is entitled to an acquittal. So far as accused 2 is concerned, there is no doubt that it was he who submitted the return and made verification on behalf of the firm. In the normal course, a person who makes the return with a verification under his signature will be deemed to be liable for the contents of the return an the verification. Accused 2 in his verification has stated that the return submitted by him on behalf of the firm was true to his knowledge and belief. It is not the case of accused 2 that he merely submitted the return without knowing the truth or otherwise of the return and the verification made by him. But his case is that all the transactions entered in the return were true. Therefore, it is not open for accused 2 to say that he could not have knowledge or belief that the return was not true. It is contended by the learned counsel for the accused that since the authorities had, after investigation, ultimately agreed to compound the matter by adding about Rs. 60,000 to the income shown in the return, the prosecution should not have been instituted, while the Special Public Prosecutor, Sri C.K. Venkatanarasimhan, contended that the very fact that the acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ship Act, 1932. Section 4 of the Partnership Act, 1932, is as follows: " ' Partnership ' is the relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all. Persons who have entered into partnership with one another are called individually ' partners ' and collectively ' a firm ', and the name under which their business is carried on is called the ' firm name '. " The " act of a firm " is defined under section 2 of the Partnership Act as " any act or omission by all the partners, or by any partner or agent of the firm, which gives rise to a right enforceable by or against the firm. " I will show at a later stage that, so far as this case is concerned, the definition of " company " or " firm " may not have much relevance as, as already pointed out by me, the definition of " person " under the Act includes both " company " and " firm ". The liability of a company in a prosecution for the offence committed by its agents had come into question in a number of cases, both English and Indian. In the decision in Director of Public Prosecutions v. Kent and Sussex Contractors Ltd , a question arose whether a li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ving personal violence, yet, as decided in Triplex Safety Glass Co. Ltd. v. Lancegaye Safety Glass (1934) Ltd. , it was possible to prove against a limited company all the constituent elements of the crime of publishing a defamatory libel, the vital ingredients of which is a malicious state of mind. Based upon this decision, it was contended by the counsel for the appellant therein that if a company can be guilty of malice, it must be assumed to have that kind of fictitious mind which can be affected with malice and that equally so, it can have knowledge and an intent to deceive and so can be held to be guilty of the offences charged in that case. On the contrary the counsel for the respondent-company contended that a company can only be held to be responsible in respect of the intention or knowledge of its agents, the officers of the company, to the same extent as a private individual is responsible for the acts of his agent, and, therefore, that the respondent-company cannot be held to form the intention or to have the knowledge necessary to consititute the offences charged. Viscount Caldecote C.J., after having referred to the case law, observed that though a company cannot be f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be false and by which he intends to deceive, I apprehend, that, according to the authorities that my Lord has cited, his knowledge and intention must be imputed to the company." Hallett J., while agreeing with the observations made by the other two learned judges, after referring to the expression " any person " in regulation 82, including a limited liability company, observed as follows: " Inasmuch as a body corporate, being a fictitious person, can only act through a servant or agent, it can never commit a tort or a crime except through the act or omission of a servant or agent." It is worthwhile to note 'the observations made by the learned judge as to how the principle relating to the liability of a body corporate for torts or crimes had developed in due course: " With regard to the liability of a body corporate for torts or crimes, a persual of the cases shows, to my mind, that there has been a development in the attitude of the courts arising from the large part played in modern times by limited liability companies. At one time the existence, and later the extent and conditions of such a body's liability in tort was a matter of doubt, due partly to the theoret ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cognized by the law, can as a general rule be indicted for its criminal acts which from the very necessity of the case must be performed by human agency and which in given circumstances become the acts of the company, and that for this purpose there was no distinction between an intention or other function of the mind and any other form of activity. It was further contended by the Crown that the offences for which a limited company cannot be indicted are exceptions to the general rule arising from the limitations which must inevitably attach to an artificial entity, such as a company. Included in these exceptions are the cases in which, from its very nature, the offence cannot be committed by a corporation, as, for example, perjury, an offence which cannot be vicariously committed, or bigamy, an offence which a limited company, not being a natural person, cannot commit vicariously or otherwise. A further exception, but for a different reason, comprises offences of which murder is an example, where the only punishment the court can impose is corporal, the basis ion which this exception rests being that the court will not stultify itself by embarking on a trial in which, if a verdict ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as the agents of or with the authority of the company but in fraud of the company. Viscount Caldecote L.C.J., following the principles laid down in Director of Public Prosecutions v. Kent and Sussex Contractors Ltd. and in R. v. I. C. R. Haulage Ltd., while setting aside the order of acquittal by the Quarter Sessions observed that when both the secretary of the respondent-company and the general manager of the Nottingham branch together, sold goods which were the property of the respondent-company and intended for sale, they were acting within the scope of their authority; and the sales which were effected were made by them as agents and with the authority of the respondents and that, therefore, by their act, they made the company also liable for the offence which was committed. Subsequently, in Bolton (Engineering) Co. v. Graham and Sons, Denning L.J., while approving the principle laid down in the earlier cases cited above, stated clearly and succinctly, which is the present position of law that a company can be indicted for the criminal act of its agents, the liability depending upon the nature of the charge, the relative position of the agents and other relevants facts. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... disclosed by the allegations in the complaint or in the charge sheet, the relative position of the officer or agent vis-a-vis the corporate body and the other relevant facts and circumstances which could show that the corporate body, as such, meant or intended to commit that act. The learned judge has elaborately discussed both the English law and the Indian law on the subject. In paragraph 17 of the judgment following the English and Indian cases, the learned judge has observed that a company cannot be indictable for offences like bigamy, perjury, rape, etc., which can only be committed by a human individual or for offences punishable with imprisonment or corporal punishment. In the decision in Express Newspapers v. Raisina Publications (P.) Ltd. it was held that a corporation like a private limited company doing business as a printer and publisher of a newspaper cannot escape vicarious liability for a publication if it amounted to a contempt of court and that the agents and officers who act for the corporation are liable to punishment. It was contended by the learned counsel for the accused that a firm is different from a company, that the law applying to the company will ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... minarayan constituted under the aforesaid dead of partnership consisted of three firms, one Hindu undivided family business and one individual and taking the view that a firm or a Hindu undivided family could not as such enter into a partnership with other firms or individuals, held that the said Dulichand Laxminarayan could not be registered as a firm under section 26A and, accordingly, rejected the application. On appeal, the Appellate Assistant Commissioner while holding that there was no legal flaw in the constitution of the bigger firm of Dulichand Laxminarayan consisting of the other smaller firms, however, found that the application for registration had not been signed personally by all the partners of the three smaller firms as required by section 26A of the Act, and as there was no valid application for registration, dismissed the appeal. Then the assessee appealed to the Income-tax Appellate Tribunal. The Tribunal agreed with the Appellate Assistant Commissioner that a valid partnership had beep brought into existence but reversed the decision of the Appellate Assistant Commissioner on the ground that as all the five executants of the deed had signed the application for r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was authorised to sign and verify the return of income and a notice under the Act was served upon him as the manager of the Hindu undivided family. It was held that the manager of a Hindu undivided family cannot be treated as an assessee and, as such, the manager cannot be arrested and detained in prison for the non-payment of tax by the Hindu undivided family, which is the assessee. This decision emphasises the fact that a Hindu undivided family which is a combination of coparceners can be made liable for failure to pay tax. In the decision in Agrawal Trading Corporation v. Assistant Collector of Customs it was held that a company for the purpose of section 23-C of the Foreign Exchange Regulation Act is defined to mean any body corporate and includes a firm or other association of individuals and a director in relation to a firm means a partner in the firm. It was further held therein that once it is found that there has been a contravention of any of the provisions of the Foreign Exchange Regulation Act read with the Sea Customs Act by a firm, the partners of it who are in charge of its business or are responsible for the conduct of the same, cannot escape liability, unless i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by natural persons (such as bigamy), nor of those which cannot be committed vicariously (such as perjury, bigamy, rape, homicide, etc.). A company cannot be indicted for a crime where the only punishment is death or imprisonment. A company may be guilty both of statutory and common law offences (of course in exceptional cases in respect of common law offences), even though the latter involves mens rea. A Corporation can be indicted for contempt and libel. Wherever a duty is imposed by statute in such a way that a breach of the duty amounts to a disobedience of the law, then if there is nothing in the statute either expressly or impliedly to the contrary, a breach of the statute is an offence for which a corporation will be indicted, whether or not the statute refers in terms to corporations. A statute which creates a criminal offence may expressly or by necessary implication define the particular state of mind which is an element of offence or it may be silent on this point. It is of utmost importance to the protection of the liberty of the subject and of the corporation or company to which such state of mind is imputed by fiction that a court shall always bear in mind tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rse of my discussion in the previous case, I have found that the return was false and that the invoices produced by the accused could not be true. It is not necessary to repeat those facts as they have been referred to in my judgment in C. A. No. 466 of 72. The fabrication of evidence related to the invoices, exhibits P-20, P-22, P-28, P-33 and P-37. So far as exhibit P-20 is concerned, it has been clearly established by the prosecution that the firm mentioned in the invoice, namely, Ramkumar Ramnarayan, is a fictitious one and that it never existed. I have fully discussed about this in my judgment in C. A. No. 466 of 72. There cannot be any doubt that 'exhibit P-20 has been fabricated. Similarly, the partners of the Calcutta firms who gave evidence in this case had stated that the invoices relating to their firms, produced by the accused, namely, exhibits P-22, P-28, P-33 and P-37, are not the invoices belonging to those firms. There is no reason to disbelieve the evidence of those witnesses. I have also discussed about the evidence of the witnesses who spoke about these invoices in my judgment in C. A. No. 466 of 1972. But however, for the reasons given by me in C. A. No. 466 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submitted under the signature of accused 2 on behalf of the firm. In that return, the income from the business has been declared at Rs. 1,85,213 whereas, according to the prosecution, the real income must have been Rs. 3,65,112. In the trading accounts submitted by the firm, it was stated that arecanuts were purchased for Rs. 18,42,926.06, during the year ending March 31, 1962. On investigation, it was found that in respect of the following purchases, either the firm mentioned therein was non-existent or the firms which existed did not sell arecanuts as shown in the accounts or the purchases were inflated in respect of the sale of arecanuts by certain firms: Rs. 1. Ramkumar Ramnarayan 21,577.50 2. Messrs. R. K. Santosh 3,968.52 3. Messrs. Jayashree Importers 22,443.95 4. Messrs. Indo-Foreign Agents (P.) Ltd. 10,969.50 5. Messrs. R. M. Jhunjhunwalla Co. 11,016.36 6. Messrs. Jaybharath Co. (P.) Ltd. 10,681.92 7. Messrs. Mansukroy Hazarimal 10,872.00 8. Messrs. K. H. Gupta Co. 32,054.00 9. M. R. Ranganathan Chettiar 11,534.17 It is the case of the prosecution that party No. 1, namely, Ramkumar Ramnarayan, never existed and, therefore, the item of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tinam under the bill of entry, exhibit P-27, dated February 3, 1961, which shows that ten bags were imported at Nagapattinam. This invoice was purported to have been signed by one broker by name Swaminathan. The invoice would show that the goods were imported under the licence dated January 4, 1960, held by Santosh, for goods to be imported to the value of Rs. 500. Exhibit P-28(a), dated May 27, 1961, is the sale bill for Rs. 4,220 in respect of ten bags of betelnuts, at the rate of Rs. 422 per bag. This bill is made in the name of Messrs. S. K. Somasundara Nadar, Nagapattinam, South India. This is purported to have been signed by a partner of R.K. Santosh. P. W. 10, Ramkanth, Kajaria, the partners of Messrs. R. K. Santosh, stated that their firm imported ten bags of betelnuts on or about April 12, 1961, under bill of entry, exhibit P-27, and got the goods cleared at Nagapattinam Sea Port and that they sold the entire consignment for Rs. 4,220 under bill, exhibit P-28(a), dated May 27, 1961, to S. K. Somasundara Nadar, Nagapattinam. P.W. 10 further stated that exhibit P-24 produced by the accused was not the bill of their company, that they never issued a bill like that and that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1961, and credited to the betelnut account. This extract shows that 33 bags of betelnuts weighing 7,227 pounds were sold at Rs. 2 per pound, amounting to Rs. 14,454. P.W. 15 further stated that accused 1 paid a sum of Rs. 10,119 towards customs duty, clearing charges, etc., at Nagapattinam and he further paid a sum of Rs. 1,361.25 towards the account of their firm in the bank and cleared the documents through the bank and that the balance amount of Rs. 2,973.75 was paid in cash to them through brokers on October 11, 1961. This statement of P.W. 15 was supported by the account books produced in court, the English translations of which are marked as exhibits P-114 and P-115. This witness stated that exhibit P-29 is a bogus invoice, and that even the letter-head in which the invoice was prepared was not the letter-head of the firm though it looks similar to their letter-head. The witness also stated that their letter-heads will not contain the code particulars. He further stated that their firm has got invoice forms and that they will not use letter-heads for preparing invoices. In cross-examination, this witness had stated that the brokers will not issue bills and invoices on behalf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tated that they appointed accused 1 as the clearing agents for the clearance of 16 bags covered under that licence and that the entire consignment was sold to accused 1 for Rs. 6,427.85 under invoice exhibit P-106, dated December 20, 1961. According to this witness exhibit P-32 is a bogus invoice and the letter-head in which the invoice was prepared by the accused was not their letter-head and that the invoice was not issued or signed by any one concerned in that firm. He also stated that even the name of the company was not correctly noted in exhibit P-32. He further stated that they did not receive Rs. 4,350 on November 28, 1961, or Rs. 1,191.65 on December 21, 1961, from accused 1-firm. According to him, they received only Rs. 1,000 on November 21, 1961. He stated that as per sales invoice, all the taxes, customs clearance charges, etc., have to be borne by the purchasers. It is clear from exhibit P-106, produced by the witness, that 16 bags of betelnuts were sold for Rs.6,427.85. There was no cross-examination of this witness at all. Therefore, there can be no doubt that exhibit P-32 is a false invoice and the amount shown therein has been inflated and, consequently, the return ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gus and the return made in respect of this purchase is false. No one has been examined on behalf of Jayabharath and Company and, therefore, it would not be safe to hold that the return is false as the evidence to hold so is not available. But, however, taking into consideration the pattern adopted by the accused in preparing bogus invoices it may throw a considerable suspicion that the return and verification in respect of this transaction must also be false. 7. M/s. Mansukroy Hazarimull : The accused produced the invoice, exhibit P-50, dated March, 1962, for Rs. 10,872, purporting to have been issued by Mansukroy Hazarimull. It appears that the consignment covered under this invoice was cleared at Nagapattinam under bill of entry No. 79 dated February 21, 1962. P.W. 7, Kesava Prasad Parasuramka, one of the partners of M/s. Mansukroy Hazarimull, Calcutta, stated that under exhibit P-54, the bill of entry, their firm imported 18 bags of betelnuts in February, 1962, that they sold the entire consignment to Nataraja Trading Company, Mount Road, Madras, under the invoice, exhibit P-53(a), dated March 14, 1962, for Rs. 1,246.12, and that they made a profit of Rs. 750. This witness ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orrespondence. However, he denied that they really sold betelnuts to the accused, that they did not make any sales to Nataraja Trading Company and that they were suppressing the truth and deposing falsehood. Though it appears to my mind that all was not well with the Calcutta firm, yet there cannot be any doubt that the invoice, exhibit P-55, produced by the accused is bogus and the amount shown therein has been inflated. As already pointed out by me in respect of the other instances, the return and verification made by accused 1-firm are false. 9. M. R. Ranganathan Chettiar : The accused produced exhibit P-61 dated December 1, 1961, for Rs. 11,534.17, in respect of 16 bags of betelnuts purported to have been purchased through broker, P.A. According to the prosecution, this invoice is bogus and the amount shown therein has been inflated. This invoice was purported to have been issued by Ranganathan Chetty Brothers, signed by one D. Ramaswami. P.W. 5, Bhakthavathsalam, stated that he and his brother were doing business in groceries and betelnuts till 1969 in the name, Ranganathan Chetty Brothers, and that they also used to import betelnuts. He stated that in 1961, they had imp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by them could not have been true. But, however, I take the view that this circumstance of compounding is neither here nor there. It might be that the accused agreed for determination of a certain figure as they might have thought to give a quietus to this matter. Or it might be that the accused knew that the department might prove the return to be false by letting in evidence, and to avoid a determination by the department on the evidence, the accused might have agreed to compound. I, therefore, do not take the compounding as a piece of evidence that can be put against the accused. I have already discussed in the paragraphs supra as to how each invoice relating to the respective purchase has been fabricated and the amount inflated. The next question that has to be considered is whether the convictions of the accused can be sustained. So far as accused 1 and 2, namely, the firm and the person who submitted the return under his signature are concerned, there cannot be any difficulty in holding that they are liable for punishment. Accused 2 while he submitted the return must have had the knowledge or at least the belief that what was contained in all the bogus invoices must be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accounts were false and fabricated. Therefore, there cannot be any doubt that whoever used those documents as genuine will be liable for punishment under this charge. So far as accused 3 is concerned, I am of the view that the prosecution has failed to establish that he had delivered the documents knowing them to be false or that he had used those documents knowing them to be false. He is entitled to the benefit of doubt. He is acquitted of all the charges. His convictions and sentences are set aside. So far as accused 1 and 2 are concerned, it has been made clear that it was accused 2 who delivered the documents and also used those documents knowing them to be false. He submitted the return himself under his signature and, therefore, his convictions under all the charges are confirmed. Accused 1 being a firm, as observed by me in the other appeal, is liable for the acts done by accused 2. Therefore, the convictions of accused 1 are also confirmed. So far as the sentence is concerned, for the reasons mentioned by me in the other appeal, I reduce the sentence of fine imposed on accused 1 and 2 to Rs. 250 under each count under charges Nos. 3, 4 and 5; in default, accused 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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