The petitioner herein is arraigned as accused No.5 in the complaint filed under Section 200 of Cr.P.C. by the first respondent / 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 the accused 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 also the consequential non-bailable warrant ordered against him.
3. Sri Udaya Holla, learned Senior Counsel for the petitioner submits that the petitioner herein is the non-executive Director of the 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, he has no role to play either in administration or management control of M/s.Reid & Taylor (India) Limited. The complainant in his complaint has alleged that accused Nos.2 to 4 are the Managing Directors who have been treated as Principal Officers of the Company 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 herein either directly or indirectly is responsible for the omission alleged in the complaint. In that view of the matter, the order of the learned Magistrate in taking cognizance against him is not legal and liable to be quashed.
4. Learned Senior Counsel while emphasizing on Section 278B(1) submits that it is only a person, who at the time of the offence alleged to have committed, was in charge and responsible for the conduct of the business of the Company, who shall be deemed to be guilty of the offence, liable for prosecution, the offence alleged in the complaint and no offence is made out against the petitioneris not attracted in this case and prays to quash the entire criminal prosecution against him may be quashed.
5. In reply, Sri Jeevan J.Neeralagi, learned Counsel for the respondents emphasizing on Section 278B(2), which reads thus:
"Section 278B(2) : Notwithstanding anything contained in sub-section 91), where an offence under this Act has been committed by a company and it is proved that the offence has been committed with the consent or connivance of, or is attributable to any neglect on the part of, any director, manager, secretary or other officer of the company, such director, manager, secretary or other officer shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished 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 is equally guilty of the offences alleged along with the co-accused.
6. There is no dispute to the fact that the petitioner herein is a non-Executive Director of the Company. In the entire complaint there 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 no concept of vicarious liability under criminal jurisprudence, unless the statute specifically prescribed for the same. Though Section 278B of the Act contemplates such vicarious liability, the basic requirement is, there must be specific allegation to that effect in the complaint which is lacking in the present case. In that view of the matter, the prosecution against this petitioner is vitiated and initiation of such proceedings is pure abuse of the process of law.
8. Accordingly, the petition is allowed.
The complaint so far petitioner is concerned, the cognizance taken against him vide Annexure 'B' dated 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 it does not survive for consideration.