SETHURAMAN J Vs. THIRUVENGADATHAN V IAC

JUDGEMENT

(1.) THE petitioner is A-8 in C.C. No. 29 of 1985, pending on the file of the Additional Chief Judicial Magistrate (Economic Offences), Madurai. At the instance of the respondent who is the Inspecting Assistant Commissioner of Income-tax (Assessment Range-I), Madurai, he along with nine others are being prosecuted for alleged commission of offences punishable under section 120B, section 192, section 196 and section 420 read with section 511 of the Indian Penal Code, 1860, and sections 276C(1), 277 and 278 read with section 278B(1) of the Income-tax Act, 1961. Some of the directors appear to have preferred along with the company Criminal Miscellaneous Petition No. 4154 of 1985 (Geethanjali Mills Ltd. v. Thiruvengadathan [1981] 179 ITR 558) before this court for quashing the prosecution in very same calendar case. THE petitioner was not a party to the said petition. Janarthanam J., by his order dated September 9, 1988, refused to quash further proceedings holding that the questions raised may have to be canvassed and considered during trial, after evidence was brought on record.

(2.) MR. R. S. Jeevarathanam, learned counsel representing the petitioner, contended that the petitioner who was nominee-director, cannot be considered on a par with the other directors, since he does not enjoy the privileges as the others do. He also submitted, on the basis of a Government order, that the petitioner had not been expected to participate in the day-to-day administration or conduct of the business of the company, but was only responsible for the prompt payment of the instalments of dues to the Government by Geethanjali Mills Ltd. He submitted that the appellant was made a nominee-director on May. 26, 1978, and assumed office on August 23, 1978, and was relieved on February 20, 1981. He has retired from service on January 28, 1984. This prosecution was launched on March 18, 1985, in relation to the assessment year 1980-81, the period being January 1, 1979, to March 31, 1980. He also contended that under section 30A of the Industrial Development Bank of India Act, 1964, if appointment of a director has been made as in the case of the petitioner such director will not incur any obligation or liability by reason only of his being a director or for anything done or omitted to be done in good faith in the discharge of his duties as a director or anything in relation thereto. On those grounds, he would invite this court to quash the pending prosecution.