M.V.JAVAL versus MAHAJAN BOREWALL AND CO. AND ORS.

M.V.JAVAL versus MAHAJAN BOREWALL AND CO. AND ORS.

Section 278-B includes companies and firms within its scope, and mandates prosecution and punishment of such entities for offences under Section 276-B. Although companies cannot be imprisoned, they can be prosecuted and punished with fine. A harmonious construction of Section 276-B allows mandatory imprisonment and fine for natural persons, and only fine for juristic persons such as companies and firms. High Court's view that prosecution was impermissible is erroneous.

Parties
Appellant: M.V. Javali; Respondent No. 1: Mahajan Borewell and Co.; Respondents: Partners of Mahajan Borewell and Co. (Respondent Nos. 2-4)
Jurisdiction
India
Judgment Date
26 September 1997
Procedural Posture
Criminal Appeal / Appeal From Order of Karnataka High Court in Criminal Revision No. 671 of 1994
Outcome
Appeal allowed
Legal Topics
Company Liability for Criminal Offences, Substitution of Punishment for Juristic Persons, Interpretation of Statutes
Criminal Law Taxation Law Company Liability for Criminal Offences Substitution of Punishment for Juristic Persons Interpretation of Statutes

Case Brief

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Parties

M.V. Javali

Appellant

Mahajan Borewell and Co.

Respondent No. 1

Partners of Mahajan Borewell and Co. (Respondent Nos. 2-4)

Respondents

Procedural Posture

Criminal Appeal / Appeal From Order of Karnataka High Court in Criminal Revision No. 671 of 1994

Legal Issues

  1. 1 Whether a company (including a partnership firm), as a juristic person, can be prosecuted and punished for an offence under Section 276-B of the Income Tax Act, 1961 where mandatory imprisonment and fine are prescribed;
  2. 2 Whether punishment of fine in substitution of imprisonment is permissible for companies under the Act;

Ratio Decidendi

Section 278-B includes companies and firms within its scope, and mandates prosecution and punishment of such entities for offences under Section 276-B. Although companies cannot be imprisoned, they can be prosecuted and punished with fine. A harmonious construction of Section 276-B allows mandatory imprisonment and fine for natural persons, and only fine for juristic persons such as companies and firms. High Court's view that prosecution was impermissible is erroneous.

Court Disposition

Appeal allowed

Orders

  • Impugned order of the High Court upholding discharge of respondents set aside.
  • High Court directed to hear the revision petition filed by the appellant afresh, in accordance with law and in light of Supreme Court's observations.