Sitaram vs State of Madhya Pradesh

Rewritten Version Notice: This is a rewritten version of the original judgment.

Court: Supreme Court of India

Case Number: Criminal Appeals Nos. 146 and 147 of 60

Decision Date: 5 February 1962

Coram: J.L. Kapur, K.C. Das Gupta, Raghubar Dayal

In this case the Supreme Court heard appeals numbered 146 and 147 of 1960, which were filed by special leave against a judgment of the Madhya Pradesh High Court dated 11 February 1960. The appeals concerned a decision of the High Court that had rejected a reference made by the Sessions Judge seeking the quashal of criminal proceedings against the appellants for allegedly violating the Central Provinces and Berar Sales Tax Act, 1947 (referred to as “the Act”). The appellants were two of five brothers who were partners in a firm that had filed sales‑tax returns for the period from the quarter beginning 1 June 1947 to the quarter ending 31 December 1951. A complaint was lodged on 19 July 1957 alleging that the returns filed by the partners were false and that the accounts produced were incorrect, thereby constituting an offence under sections 24(1)(b) and (g) of the Act. The accused raised an objection on 12 December 1958 contending that, under section 26(2) of the Act, no prosecution could be instituted after the expiry of three months from the date of the alleged offence. The learned magistrate did not consider the objection, reasoning that the matter was not before the appropriate forum. Four revisions were made to the Sessions Judge, who on 4 May 1959 referred the matter to the High Court for a decision on the propriety of the proceedings. The High Court rejected the reference, holding that a person who makes a false return does not act under the Act and therefore section 26(2) was inapplicable. The appellants appealed this decision, and counsel for the appellants and counsel for the State presented their respective arguments before the bench comprising Justice Kapur, Justice K.C. Das Gupta and Justice Raghubar Dayal.

The Supreme Court examined the relevant provisions of the Act to determine whether the limitation contained in section 26(2) applied to the present facts. Section 10 of the Act obliges every dealer to furnish a return when called upon, and section 15 requires registered dealers to produce accounts as prescribed. The Court observed that the words “any person” in section 26(2) were of wide import and were not confined to government officials; consequently the appellants fell within its scope. Both the act of filing the return under section 10 and the act of producing the accounts under section 15 were considered acts done under the Act. Accordingly, the limitation period prescribed in section 26(2) was applicable to the prosecution. The Court therefore held that the prosecution was barred because it had been instituted more than three months after the alleged offence. The judgment affirmed that the High Court’s rejection of the reference was erroneous, and the appeals were allowed, resulting in the quashal of the proceedings against the appellants.

In this case the Court observed that the prosecution could not be instituted because it was barred by the limitation period, having been commenced more than three months after the alleged offence was committed. The learned magistrate had not examined the objection on the ground that the magistrate’s court was not the appropriate forum for considering that objection. Four revisions were subsequently taken to the Sessions Judge, who on 4 May 1959 referred the matter to the High Court with a request that the proceedings be set aside. The High Court, however, dismissed the reference, holding that a person who makes a false return neither acts nor purports to act under the Act, and consequently its provision s. 26(2) did not apply to him. Special leave petitions were filed against that order, and the Court needed to determine the correct interpretation of the relevant statutory provisions. Section 10 of the Act obliges every dealer to furnish a return when called upon, and it requires every registered dealer to file returns by the dates prescribed by the authorities. The appellants were registered dealers and had filed returns in accordance with that provision. Section 15 governs the production and inspection of accounts, while section 24 enumerates the offences punishable under the Act. The alleged wrongdoing of the appellants was said to fall under s. 24(1)(b) and (g), namely the failure to submit any return, the furnishing of false returns, and the knowing production of incorrect accounts, registers, documents, or information. Section 26 deals with the protection of persons acting in good faith and with the limitation period for suits and prosecutions. The provision reads as follows: “(1) No suit, prosecution or other legal proceedings shall lie against any servant of the Government for anything which is in good faith done or intended to be done under this Act or rules made thereunder. (2) No suit shall be instituted against the Government and no prosecution or suit shall be instituted against any person in respect of anything done or intended to be done under this Act unless the suit or prosecution has been instituted within three months from the date of the act complained of.” The appellants argued that the words “any person” in sub‑section (2) encompassed their situation and therefore the limitation period applied to them as well. The respondent contended that both sub‑sections of s. 26 should be read together, emphasizing that the legislature intended the protection to apply only to Government servants with respect to prosecutions or other legal actions. The Court, however, held that the language of sub‑section (2) is of a broader import and extends to all persons, not merely to Government officials. There is no textual limitation restricting the phrase “any person,” and no justification was provided to exclude the appellants from its coverage.

In this case, the High Court had rejected the reference on the ground that, in its view, the appellants had neither acted nor purport to act under any provision of the Act when they filed false returns or produced false accounts, and that consequently they were exposing themselves to punishment under section 24 of the Act. The High Court explained its reasoning by stating that the test for determining whether an act is done or intended to be done under a particular law is whether the person who performed the act can, if challenged, reasonably justify his conduct by relying on any provision contained in that law. The Court of this jurisdiction found that opinion unsustainable. The present Court observed that when the appellants prepared and submitted their returns, they did so pursuant to section 10 of the Act, and when they prepared and produced the accounts, they acted pursuant to section 15 of the Act. Accordingly, both the filing of returns and the production of accounts were acts performed within the framework of the Act and therefore could not be said to fall outside its provisions. In the view of this Court, the High Court erred in rejecting the reference. Consequently, the appeals were allowed, the order of the High Court was set aside, and the proceedings in the trial court were quashed. The appeals were thereby allowed.