Page 111 - ELT_15th August 2020_Vol 373_Part 4

2020 ] SHAILENDRA SWARUP v. DEPUTY DIRECTOR, ENFORCEMENT DIRECTORATE 445

for an offence of which the principal accused is the Company, had a role to
play in relation to the incriminating act and further that such a person
should know what is attributed to him to make him liable. In other words,
persons who had nothing to do with the matter need not be roped in. A
company being a juristic person, all its deeds and functions are result of
acts of others. Therefore, officers of a Company who are responsible for acts
done in the name of the Company are sought to be made personally liable
for acts which result in criminal action being taken against the Company. It
makes every person who. at the time the offence was committed, was in-
charge of and was responsible to the Company for the conduct of business
of the Company, the Company, liable for the offence. The proviso to the
sub-section contains an escape route for persons who are able to prove that
the offence was committed without their knowledge or that they had exer-
cised all due diligence to prevent commission of the offence.”
30. This Court held that the criminal liability arises from being in-
charge of and responsible for the conduct of the Company at the relevant time.
Elaborating the requirement for a person to be made liable under Section 141 this
Court laid down following in paragraphs 10 and 12 :
“10. While analysing Section 141 of the Act, it will be seen that it operates
in cases where an offence under Section 138 is committed by a company.
The key words which occur in the Section are “every person”. These are
general words and take every person connected with a company within
their sweep. Therefore, these words have been rightly qualified by use of
the words “who, at the time the offence was committed, was in charge of
and was responsible to the company for the conduct of the business of the
company, as well as the company, shall be deemed to be guilty of the of-
fence etc.” What is required is that the persons who are sought to be made
criminally liable under Section 141 should be at the time the offence was
committed, in charge of and responsible to the company for the conduct of
the business of the company. Every person connected with the company
shall not fall within the ambit of the provision. It is only those persons who
were in charge of and responsible for conduct of business of the company at
the time of commission of an offence, who will be liable for criminal action.
It follows from this that if a director of a Company who was not in charge
of and was not responsible for the conduct of the business of the company
at the relevant time, will not be liable under the provision. The liability
arises from being in charge of and responsible for conduct of business of
the company at the relevant time when the offence was committed and not
on the basis of merely holding a designation or office in a company. Con-
versely, a person not holding any office or designation in a Company may
be liable if he satisfies the main requirement of being in charge of and re-
sponsible for conduct of business of a Company at the relevant time. Liabil-
ity depends on the role one plays in the affairs of a Company and not on
designation or status. If being a Director or Manager or Secretary was
enough to cast criminal liability, the Section would have said so. Instead of
“every person” the section would have said “every Director, Manager or
Secretary in a Company is liable”.... etc. The legislature is aware that it is a
case of criminal liability which means serious consequences so far as the
person sought to be made liable is concerned. Therefore, only persons who
can be said to be connected with the commission of a crime at the relevant
time have been subjected to action.

EXCISE LAW TIMES  15th August 2020  111