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

Citation: [1997] SUPP. 4 S.C.R. 320 · Decided: 26-09-1997 · Supreme Court of India · Bench: M.K. MUKHERJEE, M. JAGANNADHA RAO · Disposal: Appeal(s) allowed
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Judgment (excerpt)

A 
M.V.JAVALl 
v. 
MAHAJAN BOREWALL AND CO. AND ORS. 
SEPTEMBER 26, 1997 
B 
[M.K. MUKHERJEE AND M. JAGANNADHA RAO, JJ.] 
Income Tax Act, 1961 : Sections 276-B and 278-B. 
Company-Offence by-Prosecution-Punishment-Company being a 
C juristic person cannot be imprisoned-Punishment of fine in substitution of 
imprisonment-Prosecution of respondent-Partnership firm and its partners 
in Special Court for economic offences-Alleged commission of offence under 
section 276-B-Trial Court discharged the firms as well as its partners-
Appeal-High Court held that prosecution of firm was legally impermissible-
D Partners of firm also discharged by High Court-Appeal befon Supreme 
Court-Held in view of the provisions of Section 278-B, a company can be 
prosecuted and punished for an offence committed under Section 276-B, yet 
the sentence of imprisonment which has got to be imposed thereunder cannot 
be imposed, it being a juristic person-However, this apparent anomalous 
situation can be resolved, needless to say, only by a proper interpretation 
E of the Section-The only harmonious construction that can be given to 
Section 276-B is ihat the mandatory sentence of imprisonment and fine is to 
be imposed where it can be imposed, namely on persons but where it cannot 
be imposed, namely on a company, fine will be the only p11nishment. 
Siraj-ul-Haq Khan v. The Sunni Central Board of Wakf U.P., AIR (1959) 
F SC 198 and Union of India v. Fillip Tiago De Gama, AIR (1990) SC 98, relied 
on. 
P. V. Paiv. Rl. Rinawna, ILR (1993) Karnataka 709, referred to. 
Towne v. Elsjher, [1918] 245 US 418, 425; Lenigh Valley Coal Co. v. 
G Yensavage, 218 FR 547 and Mahadeolal Kanodie v. The Administrator General 
of West Bengal, [1950] 3 SCR 578, AIR (1960) SC 936, cited. 
47th Report of the Law Commission of India, referred to. 
Interpretation of Statutes-Principles of-Ascertainment of legislative 
H intent. 
320 
-
M.V. JAVALI v. MAHAJAN BOREWALL 
321 
CRIMINAL APPELLATE JURISDICTIC' ·Criminal Appeal No. 899. A 
of 1997. 
From the Judgment and Order dated 2.12.94 of the Karnataka High Court 
in Cr!. R. No. 67 I of 1994. 
K.N. Shukla, Ms. Sushila, Shukla and S.N. Terdol for the Appellant. 
B 
Joseph Vellapally, Ms. Janaki Ramachandran and Ramesh Babu M.R. for 
the Respondents. 
The following Order of the Court was delivered : 
Special Leave granted. Heard the learned counsel for the parties. 
The appellant, who is an Assistant Commissioner of Income Tax, filed 
c 
a complaint in the Special Court for Economic Offences at Bangalore alleging 
commission of an offence under Section 276-B, read with Section 278B, of the 
Income Tax Act, 196 I (' Aci' for short) by M/s Borewell & Co., a registered D 
partnership firm (the respondent No. 1) and its three partners (the respondent 
Nos. 2 to 4.) The Special Court took cognizance of the offence alleged and 
issued process against the respondents for their attendance. After entering 
appearance they filed an application praying for their discharge under Section 
245(2) of the Code of Criminal Procedure. The Special Court allowed the E 
application on the ground that before granting sanction for their prosecution 
under Section 279( l) of the Act, the Sanctioning Authority did not give the 
respondents a personal hearing . The other grounds raised by the respondents 
for their discharge were however kept open. Assailing the order of discharge 
the appellant filed a revision petition in the High Court which was dismissed 
by the impugned order. Hence this appeal. 
In upholding the order of discharge, the High Court did not deal with 
the ground that found favour with the Special Court but held - relying upon 
its earlier judgment in P. V. Pai v. R.L. Rinawna, !LR (1993) Karnataka 709 that 
the prosecution of respondent No. 1 under Section 276-B was not maintainable 
F 
for if ultimately the Special Court found it to be guilty it (the Court) could not G 
legally impose a substantive sentence upon it which was mandatory thereunder. 
As regards the other respondents, though the High Court found that the 
prosecution against them was maintainable for the above offence, it still 
upheld their discharge. 
To answer the question whether a company, being a juristic person and H 
322 
SUPREME COURT REPORTS [1997] SUPP. 4 S.C.R. 
A thus incapable of being sentenced to imprisonment can be prosecuted - and 
for that matter convicted - for committing an offence under the Act which 
provides for compulsory imprisonment and
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