1 IN THE COURT OF SH. [ENTITY], ACMM, SOUTHEAST, SAKET COURTS, NEW DELHI [ENTITY] VS. M/s [ENTITY] U.S. : U/[SECTION]/[SECTION] [ENTITY] Act J U D G M E N T
a. Sl. No. of the case and : RBT4/D dated 23.01.2014 date of its institution b. Name of the complainant : [ENTITY] c. Date of commission of offence : 16.12.2002 d. Name of the accused 1. M/s. [ENTITY], through partners [ENTITY]
2. [ENTITY],
3. [ENTITY],
4. [ENTITY].
(Proceedings against him abated on 12.4.2006) e. Offence complained of : U/[SECTION]/[SECTION] [ENTITY] Act f. Plea of accused : Pleaded not guilty g. Case reserved for orders : 22.01.2015 h. Final order : Acquitted i Date of such order : 28.01.2015 BRIEF STATEMENT OF FACTS FOR THE DECISION:
1. The present complaint is filed by the complainant on behalf of the [ENTITY] through Sh.[ENTITY], Addl. Director Enforcement, [ENTITY] U/[SECTION] of [ACT] against accused persons. It is alleged that on inspection of the field staff on 16.12.2002 a shop and godown of stones and granites was found running in property no.T1, Chirag Delhi Chowk, New Delhi, under name and style of M/s [ENTITY] and the area under misuse was found about 300 sq feet and three persons were found working at the time of inspection. It is also stated that the said property was put to a nonconforming use by running a shop and godown of stone and granites because the building/property falls in Zonal Development Plan/Master Plan Delhi and can be used only for residential purposes. Thereby it is alleged that accused persons have committed an offence u/[SECTION] of [ACT] read with [SECTION] of the said Act. It is also alleged that accused no.2 to 4 are the partners of accused no.1 and were incharge of and responsible for the business of accused no.1. The prior sanction u/[SECTION] of the [ENTITY] was also placed on record.
2. The accused persons were summoned and after compliance of the provisions of [SECTION] [ACT], notice u/[SECTION] [ACT] for commission of the offence punishable u/[SECTION] of the [ENTITY] Act was framed to accused no. 1 M/s [ENTITY] through its partner Sh.[ENTITY] and to other accused persons and same was explained to them in vernacular, to which, they pleaded not guilty and claim trial. During trial, accused [ENTITY] expired and proceedings against him were abated vide order dated 12.4.2006.
3. The complainant to prove its case examined Sh.S.C. Saxena, JE, [ENTITY], who conducted the inspection as CW1 and Sh.[ENTITY], LDC from Sales Tax Department as CW2. During prosecution evidence, the following documents were exhibited : First Information Report prepared by JE, [ENTITY] Ex.CW1/A, Zonal Development Plan and LUP Ex.CW1/B & Ex.CW1/C, respectively, and show cause notice Ex.CW1/D, verification Ex.CW1/E, sanction Ex.CW1/F, complaint by Sh.[ENTITY], A.D. (Survey) Enforcement Ex.CW1/G and copies of resolution & notification Ex.CW1/HH1 and Ex.CW1/II1, copy of registration certificate of firm (local and central) Ex.CW2/A and Ex.CW2/B.
4. The statement of the accused recorded u/[SECTION] [ACT], wherein they stated that the shop in question was continuing since 1958 and they had got commercial license from the MCD and other shops were also running in the area. They further stated that M/s [ENTITY] was a proprietorship concern and Mr. [ENTITY] was proprietor since 1.4.1991.
5. Accused led defence evidence. Accused no.2 [ENTITY] examined himself as DW1, DW2 Smt.[ENTITY], Inspector [ENTITY], ITO Trade & Taxes Department and accused no.3 [ENTITY] examined himself as DW3. DW1 produced the register of establishment, copy of which was exhibited as Ex.DW1/A, containing entry at sr. no.7085 in respect of registration no. 7085/1 dated 23.11.1963. However, the premises number not mentioned at entry no.7085. During defence evidence, following documents were exhibited :
Dissolution Deed of partnership dated 31.3.1991 Ex.DW3/A, cremation wood receipt and copy of FIR regarding death of the accused [ENTITY] Ex.DW3/B and Ex.DW3/C, rent agreement dated 27.5.1961 Ex.DW3/D, assessment orders Ex.DW3/E1 to Ex.DW3/E7.
6. I have carefully perused the material on record and gone through the contentions of the Ld. Counsel for [ENTITY] and Ld. counsel for accused persons. Ld. Counsel for [ENTITY] submitted that the premises in question was to be used for residential purpose, but the accused persons converted it into a non conforming use by running a shop and godown and this fact has been proved by the CW1. Ld. Counsel further submitted that CW2 had also proved that accused no.2 to 4 were partners of accused no.1. Ld. Counsel further argued that premises was not in continuous use for commercial purpose, therefore, not entitled for benefit of [ACT]. Therefore, all accused are liable to be convicted. Ld. Counsel relied upon following rulings :
(i) Oriental Bank of Commerce vs. [ENTITY], 1984 55 Company Cases 81 Delhi
(ii) [PRECEDENT] decided in [CASE NUMBER].
7. Ld. Counsel for accused persons submitted that the sanction u/[SECTION] of [ENTITY] Act has been obtained in a cyclostyled proforma and the same was filled by a person other than the competent officer and authorized to grant sanction. Ld. Counsel further submitted that the complainant also failed to establish that accused no.2 to 4 are incharge of and responsible for conducting day to day affairs of accused no.1. Ld. Counsel further submitted that M/s [ENTITY] is a proprietorship concern and not partnership firm. Ld. Counsel further submitted that no independent evidence to corroborate the case of the complainant was lead by the complainant and the inspection carried out is sketchy and no material/document was seized. Ld. Counsel further submitted that the premises in question was being used for commercial purpose before the enforcement of [ENTITY] Act, 1951, therefore, accused is entitled for protection under [ACT].
8. CW1 Sh.[ENTITY], JD, [ENTITY] deposed that on 16.12.2002, he inspected the premises no. T1, Chirag Delhi Chowk, New Delhi and found that a shop and godown of stones and granites under the name and style of M/s [ENTITY] was functioning at ground floor, in an area of about 300 sq. ft. approx. and three persons were seen working at the time of inspection. One [ENTITY], Salesman had met him at the site and disclosed that [ENTITY] was the proprietor of M/s [ENTITY]s and in charge of and responsible for conducting day to day affairs of the above said firm. CW1 further deposed that FIR Ex.CW1/A bearing his signature at point 'A' was prepared at the site which he ([ENTITY]) refused to sign. CW1 further deposed that the premises fell in Zone No. F9 of the Master Plan for Delhi/Zonal Development Plan and could be used for residential purposes. The premises has been located in Zonal Development Plan and LUP Ex.CW1/C & B respectively. He also located the premises in Zonal Development and LUP at points 'X' indicated by mark A. Show cause notice Ex.CW1/D was issued but no reply received and the verification has been done from the Sales Tax Department Ex.CW1/E and it was found that [ENTITY], [ENTITY] and [ENTITY] were the partners of M/s [ENTITY]s and incharge of and responsible for conducting day to day affairs of the said firm situated at T1, Chirag Delhi Chowk, New Delhi. Complete file was sent to the sanctioning authority Sh.[ENTITY], Additional Secretary (Enforcement) for obtaining sanction. CW1 identified the signatures of sanctioning authority on sanction Ex.CW1/F at point 'A' and deposed that he had seen him signing and writing during the official course of duties. CW1 further deposed that complaint Ex.CW1/G was filed and signed by Sh.[ENTITY], A.D. Survey, Enforcement, bearing his ([ENTITY]) signatures at point 'A'. CW1 further deposed that he had seen [ENTITY] signing and writing during the official course of duties. Resolution and notification are Ex.CW1/HH1 and Ex.CW1/II1. In his crossexamination, CW1 deposed that he had visited the premises on 16.12.2002 at about 11/12 p.m. and he was alone. He did not ask anybody to endorse that [ENTITY], who refused to sign on his notice, had refused. He measured the area of the shop by his estimation. CW1 further deposed that there were about 4/5 shops on both the sides as he saw. On the front of this shop, there were other shops also. He sent the show cause notice to the accused but he possessed no postal receipt or any AD form received from the accused. CW1 further deposed that he did not remember the height or dimension of the shop and godown nor did he remember about the position of the stock in the godown. Cw1 further deposed that after the verification on the [ACT] of the firm, a sanction was obtained and the case was filed in the court. He sent about 4/5 files seeking sanction and the same was accorded in all the cases. He was not called in any case for any kind of query. CW1 further deposed that sanction was accorded in normal course and he was not present. This was the normal procedure being adopted that they filled in the blank columns in the cyclostyled proforma kept in the office.
9. CW2 Sh.[ENTITY], LDC from Sales Tax Department produced record in respect of M/s [ENTITY] functioning at T1, Chirag Delhi Chowk, New Delhi and he deposed that as per their record, Sh.[ENTITY], Sh.[ENTITY] and Sh.[ENTITY] were the partners of the said firm. There was no change in the [ACT]. He produced the copy of RC (local and central) Ex.CW2/A and Ex.CW2/B.
10. DW1 [ENTITY] deposed that the partnership under the name of M/s [ENTITY] at T1, Chirag Delhi Chowk, New Delhi110017 was dissolved on 31st March 1991 and he was no longer a partner in the said firm. DW1 further deposed that to this effect, an intimation regarding the dissolution of firm was sent to the Sales Tax Department. Since 1.4.19991, the above said firm was a proprietor concern and Sh.[ENTITY] was the sole proprietor till date. Copy of dissolution deed Mark DW1/A. DW1 deposed in his cross examination that he was partner in [ENTITY]. It was functioning at E1, Chirag Delhi. DW1 denied the suggestion that the firm was not dissolved on 31.3.1991 and he was partner in the said firm on the date of inspection also. DW1 further deposed that he had not given the intimation to the Sales tax department about the dissolution of partnership. He denied the suggestion that as per record of the sales tax department, he was partner in [ENTITY]. DW1 further deposed that [ENTITY] and [ENTITY] were also partners in [ENTITY]. He voluntarily deposed that they were partners upto 1991.
11. DW2 Smt.[ENTITY], Inspector VATI, ITO Trade and Taxes Department deposed that she joined the department from September, 2006 and during the period she had acquired sufficient knowledge and experience of the working in this department. DW2 admitted that Forms 2C for the issuance of forms "C" dated 25.2.2003 was filed by Sh.[ENTITY] as proprietor of [ENTITY]. DW2 was shown the assessment orders of Sales Tax by the sales tax officer for the period 199899 and 199798 passed on 27.3.2001 and 19.9.2000 respectively bearing Sh.[ENTITY] as proprietor of [ENTITY], T1, Chirag Delhi Chowk, New Delhi. She had seen the order sheet in respect of sales tax case of M/s [ENTITY] dated 23.2.2001 and 21.3.2001 which stated that Sh.[ENTITY], the proprietor present. She had seen the order of the sales tax officer dated 18.9.2000 which stated "present Sh.[ENTITY], proprietor and filed trading account, sales summary and an affidavit." DW2 admitted that Sh.[ENTITY] filed affidavit duly attested on dated 12.1.1994 and 18.9.2000 affirming that he was the proprietor of [ENTITY], T1, Chirag Delhi Chowk, New Delhi which were held on the record of the file. DW2 deposed that she did not know whether there were other record in their office related to the accused. DW2 deposed in her crossexamination that she was also dealing with ward no.95. She could not tell and did not identify the signature of the official who had signed the Form 2C dated 25.2.2003. She also could not tell and identify the official who had put his signatures on the assessment order 199798 and 199899. DW2 admitted that Ex.CW1/E dated 20.2.2003 was issued in writing by her office but the same was not in the record file. She admitted that she was not posted in the concerned department when the relevant Form C and the assessment orders were issued/passed.
12. DW3 [ENTITY] deposed that [ENTITY] was a partnership firm till 31st March, 1991. The said firm got covered into a proprietorship firm in his name w.e.f. 1.4.1991. The dissolution deed dated 31.3.1991 of partnership firm Ex.DW3/A. DW3 further deposed that till it was partnership firm, his brother [ENTITY] and and his father [ENTITY] were partners with him till 31.3.1991. His father expired on 24.10.1994 as he was murdered. The copy of FIR and cremation wood receipt Ex.DW3/C and Ex.DW3/B. DW3 further deposed that the commercial activities in the said premises i.e. Khasra No.481 situated in Village Chirag Delhi, New Delhi were going on since 1958. The owner of the premises was Pt. [ENTITY] and after his death, his sons became the owner. The said premises were taken on rent by [ENTITY] S/o [ENTITY] from late [ENTITY]. DW3 further deposed that the rent agreement dated 27.5.1961 Ex.DW3/D. In front of said premises, there was an open area of about 40 feet width and thereafter MCD railing and then a road of width of 100 feet. Thereafter there was a boundary wall of Jahanpanah City Forest. The area of their shop premises was consisting of two floors with loft introduced and worked to about 1250 sq. feet. DW3 further deposed that they never received any show cause notice from the [ENTITY] as shown to him Ex.CW1/D. No official form the [ENTITY] as claimed in Ex.CW1/A never visited their shop. DW3 further deposed that he informed about the change of status of [ACT] of the firm to the Sales tax department and had since ever been assessed as proprietorship firm. Some of the assessment order Ex.DW3/E1 to Ex.DW3/D7. DW3 further deposed that he was operating the shop as its proprietor in tune to the local laws and guidelines issued by the competent authorities from time to time. DW3 admitted in his cross examination that dissolution deed Ex.DW3/A was unregistered. The dissolution was intimated to register of firms. He could check and try to locate the said intimation from his CA. DW3 further deposed that he could not produce the intimation document to the Registrar of the Firm regarding the dissolution of the accused firm dated 1.4.19991 as the same was not available. There was no other rent agreement after 27.5.1961 Ex.CW3/D. He had just the rent receipts with regard to the premises in question.
DECISION AND LEGAL REASONING:
13. CW1 deposed that when he inspected the premises on 16.12.2002, he found a shop and godown was functioning under the name and style of M/s [ENTITY] on ground floor in an area of about 300 sq. yards and three persons were seen working at the time of inspection. CW1 found three persons working in the premises, however, he recorded the name of only one person [ENTITY] and the names and antecedents of other two persons were not recorded. Even none of them has been made as a witness by the complainant. CW1 has neither stated in his complaint Ex.CW1/A nor deposed in his evidence that what specific work was being done by the three persons, who were found in the premises. Merely stating that three persons were found in the premises shows that inspection was very sketchy. Neither any document was seized nor any photograph was taken. No independent evidence was gathered. It was held/observed in [ENTITY] vs. M/s Gautam Hospital & Anr. that the inspection was not supported by any independent corroborative evidence and neither any document had been seized nor any photographer been taken nor any independent witness was associated with the inspection and such inspection was a sketchy inspection.
14. CW1 further deposed that when he inspected the premises in question, [ENTITY] who was found there, informed that Sh.[ENTITY] was the proprietor of M/s Lakshmi Bagga and incharge and responsible for conducting day to day affairs of the said firm. CW1 further deposed that verification had been done from Sales Tax Department and same was Ex.CW1/E. As per the report, it was found that Sh.[ENTITY], [ENTITY] and [ENTITY] were partners of M/s [ENTITY] and they were responsible and incharge of conducting day to day affairs of the said firm. CW2, witness from Sales Tax Department, deposed that as per their record, Sh.[ENTITY], [ENTITY] and [ENTITY] were partners of M/s [ENTITY].
Accused has also lead defence evidence and examined DW2 Smt.[ENTITY], Inspector from Trade & Taxes Deptt. DW2 deposed that that she had seen the assessment orders of the sales tax by the sales tax officer for the period 199798 and 199899 passed on 19.9.2000 and 27.3.2001, respectively. DW2 further deposed that she had also seen order of sales tax officer dated 18.9.2000, which also stated "present Sh.[ENTITY], proprietor and filed trading account, sales summary and an affidavit." DW2 also admitted that FormC for the issuance of Forms "C" dated 25.2.2003 was filed by Sh.[ENTITY] as prop. of M/s [ENTITY]. From the depositions of DW2, it is established that M/s [ENTITY] is a proprietorship concern and Sh.[ENTITY] is its proprietor. This fact was also told to CW1 when he inspected the premises that [ENTITY] the proprietor of M/s [ENTITY]. From this, it is clear that proper verification was not made by the complainant to find out the status of M/s [ENTITY].
15. The sanctioning authority had given the sanction u/[SECTION] of [ENTITY] Act to prosecute M/s [ENTITY] as partnership firm and Sh.[ENTITY], [ENTITY] and [ENTITY] as its partners. Thus, it is clear that sanction was not granted while considering the correct position of M/s [ENTITY] and the sanction was accorded in a cyclostyled proforma in a routine manner. Ld. Counsel for the complainant relied upon Oriental Bank of Commerce vs. [ENTITY], 1984 55 Company Cases 81 Delhi to establish that filling of necessary facts in the blank spaces indicate consideration and proper application of mind. The ruling relied upon by Ld. Counsel for the complainant is not applicable to the facts of the present case because in the case in hand, the sanction was granted to prosecute M/s [ENTITY] as partnership firm alongwith its three parnters, whereas, the fact is M/s [ENTITY] is a proprietorship concern and not a partnership firm. It is also important to mention here that Sh.[ENTITY] expired on 24.10.1994 as he was murdered. Thus, it is clear that Sh.[ENTITY] was not a partner when premises was inspected and sanction was granted by the sanctioning authority. The grant of sanction to execute the deceased person itself shows that proper facts were not put up before the sanctioning authority and the sanction was granted in a routine manner.
16. DW3 deposed that commercial activities in the premises in question had been going on since 1958. The owner of the premises Pt. [ENTITY] and after his death, his sons became the owners. The premises was taken on rent by [ENTITY] S/o Sh.[ENTITY] from Late Sh.[ENTITY]. The rent agreement dated 27.5.1961 Ex.DW3/D was executed. DW3 deposed in his crossexamination that there was no other rent agreement after 27.5.1961 Ex.DW3/D and he had just the rent receipts with regard to premises in question. The rent agreement/lease agreement Ex.DW3/D was executed on 27.5.1961 regarding the premises in question. The rent agreement was executed regarding two shops and they were let out for commercial purpose. From this, it is established that the premises in question was being used for commercial purpose, even prior to 27.5.1961. Though, it is argued on behalf of [ENTITY] that commercial use was discontinued and the accused had failed to prove that the property was in continuous commercial use since coming into force of the Act, therefore, accused is not entitled for protection as mentioned at Page 48 of [ACT]. I am not satisfied with this contention of the [ENTITY]. I have relied upon the judgment of Hon'ble Supreme Court passed in [PRECEDENT] wherein it was held that onus of proving the ingredients of an offence is always on the prosecution and at no stage it shifts to the accused. The accused in their defence have brought that the property in question was being used as commercial premises prior to coming into force of the Act, therefore, onus was upon the [ENTITY] to prove that commercial use of the premises discontinued for more than one year and accused is not entitled for protection under the [ACT]. However, [ENTITY] failed to prove this. It is well settled law that burden of proof always lies upon the prosecution. As per provisions of [SECTION] of [ENTITY] Act, miseuse which was going on before coming into force of the Act should be exempted. From the rent agreement Ex.DW3/D, it is established that the premises were used for commercial purpose since 27.5.1961 and [ENTITY] failed to prove that misuse was discontinued. Hence, I am of the considered view that accused are entitled for protection given under the provisions of [SECTION] of [ENTITY] Act.
17. In view of the above discussions, I am of the considered view that the complainant has failed to prove its case against the accused persons beyond reasonable doubts and it is well settled law that benefit of doubt always goes in favour of the accused. Accordingly, all accused persons are acquitted from the charge of offence u/[SECTION] of the [ENTITY] Act.
Announced & dictated in ([ENTITY]) the open Court on 30.01.15 A.C.M.M. (SOUTHEAST) SAKET/NEW DELHI