PATIL, J. ( 1 ) IN this revision petition filed under ss. 397 r/w 401 Cr. P. C , the petitioner m/s. Vijaya Ccmmercial Credit Ltd. , formerly known as M/s. Vijaya Bank Ltd. , accused No. 1 in CC. Nos. 4 to 17 of 1982, on the file of the Court of the presiding Officer, Special Court for economic Offences, Bangalore, represented by its Managing Director Sri T. K. Alva, has sought to challenge the legality and correctness of the order dated 9-2-1983, whereby the application made for discharging it of the offences alleged has been rejected. ( 2 ) THE criminal cases have been instituted on private complaints filed by the Vlth Incometax Officer, Mangalore circle, Mangalore, on being authorised by the Commissioner of Income Tax, karnataka-l, Bangalore, as provided under s. 279 of the Income Tax Act, 1961, hereinafter referred to as the 'act', on the allegation that M/s. Vijaya Bank Ltd. , (A-1), being a scheduled Bank and a Company registered under the Indian Companies act, with its registered office at mangalore, South Kenara, and having its branches all over India, as provided under s. 285 of the Act, was required to submit returns in the prescribed form and verified in the prescribed manner of the names and addresses of all the persons to whom interest exceeding Rs. 400/- had been paid during each financial year and although there were large deposits in the names of seventeen different persons, most of whom were fictitious persons, in various branches of M/s. Vijaya Bank, hereinafter referred to as the 'company', to whom interest exceeding Rs. 400/- had been paid during the financial years ending with 31-3-1972, 31-3-1973, 31-3-1974 and 31-3-1975 (details given), with a view to prevent detection of the source of deposit being inquired into by the Income tax Officer, at the instance of and/or instruction and guidance of the then Chairman, the Company had deliberately and intentionally failed to furnish that information in the annual returns of the said years filed by the company verified by the Branch Manager mr. B. Manohar Shetty (A-4) and forwarded by Mr. C. H. Sreedharan (A-3) ; while the Company (A-1) had thereby committed an offence punishable under s. 277 of the Act, the officials of the company (A-2 to A-5) had committed an offence punishable under S. 278 of the act and they were therefore liable to be punished. B. Manohar Shetty (A-4) and forwarded by Mr. C. H. Sreedharan (A-3) ; while the Company (A-1) had thereby committed an offence punishable under s. 277 of the Act, the officials of the company (A-2 to A-5) had committed an offence punishable under S. 278 of the act and they were therefore liable to be punished. ( 3 ) THE complaints were filed before the nationalisation of the petitioner- company M/s. Vijaya Bank (A-1), represented by the principal Officer and chairman Mr. M. Sundar Ram Shetty- in the court of the JMFC, Mangalore. During enquiry, when the evidence was being recorded, on the application filed by the complainant-respondent herein- the cases were transferred from the Court of the Magistrate at Mangalore to the court of the Presiding Officer, Special court for Economic Offences at bangalore. Later on, when the Chairman of the petitioner-Company Mr. M. Sunder ram Shetty died, the successor chairman Mr. B. T. R. Punja was arrayed as party representing the petitioner- company. ( 4 ) THE petitioner-Company sought for discharge of the offence-firstly on the ground that the banking undertaking of vijaya Bank Ltd. having been nationalised with effect from 15-4-80 under the banking Companies Acquisition and Transfer of Undertakings Ordinance 1980 which was replaced by the Banking companies Act, 1980, the proceedings against the petitioner-Company as it stood prior to the nationalisation cannot be continued ; and secondly on the ground that during the relevant periods, in the provisions as contained in S. 278 of the Act, before its amendment, there was no penal liability attached to the bank/company for the offences committed under the Act, and, therefore, the petitioner-company deserved to be discharged of the offence. ( 5 ) THE court below rejected both the contentions and observed, even after the nationalisation of the Banking business, A-1 Company continued to be in existence and the criminal liability cannot be transferred to the corresponding new Company coming into existence after the nationalisation and since for the purpose of S. 285, 'person responsible for paying' means a Company including the Principal Officer and under S. 277 such person is liable to be punished, the liability of the Company to answer the charge does not cease although it may be that the new Chairman Mr. B. T. R. Punja, who succeeded the then Chairman of the Company, will not be liable for the offence personally. B. T. R. Punja, who succeeded the then Chairman of the Company, will not be liable for the offence personally. In that view, he having rejected the application made for discharge, the petitioner-Company has come up with this revision. ( 6 ) MR. Naganand, learned counsel for the petitioner, in addition to these two grounds urged before the magistrate for discharge of the petitioner- company, also submitted since submitted since the offence under S. 277 is punishable with rigorous imprisonment for not less than six months, but extending to seven years and no discretion is left to the court in the matter of imposition of sentence of imprisonment on conviction and since the petitioner-company is a body corporate and even on conviction imposition of sentence of imprisonment being not possible, no useful purpose will be served in proceeding with the enquiry and trial as against the petitioner-company and therefore the criminal proceedings instituted as against the petitioner deserved to be quashed. In support of this contentions, the learned counsel also relied upon various authorities. ( 7 ) MR. Chandrakumar, learned councel for the respondent, refuting all those tontentions submitted that the expresation 'person' as defined under the Act is wide enough to include a Company or my juristic person. Therefore, the petitioner-company as well as the other iccused were liable to be punished and ince A-1 Company continues to be in axistence even after nationalisation of he banking business of the Company, he court below was right in rejecting he applications and no interference was t all called for. ( 8 ) BEFORE considering these con- entions on their merits, it would be releant to mention here that Section 277 of the Act as it stood originally prescribed unishment of simple imprisonment xtending to six months or with fine xtending to Rs. 1000/- or both. That has the position till March 31, 1964. thereafter the provisions were amended nd rigorous imprisonment for a term axtending to seven years was made compulsory. 1000/- or both. That has the position till March 31, 1964. thereafter the provisions were amended nd rigorous imprisonment for a term axtending to seven years was made compulsory. The provisions were amended by the Taxation Laws (Amendment) Act, 1975, and the provisions of S. 277 as mended read as follows :"if a person makes a statement in any verification under this Act or under any rule made thereunder, or delivers an account or statement which is false, and which he either knows or believes to be false, or'does not believe to be true, he shall be punishable, - (i) in a case where the amount of tax, which would have been evaded if the statement or account had been accepted as true, exceeds one hundred thousand rupees, with rigorous imprisonment for a term which shall not be less than six months but which may extend to seven years and with fine ; (ii) in any other case, with rigorous imprisonment for a term which shall not be less than three months but which may extend to three years and with fine. "s. 278, with the aid of which the other accused are sought to be prosecuted for the offence punishable under s. 277 of the Act reads as follows :"if a person abets or induces in any manner another person to make and deliver an account or a statement or declaration relating to any income chargeable to tax which is false and which he either knows to be false or does not believe to be true or to commit an offence under sub-section (1) of section 276c, he shall be punishable,- (i) in a case where the amount of tax, penalty or interest which would have been evaded, if the declaration, account or statement had been accepted as true, or which is wilfully attempted to be evaded, exceeds one hundred thousand rupees, with rigorous imprisonment for a term which shall not be less than six months but which may extend to seven years and with fine ; (ii) in any other case, with rigorous imprisonment for a term which shall not be less than three months but which may extend to three years and with fine. "s. 278-B provides,- (1) Where an offence under the Act has been committed by a company, every person 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 offence and shall be liable to be proceeded against and punished accordingly : provided that nothing contained in this sub-section shall render any such person liable to any punishment if he proves that the offence was committed without his knowledge or that he had exercised all due diligence to prevent the commission of such offence. (2) Notwithstanding anything contained in sub-section (1), where an offence under this Act has been committed by a company and it is proved that the offence has been committed with the consent or connivance of, or is attributable to any neglect on the part of, any director, manager, secretary, or other officer of the company, such director manager, secretary or other officer shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly. Explanation : For the purposes of this section,- (A) "company" means a body corporate, and includes- (i) a firm ; and (ii) an association of persons or a body of individuals whether incorporated or not ; and (B) "director", in relation to- (i) a firm, means a partner in the firm ; (ii) any association of persons or a body of individuals, means any member controlling the affairs thereof. Obviously, the offences alleged having been committed during the period 1971-72 to 1974-75, on conviction, sentence of imprisonment is undoubtedly compulsory. As stated earlier, apart from the two contentions urged before the court below, the main and substantial contention now raised by Mr. Naganand, learned counsel for the petitioner, is that since on conviction the offence is punishable with imprisonment, the petitioner-Company being a body corporate, imposition of sentence of imprisonment being not possible, no useful purpose would be served by proceeding with the enquiry and trial as against the petitioner-Company and, therefore, the proceedings instituted against the petitioner-Company deserve to be quashed. The contention not only merits consideration, but also finds support from various decisions referred to and relied upon by him. The contention not only merits consideration, but also finds support from various decisions referred to and relied upon by him. It is not necessary to refer to all those decisions, since a very reading of the provisions of s. 277 of the Act as they now stand makes it clear that the person who makes the statement in any verification under the Act or under any rule made thereunder, or delivers an account or statement which is false, and which he either knows or believes to be false, or does not believe to be true, shall be punishable with imprisonment and fine. In other words, mens rea, as in other criminal cases, is an essential ingredient of the offence. ( 9 ) ALTHOUGH as argued by Mr. Chandrakumar, learned counsel for the respondent, the word or expression 'person' as defined under S. 2 (31) is wide enough to include a company or other juristic person, having regard to the fact that sentence of imprisonment has been made compulsory, it cannot be said that the expression 'person' has been used in that sense ; in as much as it is not possible for the court on conviction to impose a sentence of imprisonment. In the case of Kusum Products ltd. v. S. K. Sinha [ (1980) 126 I. T. R. 804]. considering these provisions, a division Bench of Calcutta High Court has observed as follows :". . . . . . . . MENS rea is an essential ingredient of an offence under s. 277 of the act is clear from the section itself and only an actual person who does any of the acts indicated therein with a specific knowledge or intent can be made liable. Although under s. 2 (31) of the Act the definition of a person is wide enough to include a company or any juristic person, the word person could not have been used by Parliament in s. 277 of the Act in the sense given in the definition clause. That this was the intention of Parliament is clear because imprisonment has been made compulsory for an offence under s. 277 of the Act. That this was the intention of Parliament is clear because imprisonment has been made compulsory for an offence under s. 277 of the Act. A company or a juristic person cannot possibly be sent to prison, and it is not open to a court to impose a sentence of fine or not to award any punishment if the court finds a company guilty under the said section. If the court does so it would be altering the very scheme of the Act and usurping the legislative function. "where an offence under the Act is committed by a Company, every person who at the time of the offence was committed was incharge of and was responsible to the Company for the conduct of the business of the Company as well as the the Company shall be deemed to be guilty of the offence and punished accordingly, yet it would appear there is no point in proceeding against the company, whether it amounts to abuse to process of court or not. Since as pointed out by their Lordships of the supreme Court in the case of Sheoratan agarwal v State of M. P. (AIR 1984 S. C. 1824) there is no statutory compulsion to prosecute a Company alongside the officers of persons in charge and responsible to the Company and such officers or the persons responsible to the ccmpany may be prosecuted without prosecuting the Company, it appears, these criminal proceedings instituted against the petitioner-Company being futile deserve to be quashed. ( 10 ) IN the result and for the reasons stated above, the petition is allowed. The criminal proceedings instituted as against the petitioner-Company in C. C. Nos. 4 to 17 of 1982, on the file of the presiding Officer, Special Court for economic Offences, Bangalore, are quashed. Petition Allowed. --- *** --- .