Karnataka High Court
Barnch Manager, Branch Office, Esi ... vs M.S Decan Darbar Restrurant And Anr on 30 November, 2022
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IN THE HIGH COURT OF KARNATAKA
KALABURAGI BENCH
DATED THIS THE 30TH DAY OF NOVEMBER, 2022
BEFORE
THE HON'BLE MR. JUSTICE ANIL B. KATTI
CRIMINAL APPEAL NO.200005/2018
Between:
Branch Manager,
Branch Office,
ESI Corporation,
Kalaburagi-585102.
... Appellant
(By Sri R.S. Patil, Advocate)
And:
1. M/s Deccan Darbar Restaurant,
STBT Cross Darga Road,
Kalaburagi-585103.
2. Md. Idris Ahmed
S/o Dd. Saduddin Qureshi,
R/o STBT Cross, Darga Road,
Kalaburagi-585103.
... Respondents
(By Sri Chaitanyakumar C.M, Advocate for R2;
Notice to R1 served)
This Criminal Appeal is filed under Section 378(4) of
Cr.P.C, praying to set aside the impugned order and judgment of
acquittal sentence dated 30.03.2016 passed by the I Addl. Civil
Judge & JMFC at Kalaburagi in C.C.No.2697/2011 acquitting the
appellant /accused for the offences punishable under Sections
85(i) & 85(ii) of ESI Act.
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This appeal having been heard through Physical Hearing /
Video Conference and reserved for Judgment on 28.10.2022,
coming on for pronouncement of Judgment this day, delivered
the following:
JUDGMENT
The appellant-complainant is challenging judgment of acquittal passed by the I Additional Civil Judge & JMFC, Kalaburagi in C.C. No.2697/2011 dated 30.03.2016.
2. The parties to the appeal are referred with their ranks as assigned in the trial Court for the sake of convenience.
3. The factual matrix leading to the case of complainant can be stated in nutshell to the effect that accused No.1 is an establishment called M/s. Deccan Darbar Restaurant and accused No.2 is it's Proprietor. The said establishment is covered under the Employees' State Insurance Act, 1948 (hereinafter referred as 'the ESI Act') with Code No.58-1566-112. Thereafter, new digital Code 3 71000003730001102 was assigned. The accused No.2 is a principal employer of the establishment in terms of Section 2(17) of the ESI Act and was in-charge of the establishment during the period of default. The accused has failed to pay contribution in terms of Section 39 of the ESI Act. The show cause notice was issued and the same was not responded by the accused. Therefore, the complainant proceeded to pass an order dated 05.10.2010 in terms of Section 45-A of the ESI Act. The show cause notice dated 28.11.2008 was issued calling upon the accused to pay `40,279/- for the period from 23.04.2007 to 31.03.2008 and another notice dated 01.04.2008 to pay an amount of `21,450/- for the period of 01.04.2008 to 30.09.2008, totally amounting to `61,729/-. The accused has neither replied to the show cause notice nor paid the contribution amount as called upon in the show cause notice dated 02.11.2010. Thus the accused has committed the offence under Section 85(i) and 85(ii) of the ESI Act. 4
4. In response to the summons, the accused has appeared before the Trial Court. The substance of accusation came to be recorded and the accused claimed to be tried.
5. The prosecution was called upon to prove, the accusation leveled against the accused. The prosecution has relied on oral evidence of PW1 and PW2 and the documents as per Ex.P1 to Ex.P21. On closure of the prosecution evidence, the statement of accused under Section 313 of Cr.PC came to be recorded, the accused has denied the incriminating material evidence against him and not lead any defence evidence.
6. The Trial Court after having heard the arguments of both side and perusal of oral and documentary evidence placed before it has acquitted the accused from the accusation leveled against him.
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7. The correctness and legality of the said judgment of acquittal has been assailed by the appellant/complainant contending that Trial Court on the basis of averments in the inspection report that only 2 workers were found and there being no documentary evidence to show that 10 workers were employed in the establishment has acquitted the accused. The said finding recorded by the Trial Court is contrary to law and evidence on record. The approach and appreciation of oral documentary evidence by Trial Court cannot be legally sustained. Therefore, prayed for allowing the appeal and to convict the accused for the accusation made against him.
8. In response to the notice of appeal, the respondent has appeared through counsel.
9. Heard the arguments of both sides.
10. The prosecution alleges that accused No.2 is incharge of the accused No.1 establishment M/s Deccan 6 Darbar Restaurant is covered under the ESI Act with Code No.58-1566-122. The new digital code number is 71000003730001102 is assigned to the establishment. The accused No.2 who is the principal employer of the establishment has failed to pay contribution in accordance with 39 of the ESI Act for the period from 23.04.2007 to 31.03.2008 and for the period from 01.04.2008 to 30.09.2008, totally amounting to `61,729/- as per the order passed by the complainant dated 05.10.2010 in terms of Section 45-A of the ESI Act. The non payment of employer and employee contribution in terms of Section 39 of the ESI Act attracts the penal provision in terms of Section 85 punishable under Section 85(i) and 85(ii) of the ESI Act.
11. The Trial Court on the basis of admissions of PW1 and PW2 during the course of their cross examination as referred in the judgment, coupled with the preliminary enquiry report as per Ex.P20 and the letter of principal 7 employer as per Ex.P21 disclosing the names of employees engaged for the accused No.1 establishment, has held that the accused is not found guilty of the charges leveled against him.
12. The learned counsel for appellant/ complainant has argued that the accused No.1 establishment is covered under the ESI Act and the communication in Form No.C-11 dated 11.06.2007 as per Ex.P3 is duly communicated in view of the acknowledgment at Ex.P4. The accused No.2 being the principal employer was suppose to pay employer and employee contribution in terms of Section 39 of the ESI Act. The accused No.2 the principal employer of the accused No.1 establishment has not responded to the notice issued by complainant. Therefore, the complainant has proceeded to pass an order in terms of Section 45-A of the ESI Act. The same has not been challenged by the accused, the Trial Court without considering all these 8 material aspects of the matter has proceeded to acquit the accused on erroneous grounds.
13. On the other hand, the learned counsel for respondent/accused has argued that there is no evidence to show that 10 employees were working in the accused No.1 establishment and as such the Act has no application. The admissions of PW1 and PW2 during the course of their cross examination nullifies the complaint allegations, as such the accused No.2 principal employer is not liable to pay the contribution of employee insurance as determined by order dated 05.10.2010 by the complainant in terms of Section 45-A of the ESI Act. The Trial Court has rightly appreciated the evidence on record and same does not call for any interference of this Court. The above line of arguments of respective counsels will have to be appreciated in the light of the material evidence placed on record. 9
14. The preliminary inspection report dated 23.04.2007 as per Ex.P20 and the list of workers furnished by principal employer of the accused No.1 establishment as per Ex.P21 are the basis for issuing communication regarding coverage of the ESI Act sent in Form No.C-11 dated 11.06.2007. The principal employer accused No.2 representing the accused No.1 establishment has not paid the employer and employee contribution. The notices were issued, but the same was not responded by the accused and as such the complainant proceeded to pass order dated 05.10.2010 in terms of Section 45-A of the ESI Act. The contribution of the employer and employee during the relevant period is determined as `61,729/- as per the said order has not been paid by the accused in spite of due service of show cause notice. Therefore, the complainant has sought for criminal prosecution on obtaining the sanction as per Ex.P2 dated 05.08.2011 in terms of Section 86 (i) of the ESI Act. The principal employer accused No.2 10 has denied the liability of accused No.1 establishment for paying employer and employee contribution in terms of Section 39 of the ESI Act pursuant to order dated 05.10.2020 passed by the complainant in terms of Section 45-A of the ESI Act.
15. The object of enacting ESI Act is to provide certain benefits in the event of sickness, maternity and employment injury to workman employed in or in connection with the work in factories other than seasonal factories. The insurance fund will be mainly derived from contributions of employer and workmen. The contribution payable in respect of each workmen will be based on his average wages and will be payable in the first instance by the employer. The scheme of the ESI Act is to benefit the employee of the factory or establishment in the event of sickness, maternity and employment injury. 11
16. In order to make the ESI Act applicable to the employees, there must be 10 or more persons employed in the factory or in the establishment as defined in terms of Section 2(12) of the ESI Act. The term wages is defined in terms of Section 2(22) of the ESI Act. On communication of covering insurance Act to the employee of accused No.1 establishment as per Ex.P3 dated 11.06.2007, the accused No.2 principal employer has not got registered in terms of Section 2-A of the ESI Act. In terms of Section 38 of the ESI Act all the employee in factories, or establishments to which this Act applies shall be insured in the manner provided by this Act. The proviso Section 39 of the ESI Act mandates that the contribution payable under this Act in respect of an employee shall comprise contribution payable by the employer and contribution payable by the employee shall be paid to the Corporation. The proviso Section 40 of ESI Act mandates that the principal employer has to pay contribution in the first instance.
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17. In the present case, the coverage of ESI Act is communicated to the accused by sending Form No.C-11 dated 11.06.2007 as per Ex.P3 which is duly served as per acknowledgment at Ex.P4. Therefore, notice in Form-C18 dated 28.11.2008 as per Ex.P7 for the period from 23.04.2007 to 31.03.2008 was issued fixing the personal hearing on 02.01.2009, the accused No.1 and 2 have refused to receive the same as per Ex.P5 and Ex.P6. The address of accused No.1 and 2 given in the cause title of the complaint is not denied by the accused. Therefore, it will have to be held that there is deemed service of notice as per Ex.P7. Thereafter another notice in Form No.C-18 dated 10.08.2009 for the period from 01.04.2008 to 30.09.2008 as per Ex.P8 came to be issued by fixing the personal hearing on 02.09.2009. The said notice is duly served to accused Nos.1 and 2 as per Ex.P9 and Ex.P10. However, the accused have not availed the opportunity of 13 personal hearing in challenging the employer contribution fixed by the complainant before appropriate forum.
18. The complainant by exercising powers in terms of Section 45-A of the ESI Act has proceeded to pass separate order dated 05.10.2010 with respect to the above mentioned period as per Ex.P11 and Ex.P12. The said order of complainant came to be communicated to the accused by issuing show cause notice dated 02.11.2010 as per Ex.P19. The said show cause notice was returned as refused as per Ex.P15 to Ex.P18. The accused No.2 principal employer has not denied the address shown in the cause title of the complaint and also on the seal of accused No.1 establishment with signature of principal accused No.2. The show cause notice as per Ex.P19 was sent to the correct address of accused No.1 establishment and the principal employer accused No.2. Therefore, under these circumstances, it will have to be held that the principal employer accused No.2 by knowing the contents of the 14 show cause notice as per Ex.P19 deliberately avoided to receive the envelope containing the show cause notice as per Ex.P19. Hence, necessary inference will have to be drawn of deemed service of show cause notice Ex.P19 to accused Nos.1 and 2 as per Ex.P15 to Ex.P18. The principal employer accused No.2 has not paid the contribution in terms of Section 39 and 40 of the ESI Act.
19. If at all the principal employer accused No.2 is not satisfied with the findings recorded by the Inspector in the inspection report as per Ex.P20 and disclosure of employees made by the principal employer as per Ex.P21 and the determination of the contribution by the complainant as per Ex.P7 and Ex.P8 then the same will have to be challenged before the employees' insurance court in terms of Section 75 of the ESI Act. Secondly, if the principal employer accused No.2 is not satisfied with the order passed by the complainant dated 05.10.2020 as per Ex.P11 and Ex.P12 in terms of Section 45-A of the ESI Act 15 then the same would have been challenged before the appellate authority in terms of Section 45-AA of the ESI Act. The principal employer accused No.2 admittedly has not availed the remedy available under the ESI Act in questioning the communication as per Ex.P3 in spite of due service of the same as per Ex.P4. Similarly the determination of contribution of the employer as per Ex.P7 and Ex.P8, though served as per Ex.P5, Ex.P6, Ex.P9 and Ex.P10 before the employees' insurance court in terms of Section 75 of the ESI Act. The order passed by the complainant in terms of Section 45-A dated 05.10.2010 as per Ex.P11 and Ex.P12 also remained unchallenged in spite of due service of show cause notice as per Ex.P19. Therefore, it will have to be held that the principal employer accused No.2 having knowledge about accused No.1 establishment is covered under the ESI Act with code and the communication of the same as per Ex.P3 has not bothered to pay the employer and employee contribution in 16 terms of Section 39 and 40 of the ESI Act for the period covered under Ex.P7 and Ex.P8.
20. The Trial Court has referred the admissions of PW1 and PW2 and the correctness of the contents of inspection report as per Ex.P20 and the name of employees' shown as per Ex.P21 has held that there were only two employees' in the accused No.1 establishment and only tea and coffee is being prepared and served with the apparatus grinder and deep fridge found in the accused No.1 establishment at the time of inspection. The accused No.1 establishment is not covered under the ESI Act and the principal employer accused No.2 is not liable to pay the employer and employee contribution. It is pertinent to note that the principal employer accused No.2 has not denied the seal of accused No.1 establishment with his signature as per Ex.P21. The evidence of PW2 would go to show that names of employees were recorded as disclosed by the principal employer accused No.2 during the course of 17 inspection. What is suggested in the cross examination of PW2 is that name of the employees shown in the Ex.P21 is being subsequently got included and the same has been denied. It means that the principal employer accused No.2 does not dispute the accused No.1 establishment seal and his signature appearing on Ex.P21. The principal employer accused No.2 has never challenged the correctness of Ex.P20 and Ex.P21 before appropriate forum. It means that the principal employer accused No.2 has accepted the preliminary inspection report as per Ex.P20 and the communication of application of ESI Act as per Ex.P3. The mere reference of two employees being found in the accused No.1 establishment at the time of inspection and the same being admitted by PW1 and PW2 during the course of their cross examination cannot be itself said as sufficient evidence to hold that ESI Act is not applicable to the establishment of accused No.1 without challenging Ex.P3, Ex.P7, Ex.P8, Ex.P11 and Ex.P12 before appropriate 18 forum. The Trial Court without appreciating the above referred material evidence on record has improperly recorded the finding that ESI Act is not applicable to the accused No.1 establishment on the basis of admission of PW1 and PW2 in the cross examination. The principal employer accused No.2 has failed to pay the contribution in terms of Section 39 and 40 of the ESI Act after the receipt of communication covering the accused No.1 establishment under ESI Act as per Ex.P3. The same would attract the panel provision in terms of Section 85(i) of the ESI Act. The principal employer accused No.2 has failed to submit return within stipulated time in terms of Regulation 26 of the Employees' State Insurance (General) Regulations 1950 and the same is in violation of Section 85(e) which attracts panel provision in terms of Section 85(ii) of the ESI Act. The contrary finding recorded by the Trial Court as observed in its judgment cannot be legally sustained. In view of the reasons recorded above, I am of the opinion 19 that the prosecution has proved beyond all reasonable doubt that the accused have committed offence under Section 85(i) and 85(ii) of the ESI Act.
21. The question now remain is imposition of sentence. The accused No.2 is the principal employer of accused No.1 establishment and sentence has to be imposed on accused No.2 representing the accused No.1 establishment. The sentence has to be imposed in terms of Section 85(i)(a) & (b) for contravention of Section 85(a) of the ESI Act. However, the court may, for any adequate and special reasons to be recorded in the judgment, impose a sentence of imprisonment for a lesser term. The imposition of sentence and fine is compulsory in terms of Section 85(i)(a) & (b). The discretion given to the court is to impose imprisonment for lesser term, but that does not mean that court can impose only imprisonment or fine. Therefore, in my opinion the imposition of imprisonment and fine is mandatory. The principal employer accused 20 No.2 has also failed to submit return required by the Regulations in terms of Section 85(e) of the ESI Act. The principal employer accused No.2 within the time stipulated in terms of Regulation 26 of the Employees' State Insurance (General) 1950 has not submitted the returns, which amounts to violation of Section 85(e) attracting panel provision in terms of Section 85(ii) of the ESI Act. The said proviso empowers the court to impose sentence or fine which may extend to Rs.4,000/- or with both.
22. In the present case, the principal employer accused No.2 of accused No.1 establishment after assigning the code and communication of the same as per Ex.P3 has failed to make a employer contribution. The accused No.1 establishment was for the first time covered under the ESI Act. Keeping in mind the facts and circumstances of the case, in my opinion if the accused No.2 is sentenced to undergo simple imprisonment for three months and pay a fine of Rs.5,000/- in default to undergo simple 21 imprisonment of one month for the offence under Section 85(i) of the ESI Act and further the accused is sentenced to pay a fine of Rs.4,000/- and in default payment of fine to undergo simple imprisonment of one month for the offence under Section 85(ii) of the ESI Act is ordered will meet the ends of justice. Consequently, I proceed to pass the following:
ORDER The appeal filed by the appellant/ complainant is hereby allowed.
The judgment of acquittal passed by the I Additional Civil Judge and JMFC, Kalaburagi in CC No.2697/2011 dated 30.03.2016 is hereby set aside.
Accused Nos.1 and 2 are convicted for the offences punishable under Section 85(i) & (ii) of ESI Act. The accused No.2 being the employer of accused No.1 establishment is sentenced to undergo simple imprisonment for three months and pay a fine of Rs.5,000/- in 22 default to undergo simple imprisonment of one month for the offence under Section 85(i) of the ESI Act.
The accused is further sentenced to pay a fine of Rs.4,000/- and in default payment of fine to undergo simple imprisonment of one month for the offence under Section 85(ii) of the ESI Act.
The Registry to transfer records along with copy of this judgment to the trial Court.
Sd/-
JUDGE SMP