Madras High Court
M/S.North Chennai Thermal Power ... vs Employees' State Insurance ... on 15 November, 2019
Crl.O.P.No.835 of 2021
IN THE HIGH COURT OF JUDICATURE AT MADRAS
Reserved On : 15.06.2022
Delivered On : 05.08.2022
CORAM:
THE HON'BLE MR.JUSTICE SATHI KUMAR SUKUMARA KURUP
Crl.O.P.No.835 of 2021
and
Crl.M.P.No.506 of 2021
1.M/s.North Chennai Thermal Power Station – II,
Athipattu, Chennai – 600 120 (Principal Employer),
Represented by its Chief Engineer.
2.The Chief Engineer,
North Chennai Thermal Power Station – II,
Athipattu, Chennai – 600 120. ... Petitioners/Accused 3 & 4
-vs-
Employees' State Insurance Corporation,
Having its Regional Office at No.143,
Sterling Road, Chennai – 600 034,
Represented by Superintendent (Legal),
ESI Corporation, Regional Office,
ESI Corporation, Chennai – 600 034. ... Respondent/Complainant
PRAYER: Criminal Original Petition had been filed under Section 482 of
Cr.P.C, praying to call for the records in C.C.No.1228 of 2020 now pending
trial on the file of the learned II Metropolitan Magistrate, Egmore and quash
the proceedings in so far as the Petitioners are concerned.
1/18
https://www.mhc.tn.gov.in/judis
Crl.O.P.No.835 of 2021
For Petitioners : Mr.Haroon Al Rasheed
for M/s.T.S.Gopalan & Co.
For Respondent : Mr.S.P.Srinivasan
ORDER
This Criminal Original Petition had been filed seeking to call for the records in C.C.No.1228 of 2020 on the file of the learned II Metropolitan Magistrate, Egmore and quash the proceedings in so far as the Petitioners are concerned.
2.The learned Counsel for the Petitioners submitted his arguments. It is the submission of the learned Counsel for the Petitioners that the Petitioners – M/s.North Chennai Thermal Power Station, Athipattu, which is a Government of Tamil Nadu undertaking, is involved in generation of electricity. It has Thermal Stations in various locations. The Petitioners – M/s.North Chennai Thermal Station is one of such power stations. In order to carry on various activities, the Thermal Power Station had called for tender and awarded works to various persons. The third party agencies are required to depute their employees to work inside the premises of the Power Stations. In order to handle the collection of ash, the Power Station had 2/18 https://www.mhc.tn.gov.in/judis Crl.O.P.No.835 of 2021 utilized the services of M/s.Chennai Radha Engineering Works (P) Limited which has its registered office at Sapthagiri Colony, Jafferkhanpet, Chennai. The said establishment not only carries out work for the North Chennai Thermal Power Station, TANGEDCO but also has various other activities. The Company M/s.Chennai Radha Engineering Works (P) Limited is registered under the Provident Funds Act as well as the Employees' State Insurance Act, 1948. The Employees' State Insurance Corporation Registration number is 32000030260001001. Further, the learned Counsel for the Petitioners submitted that M/s.Chennai Radha Engineering Works (P) Limited had employed one Shri.Yaduwar Singh who was deputed to work in North Chennai Thermal Power Station from 01.07.2019. The employer M/s.Chennai Radha Engineering Works (P) Limited tried to register Shri.Yaduwar Singh in the online portal of Employees' State Insurance Corporation. However, due to mismatch of Aadhaar details his name could not be registered. Later, his name was registered only on 08.07.2019 and was given Registration No.5129937392. Unfortunately, on the same day he met with a fatal accident. On 09.07.2019 M/s.Chennai Radha Engineering Works (P) Limited submitted an accident report. The 3/18 https://www.mhc.tn.gov.in/judis Crl.O.P.No.835 of 2021 Petitioners paid a compensation of Rs.2,00,000/- (Rupees Two Lakhs only) to the legal heirs of Shri.Yaduwar Singh as per its policy even though there was no legal obligation on the Petitioners to do so. The Employees' State Insurance Corporation issued a notice to M/s.Chennai Radha Engineering Works (P) Limited on 29.10.2019 alleging that they had violated the provisions of Employees' State Insurance Act, 1948 as they had not registered the employee within time. M/s.Chennai Radha Engineering Works (P) Limited gave reply on 08.11.2019. However, not satisfied with the reply, the Employees' State Insurance Corporation had filed a complaint in C.C.No.1228 of 2020 against the Managing Director of M/s.Chennai Radha Engineering Works (P) Limited. It is the submission of the learned Counsel for the Petitioners that as far as the Petitioners are concerned, the same show cause notice was also sent to the Petitioners. On 15.11.2019, the Petitioners in its reply stated that the employer who had engaged Shri.Yaduwar Singh was M/s.Chennai Radha Engineering Works (P) Limited and that they are the Company which had been independently registered under the Employees' State Insurance Act, 1948. Therefore, the question of prosecuting this Petitioners under the Employees' State Insurance 4/18 https://www.mhc.tn.gov.in/judis Crl.O.P.No.835 of 2021 Act, 1948 does not arise. Further, the learned Counsel for the Petitioners invited the attention of this Court to Section 85(ii) of the Employees' State Insurance Act, 1948 which is extracted as under:
“85. Punishment for failure to pay contributions, etc.-If any person
(a) fails to pay any contribution which under this Act he is liable to pay, or
(b) deducts or attempts to deduct from the wages of an employee the whole or any part of the employers contribution, or
(c) in contravention of section 72 reduces the wages or any privileges or benefits admissible to an employee, or
(d) in contravention of section 73 or any regulation dismisses, discharges, reduces or otherwise punishes an employee, or
(e) fails or refuses to submit any return required by the regulations, or makes a false return, or
(f) obstructs any Inspector or other official of the Corporation in the discharge of his duties, or
(g) is guilty of any contravention of or non-compliance with any of the requirements of this Act or the rules or the regulations in respect of which no special penalty is provided, 1[he shall be punishable 2[(i) where he commits an offence under clause (a), with imprisonment for a term which may extend to three years but
(a) which shall not be less than one year, in case of failure to pay the employees contribution which has been deducted by him from the employees wages and shall also be liable to fine of ten thousand rupees;
(b) which shall not be less than six months, in any other case and shall also be liable to fine of five thousand rupees: Provided that the court may, for any adequate and special reasons to be recorded in the judgment, impose a sentence of imprisonment for a lesser term;
(ii) where he commits an offence under any of the clauses (b) to (g) (both inclusive), with imprisonment for a term which may extend to one year or with fine which may extend to four thousand rupees, or with both.]]”
3.The learned Counsel for the Petitioners submitted that under the 5/18 https://www.mhc.tn.gov.in/judis Crl.O.P.No.835 of 2021 Employees' State Insurance Act, 1948, the person is considered as a Contractor only if he is not registered and hence, deputed his employee to work in the premises of another employer, only in such event, the employer in whose premises the employee of the contractor works will be considered as principal employer. If the contractor himself is registered and has his own account number, then the contractor himself would be the principal employer. This is the settled position of law under the Employees' State Insurance Act, 1948 and the Employees' Provident Fund Act. M/s.Chennai Radha Engineering Works (P) Limited was registered and was allotted a number, vide Employees' State Insurance Code No.3200030260001001.
That being so, for the purpose of Employees' State Insurance Act, 1948, M/s.Chennai Radha Engineering Works (P) Limited themselves would be a principal employer and no liability can be fastened on the Petitioners herein by treating the Petitioners as principal employer. Unfortunately, without appreciating the same, the Respondent had initiated prosecution against the Petitioners in C.C.No.1228 of 2020 before the learned II Metropolitan Magistrate, Egmore. The Petitioners had appeared before the said Court on 18.12.2020 and collected the copy of the complaint. The Petitioners filed 6/18 https://www.mhc.tn.gov.in/judis Crl.O.P.No.835 of 2021 this Petition under Section 482 of Cr.P.C. invoking the extraordinary powers of this Court to challenge the complaint of the Respondent in C.C.No.1228 of 2020 treating the Petitioners as principal employer. The Petitioners are advised to state that the complaint filed by the Respondent against the Petitioners is not tenable in law. It is nothing but an abuse of process of law. The cognizance of the complaint by the learned II Metropolitan Magistrate, Egmore is wholly opposed to law, settled principle of law and canons of jurisprudence. The cognizance of the complaint is contrary to the provisions of Employees' State Insurance Act, 1948 and the same is liable to be quashed. The Respondent failed to appreciate that the Petitioners are not principal employer as M/s.Chennai Radha Engineering Works (P) Limited which had employed Shri.Yaduwar Singh was itself registered under the Employees' State Insurance Act, 1948. Hence, a principal employer for the purpose of Employees' State Insurance Act, 1948. The action of the Respondent in initiating proceeding against the Petitioners without a speaking order, having issued show cause notice is liable to be set aside. The Respondent having issued show cause notice to the Petitioners, if not satisfied with the reply of the Petitioners dated 15.11.2019 ought to have 7/18 https://www.mhc.tn.gov.in/judis Crl.O.P.No.835 of 2021 rejected the reply by the Petitioner. It should have been mentioned in the complaint. It had not been mentioned in the complaint by the Respondent. The complaint of the Respondent is bereft of any details and not considered the reply from the Petitioners dated 15.11.2019. The Respondent failed to appreciate that the Petitioners and M/s.Chennai Radha Engineering Works (P) Limited both cannot be treated as an employer and any prosecution can be only against one of the employer. The complaint of the Respondent is further bad in law for the reason that there is no violation of provisions of Employees' State Insurance Act, 1948 as the registration of the employee on 18.07.2019 was well within the legally permissible time frame. The Respondent failed to appreciate that in terms of Regulation 14 of the Employees' State Insurance (General) Regulations, 1950, it is sufficient compliance that if an employee is registered with Employees' State Insurance Corporation within ten days of joining service. Therefore, the initiation of prosecution by the Respondent against these Petitioners is an erroneous understanding of law and hence, it is liable to be set aside on that ground. The learned Counsel for the Petitioners relied on the rulings of the Hon’ble Supreme Court in the case of Madurai District Central Cooperative Bank 8/18 https://www.mhc.tn.gov.in/judis Crl.O.P.No.835 of 2021 Ltd., -vs- Employees' Provident Fund Organization [2011 SCC OnLine Mad 1350]. The ratio of the said ruling squarely applies to the facts and circumstances of this case. The same position was reiterated in the reported rulings of the High Court of Madras in the case of Brakes India Ltd., -vs- Employees Provident Fund Organization [2015 SCC OnLine Mad 2994].
4.In the light of the above, the learned Counsel for the Petitioners sought indulgence of this Court to quash the Criminal Complaint filed by the Respondent against the Petitioners in C.C.No.1228 of 2020 before the learned II Metropolitan Magistrate, Egmore, Chennai as it is nothing but an abuse of process of Court to harass this Petitioners. The Regulation 14 of the Employees' State Insurance (General) Regulations, 1950 reads as under:
“14.Declaration Form to be sent to appropriate Office. - The employer shall send to the appropriate office by registered post or messenger, all Declaration Forms without detaching the Temporary Identification Certificate prepared under these regulations together with a return in duplicate in Form 3 within 10 days of the date on which the particulars for the Declaration Forms were furnished.”
5.The learned Counsel for the Respondent/Employees' State Insurance Corporation vehemently objected the submission made by the learned 9/18 https://www.mhc.tn.gov.in/judis Crl.O.P.No.835 of 2021 Counsel for the Petitioners stating that this Court exercising discretion under Section 482 of Cr.P.C. cannot consider the evidence available before the Trial Court. Only on appreciation of evidence, the trial Court can consider the valuable defence of the Accused. What had been argued by the learned Counsel for the Petitioners are to be treated as valuable defence available to the Petitioners before the trial. Whether M/s.Chennai Radha Engineering Works (P) Limited was an independent entity having registered its employees under Employees' State Insurance Act, 1948 and Employees' Provident Fund Act is subject to evidence. Whether Shri.Yaduwar Singh died before registering his name with the Employees' State Insurance Act, 1948 or Employees' Provident Fund Act are all subject to evidence. Based on the submission of the learned Counsel for the Petitioners this Court cannot exercise extraordinary power under Section 482 of Cr.P.C. to quash the complaint filed by the Respondent against the Petitioners. The learned Counsel for the Respondent also submitted that the Petitioners had admitted his liability. What had been submitted by the learned Counsel for the Petitioners disputed facts and it is for the trial Court to consider the same based on evidence to be recorded before the trial Court either to accept or 10/18 https://www.mhc.tn.gov.in/judis Crl.O.P.No.835 of 2021 reject the claim of the Petitioners as per the assessment of evidence. The learned Counsel for the Respondent invited the attention of this Court to Regulation 12 of the Employees' State Insurance (General) Regulations, 1950 which reads as under:
“12.Declaration by persons engaged after the appointed day. -
(1) The employer in respect of a factory or an establishment shall, before taking any person into employment in such factory or establishment after the appointed day, require such person (unless he can produce an Identity Card or other document in lieu thereof issued to him under these regulations) to furnish and such person shall on demand furnish to him correct particulars required for the Declaration Form including the Temporary Identification Certificate.
Such employer shall enter the particulars in the Declaration Form including the Temporary Identification Certificate and obtain the signature or the thumb-impression of such person and also complete the form as indicated thereon.
(2) Where an Identity Card is produced under such sub-regulation (1), the employer shall make relevant entries thereon.”
6.The learned Counsel for the Respondent also submitted that before taking the employee, he has to be given identity card. The learned Counsel for the Respondent also invited the attention of this Court to the petition averments in paragraph No.8 which reads as under:
“8.It is pertinent to mention that the insurable employment was on 01/07/2019, date of accident was 08/07/2019 and date of death was 08/07/2019, whereas the accused had submitted the online Declaration form only on 08/07/2019 and Accident Report on 09/07/2019 after the death of the employee. Thus the Accused had delayed the submission of Declaration form and the Accident Report.11/18
https://www.mhc.tn.gov.in/judis Crl.O.P.No.835 of 2021 The Employer is liable for violation of Regulation 12 of ESI (General) Regulations 1950.”
7.The learned Counsel for the Respondent relied on paragraph No.5 of the complaint filed before the Court of the learned II Metropolitan Magistrate, Egmore, Chennai which reads as under:
“5.The Accused No.1 is the Immediate employer which is registered under the ESI Act and represented by its Managing Director V.R.Senthilkumar, accused No.2 is the Managing Director of Accused No.1 and accused No.3 and 4 are the Principal employer and its Chief Engineer who are in charge of and responsible for the commission of offence and so vicariously liable for the said offence.”
8.The learned Counsel for the Respondent further submitted that the complaint filed by the Respondent before the Court of the learned II Metropolitan Magistrate, Egmore, Chennai, is maintainable and this Petition filed by the Accused by invoking the extraordinary power under Section 482 of Cr.P.C. is not at all maintainable as the disputed facts have to be considered only before the trial Court by adducing evidence.
9.On consideration of the rival submissions and on perusal of the Employees' State Insurance Act, 1948, the Regulations cited by the Respondent under Section 85 (ii) relied on by the learned Counsel for the 12/18 https://www.mhc.tn.gov.in/judis Crl.O.P.No.835 of 2021 Petitioners, it is found that the complaint filed by the Respondent before the learned II Metropolitan Magistrate, Egmore, is silent regarding the reply given by the Petitioners to the show cause notice issued by the Respondent to the Petitioners. Whether it was considered or rejected is not stated. On perusal of the reported rulings of the High Court in the case of Brakes India Ltd., -vs- Employees Provident Fund Organization [2015 SCC OnLine Mad 2994] it is found that it was a similar case regarding the liability of the principal employer in which case also, there was an independent entity registered with the Employees' State Insurance Act, 1948 and Employees Provident Fund Act for its employees and which Company provides employment is a contractor. Therefore, this Court had set aside the impugned order by observing as under:
“17.This Court in the judgment reported in 2012 LLR 702 (The Madurai District Central Co-operative Bank Ltd. rep by its Special Officer -vs- Employees' Provident Fund Organization), cited supra has clearly held that with respect to the contractors, who are registered with the Provident Fund Department, having independent code number, they are to be treated as “independent employer”.
The above observation was made based on the earlier rulings of this Court in the case of Madurai District Central Cooperative Bank Ltd., -vs-
Employees' Provident Fund Organization [2011 SCC OnLine Mad 1350].13/18
https://www.mhc.tn.gov.in/judis Crl.O.P.No.835 of 2021 The relevant portion of the said order reads as under:
“18.It is not in dispute that the petitioner is an exempted establishment, under section 17 of the Act, therefore, is not covered under the Act. The employees of the contractor, by no stretch of imagination can be treated to be employees of the principal employer, but, as rightly conceded by the learned counsel for the petitioner, the liability of unregistered contractors, would fall on the petitioner, in view of clause 30 of the Employees' Provident Fund Scheme, 1952, whereas with respect to the contractors, who are registered with the Provident Fund Department, having independent code number, they are to be treated as 'independent employer'.”
10.Therefore, in the light of the above rulings cited by the learned Counsel for the Petitioners and the fact that here in this case also M/s.Chennai Radha Engineering Works (P) Limited being the employer of the deceased Shri.Yaduwar Singh and the Company M/s.Chennai Radha Engineering Works (P) Limited, who is the Contractor of the Petitioners herein, was employed for removal of ash from the Thermal Station which contract employee namely the said Shri.Yaduwar Singh who met with an accident, the Petitioners cannot be held liable when the contractor is registered as an independent entity as per the above rulings cited by the learned Counsel for the Petitioners. If there are any violations, as the contractor is the Company which is a separate entity having been registered with the Provident Fund Authority as well as Employees State Insurance 14/18 https://www.mhc.tn.gov.in/judis Crl.O.P.No.835 of 2021 Corporation, is responsible. Therefore, the reply to the show cause notice by the Petitioners herein was not considered by the Respondent and ignoring the reply sent by the Petitioners, the complaint filed before the Court of the learned II Metropolitan Magistrate, Egmore, Chennai, is only to cause harassment to the Petitioners herein. On perusal of the typed set furnished by the Petitioners, what had been submitted by the Petitioners is found acceptable and reasonable in the light of the reply sent by the Petitioners to the show cause notice and the fact that M/s.Chennai Radha Engineering Works (P) Limited who had been registered with the Provident Fund and ESI Act. Therefore, for the death of Shri.Yaduwar Singh who was employed by M/s.Chennai Radha Engineering Works (P) Limited the Petitioners cannot be held liable as a principal employer. Therefore, on that ground, the private Complaint preferred by the Respondent herein is found not maintainable as it is nothing but an abuse of process of Court. Therefore, the private complaint preferred by the Respondent in C.C.No.1228 of 2020 on the file of the learned II Metropolitan Magistrate, Egmore, Chennai, is liable to be quashed against this Petitioners.
15/18 https://www.mhc.tn.gov.in/judis Crl.O.P.No.835 of 2021 In the result, this Criminal Original Petition is allowed. The proceedings in C.C.No.1228 of 2020 pending on the file of the learned II Metropolitan Magistrate, Egmore, Chennai is quashed against these Petitioners alone. The learned II Metropolitan Magistrate, Egmore, Chennai is directed to proceed with the trial regarding M/s.Chennai Radha Engineering Works (P) Limited and dispose of the same as per law. Consequently, connected miscellaneous petition is closed. 05.08.2022 SRM Index : Yes / No Internet : Yes / No 16/18 https://www.mhc.tn.gov.in/judis Crl.O.P.No.835 of 2021 To
1.The Chief Judicial Magistrate, Salem.
2.The Deputy Director of Factories, Safety and Health, Mettur, Salem – 636 402.
3.The Public Prosecutor, High Court, Madras.
17/18 https://www.mhc.tn.gov.in/judis Crl.O.P.No.835 of 2021 SATHI KUMAR SUKUMARA KURUP., J.
SRM Order made in Crl.O.P.No.835 of 2021 05.08.2022 18/18 https://www.mhc.tn.gov.in/judis