Jharkhand High Court
M/S. Tata Iron And Steel Co. Ltd. (Now ... vs The State Of Jharkhand on 5 February, 2020
Equivalent citations: AIRONLINE 2020 JHA 1002, 2021 (1) AJR 588
Author: Ananda Sen
Bench: Ananda Sen
IN THE HIGH COURT OF JHARKHAND AT RANCHI
Cr. M.P. No. 100 of 2006
WITH
I.A. No. 361 of 2020
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1. M/s. Tata Iron and Steel Co. Ltd. (now Tata Steel Ltd.), represented by Shri A.D. Baijal, Executive Director (I/C) (IM & RM)
2. Rama Sankar Singh
3. L.S. Divakar
4. Subroto Das ... Petitioners
-versus-
1. The State of Jharkhand
2. Labour Enforcement Officer (Central), Dhanbad and An Inspector under Sub-Section (1) of Section 28 of the C.L.(R&A) Act ... Opposite Parties
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CORAM : HON'BLE MR. JUSTICE ANANDA SEN
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For the Petitioners : Mr. Indrajit Sinha, Advocate
Mr. Ajay Kumar Sah, Advocate
For the State : Mr. Shekhar Sinha, A.P.P.
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6/ 05.02.2020 Heard Mr. Indrajit Sinha, learned counsel for the petitioner and
Mr. Shekhar Sinha, learned A.P.P. for the State.
2. In this criminal miscellaneous petition, petitioners have prayed to quash the entire criminal proceeding including the order dated 15.02.2004 passed in CLA Case No.69 of 2004, whereby cognizance of offence under Section 23 of the Contract Labour (Regulation & Abolition) Act, 1970 (hereinafter referred to as the 'Act') was taken and thereafter petitioners were summoned.
3. Mr. Indrajit Sinha, learned counsel appearing for the petitioners, submits that in the entire complaint petition, there is no statement to suggest as to how petitioners Nos.2 to 4 are responsible for committing the alleged offence and are responsible for the day to day affairs of the company. He submits that admittedly, the offence has been committed by the Company and not by the individual persons. So far as prosecuting the company is concerned, which is a juristic person, it is for the Company in terms of Section 305 of the Code of Criminal Procedure to say as to who will represent the company. In absence of the averments, which is mandatory in terms of Section 25 of the Act, entire prosecution -: 2 :- against these petitioners should be declared as bad in law.
4. Mr. Shekhar Sinha, learned A.P.P. appearing on behalf of the State opposes the prayer and submits that the Company has committed the offence. He submits that the offence is made out not only against the Company, but also against the General Manager, Executive Director and other officials of the Company under the Act.
5. A complaint was filed in the Court of learned Chief Judicial Magistrate, Dhanbad for alleged violation of provisions of the Act praying to take cognizance under Section 23 of the Act. Allegation in the complaint is that in contravention of Section 10(1) of the Act, employer of Tata Iron & Steel Company Ltd. (now Tata Steel Ltd.) had engaged 5 (five) contract labourers for driving of stone drops and miscellaneous stone cutting underground through their contractor namely S.L. Chopra in the job of construction of incline shaft in hard rock to cross the fault 3rd dip and 4th dip of 7th level at 8 pit 10 seam (loading in tubs), which is a prohibited category of job. It has also been mentioned that notice was issued to employer, but unsatisfactory reply was given.
6. After going through the entire complaint petition, I find that no where it has been revealed as to how petitioners Nos.2 to 4 were responsible for conduct of business of the company with respect to employment of contract labourers and also with respect to the work, which was given in contract to the contractor. Section 25 of the Act provides that if the offender is the Company, then the Company and also every person incharge of and responsible to the company for the conduct of its business at the time of commission of offence shall be deemed to be guilty of the offence and shall be liable to be prosecuted against and punished accordingly. Thus, pre-requisite for initiating prosecution against the officers of the company is that there should be averment in the complaint that the person was incharge of and was responsible to the company for the conduct of its business, that too at the time of commission of the offence.
7. Section 25 of the Act is pari materia with Section 141 of the Negotiable Instruments Act. This provision of Negotiable Instruments Act has been dealt by the Hon'ble Supreme Court in the case of S.M.S. Pharmaceuticals Ltd. versus Neeta Bhalla and Another reported in -: 3 :- (2005) 8 SCC 89 at paragraph 19 thereof. It is necessary to quote paragraph 19 of the said judgment, which reads as under: -
"19. In view of the above discussion, our answers to the questions posed in the reference are as under:
(a) It is necessary to specifically aver in a complaint under Section 141 that at the time the offence was committed, the person accused was in charge of, and responsible for the conduct of business of the company. The averment is an essential requirement of Section 141 and has to be made in a complaint.
Without this averment being made in a complaint, the requirements of Section 141 cannot be said to be satisfied.
(b) The answer to the question posed in sub-para (b) has to be in the negative. Merely being a director of a company is not sufficient to make the person liable under Section 141 of the Act. A director in a company cannot be deemed to be in charge of and responsible to the company for the conduct of its business. The requirement of Section 141 is that the person sought to be made liable should be in charge of and responsible for the conduct of the business of the company at the relevant time. This has to be averred as a fact as there is no deemed liability of a director in such cases.
(c) The answer to Question (c) has to be in the affirmative. The question notes that the managing director or joint managing director would be admittedly in charge of the company and responsible to the company for the conduct of its business. When that is so, holders of such positions in a company become liable under Section 141 of the Act. By virtue of the office they hold as managing director or joint managing director, these persons are in charge of and responsible for the conduct of business of the company. Therefore, they get covered under Section
141. So far as the signatory of a cheque which is dishonoured is concerned, he is clearly responsible for the incriminating act and will be covered under sub-section (2) of Section 141."
8. Further I find that a coordinate Bench of this Court in Cr. M.P. -: 4 :- No.101 of 2006 decided on 30.04.2018, has also taken note of the provisions of the Act and the judgment passed by the Hon'ble Supreme Court and has concluded that merely arraigning the higher officers in the complaint does not confirm that the said officers are responsible for the conduct of business of the company.
9. The averment that the persons were responsible for the day to day affairs of the company and that too at the time of violation should be mentioned and pleaded in the complaint petition itself and in absence of such pleadings, it cannot be said that the mandatory provisions of Section 25 of the Act has been followed. When the mandatory provisions of the Act has not been followed, natural consequence would be that the prosecution cannot be initiated against those persons, who are not incharge of and responsible to the Company for the conduct of the business at the time of commission of the offence.
10. So far as the Company is concerned, there is a provision in the Code of Criminal Procedure as to how a Company has to be prosecuted. Sub section (2) of Section 305 of the Code of Criminal Procedure provides that where a corporation is the accused person or one of the accused person in an enquiry or trial, it may appoint a representative for the purpose of enquiry or trial and such appointment need not be under the seal of the corporation. The word corporation in terms of Section 305(1) includes an incorporated company. Admittedly, the petitioner No.1 is an incorporated company. When an incorporated company is an accused, it is prerogative of the company to appoint its representative who will represent the company. The prosecutor or the complainant has no right to appoint or to choose any person of the Company as an accused or as a representative of the Company in a criminal trial or enquiry, as the same is the sole prerogative of the Company. This liberty is granted to the company by the statute, which cannot be taken away. Arraigning any person and showing them as accused on behalf of the Company is not the correct procedure, which is adopted in this case. The statutory right of the company has been taken away by the complainant, which could not and should not have been done.
11. On the basis of the aforesaid findings, I find merit in this criminal miscellaneous petition. Accordingly, the impugned order dated 15.02.2004 passed in CLA Case No.69 of 2004, so far as it relates to the -: 5 :- petitioners No.2 to 4, is hereby quashed. So far as the petitioner No.1 is concerned, it is open to the petitioner No.1 to appoint a person as representative of the Company. So far as the other grounds which are sought to be urged before this Court are concerned, it will be open to the Company to raise them before the Trial Court at an appropriate stage.
12. This criminal miscellaneous petition stands allowed to the aforesaid extent.
13. In view of the final order passed in the main criminal miscellaneous petition, interlocutory application being I.A. No. 361 of 2020 also stands disposed of.
(Ananda Sen, J.) Kumar/Cp-03