Delhi District Court
12. In Sawarmal Agarwalla vs . State Of Assam & Anr. (2008) on 20 December, 2017
IN THE COURT OF SH. PRANJAL ANEJA
METROPOLITAN MAGISTRATE-01, SHAHDRA DISTRICT,
KARKARDOOMA COURTS, DELHI
Employees State Insurance Corporation (ESIC)
V.
M/s Amba Products
Complaint case no. 56ESI/09
New CC No. 4992/16
U/s 85(a) & (e) ESIC Act, 1948
a. Serial No. of the case : 4992/16
b. Date of commission of offence : Continuing offence
c. Date of institution of the case : 16.04.2003
d. Name of complainant : Employees State Insurance
Corporation
e. Name of accused : 1. M/s Amba Products
Khasra No. 63, Holambi Khurd,
Near Maan Dharam Kanta,
Delhi.
2. Sh. Babu Lal Sharma,
S/o Sh. Nathu Lal Sharma,
R/o D-109, Yadav Nagar,
Delhi.
Proprietor & Principal Employer.
f. Offence complained of : U/s 85(a) & (e) ESIC Act, 1948
g. Plea of accused persons : Pleaded not guilty
h. Arguments heard on : 13.12.2017
CC No.56ESI/09 ESIC v. M/s Amba Products 20.12.2017 Page No. 1 of 10
i. Final order : Acquitted
j. Date of judgment : 20.12.2017
JUDGMENT
FACTS IN BRIEF:
1. Briefly stating, the case of the complainant is that the accused Babu Lal sharma is under statutory obligation to pay the contribution and submit returns of contribution under the ESIC Act in respect of the the company M/s Amba Products and accused Babu Lal Sharma is proprietor/principal employer of the company and responsible towards the conduct, supervision and control of the business of above said company. It is alleged that the accused failed to pay contribution from 03.04.2001 to 30.09.2002 and also failed to submit return of contribution from 09/2001 to 03/2002 thereby infringing provisions of section 39, 40 & 43 of ESIC Act, 1948 r/w regulation 31, & 26 of ESI (General) Regulation, 1950. Further alleged that despite show cause notice dated 22.11.2002, the accused has failed to discharge their statutory obligation in time. It is thus alleged that the accused persons committed the offence punishable u/s 85(a) & (e) of the ESIC Act, 1948.
2. Cognizance was taken & accused was summoned. Pre-
charge evidence was led and charge was framed against the accused for the offence punishable u/s 85(a) & (e) of the ESIC Act, 1948.
CC No.56ESI/09 ESIC v. M/s Amba Products 20.12.2017 Page No. 2 of 10 Accused persons pleaded not guilty and claimed trial.
3. In order to prove its case the complainant examined Sh. S.C. Gupta Retired Assistant Director as CW-1 (also examined as CW-3 in pre-charge evidence).
4. CE was closed on 11.09.2017 and statement of accused u/s 313 r/w Section 281 Cr.P.C was recorded on 21.11.2017 wherein he opted to lead DE and examined himself as DW-1.
5. I have heard the arguments of Ld. Counsels for both sides. I have also gone through the evidence on record.
REASONS FOR DECISION :
6. In order to establish the guilt of the accused, prosecution was under obligation to prove that the accused failed to pay contribution from 03.04.2001 to 30.09.2002 and also failed to submit return of contribution from 09/2001 to 03/2002 despite notice dated 22.11.2002 and thereby infringing provisions of section 39, 40(1) & 43 of ESIC Act, 1948 r/w regulation 31, 26 & 27 of ESI (General) Regulation, 1950 and thus committed the offence punishable u/s 85(a) & (e) of the ESIC Act, 1948.
7. The testimonies of complainant witnesses is touched upon CC No.56ESI/09 ESIC v. M/s Amba Products 20.12.2017 Page No. 3 of 10 in brief as follows:-
7.1 CW1 Sh. S.C. Gupta adopted his pre-charge deposition as CW-3 dated 23.01.2012 in his post-charge evidence. CW1 deposed that present complaint Ex. CW3/A was filed by him on the basis of sanction memo already Ex. CW1/1 bearing the signature of Regional Director at point A and also deposed that regional director was authorised to issue the sanction memo vide notification Mark-A and B. In cross-examination dated 19.03.2014, CW-1 stated that he has no knowledge whether the factory was running or not as the accused have not intimated about the closure of the factory or the factory was closed by SDM in 2001. CW-1 was also not able to tell whether the list/name of the employment who the accused deducted is filed or not in the complaint. CW-1 stated that return is submitted by the employer and the names are written in the return to be filed by the employer. CW-1 was also not able to tell the date of sanction order and stated that same was signed by Ms. S. Thomas, the then Regional Director, Delhi.
8. The accused Babu Lal Sharma in his statement u/s 313 Cr.P.C. deposed that his factory was sealed by the SDM on 17.05.2001 and he has no liability to deposit any contribution or to file any return.
Accused further stated that he has not received any show cause notice and this is a false complaint initiated against him. Accused opted to lead DE and examined himself as DW-1.
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9. DW-1/accused deposed that he is the proprietor of M/s Amba Product and relied upon RTI dated 08.12.2011 Mark A and reply of RTI from department of ESIC dt. 28.12.2011 Mark B and stated that no record of his concern is with ESIC. Since the documents Mark A and Mark B are merely photocopies, these are not admissible in evidence. Efforts were made by accused to summon the record of sealing of his concern but report from SDM was received to the effect that no record was found.
10. In the analysis of the above evidence, it observed that complainant has not led any evidence in post-charge evidence except CW-1 Sh. S.C. Gupta who merely filed the present complaint and deposed regarding the sanction Ex. CW1/1. In cross-examination, this witness has not knowledge whether the factory was running or not and the unit/factory of accused was closed by SDM in 2001. Further in cross-examination, this witness was not even able to tell the date of sanction for which he appeared to prove. Nothing has been deposed with regard to show cause notice and its service upon the accused. Without proper proof it cannot be assumed that the show cause notice, as issued, was served upon the accused. Thus, complainant failed to prove the show cause notice & its service.
11. Regarding sanction Ex. CW1/1 also it is observed that the sanctioning authority has not appeared as a witness to prove the same.
CC No.56ESI/09 ESIC v. M/s Amba Products 20.12.2017 Page No. 5 of 10 In the sanction letter Ex. CW1/1 the Regional Director mentions that after studying all the papers and applying his mind he is satisfied regarding the failure to pay contribution and submissions of return and required under various provisions of the ESI Act, 1948. The said satisfaction of the sanctioning authority i.e. the Regional Director was required to be proved by examining him which has not been done in the present case. It was more so required especially in view of the circumstance wherein the complainant has not examined any witness or failed to prove the show cause notice and dispatch register.
12. In Sawarmal Agarwalla vs. State of Assam & Anr. (2008) 3 Gauhati Law Reports 575 it has been observed and held by Hon'ble High Court as under:-
"22. In short, the proviso to section 45A(1) follows the decision in U.P. Hotel & Restaurant Ltd. and Another, (Supra), Hedge and Golay Lt. and Another (supra) and Masco (P.). Ltd., (supra), which, Mr. Bhattacharjee has relied upon. In the face of this specific protection, which by way of amendment, has been introduced in the year 1989, it becomes abundantly clear that before a person is asked to make payment of contribution for an employee or employees in respect of a given contribution period, the in-built protection provided to the person under the proviso to Section 45(1) must be scrupulously followed. Moreover, a careful reading of the regulation 26 shows that the return is required to be filed after the contributed is already deposited in the Bank by way of challans. Thus, there are two eventualities in which the regulation 26 may be attracted, namely, (i) when the contribution has been paid by way of challan, but the return of the contribution in Form-6 along with the receipted copies of challans for the amounts deposited in the Bank has not been sent to the proper office by the employer and (ii) when no contribution has been made and in consequence thereof, no return in the manner, as indicated hereinbefore, is filed.
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23. The logical conclusion, therefore, is that in either of the two eventualities indicated above, the conditions precedent for filing of the return is that the employer must have deposited the amount of contribution to be paid for the employees(s) during a given contribution period. If no such contribution is paid, the corporation cannot straightway start prosecution, for, every quarter in respect of which contribution has not been paid, the corporation has to determine the amount of the contribution and this determination must be done only by resorting to, and abiding by, the provisions of section 45A (1) in their entirely.
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25. It is, therefore not necessary that an employer's liability to pay contribution will remain static throughout the year or throughout a number of years. In fact, an employer, who may be liable to pay contribution in one given quarter of the year, may not remain liable at able to pay any contribution in the next quarter. Viewed from this angle, it is clear that before the contribution is demanded by the corporation, the corporation is duty bound to determine amount of the contribution, which, in the given period, the employer, who is proceeded against, has to pay. For making such a determination, the corporation has to take recourse to section 45A and if the authorities concerned take recourse to section 45A for determining the amount of contribution, the proviso appended thereto has to be followed meaning thereby that a reasonable opportunity hearing has to given to the person from whom the contribution is to be claimed. On determination of the amount of contribution made under section 45A, the demand has to be raised and if the demand is not fulfilled, the person concerned can be proceeded against for non-payment of contribution and for not filing of the return under regulation 26, for making of the payment of contribution is, as already indicated hereinbefore, a condition precedent for filing of the return under regulation 26. Hence, before any person is proceeded against for violation of the Regulation 26, it must be shown that he was liable to pay the contribution and he has failed to make payment of the contribution and has not filed return, thereafter, in terms of the Regulation 26 or though he made payment of the contribution, he has not filed the return. In short, this, if I may reiterate, for invoking penal CC No.56ESI/09 ESIC v. M/s Amba Products 20.12.2017 Page No. 7 of 10 provisions of section 85(a) or 85(e), a reasonable opportunity of hearing under the proviso to section 45A(1) must be accorded to the person, who is sought to be proceeded against.
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29. Hence, when a person is to be proceeded against for omission to make contribution, bounden duty it is of the authority concerned to determine as to what the exact amount of contribution legally realizable from the person concerned is. For determination of this liability, an opportunity of hearing, in terms of the proviso to section 45A(1), must be provided to the person concerned. To put it differently, the mere fact that a factory or an establishment continues to be governed by the ESI Act, this will not, in itself, be sufficient to prosecute the employer unless and until the quantum of contribution payable by such an employer has been determined after due inquiry. If such a liability, upon enquiry, is found to have existed, the person concerned maybe proceeded against for not making contribution or for failure to file return in terms of the Regulation 26; but if the enquiry reveals that the factory or the establishment has ceased to be operative or the employees have ceased to work, the employer cannot be prosecuted for not depositing the contribution, which he would have been, otherwise, liable to contribute. If an employer is found not liable to deposit any contribution, the question of prosecuting him for violation of the Regulation 26 does not arise at all, for, the liability to file return under the Regulation 26 arises only when the person is found liable to make contribution.
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34. The logical conclusion, therefore, is that in the face of complete non-compliance of the provisions of section 45A by the Corporation before launching the prosecution, in the present case, the prosecution of the accused-petitioner was wholly, as indicated hereinabove, contrary to the law contained in that behalf and cannot be sustained."
13. In the above authority, the Hon'ble High Court has clearly CC No.56ESI/09 ESIC v. M/s Amba Products 20.12.2017 Page No. 8 of 10 observed that for invoking penal provision of Section 85(a) or 85 (e) a reasonable opportunity of hearing under proviso to Section 45A(1) must be accorded to the person against whom proceedings are sought to be initiated. It has been further held that it is the bounded duty of the authority concerned to determine as to the exact amount of contribution legally realizable from the person concerned and the mere fact that a factory or an establishment continues to be governed by the ESI Act, will not, in itself, be sufficient to prosecute the employer unless and until the quantum of contribution payable by such employer has been determined after due inquiry. The Hon'ble Court further held that if such inquiry reveals that the factory or establishment has ceased to be operative or the employees have ceased to work, then the employer cannot be prosecuted for not depositing the contribution and in such case violation of the regulation 26 of the ESI (General) Regulations, 1950 does not arise. The Hon'ble Court in the above mentioned case quashed the proceedings by observing that the prosecution of the accused was contrary to the law and cannot sustain in the face of complete non-compliance of provisions of Section 45A of ESI Act by the corporation before launching the prosecution.
14. Similar is the position in the facts of the present case. The Corporation/complainant has not determined the quantum of contribution payable by the accused for the given period and has, thus, not carried out any proceedings as contemplated under Section 45A(1). Thus, applying the above noted authority, the prosecution in the present CC No.56ESI/09 ESIC v. M/s Amba Products 20.12.2017 Page No. 9 of 10 case also cannot sustain as the same is violative of the law. Further, the complainant has failed to prove the sanction in this case as has been observed in the foregoing paras. I may here again note that complainant has not led any evidence in post-charge to prove the show cause notice and the dispatch register.
15. It is the cardinal principle of criminal justice delivery system that the complainant/prosecution has to prove the guilt of accused beyond reasonable doubts. No matter how weak the defence of accused is, but the golden rule of criminal jurisprudence is that the case of the prosecution has to stand on its own legs. The benefit of doubt raised in this case goes in favour of the accused person and thus it can safely be concluded that complainant has failed to establish its case.
16. From the above discussions and findings, it is clear that complainant has failed to prove the case against the accused Babu Lal Sharma for the offence punishable u/s 85 (a) & (e) of ESI Act, 1948. The accused is given benefit of doubt and is consequently acquitted.
Announced in the open (PRANJAL ANEJA)
Court on 20.12.2017 Metropolitan Magistrate-01
Shahadara District,
Karkardooma Courts, Delhi
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