Bangalore District Court
E.S.I. Corporation vs H.T.Jayaram on 28 October, 2021
BEFORE THE SPECIAL COURT FOR ECONOMIC
OFFENCES: AT BANGALORE.
Dated this the 28th day of October 2021
: Present:
Smt. PREETH. J., B.A(Law)., LL.B.,
Presiding Officer, Special Court
for Economic Offences, Bangalore.
CC.No.162/2019.
Complainant: E.S.I. Corporation, Bangalore-23.
Rept., by Social Security Officer,
ESIC, Bangalore.
(By Spl. P.P., Sri.K.K.)
Vs.
Accused: H.T.Jayaram, Proprietor,
M/s.K.R. Industries, No.69,
1st Main Road, 3rd Cross,
Cholurpalya, Bangalore.
(By Sri.H.B., Advocate)
JUDGMENT
1. The complainant/Employees' State Insurance Corporation represented by its Social Security Officer, ESIC, Bangalore being authorized by the sanction dated:
06.06.2019 issued by the Additional Commissioner and Regional Director, E.S.I. Corporation, Karnataka Region, Bangalore under section 86(1) of the Employees' State Insurance Act, 1948, (Herein after referred as the 'ESI Act') has filed the complaint under section 200 of Cr.P.C., alleging that the accused has committed the offence under section 85(a) which is punishable under section 85(i)(b) of ESI Act, 1948.
2. The complainant's case in brief is that M/s.K.R. Industries, Bangalore is factory owned by the accused and it is covered under the ESI Act and Code No.53-00- 031860-000-0606 is allotted. A communication regarding its coverage under the ESI Act with a request to comply with the provisions of the ESI Act was also sent in Form No.C-11, dated:19.04.2012. The accused is in charge of the factory in terms of section 2(17) of the ESI Act and was in charge of the factory during the period of default and was responsible for the conduct of the business. The accused is Proprietor and Principal Employer of the said factory has failed to pay the contribution of Rs.1,28,700/- in accordance with section 39 of the ESI Act for the period from June-2014 to Jan-2016 as required under section 40 of the ESI Act, R/w.Regulations.29 and 31 of the ESI (General) Regulations, 1950.
3. It is further stated that the accused did not pay the contribution in terms of section 40 of the ESI Act, hence a notice in Form No.C-18 (Adhoc) dated:15.03.2016 was issued to Principal Employer to show cause as to why assessment of contribution for the period from June-2014 to Jan-2016 amounting to Rs.1,28,700/- should not be made as proposed. The notice was served upon the accused, but he neither replied to the said notice nor availed the opportunity of personal hearing provided to him on 20.04.2016. That led to the passing of order under section 45A of the ESI Act, by determining Rs.1,28,700/- as contribution payable by the accused for the period from June-2014 to Jan-2016. The order in section 45A of the ESI Act was duly served upon the accused. Even after, that accused not paid the due contribution amount. Hence accused is liable to be prosecuted for the offence under section 85 of the ESI Act. Then show cause notice dated:
20.03.2017 was issued to the accused to show cause as to why he should not be prosecuted under section 85 of the ESI Act. The accused not responded to the notice also.
The accused has violated section 39 and 40 of the ESI Act, R/w. section 29 and 31 of the General Regulations, 1950 and thereby committed an offence under section 85(a) which is punishable under sub-clause.(b) of sub-section.(i) of the ESI Act.
4. It is further stated that under section 85(C) of the ESI Act, the Hon'ble Court may direct the accused to pay the contributions and submit returns. That the Additional Commissioner and Regional Director, ESIC, Karnataka Region, Bangalore has accorded sanction to prosecute the accused on 06.06.2019 and hence, the complaint.
5. On presentation of the complaint, cognizance was taken and the case was registered against accused for the offence punishable under section 85(i)(b) of the ESI Act, 1948.
6. In response to the summons, the accused appeared through his counsel and enlarged on bail. Copies of the complaint and other documents were furnished to him. The evidence before charge was recorded as required under section 244 of the Cr.P.C. and then on hearing the learned counsels of the complainant and the accused, charge was framed for the offence punishable under section 85(i)(b) of the ESI Act and read over to accused. The accused pleaded not guilty and claimed for trial.
7. So as to prove the guilt of the accused, the complainant is examined as P.w.1 and through him documents are marked as Ex.P.01 to 15.
8. After closure of complainant's side evidence, the statement of accused was recorded as provided under section 313 of Cr.P.C. He has denied the incriminating evidence found against him, but he has not chosen to lead either oral or documentary evidence.
9. Heard the arguments of the learned counsels of the complainant and accused. The points that arise for my consideration are :
Point No.1: Whether the complainant has proved that accused willfully not paid the contributions of Rs.1,28,700/- for the period from June-2014 to Jan-2016 and thereby committed the offence punishable under section 85(i)(b) of the ESI Act, 1948.?
Point No.2: What order?
10. My findings on the above said points are as under:
Point No.1: In the Negative;
Point No.2: As per the Final orders for the following:
REASONS
11. Point No.1: There is no dispute that the accused is the Proprietor of the firm M/s.K.R.Industries. Ex.p.2 is the Form No.01 and that disclose that accused submitted the same to the complainant requesting to register the firm. In the application, it is stated that in total 12 employees are working in the firm and total salaries paid is Rs.41,700/-. The Preliminary Inspection Report dated: 04.04.2012 is marked as Ex.p.3. On perusals of the same, it goes to show that 08 persons were employed in the month of March-2012 and 11 persons in the month of April-2012. Ex.p.4 is the copy of Form No.C-11, dated: 19.04.2012 issued by the complainant and same was received by the accused. The acknowledgment card is marked as Ex.p.5. Ex.p.6 is the office copy of Form No.18 notice dated:
15.03.2016 issued by the complainant to accused. Ex.p.7 is the postal acknowledgement for having served the notice in Form No.C-18. Ex.p.8 is the office copy of the order under section 45A of the Act. Ex.p.9 and 10 are the postal acknowledgements for having served the order in section 45A of the ESI Act. Ex.p.11 is the office copy of show cause notice dated:20.03.2017 issued by the complainant to the accused. Ex.p.12 and 13 are the postal acknowledgement pertaining to the service of show cause notice dated:20.03.2017. Ex.p.12 and Ex.p.13 are the postal acknowledgements for having served the show cause notice dated:20.03.2017. Ex.p.14 is the sanction order issued by Additional Commissioner and Regional Director, ESIC, Karnataka Region, Bangalore has accorded sanction to prosecute the accused. Ex.p.15 is the attested copy of C-6 Register from 02.04.2012 to 11.02.2021 along with certificate.
12. The complainant's case is that the accused has not paid the contribution for the period from 01.06.2014 to 31.01.2016 amounting to Rs.1,28,700/- and also not submitted the monthly details of the contributions. It is alleged that the accused has not appeared and offered any explanation for not having paid the contributions and that led to the passing of section 45A order. It is the contention of the accused that he closed the firm in the Year-2014. It is contended that the show cause notice dated: 15.03.2016 and order under section 45A of the ESI Act were not served on the accused.
13. Lrd. Counsel of the complainant argued that the order under section 45A of the ESI Act was passed after giving opportunity to the accused. The accused has not intimated to the complainant about the closure of the firm. The accused has not challenged the order passed under section 45A of the ESI Act.
14. Lrd. Counsel of the accused argued that none of the officer inspected the establishment and ascertained as to whether the accused firm is running or not. The accused has not received the show cause notice, so the question of he appearing before the complainant and putting forwarding his case does not arise at all. Only for the reason that the accused has not challenged the order passed under section 45A of the ESI Act, it cannot be held that the charges leveled against the accused is proved. It is argued that P.w.1 has no personal knowledge about the case. It is also argued that the complainant has not produced any document to show that the accused has paid the contribution up to May-2014. On the other hand, the counsel for the complainant has argued that the document showing payment of contributions for the period from 02.04.2012 to 11.02.2021 is produced at the later stage and marked as Ex.p.15.
15. The order in section 45A of the ESI Act was passed on adhoc basis. Admittedly, none of the officials visited the firm to confirm as to whether the firm was running its business. Except, the order in section 45A of the ESI Act, there is no other evidence to the effect that the firm was functioning during the relevant period. The complainant has not produced the evidence to the effect that any of the employees working in the firm claimed the benefit. Ex.p.5 is the postal acknowledgement for having served the notice in Form No.C-11. Ex.p.7 is the postal acknowledgement pertaining to the service of show cause notice dated:15.03.2016. Ex.p.9 is the postal acknowledgement for having served the order in section 45A of the ESI Act. Ex.p.12 and Ex.p.13 are the postal acknowledgements for having served the show cause notice dated:20.03.2017. On comparison of the signatures found in these acknowledgements with the signature in the postal acknowledgement marked as Ex.p.5, it discloses that they are not the signatures of the accused. This substantiates the contention of the accused that he has not received the show cause notices, order under section 45A of the ESI Act and the notice dated: 20.03.2017. Lrd. Counsel for the complainant argued that person in charge of the firm might have received the notices, but to substantiate that there is no evidence.
16. As stated above, the contribution was determined on the basis of the information and documents furnished at the time of registering the firm. It is not the case of the complainant that accused submitted the return in Form No.5 for the default period. In such event, the officials ought to have inspected the firm and ascertained as to whether it is actually functioning. Only on the basis of order passed under section 45A of the ESI Act, the criminal charge cannot be held to be proved.
17. At this juncture, I would like to rely upon the decision of our Hon'ble High Court, in the case of Employees' State Insurance Corporation, Bangalore Vs. K.Uttam Chand Jain and others, reported in 2005(2) LLN 801, it is held that "unless liability is established, no person can be convicted irrespective of the civil proceedings that has been taken place".
18. Another decision of the Hon'ble Apex Court, in the case of P.Jayappan Vs. S.K.Perumal, reported in AIR 1984 SC 1693, wherein, at Para No.22, it is held that "Unless the charges are independently proved against the accused regarding previous payment of the contribution for the relevant wage periods, it cannot be assumed or presumed that the establishment is still covered for the purpose of payment of contribution. It is no doubt true from the records, it reveals that the establishment is covered under the Employees' State Insurance Act. But, for purpose of payment of contribution there must be evidence to show firstly that the numbers of employees are ten or more and then only liability can be fastened on the employer. In the absence of those materials on record, it is rather difficult to accept the contention of Smt.Geetha Papanna that the "Employees' State Insurance Corporation is not liable to prove anything except, if it is proved that the establishment is covered under he Act and that it has failed to pay the contribution" is without any merits in the light of the decision supra".
19. In the case on hand also, except the order in section 45A of the ESI Act, there is no other evidence to the effect that the firm of the accused was functioning and more than 10 employees were employed by him during the relevant period. The counsel for the complainant has argued that Ex.p.15 which is the C-6 Register goes to show that the accused has paid the contributions previous to the contributions for the relevant wage periods. In the cross- examination done to P.w.1 in respect of Ex.p.15, though the witness has denied that the amount shown in Ex.p.15 is not contributions, but recovery, he has voluntarily deposed that the recovery is done is respect of the contributions amount. So from the evidence of P.w.1, it clearly goes to show that it is the recovery made by them and not the contributions made by the accused voluntarily. At this point, it is also necessary to go through the memo dated:
22.07.2021 filed by the counsel for the complainant, wherein, it is clearly stated that the complainant has recovered the amounts from the accused against the Garnishee orders dated:20.08.2014 and 27.08.2015 issued under section 45A of the Act for the period from April-2012 to October- 2013 and November-2013 to May-2014. As such, without any hesitation, it can be safely said that the amount shown under Ex.p.15 is not the contributions made by the accused, but it is the recovery made by the complainant and the same cannot be equated to previous payment of the contribution for the relevant wage periods.
Thus, the court is the considered opinion that the complainant has failed to prove beyond reasonable doubt that the accused committed the offence punishable under section 85(i)(b) of the ESI Act. Accordingly, this Point No.1 is answered in negative.
20. Point No.2: In view of my findings on Point No.1, I proceed to pass the following :
ORDER By exercising the power conferred under section 248 (1) of the Cr.P.C. the accused is acquitted from the offence punishable under section 85(i)(b) of the ESI Act, 1948.
The bail bond of accused shall stands cancelled. (Typed by me, directly on computer, corrected and then pronounced by th me, in open court on this the 28 day of October - 2021.) PRESIDING OFFICER.
ANNEXURE:-
ON BEHALF OF THE COMPLAINANT:-
Witnesses:-
P.w.01 - T.R.Shivakumar.
Documents:-
Ex.p.01 - Copies of Gazette Notification and Memorandum, Ex.p.02 - Copy of Form-01 dted:04.04.2012, Ex.p.03 - Preliminary Inspection Report, Ex.p.04 - Form No.C-11, Ex.p.05 - Postal Acknowledgement, Ex.p.06 - O/c of Form No.C-18 Notice , Dated:15.03.2016, Ex.p.07 - Postal Acknowledgement, Ex.p.08 - O/c of Order u/s.45-A of ESI Act, Ex.p.09 - Postal Acknowledgement, Ex.p.10 - Postal Acknowledgement, Ex.p.11 - O/c of Show Cause Notice Dated:20.03.2017, Ex.p.12 - Postal Acknowledgement, Ex.p.13 - Postal Acknowledgement, Ex.p.14 - Sanction order dated:06.06.2019, Ex.p.15 - A/c of C.6-Register along with Certificate.
ON BEHALF OF THE ACCUSED:- Witnesses and Documents:- Nil.
(PREETH. J.) PRESIDING OFFICER, SPL.COURT FOR ECONOMIC OFFENCES, BANGALORE.