Delhi High Court
Regional Director Esic vs M/S Ak Motor Workshop & Anr. on 30 April, 2019
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Decided on: 30th April, 2019
+ CRL.L.P. 292/2019
REGIONAL DIRECTOR ESIC ..... Petitioner
Represented by: Mr. A.K. Verma, Advocate
versus
M/S AK MOTOR WORKSHOP & Anr. ..... Respondent
Represented by: None
CORAM:
HON'BLE MS. JUSTICE MUKTA GUPTA
MUKTA GUPTA, J. (ORAL)
Crl. M.A. No. 9130/2019 (Exemption)
Exemption allowed subject to just exceptions.
Crl.M.A. No. 9131/2019 (Delay)
For the reasons stated in the application delay of 131 days in re-filing
the leave to appeal petition is condoned.
Application is disposed of.
CRL.L.P. 292/2019 & Crl.M.A. 9129/2019 (for additional documents)
1. Aggrieved by the judgment dated 29th November 2017, whereby the
learned Metropolitan Magistrate acquitted the respondent for the offences
punishable under Sections 85 (a) and (e) of the Employee State Insurance
Act (in short 'ESIC Act'), the petitioner/complainant has preferred the
present leave petition.
2. Briefly stated, the case of the complainant as per the complaint is that
the complainant company is a statutory body constituted under the
Employees State Insurance Act and its Insurance Inspector has been
authorized by the said corporation to institute in the name of the
Corporation, suits and other legal proceedings necessary in the interest of
the Corporation, and to defend any such proceedings instituted against the
Corporation in all Courts or Tribunals including those established under the
Employees State Insurance Act and to represent the Corporation in all
Courts or Tribunals in cases in which Corporation is a party and to act
appear, make applications, plead and withdraw money on behalf of the
Corporation.
3. Respondent No.2 is the proprietor and principal employer of the M/s
A.K. Motor Workshop and is responsible for the conduct, supervision and
control of the business of firm. Respondent firm is covered by the ESIC Act
and has been allotted Code No.11-24466. Therefore Respondent no.2 is
under a statutory obligation to pay the contribution and submit returns of
contribution under the ESIC Act in respect of the employees of the company
M/s A.K. Motor Workshop. Respondent no.2 has failed to pay the
contribution from October 2003 to March 2004 and also failed to submit
return of contribution in respect of employees of his firm for the period
ending March 2004 thereby violating Sections 39/40(1)/43 ESIC Act read
with regulation 31/26 ESI (General) Regulation, 1950.
4. A show cause notice dated 7th January 2004 was sent to respondent
No.2. Despite the service of the show cause notice he failed to discharge his
statutory obligation in time. Therefore, the prosecution of the respondent
No.2 was sanctioned by the Regional Director in exercise of his powers
under Section 86 (1) of the ESIC Act.
5. After the pre-charge evidence, charge was framed against respondent
no.2 for the offences punishable under Sections 85 (a) and (e) of the ESIC
Act.
6. Petitioner examined Vijay Kumar, Retd. SSO (Insurance Inspector) as
CW-1, Sunil Prasad, SSO, Regional Office Mumbai as CW-2 and Santosh
Chauhan, Retd. SSO as CW-3.
7. Statement of respondent no.2 was recorded under Section 313 Cr.P.C.
wherein he stated that he had no place of business in the aforesaid period at
the given address as he had surrendered the said shop to the landlord in the
year 2001. He further stated that he had no liability to pay any contribution
or to file any return as no ESI number had ever been allotted to him.
8. Perusal of the record reveals that Santosh Chauhan (CW-2) proved the
show cause notice. In her testimony she stated that she was an assistant
posted at the divisional office in the year 2004 at the time of issuance of
show cause notice. In her examination in chief she stated that she prepared
the show cause notice on the direction of Ashok Chandra, Deputy Director
ESI but in her cross-examination she could not recall the date when such
direction was given. There is also no document on record containing such
direction from the Deputy Director ESIC to the assistant to prepare the show
cause notice. She stated that the direction was given in June 2004 whereas
the show cause notice bears the date of October 2004. She further stated that
the notice was sent at both addresses and the AD card contains the full
address but the AD card tendered in evidence does not mention the full
address. In the above circumstance it cannot be assumed that the show cause
notice was served upon the respondent. Mere dispatch register bearing a
postal stamp cannot by itself be a proof to the fact that the service of the
show cause notice has been duly effected upon the recipient.
9. The petitioner did not examine the sanctioning authority that is the
Joint Director or any one on his behalf as a witness to prove the sanction
letter dated 7th December 2004. Thus sanction of prosecution was not
proved by the petitioner.
10. In the decision reported as 2006 (Suppl.) GLT 412 Sawarmal
Agarwalla v. State of Assam the Guahati High Court held that while
invoking Sections 85 (a) and (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 is the duty of the authority
concerned to determine 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 ESIC Act will not in itself be
sufficient to prosecute the employer unless and until the quantum of
contribution payable by the employer has been determined after inquiry. 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 does not arise.
11. The petitioner has not determined the quantum of contribution
payable by the respondent for the given period and has thus not carried out
any proceedings as prescribed under Section 45A (1). After the survey in the
year 1995, ESIC has not carried out any determination under Section 45A or
issued any show cause notice and has neither filed any document or record
to show that the respondent had been paying the contribution and/or filing
the returns. It is only after a long gap of about nine years that ESIC issued
show cause notice and decided to prosecute the respondent without
following the procedure prescribed under Section 45A ESIC Act.
12. Considering the evidence as noted above findings of the learned
Metropolitan Magistrate in the impugned judgment acquitting the
respondent cannot be said to be perverse warranting interference of this
Court.
13. Leave to appeal petition is dismissed.
(MUKTA GUPTA)
JUDGE
APRIL 30, 2019
'vj'
