Page No.# 1/ vs The State Of Assam And Anr
2025 Latest Caselaw 3286 Gua

Gauhati High Court

Page No.# 1/ vs The State Of Assam And Anr on 19 February, 2025

Author: Malasri Nandi

Bench: Malasri Nandi

                                                                          Page No.# 1/10

GAHC010121292012




                                                                    2025:GAU-AS:1733

                              THE GAUHATI HIGH COURT
   (HIGH COURT OF ASSAM, NAGALAND, MIZORAM AND ARUNACHAL PRADESH)

                               Case No. : Crl.Pet./397/2012

            SHRI R.S. SHARMA
            FORMER CHAIRMAN AND MANAGING DIRECTOR, R/O B-3, 1102, THE
            WORLD SPA W SECTOR-30, GURGAON, NEW DELHI-122001



            VERSUS

            THE STATE OF ASSAM and ANR
            REPRESENTED BY THE LABOUR ENFORCEMENT OFFICER CENTRAL, B K
            ROAD, OPP WOMEN COLLEGE HOSTEL, AGARTALA, TRIPURA WEST, PIN-
            799001



Advocate for the Petitioner   : MR.G N SAHEWALLA, MR.B K DAS

Advocate for the Respondent : PP, ASSAM, MR. R K D CHOUDHURY, DY. S.G.I. (R-2)

BEFORE HONOURABLE MRS. JUSTICE MALASRI NANDI

JUDGMENT & ORDER (CAV)

Date : 19-02-2025

Heard Mr. G.N. Sahewalla, learned Senior Counsel assisted by Mr. B.K Das, learned counsel for the petitioner. Also heard Mr. R.K.D Choudhury, Page No.# 2/10

learned counsel for the respondents.

2. The petitioner has preferred this application u/s 482 R/W Section 401 of the Code of Criminal Procedure, 1973 (Cr.PC), praying for setting aside the order dated 01.03.2011 and 04.01.2012 in C.R Case No.37/2011 and quashing the entire proceedings of the said case, pending in the Court of learned Chief Judicial Magistrate, Cachar, Silchar.

3. The case of the petitioner is that the petitioner was the former Chairman cum Managing Director of Oil and Natural Gas Corporation (hereinafter referred as ONGC). On his appointment as Chairman cum Managing Director of ONGC dated 31.05.2010, the Ministry of Labour, Government of India referred the dispute between the General Manager, ONGC, Cachar Project, Silchar and the General Secretary, ONGC Contractual Workers Union to the Industrial Tribunal, Guwahati for adjudication of the issue i.e. "Whether the demand of the ONGC Contractual Worker's Union, Silchar on the Management of ONGC, Cachar Project, Silchar for regularization of the services of the contractual workers is justified".

4. The ONGC by filling written statement before the Industrial Tribunal stated that the reference is not maintainable as there exists no relationship of employer and workmen since the workmen were never appointed by ONGC. The workmen worked under contractors in whose favour work orders were issued by the ONGC from time to time. The payments were made to such workmen by the contractors. The workmen were neither casual nor contingent workmen. The workmen being contractual workers, they cannot be regularized. After hearing the parties, the learned Industrial Tribunal vide award dated 11.07.1994 directed Page No.# 3/10

to regularize the concerned workers in a phasewise manner.

5. The ONGC challenged the said award before this Court by filling C.R 3785/1994. After hearing the parties, this Court vide judgment and order dated 08.09.1998 held that the Tribunal acted illegally and exercised its jurisdiction by deciding issues beyond the term of reference and allowed the writ petition. Against the said judgment, the ONGC Contractual Workers Union filed Writ Appeal vide No.269/1998 before this Court and vide order dated 24.12.1999, the Division Bench of this Court allowed the appeal and restored the awards passed by the learned Industrial Tribunal.

6. The judgment dated 24.12.1999, was challenged by the ONGC before the Hon'ble Supreme Court. After hearing the parties, the Hon'ble Supreme Court vide order dated 16.05.2008, dismissed the civil appeal by upholding the view taken by the Industrial Tribunal and the Division Bench of this Court.

7. One Jagadish Chandra Chanda approached the Assistant Labour Commissioner (Central), Silchar, Cachar praying for an appropriate order for regularization of his job in view of the order dated 16.05.2008 of the Hon'ble Supreme Court. It is stated that he was deprived from the benefit of Goodwill Package Scheme (GPS), which ONGC formulated. Assistant Labour Commissioner (C), Cachar requested the petitioners to show cause for non- implementation of the award of the Industrial Tribunal as upheld by the Hon'ble Supreme Court. Pursuant to the said show cause notice, the petitioners sent a reply stating that "the scheme shall not apply to those who have not been deployed/worked during three months preceding 31.01.2007".

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8. Subsequently, the Labour Enforcement Officer (Central) alleging violation of Section 29 of the Industrial Disputes Act, 1947 for not implementation of the award dated 11.07.1994, filed a complaint case against the present petitioner before the learned Chief Judicial Magistrate, Silchar vide C.R Case No.37/2011. Accordingly, learned Chief Judicial Magistrate vide order dated 01.03.2011, took cognizance of offence under the said section and issued summons to the petitioner for appearance before the Court.

9. Learned Senior Counsel for the petitioner has submitted that the original proceeding before the Industrial Tribunal in Reference No.6(C)/1990, the petitioner was not made a party and in fact, the petitioner was also not a party before the Supreme Court in Civil Appeal No.4775/2001. Even there is no mention of the petitioner in the initial reference and in fact, in the entire proceeding right from the Tribunal to the Hon'ble Supreme Court, the petitioner was not a party. Consequently, the petitioner was unaware of the various orders passed by the different Courts. In view of such situation, the petitioner cannot be held responsible for implementing the orders passed by the Tribunal and the petitioner is entitled to the protections provided in Section 32 of the Industrial Disputes Act, 1947. In view of the above, no charge u/s 29 of the said act, against the petitioner is maintainable.

10. According to the learned counsel for the petitioner, the petitioner was appointed as the Chairman cum Managing Director of ONGC as such he is a public servant under Section 21(b) of the IPC. Therefore, there is a complete bar for any complainant to institute a proceeding before the Magistrate unless he satisfies the Court that Section 197(1)(a) of Cr.PC has been complied with. Except with the previous sanction from the Government concerned, no Court Page No.# 5/10

shall take cognizance of any offence alleged to have been committed by any public servant.

11. Learned counsel for the petitioner also contended that the petitioner was not made to know about the dispute of the workmen. His name was not in the original reference case till he received summons from the trial court. The workmen cannot claim beyond the agreement arrived at through memorandum of understanding between the workmen and the ONGC. As per clause 1 and 2, the complainant J.C. Chanda is not entitled for GPS in view of his long absence in work without any intimation whatsoever. Accordingly, learned counsel for the petitioner has prayed to set aside the order dated 01.03.2011, for taking cognizance of the complaint case and issuance of summons to the petitioner dated 04.01.2012 and quashing of the entire proceeding of C.R Case No.37/2011.

12. In response, learned counsel for the respondents, Mr. R.K.D Choudhury has submitted that the petitioner is one of the Directors of ONGC and the Management had not considered the case of the complainant due to his continuous absence in the work place. However, Mr. Choudhury, has admitted that the petitioner may not be liable for the decision taken by the Board of Management of ONGC. Therefore, the respondent has no objection if the proceeding of C.R Case No.37/2011 pending against the petitioner is quashed.

13. Having heard the learned counsel for the parties and the documents available on the record, it reveals that the alleged complaint was lodged showing the present petitioner as an accused solely on the ground that the petitioner was one of the Directors of the company. A perusal of the record Page No.# 6/10

indicates that the present petitioner was not made party in the original complaint before the Industrial Tribunal as well as the appeal before this Court and Hon'ble Apex Court. As per complaint, the allegations was that as per direction of the Hon'ble Supreme Court, though the service of the other workmen was regularized but the service of the complainant J.C. Chanda was not regularized due to his long absence in the work place. In order to rope the director of a company who is not involving in management of the company requires clear involvement of such director, whereas a perusal of the complaint and the contents of the case record falls short of insinuating the present petitioner directly or indirectly.

14. At this juncture, the observation of the Apex Court in the case of K.K. Ahuja vs. V.K. Vora reported in (2009) 10 SCC 48 is as follows -

"Section 291 of the said Act provides that subject to the provisions of that Act, the Board of Directors of a company shall be entitled to exercise all such powers, and to do all such acts and things, as the company is authorised to exercise and do. A company though a legal entity can act only through its Board of Directors. The settled position is that a Managing Director is prima facie in charge of and responsible for the company's business and affairs and can be prosecuted for offences by the company. But insofar as other directors are concerned, they can be prosecuted only if they were in charge of and responsible for the conduct of the company's business."

15. In State of NCT of Delhi through Prosecuting Officer, Insecticides, Government of NCT, Delhi Vs. Rajiv Khurana reported in (2010) 11 Supreme Court Cases 469, it was observed as follows -

" The ratio of all these cases is that the complainant is required to state in the complaint how a Director who is Page No.# 7/10

sought to be made an accused, was in charge of the business of the company or responsible for conduct of the company's business. Every Director need not be and is not in charge of the business of the company. If that is the position with regard to a Director, it is needless to emphasise that in the case of non-Director officers, it is all the more necessary to state what were his duties and responsibilities in the conduct of business of the company and how and in what manner he is responsible or liable.

Accordingly, it was held that in absence of clear averment in respect of the accused petitioner being in charge of and responsible for conduct of business and no role having been specifically attributed to the accused petitioner in commission of the alleged offence, the accused cannot be compelled to face criminal trial."

16. In the case GHCL Employee Stock Option Trust vs. CBI reported in (2013) 4 SCC 505, it has been observed as follows-

" From a bare perusal of the complaint and the allegations made therein, we do not find in any of the paragraphs that the complainant has made specific allegations against respondents 2 to 7. In Para 2 of the complaint, it is alleged that respondents 2 to 6 are looking after the day to day affairs of the company. With whom the complainant or its authorized representative interacted also has not been specified. Although in Para 11 of the complaint, it is alleged that the complainant on numerous occasions made accused 2 to 7 and requested to refund the amount, but again the complainant has not made an specific allegation about the date of meeting and whether it was individual meeting or collected meeting. Similarly, in Para 17 of the complaint, there is no allegation that a particular Director or Managing Director fabricated the debit note. In the entire complaint Page No.# 8/10

there are bald and vague allegations against respondents 2 to

7."

17. In the case of Sunil Bharti Mittal vs. CBI reported in (2015) 4 SCC 609, it has been held that -

"If the person or group of persons who control the affairs of the company commit an offence as well as they are 'alter ego' of the company. In the present case, however, this principle is applied in an exactly reverse scenario. Here company is the accused person and the special magistrate has observed in the impugned order that since the appellants represent the directing mind and will of each company, their state of mind is the state of mind of company and therefore, all these premise, acts of the company are attributed and imputed to the appellants. It is difficult to accept it as the correct principle of law. As demonstrated hereinafter, this proposition would grant contrary to the principle of vicarious liability detailing the circumstances under which a director of a company can be held liable."

18. Observation as made in paragraph 42 of the aforesaid judgment is noteworthy in this context which is as follows-

"42. No doubt, a corporate entity is an artificial person which acts through its officers, directors, managing director, chairman etc. If such a company commits an offence involving mens rea, it would normally be the intent and action of that individual who would act on behalf of the company. It would be more so, when the criminal act is that of conspiracy. However, at the same time, it is cardinal principle of criminal jurisprudence that there is no vicarious liability unless the statute specifically provides so."

19. In the case of Maksud Saiyed vs. State of Gujarat reported in (2008) 5 SCC 668, the Hon'ble Apex Court has examined the vicarious liability of directors for the charges leveled against the company. In the said judgment, Page No.# 9/10

it was held that the penal court does not contain any provision for attaching vicarious liability on the part of the managing director or the directors of the company, when the accused is a company. It is held that vicarious liability of the managing director and director would arise provided any provision exists in that behalf in the statute. It is further held that statutes indisputably must provide fixing such vicarious liability. It is also held that even for the said purpose, it is obligatory on the part of the complainant to make requisite allegations, which would attract the provisions constituting vicarious liability.

20. In the case of Sharad Kumar Sanghi vs. Sangita Rane reported in (2015) 12 SCC 781, wherein the Hon'ble Supreme Court has observed as follows-

"In the case at hand as the complainant's initial statement would reflect the allegations are against the company, the company has not been made a party and therefore the allegations are restricted to the managing director. As we have noted earlier, allegation are vague and in fact principally the allegations are against the company. There is no specific allegation against the managing director. When a company has not been arrayed as a party, no proceeding can be initiated against it even where vicarious liability is fastened under certain statutes."

21. In view of the aforesaid legal proposition and under the facts and circumstances of the case, this Court is of the opinion that as there is no specific allegation against the present petitioner, the prosecution cannot be permitted to make him stand the trial merely, because he was one of the directors of the company at the relevant point of time. Consequently, the criminal proceeding initiated bearing C.R Case No.37/2011 against the present petitioner Sri. R.S. Sharma is hereby quashed. However, this order shall not influence the trial court so far as with respect to other co-accused persons, if any.

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22. The criminal petition is disposed of accordingly.

JUDGE

Comparing Assistant