S.N.Subrahmanayan vs The State Of Jharkhand
2021 Latest Caselaw 4478 Jhar

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             IN THE HIGH COURT OF JHARKHAND, RANCHI
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Cr.M.P. No. 664 of 2020

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1.S.N.Subrahmanayan, aged about 60 years, son of late S.S.Natayanan, resident of Ballard Estate, Norattam Morarji Marg, P.O. and PS Nariman Point, Mumbai (Maharashtra), working for gain as Managing Director of M/s Larsen & Toubro Ltd., resident of Mount Poonamalle Road, Mannpakkam, PO & PS Manpakkam, P.B.No.979, District Chennai (Tamil Nadu)

2.Fatik Punkait, aged about 46 years, son of Sri Ajit Purkait, resident of Surya Toron Apartment, Flat No.A2, 2nd Floor, East Baidya Park, Sonarpur, PO and PS Sonarpur, Town and District South 23 Parganas (West Bengal), working for gain as Construction Manager of M/s Larsen and Toubro Ltd., Mount Poonamallee Road, P.S. Manapakkam, P.B.No.979, District Chennai (Tamil Nadu) ..... Petitioners

-- Versus --

1.The State of Jharkhand, through Labour Enforcement Officer, PO and PS Bokaro, District Bokaro

2.The Union of India, through Labour Enforcement Officers (Central), Bokaro, PO and PS Bokaro, District Bokaro ...... Opposite Parties With Cr.M.P. No. 612 of 2020

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S.N.Subrahmanayan, aged about 60 years, son of late S.S.Narayanan, resident of Ballard Estate, Norattam Morarji Marg, P.O. and PS Nariman Point, Mumbai (Maharashtra), working for gain as Managing Director of M/s Larsen & Toubro Ltd., resident of Mount Poonamalle Road, Mannpakkam, PO & PS Manpakkam, District Chennai (Tamil Nadu) Versus

1.The State of Jharkhand, through Labour Enforcement Officer, PO and PS Bokaro, District Bokaro

2.The Union of India, through Labour Enforcement Officers (Central), Bokaro, PO and PS Bokaro, District Bokaro

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CORAM: HON'BLE MR. JUSTICE SANJAY KUMAR DWIVEDI

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For the Petitioners :- Mr. Ajit Kumar, Sr. Advocate Mr. Nitin Kumar Pasari, Advocate Ms. Sidhi Jalan, Advocate Ms. Sugandha Kumari, Advocate For the State :- A.P.P.

       For the U.O.I       :- Mr. Rajiv Sinha, A.S.G.I
                              Ms. Shresha Sinha, Advocate
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11/30.11.2021        These two matters have been tagged together and the

       petitioners are same.

2. Cr.M.P.No.664 of 2020 is arising out of Contract Labour

(Regulation and Abolition) Act, 1970 and Cr.M.P.No. 612 of 2020 is

arising out of Minimum Wages Act, 1950.

3. Let Cr.M.P.No. 612 of 2020 be detached from these

cases and be placed on 09.12.2021.

Cr.M.P. No. 664 of 2020

4. Heard Mr. Ajit Kumar, the learned Senior counsel assisted by

Mr. Nitin Kumar Pasari, the learned vice counsel appearing on behalf of

the petitioners and Mr. Rajiv Sinha, the learned A.S.G.I. appearing on

behalf of the Union of India-O.P.No.2.

5. This petition has been filed for quashing the entire criminal

proceeding including the orders dated 22.02.2014 by which cognizance

of the offence has been taken as against the petitioners. Orders dated

15.12.2014, 25.06.2015 and 23.09.2019 whereby the learned Sub-

Divisional Judicial Magistrate, Bermo at Tenughat has issued Bailable

Warrant, Non-bailable Warrant, Processes under section 82 Cr.P.C.,

respectively against the petitioners in connection with Complaint (LEO)

Case No.17 of 2014, pending in the court of learned Sub-Divisional

Judicial Magistrate, Bermo at Tenughat, Bokaro have also been

challenged in the petition.

6. The Opposite Party No.2 filed the complaint on 17.02.2014

alleging therein as under :

A.The Opposite Party No.2 has been appointed as an

Inspector under Sub Section 1 of the Section 28 of the said Act, vide

Gazette of India Part II Section 3 (ii) dated 12th December, 1987 P-3461

(F-160-14/20/87) of the Government of India, Ministry of Labour, New

Delhi.

B.The petitioners are contractors engaged for the work of

Erection Terting and Commissioning of 1X300 MW Steam Turbine for 'A'

Plant D.V.C. B.T.P.S., P.O. and PS Bokaro Thermal, District Bokaro.

Engaged more than 24 male and 2 female contract labours. Thus, the

petitioners are contractors as per Section 2(1)(e) of the said Act.

C.That the Opposite Party No.2 inspected the establishment

of the above named accused persons on 13.11.2013 at 12.15 P.M. and

detected the following Breaches/Offences:

i.The following notices have not been displayed in English

and Hindi violation of Rule 81(1)(i) of the said Rules.

a.Notice showing rates of wages

b.Notice showing hours of work

c.Notice showing date of payment

d.Notice showing the name and complete address of the

Inspectors having jurisdiction.

e.Notice showing the date of payment of unpaid wages

ii.An abstract of the Act and Rules in English and Hindi and

in the language spoken by the majority of workers as approved by the

Chief Labour Commissioner (C), New Delhi not displayed at the place of

work as required vide Rule 79, Breach of Rule 79.

iii.Register of Wages in Form XVII and Muster Roll in Form

XVI has not been maintained, Breach of Rule 78(1)(a)(i).

iv.Register of Deduction for damage or loss in form XX,

Register of Fitness in Form XXI, Register of Advance in Form XXII has not

been maintained, Breach of Rule 78 (1)(a)(ii).

v.Register of Over Time in Form XXIII has not been

maintained, Breach of Rule 78(1)(a)(iii)

vi.Register of person employed in Form XIII has not been

maintained at all at the workspot Breach of Rule 75 read with Rule 80(1).

vii.Contractor has not issued employment Card in Form XIV

to each workers within three days for the employment, Breach of Rule

76(i).

viii.Wages slips not issued to the workers in Form XIX at all,

violation of Rule 87 (1)(b).

D.The above offences under the said Act and Rules were

incorporated in the Inspection Report No.34(41)/2013-B dated

22.11.2013 and was sent to the petitioners by Regd. A.D. Post. Thus,

the petitioners having contravened the provisions of the Act and Rules

have made himself liable for penal action under the Act. Hence this

complaint.

7. Pursuant to that the learned trial court by order dated

22.02.2014 has been pleased to take cognizance under section 23 of the

Contract Labour (Regulation and Abolition), Act, 1970 [hereinafter to be

referred to as 'the Act'] and directed to issue summons on the

petitioners.

8. Mr. Ajit Kumar, the learned Senior counsel appearing on

behalf of the petitioners by way of referring to the several orders of the

learned trial court submits that the petitioners have not received the

summons order and only after knowing that order/process under section

82 Cr.P.C has been issued, they came to know about the pendency of this

case and thereafter this petition has been filed before this Court under

section 482 Cr.P.C.

9. Mr. Ajit Kumar, the learned Senior counsel further advances

his argument by way of submitting that the petitioner no.1 was Director

at the time of occurrence and the petitioner no.2 was Construction

Manager stationed at Chennal. He submits that the company is not made

accused and only these petitioners have been made accused and in that

view of the matter the prosecution is bad in law. To buttress his this

argument, he relied in the case of Aneeta Hada v. Godfather Travels and

Tours (P) Ltd., 2012 5 SCC 661. Paragraph nos. 51 and 59 of the said

judgment are quoted herein below:

"51. We have already opined that the decision in Sheoratan Agarwal runs counter to the ratio laid down in C.V. Parekh which is by a larger Bench and hence, is a binding precedent. On the aforesaid ratiocination, the decision in Anil Hada has to be treated as not laying down the correct law as far as it states that the Director or any other officer can be prosecuted without impleadment of the company. Needless to emphasise, the matter would stand on a different footing

where there is some legal impediment and the doctrine of lex non cogit ad impossibilia gets attracted.

59. In view of our aforesaid analysis, we arrive at the irresistible conclusion that for maintaining the prosecution under Section 141 of the Act, arraigning of a company as an accused is imperative. The other categories of offenders can only be brought in the drag-net on the touchstone of vicarious liability as the same has been stipulated in the provision itself. We say so on the basis of the ratio laid down in C.V. Parekh which is a three-Judge Bench decision. Thus, the view expressed in Sheoratan Agarwal does not correctly lay down the law and, accordingly, is hereby overruled. The decision in Anil Hada is overruled with the qualifier as stated in para 51. The decision in Modi Distillery has to be treated to be restricted to its own facts as has been explained by us hereinabove."

10. By way of referring the complaint at page 16 of the brief, he

submits that the company is not made accused and the petitioner nos.1

and 2 have been shown to be the represented the company and they

have been made accused, however, the company is not made. He further

argues that in view of section 25 of the Act, if the occurrence is

committed by the company, the persons incharge and responsible to the

company are liable to be punished. He submits that there is no

averments in the complaint as to how these petitioners are involved in

discharge of day to day affairs of the company. To buttress his this

argument, he relied in the recent judgment of the Hon'ble Supreme Court

in the case of Ravindranatha Bajpe v. Mangalore Special Economic Zone

Ltd. and Others [Cr.Appeal No.1047-1048/2021 (Supreme Court)].

Paragraph nos.6.2, 8.0, 8.1, 8.2 and 8.3 of the said judgment are quoted

hereinbelow:

"6.2 It is submitted that so far as accused nos. 2 to 5 are concerned, they were arrayed as an accused being Chairman, Managing Director, Deputy General Manager (Civil & Env.) of accused no.1 and accused no.5 is the Planner and executor of the project work and all of them were stationed at Hyderabad at the time of the commission of the alleged offence and there are no allegations that at the time of commission of the alleged offence, they were present. It is submitted that similarly accused nos. 7 & 8 were arrayed as an accused being Chairman and Executive Director of

accused no.6 who also were stationed at Hyderabad at the time of commission of the alleged offence and there are no allegations even against them that at the time of commission of the alleged offence, they were present. It is submitted that even accused no.7 was aged 82 years.

Therefore, the learned Sessions Court has rightly quashed and set aside the order passed by the learned Magistrate issuing the process against accused nos. 1 to 8 herein for the offences punishable under Sections 427, 447, 506 and 120B read with Section 34 IPC. Heavy reliance is placed on the decisions of this Court in the cases of GHCL Employees Stock Option Trust v. India Infoline Limited, (2013) 4 SCC 505; and Sunil Bharti Mittal v. Central Bureau of Investigation, (2015) 4 SCC 609.

8. In the case of Sunil Bharti Mittal (supra), it is observed by this Court in paragraphs 42 to 44 as under:

(iii) Circumstances when Director/person in charge of the affairs of the company can also be prosecuted, when the company is an accused person

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 the cardinal principle of criminal jurisprudence that there is no vicarious liability unless the statute specifically provides so.

43. Thus, an individual who has perpetrated the commission of an offence on behalf of a company can be made an accused, along with the company, if there is sufficient evidence of his active role coupled with criminal intent. Second situation in which he can be implicated is in those cases where the statutory regime itself attracts the doctrine of vicarious liability, by specifically incorporating such a provision.

44. When the company is the offender, vicarious liability of the Directors cannot be imputed automatically, in the absence of any statutory provision to this effect. One such example is Section 141 of the Negotiable Instruments Act, 1881. In Aneeta Hada v. Godfather Travels & Tours (P) Ltd., (2012) 5 SCC 661, the Court noted that if a group of persons that guide the business of the company have the criminal intent, that would be imputed to the body corporate and it is in this backdrop, Section 141 of the Negotiable Instruments Act has to be understood. Such a position is, therefore, because of statutory intendment making it a deeming fiction. Here also, the principle of alter ego, was applied only in one direction, namely, where a group of persons that guide the business had criminal intent, that is to

be imputed to the body corporate and not the vice versa. Otherwise, there has to be a specific act attributed to the Director or any other person allegedly in control and management of the company, to the effect that such a person was responsible for the acts committed by or on behalf of the company.

8.1 In the case of Maksud Saiyed v. State of Gujarat, (2008) 5 SCC 668, in paragraph 13, it is observed and held as under:

"13. Where a jurisdiction is exercised on a complaint petition filed in terms of Section 156(3) or Section 200 of the Code of Criminal Procedure, the Magistrate is required to apply his mind. The Penal Code 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 the company. The learned Magistrate failed to pose unto himself the correct question viz. as to whether the complaint petition, even if given face value and taken to be correct in its entirety, would lead to the conclusion that the respondents herein were personally liable for any offence. The Bank is a body corporate. Vicarious liability of the Managing Director and Director would arise provided any provision exists in that behalf in the statute. Statutes indisputably must contain provision fixing such vicarious liabilities. 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."

8.2 As observed by this Court in the case of Pepsi Foods Ltd. v. Special Judicial Magistrate, (1998) 5 SCC 749 and even thereafter in catena of decisions, summoning of an accused in a criminal case is a serious matter. Criminal Law cannot be set into motion as a matter of course. In paragraph 28 in Pepsi Foods Limited (supra), it is observed and held as under:

"28. Summoning of an accused in a criminal case is a serious matter. Criminal law cannot be set into motion as a matter of course. It is not that the complainant has to bring only two witnesses to support his allegations in the complaint to have the criminal law set into motion. The order of the Magistrate summoning the accused must reflect that he has applied his mind to the facts of the case and the law applicable thereto. He has to examine the nature of allegations made in the complaint and the evidence both oral and documentary in support thereof and would that be sufficient for the complainant to succeed in bringing

charge home to the accused. It is not that the Magistrate is a silent spectator at the time of recording of preliminary evidence before summoning of the accused. The Magistrate has to carefully scrutinise the evidence brought on record and may even himself put questions to the complainant and his witnesses to elicit answers to find out the truthfulness of the allegations or otherwise and then examine if any offence is prima facie committed by all or any of the accused."

8.3 As held by this Court in the case of India Infoline Limited (supra), in the order issuing summons, the learned Magistrate has to record his satisfaction about a prima facie case against the accused who are Managing Director, the Company Secretary and the Directors of the Company and the role played by them in their respective capacities which is sine qua non for initiating criminal proceedings against them. Looking to the averments and the allegations in the complaint, there are no specific allegations and/or averments with respect to role played by them in their capacity as Chairman, Managing Director, Executive Director, Deputy General Manager and Planner & Executor. Merely because they are Chairman, Managing Director/Executive Director and/or Deputy General Manager and/or Planner/Supervisor of A1 & A6, without any specific role attributed and the role played by them in their capacity, they cannot be arrayed as an accused, more particularly they cannot be held vicariously liable for the offences committed by A1 & A6.

11. Referring to these judgments, he submits that merely

because the petitioners are Director and Project Manager, respectively,

they cannot be held to be liable of the lapses. He further submits that for

fixing the liability upon the Director, merely saying in the complaint or

making a bald and cursory statement in the complaint that the Director is

responsible will not sufficient. He submits that the requirement of law is

that the complainant is required to demonstrate in the complaint as to

how the Director is responsible for such lapses. To buttress his this

argument, he relied in the case of National Small Industries Corporation

Limited v. Harmeet Singh Paintal and Another, (2010) 3 SCC 330.

Paragraph nos. 12, 13, 14 and 15 of the said judgment are quoted

hereinbelow:

"12. It is very clear from the above provision that what is required is that the persons who are sought to be made vicariously liable for a criminal offence under Section 141 should be, at the time the offence was committed, was in charge of, and was responsible to the company for the conduct of the business of the company. Every person connected with the company shall not fall within the ambit of the provision. Only those persons who were in charge of and responsible for the conduct of the business of the company at the time of commission of an offence will be liable for criminal action. It follows from the fact that if a Director of a company who was not in charge of and was not responsible for the conduct of the business of the company at the relevant time, will not be liable for a criminal offence under the provisions. The liability arises from being in charge of and responsible for the conduct of the business of the company at the relevant time when the offence was committed and not on the basis of merely holding a designation or office in a company.

13. Section 141 is a penal provision creating vicarious liability, and which, as per settled law, must be strictly construed. It is therefore, not sufficient to make a bald cursory statement in a complaint that the Director (arrayed as an accused) is in charge of and responsible to the company for the conduct of the business of the company without anything more as to the role of the Director. But the complaint should spell out as to how and in what manner Respondent 1 was in charge of or was responsible to the accused Company for the conduct of its business. This is in consonance with strict interpretation of penal statutes, especially, where such statutes create vicarious liability.

14. A company may have a number of Directors and to make any or all the Directors as accused in a complaint merely on the basis of a statement that they are in charge of and responsible for the conduct of the business of the company without anything more is not a sufficient or adequate fulfilment of the requirements under Section

141.

15. In a catena of decisions, this Court has held that for making Directors liable for the offences committed by the company under Section 141 of the Act, there must be specific averments against the Directors, showing as to how and in what manner the Directors were responsible for the conduct of the business of the company."

12. He further relied in the case of S.M.S. Pharmaceuticals Ltd.

v. Neeta Bhalla And Another, (2005) 8 SCC 89. Paragraph nos. 8, 9 and

19 of the said judgment are quoted hereinbelow:

"8. The officers responsible for conducting the affairs of companies are generally referred to as directors, managers, secretaries, managing directors, etc. What is required to be considered is: Is it sufficient to simply state in a complaint that a particular person was a director of the company at the time the offence was committed and nothing more is required to be said. For this, it may be worthwhile to notice the role of a director in a company. The word "director" is defined in Section 2(13) of the Companies Act, 1956 as under:

"2. (13) 'director' includes any person occupying the position of director, by whatever name called;"

There is a whole chapter in the Companies Act on directors, which is Chapter II. Sections 291 to 293 refer to the powers of the Board of Directors. A perusal of these provisions shows that what a Board of Directors is empowered to do in relation to a particular company depends upon the roles and functions assigned to directors as per the memorandum and articles of association of the company. There is nothing which suggests that simply by being a director in a company, one is supposed to discharge particular functions on behalf of a company. It happens that a person may be a director in a company but he may not know anything about the day-to-day functioning of the company. As a director he may be attending meetings of the Board of Directors of the company where usually they decide policy matters and guide the course of business of a company. It may be that a Board of Directors may appoint sub-committees consisting of one or two directors out of the Board of the company who may be made responsible for the day-to-day functions of the company. These are matters which form part of resolutions of the Board of Directors of a company. Nothing is oral. What emerges from this is that the role of a director in a company is a question of fact depending on the peculiar facts in each case. There is no universal rule that a director of a company is in charge of its everyday affairs. We have discussed about the position of a director in a company in order to illustrate the point that there is no magic as such in a particular word, be it director, manager or secretary. It all depends upon the respective roles assigned to the officers in a company. A company may have managers or secretaries for different departments, which means, it may have more than one manager or secretary. These officers may also

be authorised to issue cheques under their signatures with respect to affairs of their respective departments. Will it be possible to prosecute a secretary of Department B regarding a cheque issued by the secretary of Department A which is dishonoured? The secretary of Department B may not be knowing anything about issuance of the cheque in question. Therefore, mere use of a particular designation of an officer without more, may not be enough by way of an averment in a complaint. When the requirement in Section 141, which extends the liability to officers of a company, is that such a person should be in charge of and responsible to the company for conduct of business of the company, how can a person be subjected to liability of criminal prosecution without it being averred in the complaint that he satisfies those requirements. Not every person connected with a company is made liable under Section 141. Liability is cast on persons who may have something to do with the transaction complained of. A person who is in charge of and responsible for conduct of business of a company would naturally know why the cheque in question was issued and why it got dishonoured.

9. The position of a managing director or a joint managing director in a company may be different. These persons, as the designation of their office suggests, are in charge of a company and are responsible for the conduct of the business of the company. In order to escape liability such persons may have to bring their case within the proviso to Section 141(1), that is, they will have to prove that when the offence was committed they had no knowledge of the offence or that they exercised all due diligence to prevent the commission of the offence.

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. This 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."

13. He further submits that this case is barred under the law.

According to him, section 27 prescribes limitation of prosecution which is

within three months from the date of knowledge. He submits that the

case has been filed on 17.02.2014 after the three months of the

knowledge. He draws the attention of the Court to paragraph no.4 of the

complaint and submits that it is disclosed therein that on 13.11.2013 the

complainant inspected the Establishment and found the lapses as

disclosed therein. He submits that's the case was filed on 17.02.2014.

According to him, three months completed on 12.02.2014. He submits

that in view of section 27 of the Act, the prosecution is bad in law. He

further placed the cognizance order dated 22.02.2014 and submits that

the cognizance order has not disclosed as to how prima facie case

against these petitioners have been made out. He relied in the case of

Dayle De'souza v. Government of India, through Deputy Chief Labour

Commissioner and Ors., MANU/SC/1016/2021 = 2002 1 SCC Online SC

1012. Paragraph nos.31 and 32 of the said judgment are quoted

hereinbelow:

"31. There are a number of decisions of this Court in which, with reference to the importance of the summoning order, it has been emphasised that the initiation of prosecution and summoning of an accused to stand trial has serious consequences (See - Pepsi Foods Ltd. and Another v. Special Judicial Magistrate and Others, (1998) 5 SCC 749 ; GHCL Employees Stock Option Trust v. Indian Infoline Ltd. and Others, (2013) 4 SCC 505 ; Krishna Lal Chawla and Others v. State of Uttar Pradesh and Another, (2021) 5 SCC 435). They extend from monetary loss to humiliation and disrepute in society, sacrifice of time and effort to prepare defence and anxiety of uncertain times. Criminal law should not be set into motion as a matter of course or without adequate and necessary investigation of facts on mere suspicion, or when the violation of law is doubtful. It is the duty and responsibility of the public officer to proceed responsibly and ascertain the true and correct facts. Execution of law without appropriate acquaintance with legal provisions and comprehensive sense of their application may result in an innocent being prosecuted.

32. Equally, it is the court's duty not to issue summons in a mechanical and routine manner. If done so, the entire purpose of laying down a detailed procedure under Chapter XV of the 1973 Code gets frustrated. Under the proviso (a) to Section 200 of the 1973 Code, there may lie an exemption from recording pre- summoning evidence when a private complaint is filed by a public servant in discharge of his official duties; however, it is the duty of the Magistrate to apply his mind to see whether on the basis of the allegations made and the evidence, a prima facie case for taking cognizance and summoning the accused is made out or not. This Court explained the reasoning behind this exemption in National Small Industries Corporation Limited v. State (NCT of Delhi) and Others: (2009) 1 SCC 407.

"12. The object of Section 200 of the Code requiring the complainant and the witnesses to be examined, is to find out whether there are sufficient grounds for proceeding against the accused and to prevent issue of process on complaints which are false or vexatious or intended to harass the persons arrayed as accused. (See Nirmaljit Singh Hoon v. State of W.B.) Where the complainant is a public servant or court, clause (a) of the proviso to Section 200 of the Code raises an implied statutory presumption that the complaint has been made responsibly and bona fide and not falsely or vexatiously. On account of such implied presumption, where the complainant is

a public servant, the statute exempts examination of the complainant and the witnesses, before issuing process.

The issue of process resulting in summons is a judicial process that carries with it a sanctity and a promise of legal propriety."

14. By way of referring the different orders of the Court, he

submits that report of execution of summons was not there and in that

view N.B.W and second proclamation under section 82 Cr.P.C was

directed to be issued against the petitioners. He submits that all these

have taken place in absence of the parameters laid down under section

73 of the Cr.P.C.

15. Per contra, Mr. Rajiv Sinha, the learned A.S.G.I. appearing

on behalf of the Opposite Party No.2 submits that at page 16 of the

complaint, the company is made an accused and these petitioners are

representing the company. He submits that on the technicality of not

arraying the company as one of the accused, the complaint will not

vitiate. To buttress his this argument, he relied in the case of Bhupesh

Rathod v. Dayashankar Prasad Chaurasia and Another, 2021 SCC Only SC

1031 of the Hon'ble Supreme Court [Cr. Appeal No.1105 of 2021].

Paragraph nos.19, 22 and 23 of the said judgment are quoted

hereinbelow:

"19. In the conspectus of the aforesaid principles we have to deal with the plea of the respondent that the complaint was not filed by the competent complainant as it is the case that the loan was advanced by the Company. As to what would be the governing principles in respect of a corporate entity which seeks to file the complaint, an elucidation can be found in the judgment of this Court in Associated Cement Co. Ltd. v. Keshavanand. If a complaint was made in the name of the Company, it is necessary that a natural person represents such juristic person in the court and the court looks upon the natural person for all practical purposes. It is in this context that observations were made that the body corporate is a de jure complainant while the human being is a de facto complainant to represent the former in the court proceedings. Thus, no Magistrate could insist that the

particular person whose statement was taken on oath alone can continue to represent the Company till the end of the proceedings. Not only that, even if there was initially no authority the Company can at any stage rectify that defect by sending a competent person.

22. If we look at the format of the complaint which we have extracted aforesaid, it is quite apparent that the Managing Director has filed the complaint on behalf of the Company. There could be a format where the Company's name is described first, suing through the Managing Director but there cannot be a fundamental defect merely because the name of the Managing Director is stated first followed by the post held in the Company.

23. It is also relevant to note that a copy of the Board Resolution was filed along with the complaint. An affidavit had been brought on record in the trial court by the Company, affirming to the factum of authorisation in favour of the Managing Director. A Manager or a Managing Director ordinarily by the very nomenclature can be taken to be the person in-charge of the affairs Company for its day-to-day management and within the activity would certainly be calling the act of approaching the court either under civil law or criminal law for setting the trial in motion. It would be too technical a view to take to defeat the complaint merely because the body of the complaint does not elaborate upon the authorisation. The artificial person being the Company had to act through a person/official, which logically would include the Chairman or Managing Director. Only the existence of authorisation could be verified."

16. By way of relying on this judgment, he submits that the

contention of the petitioners is fit to be rejected on the point of not

arraying the company as accused. On the point of limitation, he draws

the attention of the Court to the paragraph no.5 of the complaint and

submits that inspection report was prepared on 22.11.2013 was sent to

the accused persons by registered A/d and then the limitation starts with

effect from 22.11.2013 and not from 13.11.2013. By way of referring to

this judgment in the case of "S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla and

Another" reported in (2005)8 SCC 89, he submits that so far the question of

principles of law is concerned that has been answered in affirmative by the

Hon'ble Supreme Court and it has been held that Director should

be the incharge of the company and responsible for the conduct of the

company. He relied on paragraph nos. 1 and 19 of the said judgment

which is quoted hereunder:

"1. This matter arises from a reference made by a two-Judge Bench of this Court for determination of the following questions by a larger Bench:

"(a) Whether for purposes of Section 141 of the Negotiable Instruments Act, 1881, it is sufficient if the substance of the allegation read as a whole fulfil the requirements of the said section and it is not necessary to specifically state in the complaint that the person accused was in charge of, or responsible for, the conduct of the business of the company.

(b) Whether a director of a company would be deemed to be in charge of, and responsible to, the company for conduct of the business of the company and, therefore, deemed to be guilty of the offence unless he proves to the contrary.

(c) Even if it is held that specific averments are necessary, whether in the absence of such averments the signatory of the cheque and or the managing directors or joint managing director who admittedly would be in charge of the company and responsible to the company for conduct of its business could be proceeded against."

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. This 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.

17. He further submits that so far the petitioner no.2 is

concerned who is Project Manager and he cannot escape of the liability.

He submits that this has been held by the Hon'ble Supreme Court in the

case of Municipal Corporation of Delhi v. Ram Kishan Rohtagi and Others,

(1983) 1 SCC 1. Paragraph nos.15 and 16 of the said judgment are

quoted as under:

"15. So far as the Manager is concerned, we are satisfied that from the very nature of his duties it can be safely inferred that he would undoubtedly be vicariously liable for the offence; vicarious liability being an incident of an offence under the Act. So far as the Directors are concerned, there is not even a whisper nor a shred of evidence nor anything to show, apart from the presumption drawn by the complainant, that there is any act committed by the Directors from which a reasonable inference can be drawn that they could also be vicariously liable. In these circumstances, therefore, we find ourselves in complete agreement with the argument of the High Court that no case against the Directors (Accused 4 to 7) has been made out ex facie on the allegations made in the complaint and the proceedings against them were rightly quashed.

16. We, however, do not agree that even Accused 3, Respondent 1, who is Manager of the Company and therefore directcly incharge of its affairs, could fall in the same category as the Directors. Hence, we would set aside that part of the judgment of the High Court which quashes the proceedings against the Manager, Respondent 1 (Ram Kishan Rohtagi)."

18. On the point of summoning of the petitioners, he submits

that there is no illegality in the impugned order and the summon was

directed to be issued. The petitioners have evaded the service of

summons and that is why further orders of N.B.W and 82 Cr.P.C

proclamation have been issued against these petitioners. He further

elaborated his argument by way of submitting that the allegation by

paragraph no.3 is made out for violation of provision of the Act and these

petitioners are the Director and Project Manager and thus, they are liable

for the prosecution. According to him, at this stage, this Court may not

interfere under section 482 Cr.P.C. He further submits that the onus lies

upon the petitioners of proving as to how they are not liable and the

contention that they are Director which can be agitated in the trial court.

He submits that the limitation is a mixed question of facts and law which

can be dealt by the learned trial court in the proceeding.

19. Lastly Mr. Sinha, the learned A.S.G.I submits that petitioners

are contractor in terms of sub-section (C) of Section 2 of the Act.

20. In the background of the averments made by the learned

counsels appearing on behalf of the parties, the Court has perused the

complaint petition and the entire records. In paragraph no.4 of the

petition it is disclosed that the inspection was made on 13.11.2013 and

the offences have been described in the Contract Labour (Regulation and

Abolition) Central Rules, 1970. Section 27 of the Act, for ready

reference, is quoted hereinbelow:

"27. Limitation of prosecutions.-No court shall take cognizance of an offence punishable under this Act unless the complaint thereof is made within three months from the date on which the alleged commission of the offence came to the knowledge of an inspector: Provided that where the offence consists of disobeying a written order made by an inspector, complaint thereof may be made within six months of the date on which the offence is alleged to have been committed."

21. On perusal of section 27 of the said Act, it is crystal clear

that three months limitation is prescribed from the date of knowledge of

alleged commission of the offence. It is an admitted fact that as

disclosed in the paragraph no.4 that it was in the knowledge of the

Inspector on 13.11.2013 that the complaint was filed on 17.02.2014.

Three months completed on 12.02.2014. In the cognizance order, the

trial court has not dealt that limitation point and the cognizance has been

taken. The Inspector has not taken care of filing any petition for

condonation of delay. Section 27 of the Act says from the date of

knowledge thus, the contention of the learned A.S.G.I. for the O.P.No.2

that report was submitted on 12.11.2013 and from that day the limitation

will start is negated by this Court. In the complaint, on perusal, it

transpires that the petitioner nos.1 and 2 have been arrayed as accused

and they have been said to be the representatives of M/s Larsen &

Toubro Ltd. thus, it cannot be said that M/s Larsen & Tubro Ltd. is made

an accused. The cognizance against the petitioners and summons have

also been issued against the petitioner. In the case of Bhupesh Rathod v.

Dayashankar Prasad Chaurasia and Another(Supra) relied by learned

A.S.G.I it was contended that the company has not filed the case and

considering the complaint petition wherein the Managing Director has

filed the complaint on behalf of the company and the name of the

Managing Director was stated first followed by post held by the company,

considering that aspect of the matter, the Hon'ble Supreme Court has

come to the conclusion that the case was filed by the company. In the

case in hand, the company has not made an accused and cognizance has

also not taken against the company. Considering the fact that only the

petitioners have been made accused nos.1 and 2. Thus, the judgment

relied by the learned A.S.G.I is not helping the O.P.no.2. In the case of

S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla And Another(supra), position

of the Managing Director or Joint Managing Director has been discussed

Paragraph nos. 4 and 9 of the said judgment are quoted hereinbelow:

"4. In the present case, we are concerned with criminal liability on account of dishonour of a cheque. It primarily falls on the drawer company and is extended to officers of the company. The normal rule in the cases

involving criminal liability is against vicarious liability, that is, no one is to be held criminally liable for an act of another. This normal rule is, however, subject to exception on account of specific provision being made in the statutes extending liability to others. Section 141 of the Act is an instance of specific provision which in case an offence under Section 138 is committed by a company, extends criminal liability for dishonour of a cheque to officers of the company. Section 141 contains conditions which have to be satisfied before the liability can be extended to officers of a company. Since the provision creates criminal liability, the conditions have to be strictly complied with. The conditions are intended to ensure that a person who is sought to be made vicariously liable for an offence of which the principal accused is the company, had a role to play in relation to the incriminating act and further that such a person should know what is attributed to him to make him liable. In other words, persons who had nothing to do with the matter need not be roped in. A company being a juristic person, all its deeds and functions are the result of acts of others. Therefore, officers of a company who are responsible for acts done in the name of the company are sought to be made personally liable for acts which result in criminal action being taken against the company. It makes every person who, at the time the offence was committed, was in charge of, and was responsible to the company for the conduct of business of the company, as well as the company, liable for the offence. The proviso to the sub-section contains an escape route for persons who are able to prove that the offence was committed without their knowledge or that they had exercised all due diligence to prevent commission of the offence.

9. The position of a managing director or a joint managing director in a company may be different. These persons, as the designation of their office suggests, are in charge of a company and are responsible for the conduct of the business of the company. In order to escape liability such persons may have to bring their case within the proviso to Section 141(1), that is, they will have to prove that when the offence was committed they had no knowledge of the offence or that they exercised all due diligence to prevent the commission of the offence."

22. Admittedly the petitioners are stationed at Chennai which

has been disclosed in the complaint itself and the alleged offence was

allegedly occurred at Bokaro (Jharkhand). Thus, it transpires that both

the petitioners were stationed at Chennai and the alleged occurrence

took place at Bokaro (Jharkhand). It has not been disclosed in the

complaint as to how these petitioners are looking into the day to day

affairs of the company. The Court has perused the cognizance order

dated 22.02.2014. There is no disclosure of the fact as to how prima facie

case against these petitioners has been made out and cognizance under

section 23 of the Act has been taken against them. Reference may be

made to the case of "Birla Corporation Limited v. Adventz Investments

and Holdings Limited and Others", (2019) 16 SCC 610. Paragraph nos.33,

34 and 35 of the said judgment are quoted hereinbelow:

"33. The order of the Magistrate summoning the accused must reflect that he has applied his mind to the facts of the case and the law applicable thereto. The application of mind has to be indicated by disclosure of mind on the satisfaction. Considering the duties on the part of the Magistrate for issuance of summons to the accused in a complaint case and that there must be sufficient indication as to the application of mind and observing that the Magistrate is not to act as a post office in taking cognizance of the complaint, in Mehmood Ul Rehman, this Court held as under: (SCC p. 430, para 22) "22. ... The Code of Criminal Procedure requires speaking order to be passed under Section 203 CrPC when the complaint is dismissed and that too the reasons need to be stated only briefly. In other words, the Magistrate is not to act as a post office in taking cognizance of each and every complaint filed before him and issue process as a matter of course. There must be sufficient indication in the order passed by the Magistrate that he is satisfied that the allegations in the complaint constitute an offence and when considered along with the statements recorded and the result of inquiry or report of investigation under Section 202 CrPC, if any, the accused is answerable before the criminal court, there is ground for proceeding against the accused under Section 204 CrPC, by issuing process for appearance. The application of mind is best demonstrated by disclosure of mind on the satisfaction. If there is no such indication in a case where the Magistrate proceeds under Sections 190/204 CrPC, the High Court under Section 482 CrPC is bound to invoke its inherent power in order to prevent abuse of the power of the criminal court. To be called to appear before the criminal court as an accused is serious matter affecting one's dignity, self- respect and image in society. Hence, the process of criminal court shall not be made a weapon of

harassment."

(emphasis supplied)

34. In Pepsi Foods Ltd. v. Judicial Magistrate, the Supreme Court has held that summoning of an accused in a criminal case is a serious matter and that the order of the Magistrate summoning the accused must reflect that he has applied his mind to the facts of the case and law governing the issue. In para 28, it was held as under: (SCC p. 760) "28. Summoning of an accused in a criminal case is a serious matter. Criminal law cannot be set into motion as a matter of course. It is not that the complainant has to bring only two witnesses to support his allegations in the complaint to have the criminal law set into motion. The order of the Magistrate summoning the accused must reflect that he has applied his mind to the facts of the case and the law applicable thereto. He has to examine the nature of allegations made in the complaint and the evidence, both oral and documentary, in support thereof and would that be sufficient for the complainant to succeed in bringing charge home to the accused. It is not that the Magistrate is a silent spectator at the time of recording of preliminary evidence before summoning of the accused. The Magistrate has to carefully scrutinise the evidence brought on record and may even himself put questions to the complainant and his witnesses to elicit answers to find out the truthfulness of the allegations or otherwise and then examine if any offence is prima facie committed by all or any of the accused."

The principle that summoning an accused in a criminal case is a serious matter and that as a matter of course, the criminal case against a person cannot be set into motion was reiterated in GHCL Employees Stock Option Trust v. India Infoline Ltd.

35. To be summoned/to appear before the criminal court as an accused is a serious matter affecting one's dignity and reputation in the society. In taking recourse to such a serious matter in summoning the accused in a case filed on a complaint otherwise than on a police report, there has to be application of mind as to whether the allegations in the complaint constitute essential ingredients of the offence and whether there are sufficient grounds for proceeding against the accused. In Punjab National Bank v. Surendra Prasad Sinha, it was held that the issuance of process should not be mechanical nor should be made an instrument of oppression or needless harassment."

23. A reference may also be made to the case of "Sunil Bharti

Mittal v. C.B.I", (2015) 4 SCC 609. Paragraph no.48 of the said judgment

is quoted as under:

"48. Sine qua non for taking cognizance of the offence is the application of mind by the Magistrate and his satisfaction that the allegations, if proved, would constitute an offence. It is, therefore, imperative that on a complaint or on a police report, the Magistrate is bound to consider the question as to whether the same discloses commission of an offence and is required to form such an opinion in this respect. When he does so and decides to issue process, he shall be said to have taken cognizance. At the stage of taking cognizance, the only consideration before the court remains to consider judiciously whether the material on which the prosecution proposes to prosecute the accused brings out a prima facie case or not."

Sub-section (C) of Section 2 of the Act stipulates as under:

"2.(c) "contractor", in relation to an establishment, means a person who undertakes to produce a given result for the establishment, other than a mere supply of goods or articles of manufacture to such establishment, through contract labour or who supplies contract labour for any work of the establishment and includes a sub-contractor."

24. On perusal of this section it is crystal clear that persons who

undertakes to produce a given result through contract labour or who

supplies contract labour are defined as contractor. In the case in hand

the petitioners have been shown as officers of the company. Thus, point

raised by Mr. Sinha is negated.

25. There is no provision of condonation of delay in the Act. In

the case of "Municipal Corporation of Delhi v. Ram Kishan Rohtagi and

Others"(Supra), the Manager was looking after the said canteen and that

is why, the Hon'ble Supreme Court has held that the Manager is liable

and in the case in hand the petitioner no.2 was stationed at that time at

Chennai. Thus, the case relied by Mr. Rajiv Sinha, the learned A.S.G.I for

the O.P.No.2 in the case of "Municipal Corporation of Delhi v. Ram Kishan

Rohtagi and Othter"(supra) is not helping the O.P.No.2. It is an admitted

fact that the petitioner no.1 was Director at that time of occurrence

which has been stated in the complaint itself and in the case of "S.M.S.

Pharmaceuticals Ltd. v. Neeta Bhalla And Another"(supra), the Hon'ble

Supreme Court has held that if the Managing Director or the Joint

Managing Director are the party then they are deemed to be responsible

which is not the case in hand. Thus, the judgment relied by Mr. Rajiv

Sinha, the learned A.S.G.I in "S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla

And Another"(supra) is not helping the O.P.No.2. Moreover, the

subsequent orders by which the N.B.W. and proclamation under section

82 Cr.P.C have been directed to be issued are also not in accordance with

the law. These orders are in violation of Section 73 of Cr.P.C. In the

order by which 82 process has been directed to be issued, there is no

satisfaction of the concerned court recorded. There is non-compliance of

Form-IV Cr.P.C also which is statutory in nature.

26. The proclamation under section 82 Cr.P.C is also bad in law

in view of the fact that there is no satisfaction recorded in the said order

by which proclamation under section 82 Cr.P.C has been issued.

27. In view of cumulative effect of the above discussion, this

petition succeeds. The entire criminal proceeding including the orders

dated 22.02.2014, 15.12.2014, 25.06.2015 and 23.09.2019 in connection

with Complaint (LEO) Case No.17 of 2014, pending in the court of

learned Sub-Divisional Judicial Magistrate, Bermo at Tenughat, Bokaro

are hereby quashed.

28. Cr.M.P. No.664 of 2020 stands allowed and disposed

of.

( Sanjay Kumar Dwivedi, J) SI/,