Jharkhand High Court

Md. Fassihuddin vs The State Of Bihar (Now Jharkhand) on 2 May, 2023

                                                      1                     Cr.M.P. No. 1198 of 2013


                  IN THE HIGH COURT OF JHARKHAND AT RANCHI
                            Cr.M.P. No. 1198 of 2013
                 Md. Fassihuddin                                      ... Petitioner
                                        -Versus-
            1.   The State of Bihar (now Jharkhand)
            2.   Assistant Labour Commissioner (Central), Chaibasa, District- West
                 Singhbhum                                ... Opposite Parties
                                             -----

CORAM: HON'BLE MR. JUSTICE SANJAY KUMAR DWIVEDI

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            For the Petitioner         : Mr. Ajay Kumar Sah, Advocate
            For the State              : Mr. Sunil Kumar Dubey, A.P.P.
            For O.P. No.2              : Mr. Prashant Kumar Singh, Advocate
                                              -----

10/02.05.2023     Heard Mr. Ajay Kumar Sah, learned counsel for the petitioner,

Mr. Sunil Kumar Dubey, learned counsel for the State and Mr. Prashant

Kumar Singh, learned counsel for opposite party no.2.

2. This petition has been filed for quashing of the entire criminal

proceeding in connection with C-7 55/97 including the order taking

cognizance dated 21.05.1997, whereby, the learned court has been pleased

to take cognizance under Sections 23/24 of the Contract Labour (Regulation

and Abolition) Act, 1970 (herein after to be referred to as 'the Act, 1970'),

pending in the court of the learned Chief Judicial Magistrate, Chaibasa.

3. The complaint case has been filed alleging therein that accused

persons were executing the work of Iron Mining at Noamundi Iron Mine of

M/s TISCO Ltd. and are responsible for the maintenance of registers/records

and observance of various other provisions of the Act, 1970 and rules made

thereunder for their establishment. The establishment of the accused

persons were inspected by the Assistant Labour Commissioner

(Central)/Labour Enforcement Officer (Central) Chaibasa/Dhanbad/Koderma

on 21.12.1996 at 12:20 p.m. when 1748 persons were found working in the

establishment and during the course of his inspection he observed the

following illegalities:

(i) Commencement of Contract work in respect of Sri N.N. Singh

not been submitted to the authority in Form VI B till 25.02.1997,

work started in December, 1996 thereby contravening the provision

of Rule 81(3).

(ii) In contravention of Rule 81(3), the accused persons completed

contract work in respect of S.K. Bose, RBJ Engg. Co. but did not

submit, to the authority, work completed on 04.11.1996 and

25.12.1996 respectively in Form VI B.

(iii) In contravention of Rule 18(4), registration certificate was not

amended till the date of inspection.

4. The aforesaid contraventions are observed by the Labour

Enforcement Officer (Central), Dhanbad during the course of his inspection,

and was incorporated in his Inspection report cum show cause dated

20.03.1997 and the same was served to the accused persons by registered

post with A/D.

5. Mr. Sah, learned counsel for the petitioner submits that accused no.2

in the aforesaid complaint petition namely Mr. Jay Prakash Mishra, the then

Senior Divisional Manager (Mines) of Noamundi Iron Ore Mines of TISCO

has passed away on 28.01.2006 at Greater Noida. He further submits that

the petitioner was General Manager of the said company and the company

has not been made accused in the present case. He also submits that in

absence of company, liability cannot be fastened upon the petitioner. He

refers Section 25 of the Act, 1970 and submits that there is no averment

that the petitioner was looking day-to-day affairs of the company. On these

grounds, he submits that the entire criminal proceeding is bad in law.

6. On the other hand, Mr. Singh, learned counsel for opposite party no.2

submits that several illegalities were found and that is why the complaint

case was rightly filed. He further submits that the petitioner was In-charge

of the company at that time. He also submits that there is averment in the

complaint petition that the petitioner was looking day-to-day affairs of the

company.

7. Mr. Dubey, learned counsel for the State submits that the learned

court has taken cognizance looking into the complaint.

8. In view of the above submissions of the learned counsel for the

parties, the Court has gone through the materials on record including the

contents of the complaint case and finds that there is no averment that the

petitioner was looking to day-to-day affairs of the company, which is one of

the requirement to make out the case under the Act, 1970. Section 25 of

the Act, 1970 speaks as under:

"25. Offences by companies.-(1) If the person committing an offence under this Act is a company, the company as well as every person in charge of, and responsible to, the company for the conduct of its business at the time of the commission of the offence shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly:

Provided that nothing contained in this sub-section shall render any such person liable to any punishment if he proves that the offence was committed without his knowledge or that he exercised all due diligence to prevent the commission of such offence.

(2) Notwithstanding anything contained in sub-section (1), where an offence under this Act has been committed by a company and it is proved that the offence has been committed with the consent or connivance of, or that the commission of the offence is attributable to any neglect on the part of any director, manager, manging agent or any other officer of the company, such director, manager, managing agent or such other officer shall also be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly."

9. It appears that in the complaint case, the company has not been

accused and in absence of the company, the case has been lodged which is

against the mandate of law as has been held by the Hon'ble Supreme Court

in S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla and another;

[(2005) 8 SCC 89]. Paragraphs 4 and 9 of the said judgment are quoted

herein below:

"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 20 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."

10. So far as the contention of the learned counsel for opposite party

no.2 is concerned, it is well settled that only bald allegation against the

accused that he is looking day-to-day affairs of the company, is not

sufficient. What are the roles being played for such business, is required to

be disclosed in the complaint petition, as has been held by the Hon'ble

Supreme Court in S.K. Alagh v. State of Uttar Pradesh & others;

[(2008) 5 SCC 662]. Paragraph 19 of the said judgment is quoted herein

below:

"19. As, admittedly, drafts were drawn in the name of the Company, even if the appellant was its Managing Director, he cannot be said to have committed an offence under Section 406 of the Indian Penal Code. If and when a statute contemplates creation of such a legal fiction, it provides specifically therefor. In absence of any provision laid down under the statute, a Director of a Company or an employee cannot be held to be vicariously liable for any offense committed by the Company itself."

11. In view of the above facts, reasons and analysis, the entire criminal

proceeding in connection with C-7 55/97 including the order taking

cognizance dated 21.05.1997, pending in the court of the learned Chief

Judicial Magistrate, Chaibasa is quashed.