Kerala High Court
Prestige Educational Trust vs State Of Kerala on 20 December, 2023
Author: P.V.Kunhikrishnan
Bench: P.V.Kunhikrishnan
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR. JUSTICE P.V.KUNHIKRISHNAN
WEDNESDAY, THE 20TH DAY OF DECEMBER 2023 / 29TH AGRAHAYANA, 1945
CRL.MC NO. 3441 OF 2018
AGAINST THE ORDER/JUDGMENT ST 313/2017 OF CHIEF JUDICIAL
MAGISTRATE ,THALASSERY
PETITIONER/S:
1 PRESTIGE EDUCATION TRUST
REPRESENTED BY M.A.ABDUL JABBAR, CHAIRMAN, AGED 60
YEARS, S/O.E.K.KUNHAMMED, TRUSTEES OF PRESTIGE,
EDUCATIONAL TRUST, ANJARAKKANDY, KANNUR -670 612.
2 M.A.ABDUL JABBAR
CHAIRMAN, AGED 60 YEARS, S/O.E.K.KUNHAMMED, TRUSTEES OF
PRESTIGE, EDUCATIONAL TRUST, ANJARAKKANDY, KANNUR -670
612.
3 JABBIR JABBAR
MANAGING TRUSTEE, AGED 32 YEARS, S/O.ABDUL JABBAR,
TRUSTEES OF PRESTIGE, EDUCATIONAL TRUST, ANJARAKKANDY,
KANNUR -670 612.
4 A.K.MAHAMOOD
TRUSTEE, AGED 85 YEARS, S/O.KADIRI, TRUSTEES OF
PRESTIGE, EDUCATIONAL TRUST, ANJARAKKANDY, KANNUR -670
612.
5 S.V.NAZEERA
TRUSTEE, AGED 54 YEARS, D/O.A.K.MAHAMOOD, TRUSTEES OF
PRESTIGE, EDUCATIONAL TRUST, ANJARAKKANDY, KANNUR -670
612.
6 JASEERATH JABBAR
AGED 36 YEARS, D/O.M.ABDUL JABBAR, TRUSTEES OF
PRESTIGE, EDUCATIONAL TRUST, ANJARAKKANDY, KANNUR -670
612.
BY ADVS.
SRI.S.RAJEEV
SRI.K.K.DHEERENDRAKRISHNAN
SRI.D.FEROZE
SRI.V.VINAY
RESPONDENT/S:
1 STATE OF KERALA
REPRESENTED BY PUBLIC PROSECUTOR, HIGH COURT OF KERALA,
ERNAKULAM -682 031.
2 DISTRICT LABOUR OFFICER ENFORCEMENT
OFFICE OF THE DISTRICT LABOUR OFFICER, KANNUR.
SMT SREEJA V, PP
THIS CRIMINAL MISC. CASE HAVING COME UP FOR ADMISSION ON
20.12.2023, ALONG WITH Crl.MC.3427/2018, 3434/2018 AND CONNECTED
CASES, THE COURT ON THE SAME DAY PASSED THE FOLLOWING:
CRL.MC NO. 3441 OF 2018 & Connected Cases
2
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR. JUSTICE P.V.KUNHIKRISHNAN
WEDNESDAY, THE 20TH DAY OF DECEMBER 2023 / 29TH AGRAHAYANA, 1945
CRL.MC NO. 3427 OF 2018
AGAINST THE ORDER/JUDGMENT ST 314/2017 OF CHIEF JUDICIAL
MAGISTRATE ,THALASSERY
PETITIONER/S:
1 PRESTIGE EDUCATIONAL TRUST
REP.BY M.A.ABDUL JABBAR,CHAIRMAN,AGED 60
YEARS,S/O.E.K.KUNHAMMED,TRUSTEES OF PRESTIGE,EDUCATIONAL
TRUST,ANJARAKKANDY,KANNUR-670612.
2 M.A.ABDUL JABBAR
CHAIRMAN,S/O.E.K.KUNHAMMED,TRUSTEES OF PRESTIGE,EDUCATIONAL
TRUST,ANJARAKKANDY,KANNUR-670612.
3 JABBIR JABBAR
MANAGING TRUSTEE,AGED 32 YEARS,S/O ABDUL JABBAR,TRUSTEES OF
PRESTIGE,EDUCATIONAL TRUST,ANJARAKKANDY,KANNUR-670612.
4 A.K.MAHAMMOOD
TRUSTEE,AGED 85 YEARS,S/O.KADIRI,TRUSTEES OF PRESTIGE,EDUCATIONAL
TRUST,ANJARAKKANDY,KANNUR-670612.
5 S.V.NAZEERA
TRUSTEE,AGED 54 YEARS,D/O.A.K.MAHAMOOD,TRUSTEES OF
PRESTIGE,EDUCATIONAL TRUST,ANJARAKKANDY,KANNUR-670612.
6 JASEERATH JABBAR
TRUSTEE,AGED 36 YEARS,D/O.M.ABDUL JABBAR,TRUSTEES OF
PRESTIGE,EDUCATIONAL TRUST,ANJARAKKANDY,KANNUR-670612.
BY ADVS.
SRI.S.RAJEEV
SRI.K.K.DHEERENDRAKRISHNAN
SRI.D.FEROZE
SRI.V.VINAY
RESPONDENT/S:
1 STATE OF KERALA
REP.BY PUBLIC PROSECUTOR,HIGH COURT OF KERALA,ERNAKULAM-682031.
2 DISTRICT LABOUR OFFICERENFORCEMENT
OFFICE OF THE DISTRICT LABOUR OFFICER,KANNUR.
THIS CRIMINAL MISC. CASE HAVING COME UP FOR ADMISSION ON 20.12.2023, ALONG
WITH Crl.MC.3441/2018 AND CONNECTED CASES, THE COURT ON THE SAME DAY PASSED THE
FOLLOWING:
CRL.MC NO. 3441 OF 2018 & Connected Cases
3
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR. JUSTICE P.V.KUNHIKRISHNAN
WEDNESDAY, THE 20TH DAY OF DECEMBER 2023 / 29TH AGRAHAYANA, 1945
CRL.MC NO. 3434 OF 2018
AGAINST THE ORDER/JUDGMENT ST 315/2017 OF CHIEF JUDICIAL
MAGISTRATE ,THALASSERY
PETITIONER/S:
1 PRESTIGE EDUCATIONAL TRUST
REP.BY M.A.ABDUL JABBAR, CHAIRMAN, AGED 60 YEARS,S/O.E.K.KUNHAMMED,
TRUSTEES OF PRESTIGE, EDUCATIONAL TRUST,ANJARAKKANDY,KANNUR 670612.
2 M.A.ABDUL JABBAR
CHAIRMAN,AGED 60 YEARS, S/O.E.K.KUNHAMMED,TRUSTEES OF
PRESTIGE,EDUCATIONAL TRUST,ANJARAKKANDY,KANNUR 670 612.
3 JABBAIR JABBAR
MANAGING TRUSTEE, AGED 32 YEARS, S/O.ABDUL JABBAR,TRUSTEES OF
PRESTIGE, EDUCATIONAL TRUST,ANJARAKKANDY,KANNUR 670 612.
4 A.K.MAHAMMOODTRUSTEE
AGED 85 YEARS, S/O.KADIRI,TRUSTEES OF PRESTIGE,EDUCATIONAL
TRUST,ANJARAKKANDY,KANNUR 670 612.
5 S.V.NAZEERA TRUSTEE
AGED 54 YEARS, D/O.A.K.MAHAMOOD, TRUSTEES OF PRESTIGE,EDUCATIONAL
TRUST,ANJARAKKANDY,KANNUR 670 612.
6 JASEERATH JABBAR
TRUSTEE, AGED 36 YEARS,D/O.M.ABDUL JABBAR,TRUSTEES OF PRESTIGE,
EDUCATIONAL TRUST,ANJARAKKANDY,KANNUR 670 612.
BY ADVS.
SRI.S.RAJEEV
SRI.K.K.DHEERENDRAKRISHNAN
SRI.D.FEROZE
SRI.V.VINAY
RESPONDENT/S:
1 STATE OF KERALA
REP.BY PUBLIC PROSECUTOR, HIGH COURT OF KERALA,ERNAKULAM 682 031.
2 DISTRICT LABOUR OFFICERENFORCEMENT
OFFICE OF THE DISTRICT LABOUR OFFICER,KANNUR.
THIS CRIMINAL MISC. CASE HAVING COME UP FOR ADMISSION ON
20.12.2023, ALONG WITH Crl.MC.3441/2018 AND CONNECTED CASES, THE
COURT ON THE SAME DAY PASSED THE FOLLOWING:
CRL.MC NO. 3441 OF 2018 & Connected Cases
4
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR. JUSTICE P.V.KUNHIKRISHNAN
WEDNESDAY, THE 20TH DAY OF DECEMBER 2023 / 29TH AGRAHAYANA, 1945
CRL.MC NO. 3729 OF 2018
AGAINST THE ORDER/JUDGMENT ST 316/2017 OF CHIEF JUDICIAL
MAGISTRATE ,THALASSERY
PETITIONER/S:
1 PRESTIGE EDUCATIONAL TRUST
REPRESENTED BY M.A ABDUL JABBAR, CHAIRMAN, AGED 60 YEARS, S/O. E.K.
KUNHAMMED, TRUSTEES OF PRESTIGE, EDUCATIONAL TRUST, ANJARAKKANDY,
KANNUR- 670 612.
2 M.A. ABDUL JABBAR
CHAIRMAN, AGED 60 YEARS, S/O. E.K. KUNHAMMED, TRUSTEES OF PRESTIGE,
EDUCATIONAL TRUST, ANJARAKKANDY, KANNUR- 670 612.
3 JABBIR JABBAR
MANAGING TRUSTEE, AGED 32 YEARS, S/O. ABDUL JABBAR, TRUSTEES OF
PRESTIGE, EDUCATIONAL TRUST, ANJARAKKANDY, KANNUR- 670 612.
4 A.K. MAHAMOOD
TRUSTEE, AGED 85 YEARS, S/O. KADIRI, TRUSTEES OF PRESTIGE,
EDUCATIONAL TRUST,ANJARAKKANDY, KANNUR- 670 612.
5 S.V. NAZEERA
TRUSTEE, AGED 54 YEARS, S/O. KADIRI, TRUSTEES OF PRESTIGE,
EDUCATIONAL TRUST, ANJARAKKANDY, KANNUR- 670 612.
6 JASEERATH JABBAR
TRUSTEE, AGED 36 YEARS, D/O. M. ABDUL JABBAR, TRUSTEES OF PRESTIGE
EDUCATIONAL TRUST, ANJARAKKANDY, KANNUR- 670 612.
BY ADVS.
SRI.S.RAJEEV
SRI.K.K.DHEERENDRAKRISHNAN
SRI.D.FEROZE
SRI.V.VINAY
RESPONDENT/S:
1 STATE OF KERALA
REPRESENTED BY PUBLIC PROSECUTOR, HIGH COURT OF KERALA, ERNAKULAM -
682 031.
2 DISTRICT LABOUR OFFICER
(ENFORCEMENT), OFFICE OF THE DISTRICT LABOUR OFFICER, KANNUR.
THIS CRIMINAL MISC. CASE HAVING COME UP FOR ADMISSION ON
20.12.2023, ALONG WITH Crl.MC.3441/2018 AND CONNECTED CASES, THE
COURT ON THE SAME DAY PASSED THE FOLLOWING:
CRL.MC NO. 3441 OF 2018 & Connected Cases
5
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR. JUSTICE P.V.KUNHIKRISHNAN
WEDNESDAY, THE 20TH DAY OF DECEMBER 2023 / 29TH AGRAHAYANA, 1945
CRL.MC NO. 3733 OF 2018
AGAINST THE ORDER/JUDGMENT ST 318/2017 OF CHIEF JUDICIAL
MAGISTRATE ,THALASSERY
PETITIONER/S:
1 PRESTIGE EDUCATIONAL TRUST
REP. BY M.A.ABDUL JABBAR, CHAIRMAN, AGED 60 YEARS,
S/O.E.K.KUNHAMMED,TRUSTEES OF PRESTIGE, EDUCATIONAL TRUST,
ANJARAKKANDY, KANNUR-670 612.
2 M.A.ABDUL JABBAR
CHAIRMAN, AGED 60 YEARS, S/O.E.K.KUNHAMMED, TRUSTEES OF PRESTIGE,
EDUCATIONAL TRUST, ANJARAKKANDY, KANNUR-670 612.
3 JABBIR JABBAR
MANAGING TRUSTEE, AGED 32 YEARS, S/O.ABDUL JABBAR,TRUSTEES OF
PRESTIGE, EDUCATIONAL TRUST, ANJARAKKANDY, KANNUR-670 612.
4 A.K.MAHAMMOOD
TRUSTEE, AGED 85 YEARS, S/O.KADIRI, TRUSTEES OF PRESTIGE,
EDUCATIONAL TRUST, ANJARAKKANDY, KANNUR-670 612.
5 S.V.NAZEERA
TRUSTEE, AGED 54 YEARS, D/O.A.K.MAHAMOOD, TRUSTEES OF PRESTIGE,
EDUCATIONAL TRUST, ANJARAKKANDY, KANNUR-670 612.
6 JASEERATH JABBAR
TRUSTEE, AGED 36 YEARS, D/O.M.ABDUL JABBAR, TRUSTEES OF PRESTIGE,
EDUCATIONAL TRUST, ANJARAKKANDY, KANNUR-670 612.
BY ADVS.
SRI.S.RAJEEV
SRI.K.K.DHEERENDRAKRISHNAN
SRI.D.FEROZE
SRI.V.VINAY
RESPONDENT/S:
1 STATE OF KERALA
REP. BY PUBLIC PROSECUTOR, HIGH COURT OF KERALA, ERNAKULAM-682 031.
2 DISTRICT LABOUR OFFICER ENFORCEMENT
OFFICE OF THE DISTRICT LABOUR OFFICER, KANNUR.
THIS CRIMINAL MISC. CASE HAVING COME UP FOR ADMISSION ON
20.12.2023, ALONG WITH Crl.MC.3441/2018 AND CONNECTED CASES, THE
COURT ON THE SAME DAY PASSED THE FOLLOWING:
CRL.MC NO. 3441 OF 2018 & Connected Cases
6
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR. JUSTICE P.V.KUNHIKRISHNAN
WEDNESDAY, THE 20TH DAY OF DECEMBER 2023 / 29TH AGRAHAYANA, 1945
CRL.MC NO. 4656 OF 2018
AGAINST THE ORDER/JUDGMENT ST 301/2017 OF CHIEF JUDICIAL
MAGISTRATE ,THALASSERY
PETITIONER/S:
1 PRESTIGE EDUCATIONAL TRUST
AGED 60 YEARS
REP. BY M.A. ABDUL JABBAR,CHAIRMAN, AGED 60 YEARS, S/O.E.K.
KUNHAMMED,TRUSTEES OF PRESTIGE, EDUCATIONAL TRUST,ANJARAKKANDY, KANNUR-
670612.
2 M.A. ABDUL JABBAR
AGED 60 YEARS
CHAIRMAN, AGED 60 YEARS, S/O.E.K. KUNHAMMED, TRUSTEES OF
PRESTIGE,EDUCATIONAL TRUST,ANJARAKKANDY, KANNUR-670612.
3 JABBIR JABBAR
AGED 32 YEARS
MANAGING TRUSTEE,AGED 32 YEARS,S/O.ABDUL JABBAR,TRUSTEES OF
PRESTIGE,EDUCATIONAL TRUST,ANJARAKKANDY, KANNUR-670612.
4 A.K. MAHAMMOOD
AGED 85 YEARS
TRUSTEE,AGED 85 YEARS,S/O.KADIRI,TRUSTEES OF PRESTIGE,EDUCATIONAL
TRUST,ANJARAKKANDY, KANNUR-670612.
5 S.V. NAZEERA
AGED 54 YEARS
TRUSTEE, AGED 54 YEARS,D/O.A.K.MAHAMOOD,TRUSTEES OF PRESTIGE,EDUCATIONAL
TRUST,ANJARAKKANDY, KANNUR-670612.
6 JASEERATH JABBAR
TRUSTEE,AGED 36 YEARS,D/O.M.ABDUL JABBAR,TRUSTEES OF PRESTIGE,EDUCATIONAL
TRUST,ANJARAKKANDY, KANNUR-670612
BY ADVS.
SRI.S.RAJEEV
SRI.K.ANAND A-1921
SRI.K.K.DHEERENDRAKRISHNAN
SRI.D.FEROZE
SRI.V.VINAY
RESPONDENT/S:
1 STATE OF KERALA
REPRESENTED BY PUBLIC PROSECUTOR,HIGH COURT OF KERALA,ERNAKULAM-682031.
2 DISTRICT LABOUR OFFICERENFORCEMENT
OFFICE OF THE DISTRICT LABOUR OFFICER,KANNUR-670612.
THIS CRIMINAL MISC. CASE HAVING COME UP FOR ADMISSION ON 20.12.2023, ALONG WITH
Crl.MC.3441/2018 AND CONNECTED CASES, THE COURT ON THE SAME DAY PASSED THE FOLLOWING:
CRL.MC NO. 3441 OF 2018 & Connected Cases
7
P.V.KUNHIKRISHNAN, J.
--------------------------------
Crl.M.C.Nos. 3441, 3733, 4656, 3434, 3427 & 3729 of 2018
---------------------------------------------------------
Dated this the 20th day of December, 2023
ORDER
These Criminal Miscellaneous Cases are filed to quash S.T. Nos.
313/2017, 316/2017, 318/2017, 314/2017, 315/2017, and 301/2017, pending
before the Chief Judicial Magistrate Court, Thalasserry against the respective
petitioners. It is the prosecution initiated against the petitioners alleging
offences punishable under Section 22A of the Minimum Wages Act.
2. It is the case of the prosecution that the 2 nd respondent inspected
Kannur Dental College, Anjarakkandy, Kannur Medical College, Anjarakkandy,
Malabar Institute of Technology, Kannur, College of Nursing, Kannur, Ladies
Hostel of Kannur Medical College, Anjarakkandy and Men's Hostel of Kannur
Medical College, Anjarakkandy and allegedly found out certain violations and
directed to produce the records on or before 29.03.2017. The notice served on
1st accused and as against the other accused was returned and was later served
by affixing on the wall of the institution. The accused did not comply with the
directions and thereby the accused have contravened the provisions of the rule
and thereby the accused have committed the offence under Section 22A of the
CRL.MC NO. 3441 OF 2018 & Connected Cases
Minimum Wages Act, is the grievance.
3. The 1st petitioner is a Trust represented by its Chairman. The
petitioner No.2 is the Chairman and the 3 rd Petitioner is the Managing Trustee.
Petitioners No.4 to 6 are the trustees who have no control over the day-to-day
affairs of the Trust, is the submission. It is also submitted that the Petitioner
No. 4 resigned from the Trust on 29.12.2014 as evident from Annexure-II and
he is no way connected with the Trust. It is submitted that the petitioners No.5
and 6 are ladies and they are not responsible to the company for the conduct of
the business. It is also the definite case of the petitioners that there is no
specific allegation levelled against the accused so as to attract the offence
alleged.
4. It is submitted that as per Section 22C of the Minimum Wages Act,
there should be specific allegation that the accused should be in charge,
responsible to the company for the conduct of the business of the company.
These allegations are absent in Annexure-I complaint, is the submission. The
notice as allegedly issued in the address of the Trust was not served on accused
No.2 to 6 and hence the offence alleged is not attracted against the petitioners is
the further submission. It is also the case of the petitioner that the alleged
violation of the provisions of Kerala Minimum Wages Rules are not attracted as
CRL.MC NO. 3441 OF 2018 & Connected Cases
the petitioners have not been served with the notice and the petitioners are
having all the registers and such allegations are raised only with an intention to
harass the petitioners. Hence, these Criminal Miscellaneous Cases are filed to
quash the proceedings.
5. Section 22C of the Minimum Wages Act reads like this:
"Section 22C: Offences by companies.
(1) If the person committing any offence under this Act is a
company, every person who 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 as well
as the company 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 provided in this Act 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 is attributable to any
neglect on the part of, any, director, manager, secretary or other
officer of the company, such director, manager, secretary or
other officer of the company shall also be deemed to be guilty of
that offence and shall be liable to be proceeded against and
punished accordingly.
Explanation.-For the purposes of this section,-
(a) "company" means any body corporate and includes a firm
or other association of individuals, and
(b) "director" in relation to a firm means a partner in the firm."
CRL.MC NO. 3441 OF 2018 & Connected Cases
6. Section 22C is interpreted by the Apex Court in Dayle De'Souza v.
Government of India through Deputy Chief Labour Commissioner (C) and
Another [2021 (6) KLT Online 1119 (SC)] as follows:
"10. Sub-section (1) to Section 22C states that where an offence is
committed by a company, every person who at the time the offence was
committed was in-charge of and was responsible to the company for the
conduct of the business, as well as the company itself shall be deemed to be
guilty of the offence. By necessary implication, it follows that a person who
do not bear out the requirements is not vicariously liable under Section
22C(1) of the Act. The proviso, which is in the nature of an exception, states
that person who is liable under sub-section (1) shall not be punished if he
proves that the offence was committed without his knowledge or that he had
exercised all due diligence to prevent the commission of such offence. The
onus to satisfy the requirements to take benefit of the proviso is on the
accused, but it does not displace or extricate the initial onus and burden on
the prosecution to first establish the requirements of sub-section (1) to
Section 22C of the Act. The proviso is to give immunity to a person who is
vicariously liable under sub-section (1) to section 22C of the Act. In S.M.S.
Pharmaceuticals Ltd. V. Neeta Bhalla and Another, (2005 (4) KLT 209 (SC)
= (2005) 8 SCC 89), in relation to pari materia proviso in Section 141 of
the Negotiable Instruments Act, 1881, this Court observed:
"4... 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.
XX XX XX
CRL.MC NO. 3441 OF 2018 & Connected Cases
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." (Emphasis added)
In Aneeta Hada v. Godfather Travels and Tours Private Limited, (2012 (2)
KLT 736 (SC) = (2012) 5 SCC 661) this Court had reiterated that the
proviso to general vicarious liability under Section 141 of the Negotiable
Instruments Act, 1881, applies as an exception, by observing:
"22. On a reading of the said provision, it is plain as day
that if a person who commits the offence under Section 138
of the Act is a company, the company as well as every
person in charge of and responsible to the company for the
conduct of business of the company at the time of
commission of offence is deemed to be guilty of the offence.
The first proviso carves out under what circumstances the
criminal liability would not be fastened. Sub-section (2)
enlarges the criminal liability by incorporating the
concepts of connivance, negligence and consent that
engulfs many categories of officers. It is worth noting that
in both the provisions, there is a "deemed" concept of
criminal liability" (Emphasis added)
The proviso being an exception cannot be made a justification or a ground
to launch and initiate prosecution without the satisfaction of conditions
under sub-section(1) of Section 22C of the Act. The proviso that places the
onus to prove the exception on the accused, does not reverse the onus
under the main provision, namely Section 22C(1) of the Act, which
remains on the prosecution and not on the person being prosecuted.
11. Sub-section (2) states that notwithstanding anything contained
in sub-section (1), where any offence under the Act has been committed by
a company, and it is proved that such offence has been committed with the
consent or connivance of, or is attributable to any neglect on the part of,
any director, manager, secretary or other officer of the company, then such
director, manager, secretary or other officer of the company shall also be
deemed to be guilty of that offence and shall be liable to be proceeded
CRL.MC NO. 3441 OF 2018 & Connected Cases
against and punished accordingly. Without much ado, it is clear from a
reading of sub- section (2) to Section 22C of the Act that a person cannot
be prosecuted and punished merely because of their status or position as a
director, manager, secretary or any other officer, unless the offence in
question was committed with their consent or connivance or is
attributable to any neglect on their part. The onus under sub-section (2) to
Section 22C is on the prosecution and not on the person being prosecuted.
12. Unlike sub-section (2) to Section 220, sub-section (1) conspicuously
does not use the term 'director, manager, secretary or other officer of the
company' to bring them within the ambit of the vicarious liability
provision, albeit 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 in question is deemed to be additionally liable. The words in-
charge of the company' and 'responsible to the company are pivotal to
sub-section (1). This requirement has to be satisfied for the deeming effect
of subsection (1) to apply and for rendering the person liable to be
proceeded against and, on such position being proved, punished.
Interpreting an identical expression used in Sections 23-C(1) and 23- C(2)
of the Foreign Exchange Regulation Act, 1947, this Court in Girdhari Lal
Gupta v. D.H. Mehta and Another, (1971 KLT OnLine 1034 (SC)= (1971)
3 SCC 189) has held:
"6. What then does the expression "a person in-charge and
responsible for the conduct of the affairs of a company"
mean? It will be noticed that the word "company" includes
a firm or other association, and the same test must apply to
a director in-charge and a partner of a firm in-charge of a
business. It seems to us that in the context a person "in-
charge" must mean that the person should be in over-all
control of the day to day business of the company or firm.
This inference follows from the wording of Section 23-
C(2). It mentions director, who may be a party to the policy
being followed by a company and yet not be in-charge of
the business of the company. Further it mentions manager,
who usually is in charge of the business but not in over-all
charge. Similarly, the other officers may be in-charge of
only some part of business.
XX XX XX
8. In R.K. Khandelwal v. State D.S. Mathur, J., in
construing Section 27 of the Drugs Act, 1940, a provision
similar to the one we are concerned with, observed: "There
can be directors who merely lay down the policy and are
not concerned with the day to day working of the company.
CRL.MC NO. 3441 OF 2018 & Connected Cases
Consequently, the mere fact that the accused person is a
partner or director of the Company, shall not make him
criminally liable for the offence committed by the Company
unless the other ingredients are established which make
him criminally liable."
Those not in overall control of the day to day business of the
company or the firm are not deemed to be constructively liable under
Section 23-C(1) of the Foreign Exchange Regulation Act, 1947.
13. This exposition on the meaning of the term 'in-charge and
responsible for was referred to with approval in State of Karnataka v.
Pratap Chand and Others (1981 KLT OnLine 1078 (SC) = (1981) 2 SCC
335). This decision relates to the prosecution of the partner of a firm
under the Drugs and Cosmetics Act, 1940. The judgment referred to the
explanation to Section 34 in the said Act (which is pari materia with the
explanation in Section 22C of the Minimum Wages Act, 1948) to observe
that for the purpose of imposing liability on the company under the said
Section, a company includes a body corporate, a firm or an association of
individuals. A director in relation to a firm means a partner in that firm.
Therefore, even in the case of partners, when a firm commits an offence,
the requirement of either sub-section (1) or sub-section (2) to Section 22C
must be satisfied. This means that in terms of sub-section (1), the partner
should be "in-charge of" and "responsible to" the firm for the conduct of
its business as per the dictum in Girdhari Lal Gupta (supra). Further, as
per sub-section (2), a partner may also be liable, just as a director is
liable for the conduct of the business of a company, if the offence is
committed with the consent or connivance of, or is attributable to any
neglect on the part of the partner concerned.
14. Way back in 1982, in Municipal Corporation of Delhi v. Ram Kishan
Rohtagi and Others, (1982 KLT OnLine 1056 (SC) = (1983) 1 SCC 1) this
Court had quashed criminal proceedings under the Prevention of Food
Adulteration Act, 1954 against the directors of a manufacturing company
at the summoning stage, observing that the presumptive assertion made in
the complaint that the directors of the accused company 'as such were in-
charge of and responsible for the conduct of the business of the company
at the time of sampling was vague. The use of the words "as such" in the
complaint indicated that the complainant had merely presumed that the
directors must be guilty because they held the office of the director. The
Court opined that such presumptive accusations against the directors
without any specific averment or criminal attribution being made in the
complaint would be insufficient. Thereafter, reference was made to Section
319 of the Code of Criminal Procedure, 1973 which empowers the Court
to take cognisance of and proceed against a person who is not an accused
before it and try him along with others. Upholding the reasoning of the
CRL.MC NO. 3441 OF 2018 & Connected Cases
High Court quashing the proceedings against the directors, it was
highlighted:
"12.......The main clause of the complaint which is the
subject-matter of the dispute is clause 5 which may be
extracted thus:
5. That accused 3 is the Manager, of accused 2 and accused 4
to 7 are the Directors of accused 2 and as such they were
incharge of and responsible for the conduct of business of
accused 2 at the time of sampling.
XX XX XX
14. Reliance has been placed on the words "as such" in order
to argue that because (sic) the complaint does not attribute
any criminal responsibility to Accused 4 to 7 except that they
were incharge of and responsible for the conduct of the
business of the Company. It is true that there is no clear
averment of the fact that the Directors were really incharge of
the manufacture and responsible for the conduct of business
but the words "as such" indicate that the complainant has
merely presumed that the Directors of the Company must be
guilty because they are holding a particular office. This
argument found favour with the High Court which quashed
the proceedings against the Directors as also against the
Manager, Respondent 1."
However, the initiation of a prosecution and the summoning order
against the manager in the factual context was held to be proper.
15. In another decision by the same Bench titled Municipal Corporation
of Delhi v. Purshotam Dass Jhunjunwala and Others, (1982 KLT OnLine
1057 (SC) = (1983) 1 SCC 9) the assertions were that the individual
accused, namely the chairman, managing director and directors of the
company, were "in-charge of and responsible to it for the conduct of its
business at the time of commission of the offence". The words "as such"
were missing. This Court, therefore, concluded that the directors of the
company were not being prosecuted merely because of their official
position but because of the assertion that they were "in-charge of and
responsible for the conduct of the business at the time of commission of
the offence". There was a clear averment regarding the active role played
by the accused and the extent of their liability. Accordingly. restoring the
order passed by the Metropolitan Magistrate by which the directors etc.
were summoned for trial in accordance with the law and setting aside the
order of the High Court quashing the prosecution against them, this Court
has held:
"3..... The relevant allegations against the accused-
respondents are to be found in para 5 of the complaint
CRL.MC NO. 3441 OF 2018 & Connected Cases
which may be extracted thus:
5. That accused Ram Kishan Bajaj is the Chairman,
accused R.P. Neyatia is the Managing Director and
Accused 7 to 12 are the Directors of the Hindustan Sugar
Mills Ltd. and were incharge of and responsible to it for the
conduct of its business at the time of commission of
offence.
XX XX XX
5. In the instant case, a clear averment has been made
regarding the active role played by the respondents and the
extent of their liability. In this view of the matter, it cannot
be said that para 5 of the complaint is vague and does not
implicate Respondents 1 to 11. As to what would be the
evidence against the respondents is not a matter to be
considered at this stage and would have to be proved at the
trial. We have already held that for the purpose of quashing
the proceedings only the allegations set forth in the
complaint have to be seen and nothing further."
16. The legal position has undergone further elucidation in a number of
judgments. However, for the present decision, we would refer to the
summarisation in National Small Industries Corporation Limited v.
Harmeet Singh Paintal and Another, (2010 (2) KLT SN 10 (C.No. 13) SC
= (2010) 3 SCC 330) to the following effect:
"39. From the above discussion, the following principles
emerge
(i) The primary responsibility is on the complainant to
make specific averments as are required under the law in
the complaint so as to make the accused vicariously liable,
For fastening the criminal liability, there is no presumption
that every Director knows about the transaction.
(ii) Section 141 does not make all the Directors liable for
the offence. The criminal liability can be fastened only on
those who, at the time of the commission of the offence,
were in charge of and were responsible for the conduct of
the business of the company.
(iii)Vicarious liability can be inferred against a company
registered or incorporated under the Companies Act, 1956
only if the requisite statements, which are required to be
averred in the complaint/petition, are made so as to make
the accused therein vicariously liable for offence
CRL.MC NO. 3441 OF 2018 & Connected Cases
committed by the company along with averments in the
petition containing that the accused were in charge of and
responsible for the business of the company and by virtue
of their position they are liable to be proceeded with.
(iv) Vicarious liability on the part of a person must be
pleaded and proved and not Inferred.
(v) If the accused is a Managing Director or a Joint
Managing Director then it is not necessary to make specific
averment in the complaint and by virtue of their position
they are liable to be proceeded with
(vi) If the accused is a Director or an officer of a company
who signed the cheques on behalf of the company then also
it is not necessary to make specific averment in the
complaint.
(vii) 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."
17. The necessities of sub-section (2) to Section 22C of the Act are
different from sub-section (1) to Section 22C of the Act. Vicarious liability
under sub-section (2) to Section 22C can arise because of the director,
manager, secretary, or other officer's personal conduct, functional or
transactional role, notwithstanding that the person was not in overall
control of the day to day business of the company when the offence was
committed. Vicarious liability is attracted when the offence is committed
with the consent, connivance, or is attributable to the neglect on the part
of a director, manager, secretary, or other officer of the company.
18. In the factual context present before us it is crystal clear that the
complaint does not satisfy the mandate of sub-section (1) to Section 22C
of the Act as there are no assertions or averments that the appellant before
this Court was in-charge of and responsible to the company M/s. Writer
Safeguard Pvt. Ltd. in the manner as interpreted by this Court in the cases
mentioned above. The proviso to sub-section (1) in the present case would
not apply. It is an exception that would be applicable and come into
operation only when the conditions of sub-section (1) to Section 22C are
satisfied. Notably, in the absence of any specific averment, the prosecution
in the present case does not and cannot rely on Section 22C(2) of the
Act."
In the light of the above principle, this Court has to consider whether
CRL.MC NO. 3441 OF 2018 & Connected Cases
there are sufficient averments in the complaint to show that the petitioners were
in charge and responsible to the Trust for the conduct of its business. The 1 st
petitioner is a trust, the term association of individuals will include club, trust
and Hindu undivided family business along with the expression of company or
firm mentioned in 22C of the Minimum Wages Act. While interpreting Section
141 of the Negotiable Instruments Act, this Court in Prana Educational and
Charitable Trust v. State of Kerala [2023 (6) KHC 175: 2023 (6) KLT 231]
considered this point in detail. Therefore, the only point to be decided is
whether there are any averments in the complaints in these cases to the effect
that the petitioners were in charge and responsible for the conduct of the
business. This Court perused the complaints produced in these cases as
Annexure I. There are absolutely no averments in the complaint to show that
Petitioners No. 2 onwards are in charge and responsible for the affairs of the
Trust as stated in Section 22C of the Minimum Wages Act. The consequence is
that the prosecution against the petitioners in these cases are unsustainable.
Therefore, these Criminal Miscellaneous Cases are allowed. The proceedings
against the petitioners in S.T. Nos.313/2017, 316/2017, 318/2017, 314/2017,
315/2017 and 301/2017, pending before the Chief Judicial Magistrate Court,
Thalassery against the petitioners are quashed.
CRL.MC NO. 3441 OF 2018 & Connected Cases
Sd/-
P.V.KUNHIKRISHNAN
sms/nvj JUDGE
PETITIONER ANNEXURES
ANNEXURE-I CERTIFIED COPY OF THE COMPLAINT FILED BY THE
2ND RESPONDENT
ANNEXURE-II TRUE COPY OF THE MINUTES OF THE BOARD OF
TRUSTEES DATED 29.12.2014 ACCEPTING THE
RESIGNATION OF FOURTH PETITIONER.
CRL.MC NO. 3441 OF 2018 & Connected Cases
PETITIONER ANNEXURES
ANNEXURE-1 CERTIFIED COPY OF THE COMPLAINT FILED BY THE
2ND RESPONDENT
ANNEXURE-2 TRUE COPY OF THE MINUTES OF THE BOARD OF
TRUSTEES DATED 29.12.2014 ACCEPTING THE
RESIGNATION OF FOURTH PETITIONER.
CRL.MC NO. 3441 OF 2018 & Connected Cases
PETITIONER ANNEXURES
ANNEXURE -II TRUE COPY OF THE MINUTES OF THE BOARD OF
TRUSTEES DATED 29-12-2014 ACCEPTING THE
RESIGNATION OF FOURTH PETITIONER.
ANNEUSTE :-1 CERTIFIED COPY OF THE COMPKLAINT FILED BY
THE 2ND RESPONDENT.
CRL.MC NO. 3441 OF 2018 & Connected Cases
PETITIONER ANNEXURES
ANNEXURE-I CERTIFIED COPY OF THE COMPLAINT FILED BY THE
2ND RESPONDENT
ANNEXURE-II TRUE COPY OF THE MINUTES OF THE BOARD OF
TRUSTEES DATED 29.12.2014 ACCEPTING THE
RESIGNATION OF FOURTH PETITIONER
CRL.MC NO. 3441 OF 2018 & Connected Cases
PETITIONER ANNEXURES
ANNEXURE I CERTIFIED COPY OF THE COMPLAINT FILED BY THE
2ND RESPONDENT.
ANNEXURE II TRUE COPY OF THE MINUTES OF THE BOARD OF
TRUSTEES DATED 29.12.2014 ACCEPTING THE
RESIGNATION OF FOURTH PETITIONER.
CRL.MC NO. 3441 OF 2018 & Connected Cases
PETITIONER ANNEXURES
ANNEXURE -1 CERTIFIED COPY OF THE COMPLAINT FILED BY THE
2ND RESPONDENT
ANNEXURE -II TRUE COPY OF THE MINUTES OF THE BOARD OF
TRUSTEES DATED 29/12/2014 ACCEPTING THE
RESIGNATION OF FOURTH PETITIONER.
