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2003 DIGILAW 477 (CAL)

DIPAK CHOWDHURY v. E. S. I. CORPORATION

2003-09-12

PRADIP KUMAR BISWAS

body2003
PRADIP KUMAR BISWAS, J. ( 1 ) PARTIES are present before me through their learned advocates. Heard them. ( 2 ) THIS is an application under Section 401 read with Section 482 of the Code of Criminal Procedure filed at the instance of one Dipak Kumar Chowdhury and another, petitioners herein, seeking for quashing of a proceeding being Case No. C/2533 of 1998 and/or set aside the order dated 3 1. 8. 2002 passed by the Learned Metropolitan Magistrate, 6th Court, Calcutta in the aforesaid proceeding under Section 406 of the Indian Penal Code. ( 3 ) THE short facts leading to the filing of this revisional application are as under : It has been alleged by the prosecution that these two accused petitioners are the Directors of M/s. Shanks (Steel Fab) Pvt. Ltd. , and they being the principal employees within the meaning of Clause 17 of Section 2 of the E. S. I. Act read with Section 86a of the E. S. I. Act are the persons-in-charge of the said factory and are responsible for having all control over the administration and day-to-day business of the said factory. ( 4 ) IT has further been alleged that under Section 40 of the E. S. I. Act, principal employers shall pay in respect of every employee both the employers share of contribution and employees share of contribution and under Sect 40 (2) of the E. S. I. Act the principal employer is entitled to recover the aforesaid amount from the wages of the employees. The principal employer is also under statutory obligation to deposit such deducted contributions to the Employees State Insurance Corporation fund. ( 5 ) IN course of inspection by one Sri B. B. Bhowmick, Insurance Inspector, visited the aforesaid factory on 18. 12. 1997, it was detected that the accused persons as principal employers of the said company although deducted a sum of Rs. 744. ( 5 ) IN course of inspection by one Sri B. B. Bhowmick, Insurance Inspector, visited the aforesaid factory on 18. 12. 1997, it was detected that the accused persons as principal employers of the said company although deducted a sum of Rs. 744. 90 p. in respect of the employees working at the said company as employees share of contribution from their wages for the period from April 1997 to June 1997, yet, they have failed to deposit the said employees share of contribution to the E. S. I. Fund within the specified time and thus they have committed a criminal breach of trust in respect of the aforesaid amount and such they are liable to be prosecuted for commission of offence under Section 406 of I. P. C. ( 6 ) IT has been alleged by the petitioners herein that although the Employees State Insurance Corporation under the Amnestys Scheme, 2000, expressed their desire to withdraw the cases on condition that if the dues are cleared, they would withdraw such cases, but even after payment of all the dues and in, respect of the fact that the company of the petitioners complied with the Amnestys scheme, 2000, the prosecution did not take any initiative for withdrawal of the aforesaid case and as such being aggrieved by the issuance of warrant of arrest against present petitioners they have approached this Court with the prayer for quashing of the aforesaid proceeding alleging that these two petitioners cannot be regarded as principal employers and as such no such case can be proceeded against them. ( 7 ) I have heard their respective submissions before me. From the side of the petitioners, it was contended that in the decision in the case of Employees State Insurance Corporation v. SK. Agarwal and Ors, it was held by the Apex Court that Section 2 (17) of the Employees State Insurance Act, defines the principal employer as either owner or occupier taking care of all eventualities. When the owner of the factory is the principal employer, there is no need to examine who is occupier. The owner will be the principal employer under Section 40. When the owner of the factory is the principal employer, there is no need to examine who is occupier. The owner will be the principal employer under Section 40. Therefore, even if the definition of principal employer under the aforesaid Act is read in explanation 2 to Section 405 of the Indian Penal Code, the Directors of the company, would not be covered by the definition of principal employer when the company itself owns the factory and is also the employer of its employees at the head office. In any event, in the absence of any express provision in the Indian Penal Code incorporating the definition of principal employer in explanation 2 to Section 405, this definition cannot be held to apply to the term employer in explanation 2. ( 8 ) IT has further been contended by them that the term employer in Explanation 2 must be understood as in ordinary parlance. In ordinary parlance it is the company which is the employer and not its directors either singly or collectively. ( 9 ) IT has, therefore, been contended on their behalf that on the basis of the ratio of the aforesaid decision these petitioners, although they were directors, yet, they cannot be regarded as the employer so as to rope in connection with the present case. ( 10 ) THE aforesaid contention, however, has been opposed on behalf of the Employees State Insurance Corporation with reference to a decision reported in 1986 (2) Cal HN 128. But in a decision reported in R. L. Kanoria and Ors. v. State and another, the similar matter was dealt with by me and after repelling the contention of E. S. I. , it was held by this Court in the aforesaid decision that when in clear terms it was laid down by the Supreme Court in the aforesaid decision reported in 1998 Cr. L. J. 4027: 1998 C Cr L R (SC) 396 (supra) that in any event, in the absence of any express provision in the Indian Penal Code incorporating definition of principal employer in Explanation 2 to Section 405, this definition cannot be held to apply to the term employer in Explanation 2 to Section 405 of IPC and the term employer in Explanation 2 must be understood as in ordinary parlance. In ordinary parlance it is the company which is the employer and not its directors either singly or collectively. In such view of the fact, I find no force in the contention of the Opposite Party. ( 11 ) NOW in summing up the position as it has emerged now, I am rather constrained to hold on the existing materials that the present two petitioners cannot be regarded as principal employer and as such they cannot be brought into the purview of the Employees State Insurance Corporation for violating the provision of Section 40 of the aforesaid Act and as such no proceeding under Section 406 of I. P. C. can be maintained against them. ( 12 ) THAT being the position, the present proceeding under Section 406 of I. P. C. against the two petitioners Dipak Kr. Chowdhury and Prakash Kumar Chowdhury as Directors of the company cannot be maintained and as such present proceeding so far as it relates to the above-named petitioners shall stand quashed. Petition allowed.