ORDER : N.K. Balakrishnan, J. Petitioners are the accused in C.C. No. 223 of 2006 on the file of the Judicial First Class Magistrate-II, Alappuzha. Complaint was filed by the Manager, Employees' State Insurance Corporation ("the E.S.I." for short), branch office, Alappuzha, Offence alleged is u/s 85(g) of the Employees' State Insurance Act, 1948 ('ESI Act' for short). Accused are stated to be the Managing Director of M/s. Rainbow Cruises, Unit of Green Shore Holidays and Resorts Pvt. Ltd. and also the Company itself. It is contended by the complainant that the accused is a factory as defined under the E.S.I. Act. Since the accused failed to produce the records in respect of the said factory/establishment pertaining to the period from the very inception of the factory, the Insurance Inspector of the E.S.I. Corporation visited the said factory on 29-11-2005, 1-12-2005 and 9-12-2005 for the purpose of conducting inspection of the records. It was contended that prior intimation was given to the accused but they failed to produce the records for inspection. Accordingly, the matter was reported to the Divisional Officer of the E.S.I. Corporation, pursuant whereto, show-cause notice dated 23-12-2005 was issued to the accused. As per reply dated 12-1-2006 they sought three weeks' time to produce the records at the Inspector's Office, Alappuzha. That request was allowed and time was given till 15-2-2006. Still they failed to produce the records. They did not offer any explanation also. Hence, complainant contends that the accused have violated the provisions contained in Sections 44 and 45(2) of the E.S.I. Act which is punishable u/s 85(g) of the Act, The learned Magistrate took cognizance and issued process to the accused. That is being challenged in this petition filed u/s 482 of Cr. P.C. Adv. Smt. Lakshmi B. Shenoi, the learned counsel for the petitioners argued with vehemence that the petitioners are not bound to produce the records. It is also contended that the first petitioner is not the principal employer and so the cognizance taken is bad in law. It is further argued that the second petitioner Company is not a factory and as such the petitioners were not bound to produce any record or to furnish any information to the Insurance Inspector. 2. It is also contended that the first petitioner is not the principal employer and so the cognizance taken is bad in law. It is further argued that the second petitioner Company is not a factory and as such the petitioners were not bound to produce any record or to furnish any information to the Insurance Inspector. 2. Section 2(12) of E.S.I. Act, 1948 defines factory as:- "2(12) "factory" means any premises including the precincts thereof whereon ten or more persons are employed or were employed on any day of the preceding twelve months, and in any part of which a manufacturing process is being carried on or is ordinarily so carried on, but does not include a mine subject to the operation of the Mines Act, 1952 (35 of 1952) or a railway running shed". The respondent contends that when the Insurance Inspector inspected the establishment/factory he could discern that there were 29 employees working there. Their names and addresses have been furnished in the report submitted by him. Therefore, prima facie, it can be seen that it is a factory as defined under Sec. 2(12) because manufacturing process was being carried on in that premises/establishment. Sec. 2(17) of the Act defines "principal employer":- "Principal employer" means- (i) in a factory, the owner or occupier of the factory and includes the managing agent of such owner or occupier, the legal representative of a deceased owner or occupier, and where a person has been named as the manager of the factory under the Factories Act, 1948 (63 of 1948), the person so named; (ii) in any establishment under the control of any department of any Government in India, the authority appointed by such Government in this behalf or where no authority is so appointed, the head of the Department; (iii) in any other establishment any person responsible for the supervision and control of the establishment. "Immediate Employer" is defined under Sec. 2(13):- 13. "Immediate Employer" is defined under Sec. 2(13):- 13. Immediate employer" in relation to employees employed by or through him, means a person who has undertaken the execution, on the premises of a factory or an establishment to which this Act applies or under the supervision of the principal employer or his agent, of the whole or any part of any work which is ordinarily part of the work of the factory or establishment of the principal employer or is preliminary to the work carried on in, or incidental to the purpose of, any such factory or establishment, and includes a person by whom the services of an employee who has entered into a contract of service with him are temporarily lent or let on hire to the principal employer and includes a contractor. In order to find whether the Company in question is a factory within the meaning Sec. 2(12) of the Act the Inspector has to verify the records and registers of the Company to ascertain the number of persons employed or were employed on any day of the preceding 12 months and so the contention that the petitioners were not bound to produce the records for verification by the Inspector cannot be sustained. According to the complainant, the information they received is that the respondent is a factory and that there were altogether 29 persons working in that factory/establishment. 3. The decision of the Karnataka High Court in Sri Krishna Spinning and Weaving Mills Ltd. Vs. E.S.I. Corpn., cited by the learned counsel for the petitioners has no application to the facts of this case. That was a case where the E.S.I. Corporation issued show-cause notice to the employer calling upon it to show-cause why order should not be made u/s 45A to which a reply was sent by the employer. Without passing an order u/s 45A, the Corporation took action for recovery of amounts due as mentioned in the draft order. In that context, it was held that no recovery can be made unless order u/s 45A is passed. Section 45A reads:- 45A. Without passing an order u/s 45A, the Corporation took action for recovery of amounts due as mentioned in the draft order. In that context, it was held that no recovery can be made unless order u/s 45A is passed. Section 45A reads:- 45A. Determination of contributions in certain cases:- (1) Where in respect of a factory or establishment no returns, particulars, registers or records are submitted, furnished or maintained in accordance with the provisions of Section 44 or any Social Security Officer or other official of the Corporation referred to in sub-section (2) of Section 45 is prevented in any manner by the principal or immediate employer or any other person, in exercising his functions or discharging his duties u/s 45, the Corporation may, on the basis of information available to it, by order, determine the amount of contributions payable in respect of the employees of that factory or establishment:- Provided that no such order shall be passed by the Corporation unless the principal or immediate employer or the person in charge of the factory or establishment has been given a reasonable opportunity of being heard. Provided further that no such order shall be passed by the Corporation in respect of the period beyond five years from the date on which the contribution shall become payable. (2) An order made by the Corporation under sub-section (1) shall be sufficient proof of the claim of the Corporation u/s 75 or for recovery of the amount determined by such order as an arrear of land revenue u/s 45B or the recovery under Sections 45C to 45-I-I. 4. The learned counsel for the petitioners submits that for non-filing of returns or for non-production of the registers or records, the respondent, on the basis of the information available, could have determined the amount of contribution, if any, payable in respect of the employees. Though Section 45A empowers the officers to determine the amount of contributions, that does not absolve the petitioners of the liability u/s 85(g) of the Act. First of all, the Insurance Inspector has to be satisfied whether the establishment in question is a factory and he must also be satisfied as to the actual number of employees working in that establishment so as to compel the employer to comply with the provisions of the E.S.I. Act, for, the object of the Act is to provide certain benefits to the employees. That can be better achieved, if only the Inspector gets the correct details required for the proper determination of the amount of contributions payable in respect of the employees. Here no action for recovery of amount was taken nor was any order u/s 45A was passed by the Corporation. Section 85(g) of the Act reads:- 85. Punishment for failure to pay contributions, etc.-If any person- xxxx xxxx (g) is guilty of any contravention of or noncompliance with any of the requirements of this Act or the rules or the regulations in respect of which no special penalty is provided, xxxx xxxx (ii) where he commits an offence under any of the Clauses (b) to (g) (both inclusive), with imprisonment for a term which may extend to one year or with fine which may extend to four thousand rupees, or with both. Therefore, the question would be whether the petitioners are guilty of any contravention of or non-compliance with any of the requirements of the E.S.I. Act or the Rules or the Regulations issued thereunder. 5. Sri. Sandesh Raj, the learned counsel for the Corporation refers to Sections 44 and 45 of the Act. Section 44 of the Act reads:-- 44. Employees to furnish returns and maintain registers in certain cases:- (1) Every principal and immediate employer shall submit to the Corporation or to such officer of the Corporation as it may direct such returns in such form and containing such particulars relating to persons employed by him or to any factory or establishment in respect of which he is the principal or immediate employer as may be specified in regulations made in this behalf. (2) Where in respect of any factory or establishment the Corporation has reason to believe that a return should have been submitted under sub-section (1) but has not been so submitted, the Corporation may require any person in charge of the factory or establishment to furnish such particulars as it may consider necessary for the purpose of enabling the Corporation to decide whether the factory or establishment is a factory or establishment to which this Act applies. (3) Every principal and immediate employer shall maintain such registers or records in respect of his factory or establishment as may be required by regulations made in this behalf. 45. (3) Every principal and immediate employer shall maintain such registers or records in respect of his factory or establishment as may be required by regulations made in this behalf. 45. Social Security Officers, their functions and duties xxxx xxxx (2) Any Social Security Officer appointed by the Corporation under sub-section (1) hereinafter referred to as Social Security Officer or other official of the Corporation authorised in this behalf by it, may, for the purposes of enquiring into the correctness of any of the particulars stated in any return referred to in Section 44 or for the purpose of ascertaining whether any of the provisions of this Act has been complied with- (a) require any principal or immediate employer to furnish him such information as he may consider necessary for the purposes of this Act; or (b) at any reasonable time enter any office, establishment, factory or other premises occupied by such principal or immediate employer and require any person found in charge thereof to produce to such (Social Security Officer) or other official and allow him to examine such accounts, books and other documents relating to the employment of persons and payment of wages or to furnish to him such information as he may consider necessary; or (c) examine, with respect to any matter relevant to the purposes aforesaid, the principal or immediate employer, his agent or servant or any person found in such factory, establishment, office or other premises or any person whom the said Social Security Officer or other official has reasonable cause to believe to fee or to have been an employee; (d) make copies of, or take extracts from, any register, account book or other document maintained in such factory, establishment, office or other premises; (e) exercise such other powers as may be prescribed. 'Social Security Officer' was not there in 2005 and 2006, during the period mentioned in this case and so the question is whether the Insurance Inspector was competent to inspect the premises of the establishment and whether he was competent to require the principal employer or immediate employer to produce the records and registers to verify and ascertain whether such establishment is a factory within the meaning of Section 2(12) of the Act and also whether the Rules and Regulations issued under the E.S.I. Act were duly complied with. It was not disputed that the Insurance Inspector of the E.S.I. Corporation is an officer of the E.S.I. competent to inspect the premises. 6. It is beyond any pale of doubt that the Insurance Inspector inspected the petitioners' premises/establishment to examine such accounts/books and other documents relating to the employment of persons and payment of wages. Prima facie there is material to hold that the Inspector inspected the premises on three occasions. The specific allegation is that the "principal employer" or "immediate employer" did not furnish to the Inspector such information as he considered necessary, namely; the accounts, books and other documents relating to the employment of persons, payment of wages etc. Since the very inspection was for that purpose and when the principal or immediate employer did not furnish such accounts, books and other documents etc., the contention that the petitioners were not bound to produce such records or documents, cannot be countenanced for a moment. A conjoint reading of Sections 44 and 45 would make it indubitably clear that such officer of the E.S.I. Corporation can demand the principal or immediate employer or any person in-charge of the factory or establishment to furnish such particulars for the purpose of enabling the E.S.I., to decide whether the establishment is a factory to which this Act applies and to consider whether any of the provisions of the Act has or has not been complied with. 7. "Principal employer" defined in Sec. 2(17) of the Act is an inclusive definition bringing within its fold the managing agent or the owner or occupier of the factory. The first petitioner was the Managing Director of the said Company and as such it can be held that he was in ultimate control over the affairs of the Company. In other words, he was in control of or responsible to the conduct of the affairs of the Company. Therefore, there can be no doubt that the first petitioner being the Managing Director of the Company is the "principal employer" within the meaning of Section 2(17) of the Act. As such the learned counsel for the respondent submits that the first petitioner being the Managing Director and the second petitioner-being the Company are liable to be prosecuted for the offence u/s 85(g) of the Act. 8. The decision of the Delhi High Court in Employees State Insurance Corporation Vs. As such the learned counsel for the respondent submits that the first petitioner being the Managing Director and the second petitioner-being the Company are liable to be prosecuted for the offence u/s 85(g) of the Act. 8. The decision of the Delhi High Court in Employees State Insurance Corporation Vs. Masco Private Limited, is also inapplicable to the facts of this case. That was also a case where an order passed under Sec. 45A was challenged. It was observed therein that failure to file return is made punishable under Sec. 85(e) of the Act but it has no relevance to the scope of Sec. 45A which is for the purpose of making assessment and determining the contribution payable by the employer. 9. The decision in Employees' State Insurance Corporation, Hyderabad v. M/s. Ajantha Transport (Regd.), Hyderabad, 1983 Lab IC 1066 has been relied upon by Smt. Lakshmi B. Shenoi in support of her submission that the accused are not bound to produce their records at the office of the Inspector as it is not contemplated by Clause (a) of Sec. 45(2) of the Act and as there was no breach of the provisions of Clause (a) of Section 45(2) of the Act, the prosecution initiated u/s 85(g) of the Act is unsustainable. 10. Sri. Sandesh Raj, the learned counsel for the Corporation would submit that such a truncated meaning cannot be to the words employed in Sections 45(2) and 44 of the Act. Section 44 makes it clear that the "principal employer" and "immediate employer" shall maintain the registers or records in respect of the factory or establishment. They are also bound to submit to the Corporation such returns in such form containing such particulars relating to the persons employed in the factory or establishment. Sub-section (2) of Section 44 makes it further clear that even a person in-charge of the establishment is bound to furnish those particulars if it is not furnished by the principal or immediate employer. The contention that the Insurance Inspector cannot inspect the establishment for the purpose of verifying the accounts, registers and other records cannot be sustained at all. Section 45(2) enables the officer to require any principal employer or immediate employer to furnish to him such information as he considers it necessary for the purpose of this Act. The contention that the Insurance Inspector cannot inspect the establishment for the purpose of verifying the accounts, registers and other records cannot be sustained at all. Section 45(2) enables the officer to require any principal employer or immediate employer to furnish to him such information as he considers it necessary for the purpose of this Act. That right is conferred for the purposes of enquiring into the correctness of any of the particulars stated in any return referred to in Sec. 44 or for the purpose of ascertaining whether any of the provisions of the Act has been complied with. Section 45(2)(b) empowers the officer, at any reasonable time, to enter any office or establishment or factory etc. to examine such accounts and other documents relating to the employment of persons and payment etc. When admittedly, the petitioners did not furnish any returns or produce any registers or documents when the Inspector inspected the premises on three occasions, the contention that the Inspector cannot require the principal or immediate employer to produce such records and documents etc. is seen to be palpably unsound. If the principal employer fails to submit the return and if he does not furnish the documents and registers, etc. when the Inspector inspects the factory/establishment, if it is held that the Inspector has no authority to direct the employer to produce the records before the Inspector at his office then it would be giving a special privilege to the employer or to encourage him to flout the law with impunity. That is not the object of the statute. True, it is not specifically stated in Section 45 of the Act that the principal employer or immediate employer or any other person in-charge thereof should produce such records or documents at the office of the Inspector or other officer of the Corporation. When the principal employer and other officers as mentioned above are bound to submit the returns and also to furnish such information and also records and documents to ascertain whether it is a factory or establishment and also to ascertain the number of workers employed there, wages paid to them etc. When the principal employer and other officers as mentioned above are bound to submit the returns and also to furnish such information and also records and documents to ascertain whether it is a factory or establishment and also to ascertain the number of workers employed there, wages paid to them etc. it would be putting a premium on such non-cooperating principal or immediate employer or other officers of the Company/factory to steel a march on the officers, more so when it is not stated that if the principal or immediate employer fails to furnish such information or records at the time of inspection the inspector cannot require the employer or other officer to produce such records or documents at the office of the Inspector. When the Inspector of the Corporation is empowered to inspect the premises the right to obtain such records and documents to ascertain whether it is a factory within the meaning of Section 2(12) of the Act and whether there was non-compliance of any of the provisions of the E.S.I. Act are the concomitants of the power conferred on the Inspector, for, otherwise the two provisions would become otiose and meaningless. The object of the Act is to provide for certain benefits to employees in case of sickness, maternity and employment injury and to make provisions for certain other matters in relation there to. When, prima facie, it could be seen that there were 29 employees engaged in manufacturing process of that Company and when prima facie it could be seen that the principal employer failed to furnish such returns and also failed to produce such records and documents pertaining to the employment of such persons the contention that the petitioners were not bound to produce such documents to the Inspector at his office is rather unsound and untenable. 11. The decision in Kanoria Jute and Industries Ltd. and Others Vs. Employees' State Insurance Corporation and Others, has also been referred to here. That was a case where the complaints against the accused were filed stating that the accused being the principal employers failed to pay contribution for the periods mentioned in the complaints within the specific time as required under the provisions of the Employees' State Insurance Act, 1948. Since the complaint contained the ingredients of the offence committed by them, the writ petition filed, challenging the taking of cognizance of the offence was dismissed. Since the complaint contained the ingredients of the offence committed by them, the writ petition filed, challenging the taking of cognizance of the offence was dismissed. In that case, the 2nd accused/petitioner No. 2 was the Managing Director of the 1st petitioner company and so the contention that the Managing Director is not a principal employer was rejected. It is pointed out that the facts dealt with therein were not identical to the facts of this case. 12. The decision of the Gauhati High Court in Sawarmal Agarwalla Vs. State of Assam and Another, also is inapposite to the facts of this case. There the prosecution was launched against a person under Sections 85(a) and 85(e) of the E.S.I. Act. It was contended that before launching prosecution against a person u/s 85(a) or 85(e) of the ESI Act, the ESI Corporation must comply with the provisions of Section 45A and must follow, the procedure prescribed under the proviso to Section 45A which makes it incumbent upon the Corporation to give to the person, who has to be proceeded against, a reasonable opportunity of being heard before the amount due to be paid as contribution by such a person is formally demanded and/or such a person is held responsible for not filing of return in respect of the contribution to be paid in terms of Section 40 of the E.S.I. Act. The facts dealt with therein are entirely different. Here, the prosecution is launched for the reason that the petitioners failed to submit the returns and also failed to produce the accounts, registers etc. before the Inspector at his office in spite of the notices issued to the petitioners. Here, the contribution payable by the petitioners was not decided nor any order u/s 45A was passed and as such the aforesaid ruling also does not come to the rescue of the petitioners. 13. The decision of the Supreme Court in Employees State Insurance Corporation Vs. S.K. Aggarwal and Others, has also been cited in this connection. That was a case where the prosecution was launched against the Directors of a company for offence u/s 405 of Indian Penal Code. 13. The decision of the Supreme Court in Employees State Insurance Corporation Vs. S.K. Aggarwal and Others, has also been cited in this connection. That was a case where the prosecution was launched against the Directors of a company for offence u/s 405 of Indian Penal Code. There it was held:- Therefore, even if we read the definition of "principal employer" under the Employees' State Insurance Act, 1948 in Explanation 2 to Section 405 of the Indian Penal Code, the directors of the company, in the present case, 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. As the High Court has observed 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. There explanation 2 to Section 405 of Indian Penal Code was considered by the Apex Court. Expl. 2 reads:--"A person, being an employer, who deducts the employees' contribution from the wages payable to the employee for credit to the Employee's State Insurance Fund held and administered by the Employees' State Insurance Corporation established under the Employees' State Insurance Act, 1948 (34 of 1948), shall be deemed to have been entrusted with the amount of the contribution so deducted by him and if he makes default in the payment of such contribution to the said Fund in violation of the said Act, shall be deemed to have dishonestly used the amount of the said contribution in violation of a direction of law as aforesaid." In that context it was held by the Apex Court that the term "Employer" used in Explanation II must be understood as in ordinary parlance and it is the company which is the employer not its Directors either singly or collectively. Here, the question is not regarding the non-payment or non-remittance of the contribution which the employer deducted from the employees and which was not deducted. Therefore, the aforesaid decision also is not applicable to the facts of this case. 14. Here, the question is not regarding the non-payment or non-remittance of the contribution which the employer deducted from the employees and which was not deducted. Therefore, the aforesaid decision also is not applicable to the facts of this case. 14. In State Vs. Kranthi Kumar and Another, it was held by the High Court of Karnataka that when once the establishment is covered under the ESI Act, whether the establishment is liable to pay any contribution or not, it requires that the mandatory provisions have to be complied with. It is mandatory on the part of the establishment to maintain the records required and to produce the same before the authorities as and when demanded. 15. As has been referred to earlier, from the inspection conducted by the Insurance Inspector it could be found that there were 29 employees in the establishment engaged in manufacturing work and as such it would prima facie come within the definition of factory. The 1st accused, was Managing Director of the Company. It is mandatory on the part of the factory to maintain the records and to produce the same whenever demanded by the officials of the ESI. The competency of the Insurance Inspector to demand production of those documents and registers cannot be questioned at all. Since the Managing Director is to be treated as the principal employer of the factory it was his bounden duty to submit the returns. He failed or refused to produce the records. Since the Insurance Inspector is empowered or authorized to enquire into the correctness of the particulars, then it is undoubtedly clear that unless the records and registers are produced before the Inspector, it cannot be ascertained as to the number of the employees who were actually working in that establishment/factory so as to find whether the contributions payable by the company/factory were actually paid and what actually was the contribution payable. Therefore, the contention that the petitioners were not liable to furnish the particulars or the documents or registers as are required for the purpose as aforesaid cannot be sustained at all. Therefore, the contention that the petitioners were not liable to furnish the particulars or the documents or registers as are required for the purpose as aforesaid cannot be sustained at all. Since the petitioner factory and its Managing Director (principal employer) did not furnish the returns and also did not produce the records and registers as demanded by the Insurance Inspector as per the three notices issued by him, I hold that prima facie the ingredients of the offence u/s 85(g) of the ESI Act are brought out in the complaint filed by the ESI represented by the Manager, ESI Corporation, Branch office, Alappuzha. The law with regard to quashing of criminal complaint is no longer res integra. The decision in R.P. Kapur Vs. The State of Punjab,, State of Haryana and others Vs. Ch. Bhajan Lal and others; State of Bihar and Another Vs. Md. Khalique and Another, and M.N. Damani Vs. S.K. Sinha and Others, and Zandu Pharmaceutical Works Ltd. and Others Vs. Md. Sharaful Haque and Others, are some of the decisions on the point. The position is clear that the power of quashing a criminal proceedings should be exercised sparingly and with circumspection and that too in the rarest of rare cases. The learned counsel for the respondent submits that the present case is not a rarest of rare cases. The allegations made in the complaint do disclose commission of an offence u/s 85(g) of ESI Act. The truthfulness or otherwise of the allegations contained in the complaint or the probability of the defence plea can be determined only at the trial. Bearing in mind the principle governing quashing of the complaint, I have no hesitation to hold that the complaint in this case discloses sufficient materials to proceed against the accused. Hence, the request to quash the complaint and cognizance taken thereunder is only to be rejected. In the result, this Criminal M.C. is dismissed.