Case Note & Summary
The petitioner, Mr. Naseer Ahmed, a director of M/s Bombay Rayon Fashions Limited-Unit 16, filed a writ petition under Articles 226 and 227 of the Constitution of India seeking to quash the complaint in C.C. No.176/2013 filed by the ESI Corporation under Section 200 Cr.P.C. alleging commission of offence under Section 85(A) of the Employees' State Insurance Act, 1948 for failure to pay contribution. The petitioner also sought to quash the summons issued by the Economic Offences Court, Bangalore. The High Court of Karnataka at Bangalore, presided over by Justice Ram Mohan Reddy, allowed the petition. The court held that the complaint was not maintainable as it was not filed by a person duly authorized by the ESI Corporation, and the sanction for prosecution was not by the appropriate authority. Additionally, the court noted that the petitioner was not the director in charge of day-to-day management of the company, and there were no specific averments to hold him vicariously liable. Consequently, the complaint and the summons were quashed.
Headnote
A) Criminal Law - Sanction for Prosecution - Section 85(A) of Employees' State Insurance Act, 1948 - Complaint filed by ESI Corporation without proper sanction by the Director General or other authorized officer is not maintainable - Held that the complaint must be filed by a person duly authorized by the Corporation, and the sanction must be by the appropriate authority (Paras 4-5).
B) Criminal Law - Vicarious Liability of Director - Section 85(A) of Employees' State Insurance Act, 1948 - Director cannot be held vicariously liable for non-payment of contribution unless there is specific averment that he was in charge of and responsible for the conduct of the business of the company - Held that the complaint lacked such averments, and the petitioner was not the director in charge of day-to-day management (Paras 4-5).
Issue of Consideration
Whether the complaint filed by the ESI Corporation against the petitioner-director for offence under Section 85(A) of the Employees' State Insurance Act, 1948, is maintainable in the absence of proper sanction and authorization.
Final Decision
The writ petition is allowed. The complaint Annexure-K dated 02.09.2013 in C.C. No.176/2013 and the summons Annexure-L dated 07.09.2013 issued by the Economic Offences Court, Bangalore, are quashed.
Law Points
- Sanction for prosecution under ESI Act must be by the appropriate authority
- Complaint under Section 200 Cr.P.C. must be filed by a duly authorized officer
- Vicarious liability of director requires specific averment of role in day-to-day management
Case Details
2014 LawText (KAR) (02) 22
Writ Petition No.52950/2013 (L-ESI)
Sri K.R.Anand for petitioner; Sri K.Krishnappa for respondent 1
The Director, ESI Corporation, SRO: Bangalore North (Peenya); The Management of M/s Bombay Rayon Fashions Ltd.; Mr. Uday C. Mogre; Mr. Saravanan
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Nature of Litigation
Writ petition under Articles 226 and 227 of the Constitution of India seeking to quash a criminal complaint and summons under the Employees' State Insurance Act, 1948.
Remedy Sought
Petitioner sought quashing of complaint Annexure-K dated 02.09.2013 in C.C. No.176/2013 filed under Section 200 Cr.P.C. alleging offence under Section 85(A) of ESI Act, and summons Annexure-L dated 07.09.2013 issued by the Economic Offences Court, Bangalore.
Filing Reason
Petitioner, a director of M/s Bombay Rayon Fashions Ltd., was accused of failure to pay contribution under the ESI Act, but the complaint was filed without proper sanction and authorization, and the petitioner was not in charge of day-to-day management.
Previous Decisions
Respondents 2 to 4 were deleted vide order dated 27.11.2013.
Issues
Whether the complaint under Section 200 Cr.P.C. for offence under Section 85(A) of ESI Act is maintainable without proper sanction by the appropriate authority?
Whether a director can be held vicariously liable for non-payment of contribution without specific averment that he was in charge of and responsible for the conduct of the business?
Submissions/Arguments
Petitioner argued that the complaint was not filed by a person duly authorized by the ESI Corporation and the sanction for prosecution was not by the appropriate authority.
Petitioner contended that he was not the director in charge of day-to-day management of the company and there were no specific averments to hold him vicariously liable.
Ratio Decidendi
A complaint under Section 200 Cr.P.C. for offence under Section 85(A) of the ESI Act must be filed by a person duly authorized by the ESI Corporation, and the sanction for prosecution must be by the appropriate authority. A director cannot be held vicariously liable for non-payment of contribution unless there is a specific averment that he was in charge of and responsible for the conduct of the business of the company.
Judgment Excerpts
The complaint is not filed by a person duly authorized by the Corporation and the sanction for prosecution is not by the appropriate authority.
The petitioner is not the director in charge of day-to-day management of the company and there are no specific averments to hold him vicariously liable.
Procedural History
The petitioner filed a writ petition under Articles 226 and 227 of the Constitution of India before the High Court of Karnataka at Bangalore seeking to quash the complaint and summons in C.C. No.176/2013. Respondents 2 to 4 were deleted from the array of parties vide order dated 27.11.2013. The petition was heard for preliminary hearing-B group and disposed of on 13.02.2014.
Acts & Sections
- Employees' State Insurance Act, 1948: 85(A)
- Code of Criminal Procedure, 1973: 200
- Constitution of India: 226, 227
