Allowed

Shrikant Madhav Vaidya v. the State of Jharkhand

Jharkhand HC15 May 2023Cr.M.P./939/2023

Case brief

AI extract

What is this about?

Petitioner, a non-executive director, sought quashing of the order taking cognizance under the Factories Act alleging safety violations. The High Court held that without active manufacturing, premises are not a 'factory', and without specific evidence of personal involvement, a non-executive director cannot be arraigned. The impugned orders were quashed as an abuse of process.

What did the court decide?

The order dated 23.06.2022 and subsequent order dated 08.10.2022 taking cognizance and directing bailable warrant were quashed and set aside.

Shrikant Madhav Vaidya Vs the State of Jharkhand — Writ and Judicial Review | Jharkhand HC (2023)

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Cr.M.P. No.939 of 2023

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IN THE HIGH COURT OF JHARKHAND AT RANCHI Cr.M.P. No. 939 of 2023

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Shrikant Madhav Vaidya, s/o Madhav Damodar Vaidya, aged about 59 years, currently posted as the Chairman of Indian Oil Corporation Limited having his office at 3079/3, J B Tito Marg, Sadiq Nagar, P.O. Andrewsganj, P.S. Defence Colony, Dist. New Delhi 110049

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.... Petitioner

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Versus

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The State of Jharkhand

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Factory Inspector, Dhanbad Circle-2, having its office at Sanyukt Shram Bhavan Bartank, P.O. & P.S. Dhanbad, Dist. Dhanbad

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…. Opp. Party

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P R E S E N T

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HON’BLE MR. JUSTICE ANIL KUMAR CHOUDHARY

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For the Petitioner : Mr. B.M. Tripathi, Sr. Advocate : Mr. Rahul Lamba, Advocate For the State : Mrs. Nehala Sharmin, Spl. P.P.

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By the Court:-

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Heard the parties.

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This criminal miscellaneous petition has been filed invoking the jurisdiction of this Court under Section 482 Cr.P.C. with a prayer for quashing the order dated 23.06.2022 passed by the learned Chief Judicial Magistrate, Dhanbad in Complaint Case No. 6445 of 2022 by which the learned Magistrate has taken cognizance of the offences punishable under Sections 92 and 96A of the Factories Act, 1948 inter alia against the petitioner, who is the Chairmancum-non-Executive Director of Hindustan Uvarak Rasayan

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Cr.M.P. No.939 of 2023

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Limited (HURL), Jharia- cum- Jharpokhar- cum- Sindri which is a public sector undertaking of Government of India and subsequent order dated 08.10.2022 in which learned Magistrate directed the office clerk to issue bailable warrant of arrest against the petitioner even though service report of summon issued to the petitioner had not been returned.

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The brief facts of the case is that the petitioner being the director of the said company was responsible for the valves of the plant being not inspected regularly as per the Bihar Factory Rules, 1950 by the competent person declared as such and in unsafe manner and because of which on 25.03.2022 a workman namely Raju Vishwakarma who was working in the platform of gas turbine generator -2 for installing canopy died to the injuries he received from the detached pipe of the vent line. There is also allegation against the petitioner that management of the factory did not inform about the accident in format being form no. 17 A and did not provide the information of the accident in the format in violation of Rule 88 read with Rule 96 of Bihar Factories Rules, 1950 even though M/s. Hindustan Uvarak Rasayan Limited (HURL) is a hazardous factory as per Section 2 (c) (b) of the Factories Act, 1948. There is also allegation against the petitioner that the petitioner did not do the pre-employment medical examination of the workmen and for the said violations the occupier and the factory manager are equally responsible as per Section 92 and 96A of the Factories Act, 1948.

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Cr.M.P. No.939 of 2023

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Mr. B.M. Tripathi, learned Senior Advocate appearing for the petitioner by drawing attention of this Court to page no. 54 of the brief submits that the urea was to be produced in the Hindustan Uvarak Rasayan Limited (HURL) which indicates that on the alleged date of occurrence, no manufacturing process was carried out within the premises of Hindustan Uvarak Rasayan Limited (HURL). Drawing attention of this Court to the definition of factory, Section 2 (m) of Factories Act, 1948 which reads as under:-

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“Section 2(m) of Factories Act 1948

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(m) “factory” means any premises including the precincts thereof—

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(i) whereon ten or more workers are working, or were working on any day of the preceding twelve months, and in any part of which a manufacturing process is being carried on with the aid of power, or is ordinarily so carried on, or (ii) whereon twenty or more workers are working, or were working on any day of the preceding twelve months, and in any part of which a manufacturing process is being carried on without the aid of power, or is ordinarily so carried on,—

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but does not include a mine subject to the operation of [the Mines Act, 1952 (35 of 1952)], or [a mobile unit belonging to the armed forces of the Union, a railway running shed or a hotel, restaurant or eating place];

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[Explanation [I].—For computing the number of workers for the purposes of this clause all the workers in different groups and relays] in a day shall be taken into account;]

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[Explanation II.—For the purposes of this clause, the mere fact that an Electronic Data Processing Unit or a Computer Unit is installed in any premises or part thereof, shall not be construed to make it a factory if no manufacturing process is being carried on in such premises or part thereof;].”

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It is submitted by the learned Senior Advocate appearing for the petitioner that for an organization to come under the ambit of

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Cr.M.P. No.939 of 2023

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factory carrying on of manufacturing process is a sine qua non. Relying upon the judgment of Hon’ble Supreme Court of India in the case of Lanco Anpara Power Limited vs. State of Uttar Predesh & Ors. reported in (2016) 10 SCC 329 , paragraph no.38 of which reads as under:-

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“38. It is not in dispute that construction of the projects of the appellants is covered by the definition of “building or other construction work” as it satisfies first two elements of the definition pointed out above. In order to see whether exclusion clause applies, we need to interpret the words “but does not include any building or other construction work to which the provisions of the Factories Act … apply” (emphasis supplied). The question is as to whether the provisions of the Factories Act apply to the construction of building/project of the appellants. We are of the firm opinion that they do not apply. The provisions of the Factories Act would “apply” only when the manufacturing process starts for which the building/project is being constructed and not to the activity of construction of the project. That is how the exclusion clause is to be interpreted and that would be the plain meaning of the said clause. This meaning to the exclusion clause ascribed by us is in tune with the approach adopted by this Court in Organo Chemical Industries v. Union of India [Organo Chemical Industries v. Union of India, (1979) 4 SCC 573 : 1980 SCC (L&S) 92] . Two separate, but concurring, opinions were given by Justice V.R. Krishna Iyer and Justice A.P. Sen, and we reproduce here below some excerpts from both opinions:” (emphasis supplied)

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It is submitted by the learned Senior Advocate appearing for the petitioner that the construction of the building/project for a manufacturing cannot be termed factory.

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It is then submitted by the learned Senior Advocate appearing for the petitioner that as admittedly, no manufacturing process was carried on in the premises of Hindustan Uvarak Rasayan Limited (HURL) as mentioned in the complaint itself by the

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Cr.M.P. No.939 of 2023

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complainant hence, the Hindustan Uvarak Rasayan Limited (HURL) on the date of occurrence was not a factory hence, the penal provision of Section 92 or 96A of the Factories Act is not applicable and the learned Magistrate ignoring the same has taken cognizance of the offence punishable under Section 92 and 96A of the Factories Act. It is then submitted by the learned Senior Advocate appearing for the petitioner that co-accused- Dipton Roy is the occupier of the premises and in this respect, learned Senior Advocate appearing for the petitioner relied upon the Annexure-2 of the brief at page no. 56 which shows that Dipton Roy, Sindri Project of Hindustan Uvarak Rasayan Limited (HURL) is the occupier of Sindri Unit where the occurrence allegedly took place and hence, the petitioner cannot be held liable for the alleged acts. It is next submitted by the learned Senior Advocate appearing for the petitioner that the petitioner has been arraigned as “co-occupier” and the term “co-occupier” is indisputably not recognized by the factories act and in this respect, learned Senior Advocate relied upon the judgment of Hon’ble Supreme Court of India in the case of Indian Oil Corporation Limited vs. Chief Inspector of Factories & Ors. reported in (1998) 5 SCC 738 , paragraph no. 16 of which reads as under :-

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“16. Xxxxx xxxxx xxxxx xxxxx Therefore, if it is a case of a factory in fact or in reality owned or controlled by the Central Government or the State Government or any local authority, then in case of such a factory, the person or persons appointed to manage the affairs of the factory shall have to be deemed to be the occupier, even though for better management of such a factory or factories, a corporate form is adopted by the Government.”

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Cr.M.P. No.939 of 2023

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It is then submitted by the learned Senior Advocate appearing for the petitioner that as has been held by the Hon’ble Supreme Court of India in the case of Castrol (India) Ltd. vs. State of Karnataka reported in (2018) 17 SCC 275 , wherein it has been observed that clear and categorical statement in the complaint is required for fastening vicarious liability for offence committed by the company or a director who is responsible or in-charge of conduct of business of the company but as no such averment has been made in the complaint, hence, on this score also the complaint is liable to be set aside. It is next submitted by the learned Senior Advocate appearing for the petitioner that indisputably the petitioner is currently the Chairman of Indian Oil Corporation Limited and he is only a non-executive director of the alleged offending company in an ex-officio capacity and as there is no allegation that the petitioner had no personal involvement or knowledge so, no way cognizance could have been taken against him. Relying upon the judgment of Hon’ble Supreme Court of India in the case of Sunil Bharti Mittal vs. CBI reported in (2015) 4 SCC 609 , learned Senior Advocate appearing for the petitioner submits that directors of the accused company may only be roped in if (a) there is sufficient incriminating evidence against them coupled with criminal intent or (b) the statutory regime attracts the doctrine of vicarious liability and the Factories Act, 1948 do not attract any vicarious liability and for that purpose the provision of occupier has been made with the definition as mentioned in Section 2 (m) of the Factories Act, 1948. Hence, it is submitted that the order dated

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Cr.M.P. No.939 of 2023

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23.06.2022 passed by the learned Chief Judicial Magistrate, Dhanbad in Complaint Case No. 6445 of 2022 and subsequent order dated 08.10.2022 be quashed and set aside.

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Learned Special Public Prosecutor on the other hand opposes the prayer for quashing the order dated 23.06.2022 passed by the learned Chief Judicial Magistrate, Dhanbad in Complaint Case No. 6445 of 2022 and subsequent order dated 08.10.2022 and it is submitted by learned Special P.P. that since the learned Magistrate has rightly taken cognizance against the petitioner, this criminal miscellaneous petition being without any merit be dismissed.

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Having heard the submissions made at the Bar and after going through the materials in the record, since it is an admitted case of the complainant-opposite party no.2, as mentioned in the complaint itself, production of urea was to start in Hindustan Uvarak Rasayan Limited (HURL) which clearly indicates that on the date of occurrence; production of urea did not start. There is no material in the record to suggest that any manufacturing activity was going on in the organization where production has admittedly not started.

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Under such circumstances, in the absence of any material in the record regarding any manufacturing process being carried out in the premises of Hindustan Uvarak Rasayan Limited (HURL) but on the other hand, it is the admitted case of the complainant to the contrary, as already indicated above, certainly, the said Hindustan Uvarak Rasayan Limited (HURL), Sindri cannot be considered to

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Cr.M.P. No.939 of 2023

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be a factory; as defined under Section 2 (m) of the Factories Act, 1948. Further, though the petitioner is admittedly a director as mentioned in the complaint itself but there is no material in the record to suggest that he has any personal involvement or knowledge about the acts alleged. In the absence of such specific allegation and in the absence of provision of vicarious liability, except the occupier, arraigning the petitioner as an accused in this case is also not in accordance with law and as there is specific person as a occupier, in the absence of any specific allegation against the petitioner merely because he is a director of the company certainly, he cannot be arraigned as an accused in this case. Thus this Court has no hesitation in holding that the order dated 23.06.2022 passed by the learned Chief Judicial Magistrate, Dhanbad in Complaint Case No. 6445 of 2022 taking cognizance of the offence inter alia against the petitioner; being not sustainable in law, will amount to abuse of process of court. Since the order dated 23.06.2022 passed by the learned Chief Judicial Magistrate, Dhanbad in Complaint Case No. 6445 of 2022 is not in accordance with law; obviously the subsequent order by which bailable warrant of arrest has been ordered to be issued against the petitioner is also not sustainable in law.

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Accordingly, both, the order dated 23.06.2022 passed by the learned Chief Judicial Magistrate, Dhanbad in Complaint Case No. 6445 of 2022 and the subsequent order dated 08.10.2022 passed by the learned Chief Judicial Magistrate, Dhanbad in the same case is quashed and set aside.

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9 Cr.M.P. No.939 of 2023

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In the result, this criminal miscellaneous petition is allowed.

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(Anil Kumar Choudhary, J.)

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High Court of Jharkhand, Ranchi Dated the 15^th May, 2023 AFR/Sonu-Gunjan/-

Shrikant Madhav Vaidya v. the State of Jharkhand

Case brief

What is this about?

What did the court decide?

Shrikant Madhav Vaidya v. the State of Jharkhand

Case brief

What is this about?

What did the court decide?

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