Dismissed

Ajay Raj Shetty v. Director

Karnataka HC8 Dec 2023CRL.RP/164/2015

Case brief

AI extract

What is this about?

High Court dismissed the criminal revision petition filed by a General Manager challenging his conviction for failing to remit deducted ESI contributions. The Court held he was the principal employer and rejected arguments regarding his actual role as technical coordinator for lack of corroboration.

What did the court decide?

The criminal revision petition was dismissed, upholding the conviction and sentence. No interference with the quantum of sentence.

Ajay Raj Shetty Vs Director — Company and Corporate | Karnataka HC (2023)

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU

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DATED THIS THE 8^TH DAY OF DECEMBER, 2023

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BEFORE

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THE HON’BLE MR. JUSTICE RAJENDRA BADAMIKAR

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CRIMINAL REVISION PETITION NO.164 OF 2015

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BETWEEN:

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AJAY RAJ SHETTY, GENERAL MANAGER, M/S. ELECTREX (I) LTD. NO.21, D-1, 2^ND PHASE, PEENYA INDUSTRIAL AREA, BENGALURU-560 058.

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M/S. ELECTRIEX (I) LTD. NO.21, D-1, 2^ND PHASE, PEENYA INDUSTRIAL AREA, BENGALURU-560 058.

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….PETITIONERS

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(BY SRI. K.T. KUSHALAPPA, ADVOCATE)

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AND:

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DIRECTOR,

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SUB REGIONAL OFFICE BENGALURU, NORTH(PEENYS) HARINI TOWERS, 3^RD CROSS, 3^RD MAIN, OFF RING ROAD, (NEAR F T I) IIND STAGE, INDUSTRIAL SUBURB, YESHWANTPURA, BENGALURU-22, REPT. BY SOCIAL SECURITY OFFICER, ESI CORPORATION, BENGALURU-23.

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...RESPONDENT

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(BY SRI. K. KRISHNAPPA, ADVOCATE)

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THIS CRIMINAL REVISION PETITION IS FILED UNDER SECTION 397 R/W 401 CR.P.C PRAYING TO SET ASIDE THE JUDGMENT DATED 14.11.2014 PASSED BY PRESIDING OFFICER, CITY FAST TRACK COURT, BENGALURU CITY(FTC-VI) IN CRL.A.NO.553/2013 BY THE SPECIAL COURT FOR ECONOMICAL OFFENCES BENGALURU IN C.C.NO.326/2011 AND ACQUIT THE PETITIONER FROM THE CHARGES LEVELLED AGAINST HIM.

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THIS CRIMINAL REVISION PETITION HAVING BEEN HEARD AND RESERVED FOR ORDERS ON 20.11.2023, COMING ON FOR ‘PRONOUNCEMENT OF ORDER’ THIS DAY, THE COURT MADE THE FOLLOWING:

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ORDER

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This revision is filed by the accused / revision petitioners under Section 397 read with Section 401 of Code of Criminal Procedure (hereinafter referred to as 'Cr.P.C' for short) challenging the judgment of conviction and order of sentence passed by Special Court for Economic offences, Bengaluru in C.C.No.326/2011 dated 28.09.2013 and confirmed by Sessions Judge/FTC-VI, Bengaluru City in Crl.A.No.553/2013 dated 14.11.2014.

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For the sake of convenience, the parties herein are referred with original ranks occupied by them before the trial Court.

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The brief factual matrix leading to the case are

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that the accused No.2 is covered under ESI Act and a code

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number 49000055200000699 was allotted. That the accused No.1 is the General Manager and Principal employer of accused No.2 Factory in terms of Section 2(17) of the Employees State Insurance Act (ESI Act for short) and was in charge of factory as well as responsible for the conduct of the business of the factory / company. It is further alleged that accused have failed to pay contribution amounting to Rs.8,26,696/- in accordance with Section 39 of ESI Act for the period from 01.2.2010 to 31.12.2010 as required under Section 40 of ESI Act read with corresponding Regulations.

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A notice was issued on 22.03.2011 to both the accused and a show cause notice was issued to accused No.1 on 24.03.2011. Inspite of service of notice, the accused failed to remit the contribution to the tune of Rs.8,26,696/- deducted from the wages of the employees. It is further alleged that they have also not shown any

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reason for non payment of contribution and hence, a complaint came to be lodged against the accused alleging that accused have committed an offence under Section 85(a) of ESI Act.

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Since, the complaint was lodged by a public servant in his official capacity, the learned Magistrate has taken cognizance of the matter and process came to be issued. The accused have appeared through their counsel and accused No.1 was enlarged on bail as accused No.2 is the company. The charge was framed against accused and same was read over and explained to the accused and they pleaded not guilty.

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The Security Officer of ESI Corporation was examined as PW1 and Ex.P1 to Ex.P8 were marked. Thereafter, statement of accused under Section 313 Cr.P.C was recorded and the simple assertion of the accused No.1 is that he is not the Principal Employer. Later on, accused No.1 was got examined as DW1. He has also placed reliance on 4 documents marked at Ex.D1 to Ex.D4.

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The learned Magistrate after hearing the

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arguments and after appreciating the oral and documentary evidence, convicted the accused by imposing a fine of Rs.5,000/- and accused No.1 was also imposed sentence of imprisonment for a period of 6 months with default clause for the offence punishable under Section 85(a) read with Section 85(i)(b) of the ESI Act.

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Being aggrieved by this judgment of conviction

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and order of sentence, both the accused filed Criminal Appeal No.553/2013 on the file of Principal City Civil and Sessions Judge, Bengaluru and later on, the matter was transferred to FTC-VI. The learned Sessions Judge after reappreciating the oral and documentary evidence dismissed the appeal by confirming the judgment of conviction and order of sentence. Being aggrieved by these concurrent findings, the accused are before this court by way of this revision.

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Heard the arguments advanced by the learned

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counsel for the revision petitioner/ accused and learned counsel for respondent / Corporation. Perused the records.

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The learned counsel for the revision petitioner / accused would contend that accused is not a principal employer and he was working as a technical expert and he never worked as a General Manager. He would dispute contents of Ex.P1 asserting that somebody has given Ex.P1 disclosing the name of accused No.1 as General Manger, but he never worked as a General Manager. He placed reliance on number of citations regarding definition of ‘Principal Employer’. Hence, he would contend that both the courts below have committed an error in treating him as a principal employer and convicting him. As such, he would seek for allowing the revision by setting aside the impugned judgments of conviction and orders of sentence passed by both the courts below.

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Per contra, the learned counsel for the

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respondent / Corporation would support the judgment of

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conviction and order of sentence passed by the trial court and confirmed by the appellate court. He would contend that both the courts concurrently held that accused is the principal employer and Ex.P1 was never challenged, wherein it is shown to be accused as the principal employer. Further, he would also contend that accused has no where disclosed who was the General Manager then and only he is disputing his status against recitals of Ex.P1. Hence, he would seek for dismissal of the revision.

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Having heard the arguments and perusing the oral and documentary evidence, now the following point would arise for my consideration:

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(i) Whether the judgment of conviction and order of sentence passed by the trial court and affirmed by the appellate court are perverse, arbitrary and erroneous so as to call for any interference by this court.

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The main contention of the accused No.1 is that he is not the General Manager of accused No.2. Interestingly, before the lower appellate court and before

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this court, the revision petitioners/accused are represented by the same counsel. In the revision petition, the revision petitioner No.2 was shown to be the Company, but again it is represented by the same counsel who is representing petitioner No.1. All along, there is absolutely no whisper from accused No.1 or from accused No.2 as to who was the General Manager of accused No.2 if accused No.1 was not the General Manager as asserted by him.

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The records clearly disclose that there is no serious dispute of the fact that accused No.2 deducted a sum of Rs.8,26,696/-from the employees for a period from 01.02.2010 to 31.12.2010 and the same was not remitted to the Corporation. Though before the appellate court arguments were advanced regarding deposit of Rs.1 Crore before BIFR and proceedings before this court in writ petition, but before this court no such arguments have been advanced regarding adjustment and it is also not within the jurisdiction of this court.

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Apart from that, accused No.1 himself got

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examined himself as DW1 and admitted that the accused No.2 is covered under ESI Act. It is the specific assertion that accused have submitted the report relating to employees compensation deducted from 01.02.2010 till 31.12.2010 and same is amounting to Rs.8,26,696/-, but the same was not remitted to the Corporation. Further, accused No.1 admitted that Ex.P1 is issued on behalf of the company / accused No.2 and admits the seal also. He also admits that Ex.P1 is also filed by his company, but pleads ignorance as to who has signed Ex.P1 as an authorized signatory. He never disputed Ex.P1 at any point of time.

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All along, it is asserted by accused No.1 that he

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was not working as a General Manager in accused No.2 and he was a technical coordinator between February 2010 to December 2010. If he was not a General Manager and if he is only a technical coordinator, then he must be having knowledge of the fact as to who was the General Manager then, but he did not assert or disclose as to who was the

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General Manager then. He admits that in Ex.P1 his name is shown as General Manager.

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Apart from that, the accused No.1 should have

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produced his wage slip / pay slip to show his status as a technical coordinator. He has not even summoned any relevant documents from accused No.2 or not made any attempts though accused No.2 has appeared through same counsel to disclose or produce records as to who is the General Manager. Apart from that, a demand notice and

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show cause notice were admittedly served on accused No.1 and he did not bother to respond. He admits that in Ex.P1 his name is shown as General Manger with a telephone number including his residential address. He has never challenged Ex.P1 and not placed any records to show that he was only a technical coordinator, but not the General Manager.

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When Ex.P1 is not challenged, now it is not open for accused No.1 to dispute his status when he has jointly filed the appeal and contesting the matter through same

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advocate without disclosing his real status by producing material documents. As observed above, accused could have summoned the pay roll of the company to disclose his status or he could have produced his employment / appointment letter to show that he was appointed as technical coordinator. The show cause notice is served on accused Nos.1 and 2 and there was no response.

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The learned counsel for revision petitioner has invited the attention of this court to Section 2(17) of ESI Act regarding definition of ‘Principal Employer’, which defines the principal employer as occupier of the factory duly named, manager appointed, directors in-charge of the company etc. including the owner of the factory. The definition also includes the Managing Agent also and legal representative of the deceased owner or occupier. Admittedly, Managing Agent is the General Manager of the company and he is responsible for all the administrative control of the company and now it cannot lie in the mouth of accused No.1 that he is not the principal employer.

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The learned counsel for the revision petitioner

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has placed reliance on a decision reported in EMPLOYEES

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STATE INSURANCE CORPORATION, CHANDIGARH VS.

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GURDIAL SINGH AND OTHERS’, AIR 1991 SC 1741 .

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The said decision was already considered by the First Appellate Court and there in the said decision, there is clear reference that the company if had a Manager he comes under the definition of ‘principal employer’. Hence, the principles enunciated in the above cited decision would not come to the aid of revision petitioner in any way. He has

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further placed reliance on a decision in ‘J.K.INDUSTRIES LTD. AND OTHERS VS. CHIEF INSPECTOR OF

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FACTORIES AND BOILERS AND OTHERS’, (1996) 6

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SCC 665 , but it is pertaining to labour law and Factories Act and the said principles in no way assist the revision petitioner/ accused.

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The evidence on record clearly establish that the

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accused No.1 was the principal employer being the General Manager of accused No.2 and admittedly, the employees

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contribution to the tune of Rs.8,26,696/- was deducted for a period of 01.02.2010 to 31.12.2010, but not remitted to the respondent / Corporation and it is an offence under Section 85(a) of ESI Act. Further, it is in fact punishable under Section 85(i)(a) of ESI Act, but the learned Magistrate has convicted by imposing lesser sentence under Section 85(i)(b) of ESI Act. In fact, when the offence is committed under clause (a) of Section 85 of ESI Act regarding non-remittance of employees contribution, which has been deducted as in the present case, it shall be punishable with imprisonment for not less than one year and fine of Rs.10,000/-, but in the instant case, the accused was sentenced to undergo imprisonment for a period of 6 months with fine of Rs.5,000/-. Hence, it is evident that in fact, the sentence imposed is on the lower side. Though the proviso to Section 85(i) of the Act gives power to the court for adequate and special reasons court can impose sentence of imprisonment for a lesser term, but no such case is made out and no grounds are forthcoming for imposition of lesser sentence.

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Both the courts below have appreciated the oral

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and documentary evidence in detail and have rightly convicted the accused. In fact, they have imposed a lesser sentence rather than the minimum statutory sentence prescribed under the enactment. The respondent /Corporation has not challenged the same. Considering these facts and circumstances, the question of interference in the sentence portion also does not arise at all. No illegality or perversity is found in the judgment of conviction and order of sentence so as to call for interference by this court in this revision. As such, the point under consideration

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is answered in the negative and as such, the revision being devoid of any merits does not survive for any consideration

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. Accordingly, I proceed to pass the following:

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ORDER

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(i) The revision petition stands dismissed .

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Sd/- JUDGE

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