ETA Constructions (India) Pvt. Ltd. and Mr. S.M. Sadak Ansari, Director, ETA Constructions (India) Pvt. Ltd. vs State

K. Mohan Ram, J.—The accused 1 and 2 in C.C. Nos. 4552 and 4553 of 2004 on the file of the learned II Metropolitan Magistrate,

Egmore, Chennai, have filed the above Criminal Original Petitions seeking to quash all further proceedings therein.

The brief facts which are necessary for the disposal of the above Criminal Original Petitions are as follows:

The respondent within whose jurisdiction the petitioners'' construction site was situated was inspected by the respondent which revealed many

contraventions under the Contract Labour (Regulation and Abolition) Act, 1970 (Act 37 of 1970), (hereinafter referred to as ""the Act"") and the

Contract Labour (Regulation and Abolition) Central Rules, 1971 (hereinafter referred to as ""the Rules""). The respondent sent a inspection report

cum show cause notice in No. 34 (57)/2003/E1/Dated 13.12.2003 to the second accused calling upon him to show cause why action should not

be taken for non-compliance of the violations and called upon him to rectify the defects and to send an explanation within ten days, but the second

accused did not submit any reply. In the show cause notice, the second petitioner was described as a contractor within the meaning of Section 2(1)

(c) of the Act. In the show cause notice, the following defects were pointed out:

(i) As per Rule 81(1)(i) of the Rules, failed to display notice showing the rates and wages, hours of work, wage period, rate of payment of wages

and address of Inspector having jurisdiction and date of payment of unpaid wages in English, Hindi and Tamil at work spot.

(ii) As per Rule 81(2) of the Rules, failed to submit the copy of notices required to be displayed at the work spot and to be sent to the inspector.

(iii) As per Rule 71 of the Rules, failed to send the notices showing the wage period and the place and time of disbursement of wages, available at

the place of work and its copy not sent to principal employer.

(iv) As per Rule 79 of the Rules, failed to display an abstract of the Rules approved by the Chief Labour Commissioner (Central), New Delhi, at

work spot in English, Hindi and Tamil.

(v) As per Rule 75 of the Rules, failed to maintain the register of persons employed at the work spot.

(vi) As per Rule 78(1)(a)(i) of the Rules, failed to maintain the musterroll and the register of wages at work spot.

(vii) As per Rule 78(i)(a)(ii) of the Rules, failed to maintain the register of fine, deductions and advances at the work spot.

(viii) As per Rule 78(1)(a)(iii) of the Rules, failed to maintain the overtime register at the work spot.

(ix) As per Rule 78(1)(b) of the Rules, failed to issue employment cards to the workers.

(x) As per Rule 76 of the Rules, failed to issue wage slips to the workers.

Since the second accused did not send any reply, the respondent filed the complaints u/s 24 of the Act and the same were taken on file as C.C.

Nos. 4552 and 4553 of 2004. As far as the first accused is concerned, he sought to be prosecuted as the Director of the second accused /

company, u/s 24 read with Section 25 of the Act. Being aggrieved by that, the above Criminal Original Petitions have been filed by accused 1 and

Identical grounds have been raised by both the accused in the above Criminal Original Petitions, though separate Criminal Original Petitions

have been filed by them.

The contentions put forth by the petitioners are as follows:

(i) The second accused in the complaint is arrayed as ''M/s. ETA Constructions Pvt. Ltd., Represented by Shri. Ramesh Kumar, Director, No. 32,

Cathedral Road, Chennai - 600 008''. The said Mr. Ramesh Kumar is neither a Director nor hold any position and not in any way connected with

the affairs of M/s. ETA Constructions (India) Pvt. Ltd., and therefore the complaint against the second accused is totally misconceived.

(ii) Mr. S.S. Iqbal and Mr. Abdul Malick residing at No. 18/1, Wallace Garden, I Street, Chennai 600 006 are the Power of Attorney Holders for

Hameedia Agencies. They acting on behalf of the said Hameedia Agencies and in the capacity of a Principal Employer awarded a contract vide

their letter dated 01.10.2002 to M/s. ETA Constructions (India) Pvt. Ltd., for constructing a building at Door No. 14, Haddows Road,

Nungambakkam, Chennai - 600 034, as per the approved plan. In relation to the said contract, they have issued Form No. V dated 09.12.2002

read with Rule 21(2) of the Act and Rules. On the basis of the application made by the Principal Employer, the Assistant Commissioner of Labour,

Government of Tamil Nadu, issued Certificate of Registration dated 18.12.2002 indicating the M/s. ETA Constructions (India) Pvt. Ltd., as the

main contractor and Mr. P. Vilvanathan, S/o. Poongavanam, residing at No. 32, I Street, Kumaran Colony, Saidapet, Chennai - 600 015, as sub-

contractor to carry out the Civil Construction at Door No. 14, Haddows Road, Nungambakkam, Chennai - 600 034, and issued a licence dated

25.06.2003. In response to the application made by the Principal Employer dated 07.07.2003, the Member Secretary, CMDA, Chennai - 600

008, issued a Completion Certificate for the constructed building vide their letter dated 14.07.2003. The respondent / complainant issued four

show cause notices to the petitioner / first accused and to M/s. ETA Constructions (India) Pvt. Ltd. In response to the show cause notices issued

by the respondent / complainant, the first petitioner / first accused and M/s. ETA Constructions Pvt. Ltd., replied vide their reply dated

19.01.2004 rejecting the various allegations leveled against the petitioner and the construction company. There has been no contractual relationship

between the workers undertaken civil, electrical and interior works by the third accused for Thai Airways on the day on which the respondent /

complainant inspected the work place and thereafter requested to drop the action that has been contemplated against the accused.

(iii) The petitioners / accused never engaged workers for Thai Airways. From the show cause notices it is inferred that the portion of the premises

was leased to Thai Airways and Thai Airways had engaged M/s. Viswanath Associates, the third accused to do the civil, electrical and interior

works. Therefore, the first petitioner / first accused and M/s. ETA Constructions (India) Pvt. Ltd., has no connection with the owner of the

premies, Thai Airways and the Viswanath Associates. Therefore, the show cause notices and complaints made against the first petitioner / first

accused and M/s. ETA Constructions (India) Pvt. Ltd., is totally misconceived and purely upon misinformation. The complaint cannot be attributed

to either the first petitioner / first accused or M/s. ETA Constructions (India) Pvt. Ltd., / second accused.

A common counter affidavit has been filed by the respondent wherein the various alleged violations committed by the accused has been set out

in detail which are stated supra. In the counter affidavit it is specifically stated that in the show cause notices the accused did not send any reply. It

is further stated in the counter affidavit that the second accused is in the business of civil construction and it was awarded the contract for the civil

construction of an office complex in No. 14 Haddows Road, Nungambakkam, Chennai 600 034, and apart from the civil construction in the

above mentioned site, the petitioners were also assigned the task of structural, electrical, architectural, sanitary, plumbing, interior and all other

works in relation to the Haddows road site. It is further stated in the counter affidavit that the site engineer of the second accused, company,

incharge of the work site in No. 14 Haddows Road, Nungambakkam, Chennai 600 034, Mr. Mohammed Hussein, brought it to the respondent''s

notice during the inspection on 13.12.2003 that Mr. Ramesh Kumar was a director of the second petitioner, company, and only based on that the

respondent sought to proceed against Mr. Ramesh Kumar in his capacity as Director, according to Section 25 of the Act. It is further stated in the

counter affidavit that it is not the construction of the building that the respondent seeks to proceed against the petitioners, it is the works carried out

by the petitioners for Thai Airways in Haddows Road premises that is the subject matter of the inspection dated 13.12.2003 carried out by the

respondent. It is further stated that the petitioners carried out civil, interior and electrical work for Thai Airways while contravening the various

provisions of the Act and Rules. It is further stated in the counter affidavit that this Court may not enter into arena of a disputed question of fact and

such disputed question of fact can be proved only during the course of trial. It is further stated that since the allegations contained in the complaint

and the show cause notices, prima facie, constitutes the ingredients of the offence alleged, the above quash petitions are devoid of merits and the

same are liable to be dismissed.

Heard the learned Counsel on either side.

Mr. T.K. Seshadri, learned senior counsel for Mr. T.K. Bhaskar, learned Counsel for the petitioners in all the above Criminal Original Petitions,

apart from reiterating the contentions put forth in the above quash petitions submitted that Mr. Ramesh Kumar, was at no point of time a share

holder or a Director of the second accused company and without even verifying the basic facts the complaints have been filed. He further

submitted that there is absolutely no material to substantiate the allegation that the second accused company was entrusted with the electrical and

interior decoration works by Thai Airways; on the other hand, the owners of the building entrusted the civil construction work of the building and

the second accused had obtained the certificate of registration dated 18.12.2002 indicating that the second accused as a main contractor and one

P. Vilvanathan as a sub-contractor to carry out the civil construction at Door No. 14 Haddows Road, Nungambakkam, Chennai 600 034 and

issued a licence dated 25.06.2003. He further submitted that in response to the application made by the Principal Employer dated 07.07.2003, the

Member Secretary, CMDA, Chennai - 600 008, issued a Completion Certificate for the constructed building vide their letter dated 14.07.2003.

He, by referring to the reply notice dated 19.01.2004, which is made available in the typed set of papers, submitted that a detailed reply was

submitted by the second accused but the same has been suppressed in the complaints. He further submitted that inasmuch as all the relevant

provisions of the Act and the Rules have been complied with and the same have been detailed in the reply notices, the complaints are not

maintainable.

Learned senior counsel for the petitioners in all the above Criminal Original Petitions submitted that as far as the first accused is concerned,

except describing him in the cause title of the complaints as a Director of the second accused company, there are absolutely no allegations against

the first accused to the effect that he is incharge of and responsible for the conduct of the business of the second accused company and as such he

could not have been arrayed as an accused by invoking the provisions contained in Section 25 of the Act.

In support of the said contentions the learned senior counsel for the petitioners based reliance on a number of decisions and since all those

decisions are not necessary, a decision of the Apex Court rendered in the case of Sabitha Ramamurthy v. R.B.S. Channabasavaradhya and

reported in (2007) 1 Scc (Cri) 621 is referred to. In the said decision, while considering the scope of Section 141 of the Negotiable Instruments

Act, which is similar to Section 25 of the Act the Apex Court has observed as under:

...By reason of the said provision, a person although is not personally liable for commission of such an offence would be vicariously liable

therefor. Such vicarious liability can be inferred so far as a company registered or incorporated under the Companies Act, 1956 is concerned only

if the requisite statements, which are required to be averred in the complaint petition, are made so as to make the accused therein vicariously liable

for the offence committed by the company. Before a person can be made vicariously liable, strict compliance with the statutory requirements would

be insisted. Not only the averments made in para 7 of the complaint petitions do not meet the said statutory requirements, the sworn statement of

the witness made by the son of the respondent herein, does not contain any statement that the appellants were in charge of the business of the

company. In a case where the court is required to issue summons which would put the accused to some sort of harassment, the court should insist

strict compliance with the statutory requirements. In terms of Section 200 of the Code of Criminal Procedure, the complainant is bound to make

statements on oath as to how the offence has been committed and how the accused persons are responsible therefor. In the event, ultimately, the

prosecution is found to be frivolous or otherwise mala fide, the Court may direct registration of case against the complainant for mala fide

prosecution of the accused. The accused would also be entitled to file a suit for damages. The relevant provisions of the Code of Criminal

Procedure are required to be construed from the aforementioned point of view.

On the aforesaid submissions Mr. S. Haja Mohideen Gisthi, learned ACGSC for the respondent was heard.

Learned Counsel for the respondent submitted that in the complaints it has been specifically stated that for the show cause notices served by

the respondent, accused 1 and 2 did not sent any reply and when such an assertion has been made by the respondent, the question as to whether a

reply notice was sent by accused 1 and 2 becomes a disputed question of fact which cannot be gone into in the quash petition, but the same has to

be gone into only by the trial court, after recording evidence. He further submitted that had the accused 1 and 2 sent their replies with supporting

documents to show that they have complied with the provisions of the Act and the Rules alleged to have been violated the complaints would not

have been filed, but since the petitioners / accused 1 and 2 did not chose to send any reply with the supporting documents, the complaints were

filed. He further submitted that the allegations contained in the complaints clearly establish the ingredients of the offences alleged and as such, a

prima facie case is made out and therefore the above Criminal Original Petitions are devoid of merits. He further submitted that since the

complaints have been filed in a printed format, unfortunately, the role played by the first accused in the commission of the offence is failed to be

mentioned and that cannot be a ground for quashing the complaints as far as the first accused is concerned.

I have considered the aforesaid submissions made by the learned Counsel on either side, perused the allegations contained in the complaints

and the show cause notices.

A reading of the allegations contained in the complaints makes it clear that there is absolutely no averment in the complaints that the first

accused is incharge of and responsible for the conduct of the business of the second accused company. The first accused sought to be arrayed as

an accused by invoking the provisions contained u/s 25 of the Act, by reason of the said provision, a person although is not personally liable for

commission of such an offence would be vicariously liable therefor. Such vicarious liability can be inferred so far as a company registered or

incorporated under the Companies Act, 1956 is concerned only if the requisite statements, which are required to be averred in the complaint

petition, are made so as to make the accused therein vicariously liable for the offence committed by the company. Before a person can be made

vicariously liable, strict compliance with the statutory requirements would be insisted. A perusal of the complaints, in these cases, does not contain

any averment to the effect that the first petitioner / first accused was in charge of and responsible for the business of the company.

In the decision reported in Smt. Katta Sujatha Vs. Fertilizers and Chem. Travancore Ltd. and Another, , while considering the scope of

Section 141 of the Negotiable Instruments Act, the Apex Court in paragraph 4 has observed as under:

However, one thing is clear that the appellant was in no way involved in any of the transactions referred to in the complaint and it was not stated

that she was in charge of the business and was responsible for the conduct of the business of the firm in terms of Section 141 of the Act nor was

there any other allegation made against the appellant that she had connived with any other partner in the matter of issue of cheque.

In yet another decision, a Three Judges'' Bench of the Apex Court in the case of S.M.S. Pharmaceuticals Ltd. Vs. Neeta Bhalla and Another, has

laid down as under:

In view of the above discussion, our answers to the questions posed in the reference are as under:

(a) It is necessary to specifically aver in a complaint u/s 141 that at the time the offence was committed, the person accused was in charge of, and

responsible for the conduct of business of the company. This averment is an essential requirement of Section 141 and has to be made in a

complaint. Without this averment being made in a complaint, the requirements of Section 141 cannot be said to be satisfied.

(b) The answer to the question posed in sub-para (b) has to be in the negative. Merely being a Director of a company is not sufficient to make the

person liable u/s 141 of the Act. A Director in a company cannot be deemed to be in charge of and responsible to the company for the conduct of

its business. The requirement of Section 141 is that the person sought to be made liable should be in charge of and responsible for the conduct of

the business of the company at the relevant time. This has to be averred as a fact as there is no deemed liability of a Director in such cases.

If the aforesaid principles laid down by the Apex Court are applied to the facts of these cases, it could be easily held that in the absence of the

necessary averments to show that the first accused was incharge of and responsible for the conduct of the business of the second accused

company, the provisions contained in Section 25 of the Act could not have been invoked and the first accused could not have been arrayed as an

accused. This vital aspect has been failed to be noticed and failed to be kept in mind by the learned Magistrate while taking cognizance of the

offence alleged against the first accused. Therefore, the Crl.O.P. Nos. 24724 and 24813 of 2004 filed by the first accused are allowed and all

further proceedings as against the first accused in C.C. Nos. 4552 and 4553 of 2004 on the file of the II Metropolitan Magistrate, Egmore,

Chennai, are hereby quashed.

As far as the contention of the learned senior counsel for the petitioners regarding the second accused is concerned, it has to be pointed out

that though the second accused is stated to be represented by one Ramesh Kumar, as Director, it has to be pointed out that the second accused

being a legal entity incorporated under the Companies Act need not be represented by any person and therefore even assuming that the said

Ramesh Kumar is not the Director of the company it is not going to affect the prosecution as against the second accused.

The contention of the learned senior counsel for the petitioners with respect to the second accused cannot be countenanced for the following

reasons:

A perusal of the allegations contained in the complaints and the show cause notices clearly disclose a prima facie case against the second accused.

The contention of the learned senior counsel that for show cause notices issued by the first respondent, a detailed reply was sent could not be

countenanced, since the same has been disputed by the respondent not only in the complaints, but also in the counter affidavit filed in the above

Criminal Original Petitions. Therefore, such disputed question of fact cannot be gone into by this Court in the above Criminal Original Petitions.

Though the learned senior counsel for the petitioners submitted that all the requirements of the relevant rules have been complied with that relates to

the civil construction work of the building, but in the counter affidavit, it has been specifically stated that the deficiencies pointed out is only with

respect to the electrical and interior works carried out by the second accused for Thai Airways. Whether, Thai Airways, entrusted the work to the

second accused and whether Thai Airways is the principal employer and the second accused is the contractor as defined u/s 2(1) (c) of the Act is

a question of fact to be gone into only by the trial court and that cannot be gone into by this Court in a quash petition. Therefore, the contentions

put forward by the learned senior counsel for the petitioners cannot be countenanced. The Criminal Original Petition Nos. 28237 and 28238 of

2004 filed by the second accused are devoid of merits and the same are liable to be dismissed and accordingly dismissed. Consequently, the

connected Crl.M.Ps are closed.

Since the cases are pending from the year 2004, the learned II Metropolitan Magistrate, Egmore, Chennai, is hereby directed to dispose of the

same within a period of six months from the date of receipt of a copy of this order.