G.S. Garcha vs State of Bihar and Others

Anand Prasad Sinha, J.—This application is directed against the impugned order dated 11-9-1980 passed by Shri N.K. Prasad, Chief Judicial Magistrate, Dhanbad, in C.L.A. Case No. 47 of 1980 by which the learned Magistrate has taken cognizance against the petitioner and Opposite Party No. 2 for the offence under section/Rule 23/24 of the Contract Labour (Regulation and Abolition) Act, 1970 (hereinafter to be referred to as the Act) and the entire prosecution consequent to the impugned order of cognizance. From a perusal of the complaint petition it would be evident that the allegation has been made against the petitioner and one Sri S.P. Puri (opposite party No. 2 here). So far as the petitioner is concerned, the only allegation against him is that he is the Area General Manager of Chasnalla Colliery and upon an inspection of the establishment certain violation viz., violation of Rule 74 read with rule 81 and rule 18 (4) of the Contract Labour (Regulation and Abolition) (Central) Rules 1971 were found.

From a perusal of Rule 74 as also rule 18 (4) of the Rules, it would be evident that the statutory liability has been cast to comply with the said provisions upon the ''Principal Employer'', The principal employer has been defined in relation to a mine in section 2(1) (g) (iii) of the Act, which runs as follows :--

(1) (g) (iii) In a mine, the owner or agent of the mine and where a person has been named as Manager of the mine, the person so named.

From a perusal of the complaint petition, it would appear that the petitioner has neither been described as owner or agent nor has been described as Manager.

There cannot be any doubt that Indian Iron & Steel Company Limited, being a Government Company, in relation to all the Collieries, a Manager has been appointed. From a perusal of the aforesaid definition, it would be evident that it does not contemplate more than one Principal Employer and statutory liability has been fastened only upon the Manager where the Manager has been so named. Section 23 of the Act is a penal statute and has got to be construed very strictly as held by a Bench of this Court in the case of R.J. Sinha & another v. The State (1983, Bihar Law Times, 97).

In absence of any allegation or ingredients of the provisions that the petitioner comes within the mischief of the definition of "Principal Employer", the order taking cognizance as against him cannot be sustained. In this connection, it may be mentioned that so far as the word owner, agent or manager is concerned, those words will have the same meaning as contained in the corresponding provisions of the Mines Act, 1952.

In the care of S.K. Choudhary v. State of Bihar (1982 B.L.T., 231) if has been held that an Area General Manager, who looks after the entire area, cannot be said to be an Agent in relation to a particular mine. In the aforesaid case cognizance was quashed only on the ground that in the complaint petition it was not mentioned that the petitioner thereof was the representative of the owner.

In the Division Bench decision of this Court in the case of R.J. Sinha (supra) it has clearly been held that there can be only one agent in relation to a Colliery and the Area General Manager does not come within the purview of the definition of ''Agent'' nor it is possible under the law to have two Agents.

In the instant cast, an argument has been advanced on behalf of the prosecution that although the petitioner may not come within the purview of the definition of ''Principal Employer'', he may still be proceeded against in terms of section 25 of the Act.

For the purpose of invoking the provisions of section 25 of the Act, the allegation has to be made in the complaint petition that a Company is the offender. From the definition of ''Principal Employer'', it would appear that the Company need not be principal employer as even an occupier of a mine may come within the purview of the definition of owner, although actually ownership may vest in the Company.

In absence of any allegation that the Company is an offender, question of fastening any vicarious liability in terms of section 25 of the Act does not arise at all. The decision relied upon by the Opposite Party in the case of B.S. Jabbi v. Labour Enforcement Officer (C) & another (1983, B.L.J.R., 177) cannot have any application what-so-ever in the instant case and is wholly irrelevant. Suffice it to say that the said decision is not an authority for the proposition that a person can be proceeded against although the Company is not the offender. The relevant portion of the observations made in paragraph 7 of the said decision is quoted below :

On the other hand submission on behalf of the petitioner is that the expression "and" must be read as "or". The position does not appeal to be very clear and Mr. Sanyal may have a point. It is possible to read as laying down that the principal employer means the owner or agent of the mine or where a person has been named as the manager of the mine, the person so named.

The aforesaid decision, therefore, is not an authority for the proposition which has been submitted above.

Another decision relied upon on behalf of the opposite party is in the case of Rusi Homi Mody v. Labour Enforcement Officer and another (1983 B.L.J.R. 332). This decision is clearly in conflict with the decision of Uday Sinha, J in the case of B.S. Jabbi (supra) inasmuch as it has been held in paragraph 8 thereof as follows :

xx xx xxx Thus the point for consideration in this case is as to whether the petitioner is a principal employer within the meaning of the Act ? If the petitioner is not a principal employer within the meaning of the Act, the prosecution of the petitioner under sections 23 and 24 of the Act is mis-conceived.

In the said decision, the provision of section 25 of the Act have been sought to be interpreted on the basis of the definition of Managing Agent as given in the Indian Companies Act and it has been held on the basis thereof that the word ''Managing Agent'' covers the definition of ''Managing Director'' and he is connected with the affairs of the mine, and that being so, in peculiar facts and circumstances of the case, it was held that the petitioner is also vicariously liable under the provisions of the Act.

It is well settled that definition as given in one Act cannot be taken in aid for construction of the other Act, as has been held in a recent full Bench decision of this Court in the case of Kundori Labour Co-operative Society Limited v. State of Bihar and others (C.W.J.C. No. 1530 of 1983(R) and analogous cases disposed of on 20.12.1985). The relevant portion of paragraph 26 of the said decision runs as follows;

The submission of Mr. Gupta seems to forget the hallowed rule that it is not only impermissible but, indeed, dangerous whilst interpreting one Act, to travel beyond the same and apply definitions of other Act except those of the General Clauses Act or to seek the meaning of a word used in an Act in the definition clauses of another statutes even though dealing with cognate matter by the same legislature." 15. The position of Managing Agent of the Company, however, stand completely on different footing as section 25 of the Act imposes vicarious liability upon certain persons named therein. Section 25 of the Act is in two parts. Whereas sub-section (I) deals with vicarious liability of every person in charge of or responsible to the Company for the conduct of its business, sub-section (2) fastens vicarious liability only on those persons where an offence has been committed by the Company and it is proved that the offence has been committed with the consent or connivance of or is attributable to any act of neglect on the part of the Director, Manager, Managing Agent or any other officer of the Company.

So far as conduct of the Company is concerned, only the persons in charge of the Company are responsible in terms of sub-section (1) of Section 25 of the Act, provided the Company itself is an accused.

So far as sub-section (2) of section 25 of the Act is concerned, it merely fastens a vicarious liability only when it is proved that the offence has been committed by a Company and it is proved that the offence has been committed with the consent or connivance or the same is attributable to any neglect on the part of any Director, Manager, Managing Agent or any other Officer of the Company.

As in the instant case neither the Company has been made accused nor any allegation has been made that an offence has been committed by a Company, the question of invoking either the provisions of sub-section (1) or sub-section (2) of section 25 of the Act does not arise at all.

The decision of this Court in the case of The State Vs. S.P. Bhadani and Others, which has been approved by the Hon''ble Supreme Court in the case of Girdhari Lal Gupta Vs. D.H. Mehta and Another, .the distinction between sub-section (1) and (2) has been clearly laid down.

As discussed above, section 25 of the Act confers only a vicarious liability upon an Officer in terms of sub section (2) thereof, inasmuch as an Officer cannot be in charge of the affairs of the Company in terms of sub-section (1) of section 25 of the Act. Such vicarious liability has been fastened by creating a legal fiction. It is well settled that if a legal fiction is adopted in law for a limited purpose, there is no justification to extend the same beyond the purpose for which she legislature adopted it.

The aforesaid decision particularly would be applicable in relation to a penal statute as has been held by a decision of this Court in the case of United Distiller (Pvt.) Limited and 11 Others vs. The State of Bihar and Others (1986 P.L.J.R. 51), wherein in paragraph 21 it has been held as follows:--

Now, once it is held, as it must be, that the deeming fiction in the first part of section 3 of the validating Act was intended to legitimise the otherwise illegal exaction made earlier then a fortiori such a fiction has to be confined to the object for which it has been created. A legal fiction is not to be inordinately expanded and enlarged. By its very name ''fiction'' it is necessarily a thing which is not true to the actual State of the thing existing. A legal fiction is a methodology for achieving a particular legal result and in this context it was expressly for giving validity and a legal sanction to retain a levy which originally did not have that cloak of legal protection. Therefore, a fiction generally, and the particular one under examination is not to be extended beyond the area over which it was intended to expose its umbrella of protection.

It is well settled that a deeming provision cannot be pushed too far so as to result in an anamolous or absurd position in this connection reference may be made to the decision of the Supreme Court in the case of Commissioner of Sales Tax, State of Gujarat v. Union Medical Agency [(1981 (1) Supreme Court Cases, 51] wherein in paragraph 24 it has been held as follows : --

It is thus apparent that the legal fiction in sub-section (2) of section 4 is created for a limited, purpose, namely, to make section 4 a self-contained code which not only imposes a charge of tax and lays down the rate structure, but also provides the machinery for assessment and recovery of tax and penalty. The legal fiction contained in sub-section (2) of section 4 of the Act cannot be stretched any further.

The aforementioned legal fiction created u/s 25 of the Act has got to be strictly construed in view of the fact that it is of penal nature.

Reference may also be made to the recent judgment of the Supreme Court in the case of Municipal Corporation of Delhi Vs. Ram Kishan Rohtagi and Others, , wherein it has been held that so far as the Directors are concerned, there is not even a whisper nor evidence nor any thing to show, apart from the presumption drawn by the complainant, that there is any act committed by the Directors, from which a reasonable inference could be drawn that they could also be vicariously liable. In these circumstances, therefore, it could be said that no case against the Director has been made out ex facie on the allegations made in the complaint and the proceeding against them were quashed by the High Court rightly. This aspect of the case has been fully discussed in Backlas v. Elliot ( 1970 (1) A.E.R. 191) and Dovey and Melborn Bank (English & Wales) v. John Cory (1901 AC 477 486).

In the Supreme Court decision, it has been held that however, the Manager of the Company who was directly in charge of the affairs, was held to be not falling in the same category as a Director.

In the instant Case, the petitioner, as stated above, is not a Manager of the Company nor any allegation has been made that any act has been committed by him from which a reasonable inference can be drawn that he could also be vicariously liable. In the cases of B.S. Jabbi (Supra) and Rusi Homi Mody (Supra), referred to above, this vital aspect of the matter has not been considered at all.

It is well settled that a judgment is an authority for the proposition what it actually decides and not what can logically be deduced from it vide 1900 1 A.E.R. (Reprint) 1 at page 7, Speech of Lord Halsbury L.C. which view has been followed in many cases by the Patna High Court, some of which are Bibi Kaniz Fatma Vs. Sk. Hossainuddin Ahmad and Others, , Feroz alias Md. Firoz Khan v. State ( 1985 P.L.J.R. 549) and Kuli Singh and Others Vs. The State of Bihar and Others, at page 305 : 509.

It is a well known principle of jurisprudence that ratio of a decison is the reason and not the ultimate conclusion. It is also further well settled that a judgment, which was not necessary to be decided in a particular case, is not a ratio but merely an obiter vide paton on Jurisprudence, page 210 and Dias on Jurisprudence at pages 140 and 141.

Besides the fact that Uday Sinha, J., in B.S. Jabbi''s case (Supra) has not decided the question as to whether a Manager alone is responsible as a Principal Employer. On a fair interpretation of the statute, there con not be any doubt that where a Manager has been named, only the Manager answers the description of the definition of ''Principal Employer'', as contained in section 2(1) (g) of the Act. By necessary implication thereof the owner or agent ceases to be the Principal Employer as soon as a Manager is so named, the Manager when named is a human being and not a juristic person. When a human being is prosecuted as an offender, question of taking recourse to the provisions of section 25 of the Act does not arise.

Further the aforesaid decision has also not been considered in Rusi Homi Modi''s case (Supra) by M.M. Prasad, J., who proceeded on the basis that the petitioner of that case by virtue of his position as Vice-Chairman and Managing Director of the Company, is an Officer responsible for the conduct of the business of the Company, vide paragraph 12 of the said judgment and further on the basis that in paragraph 5 of the complaint petition of that case it was described that the accused persons are the Principal Employers and were required to submit annual returns and on the basis of those facts a conclusion has been drawn that in the complaint petition there are averments to show that the petitioner was also a person responsible to the Company for the conduct of its business and, as such, liable to be proceeded against.

At the cost of repetition, it may be stated that in order to invoke the provisions of section 25 of the Act, basic liability for the offence must be alleged or established against a company and then and then only question of fastening any vicarious liability upon other person being incharge of or responsible to the Company for the conduct of its business, arises by reason of legal fiction created thereby.

It may further be stated that the judgment of the Supreme Court in the case of Girdhari Lal Gupta (Supra) and Municipal Corporation of Delhi (Supra) being the law of the land, are binding on every Court in view of Article 141 of the Constitution of India and further this aspect of the matter discussed above having not been considered in the cases of B.S. Jabbi (Supra) and Rusi Homi Mody (Supra), as they do not lay down any ratio, the said decisions cannot be held to be binding in the present case. In view of the discussions made above, the impugned order of cognizance as also the subsequent prosecution thereto, as against the petitioner only, is hereby quashed and this application is allowed.