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Judgment
N.A. Britto, J.—This petition can be considered u/s 482 of the Code (the Code of Criminal Procedure, 1973). It is filed for quashing the process issued against the petitioners by order dated 6/05/2009.
The petitioners are the accused in L. Case No. 521/98/C. The respondent - Insurance Inspector had filed a complaint on or about 23/06/1998 and, surprisingly, summons were issued to the accused only on 6/05/2009.
The petitioner No. 1 is a partner of the firm petitioner No. 2 and both were arrayed as accused in the said complaint case. The allegation against them was that they had not submitted the returns for the period ending on 30/09/1997 and thereby had committed an offence punishable u/s 85(e) of the Employees'' State Insurance Act, 1948 (Act, for short).
There is no doubt that the learned Magistrate has ordered issuance of summons to the petitioners/accused without application of mind to the facts of the case and before taking cognizance of the offence alleged against the accused.
Shri Sardessai, the learned Counsel appearing on behalf of the petitioners/accused has submitted that sanction was given only against accused No. 2, the partner of the firm, and therefore, the firm, accused No. 1 could not be prosecuted. Learned Counsel next submits that there is no averment in the complaint in terms of Section 86A of the Act to show that the accused No. 2 was in charge of and responsible to the company for the conduct of the business of the company.
Learned Counsel submits that the explanation below Sub-section (2) of Section 86A shows that a ''company'' includes a firm and other associations of individuals.
Learned Counsel next submits that the petitioners/accused had defaulted in filing returns for a single month only and, therefore, the complainant was not at all justified in filing the complaint as per the guidelines issued by the said Corporation, which provide that the Officer sanctioning the prosecution should keep in mind that the prosecution is not filed as a matter of routine, but only against the chronic and willful defaluter. Learned Counsel further submits that considering that no process was issued against the accused for more then a decade, no useful purpose would be served by proceeding with the complaint and, therefore, the process issued against the accused be quashed and set aside, by taking a broader view of the matter.
Section 85(e) of the Act, inter alia, provides that:
If any person fails or refuses to submit any return required by the regulations, or makes a false return, he shall be punished with an imprisonment for a term which may extend to one year or with fine which may extend to four thousand rupees, or with both.
Section 86 of the Act deals with prosecutions and Sub-section (1) thereof provides that:
No prosecution under this Act shall be instituted except by or with the previous sanction of the Insurance Commissioner or of such other officer of the Corporation as may be authorised in this behalf by the Director General of the Corporation.
The sanction order dated 1/06/1998 issued by the Regional Director shows that it is given only against accused No. 2, ''partner of the principal employer of M/s. Landscape Developers'' and it has not been given to prosecute the firm namely accused No. 1. Shri Sardessai has placed reliance on Mohd. Iqbal Ahmed Vs. State of Andhra Pradesh, wherein the Apex Court has observed that the grant of sanction is not an idle formality but a solemn and sacrosanct act which affords protection to government servants against frivolous prosecutions. Therefore, Shri Sardessai is right in contending that no process could have been issued against accused No. 1 for want of sanction.
Section 86A of the Act is akin to Section 141 of the Negotiable Instruments Act, 1881. The Apex Court in S.M.S. Pharmaceuticals Ltd. Vs. Neeta Bhalla and Another, has held that u/s 141, a Director does not automatically become vicariously liable for offence committed by the company and that it has to be averred in the complaint that the person who is sought to be proceeded against on the premise of his being vicariously liable for commission of an offence by the Company must be incharge and shall also be responsible to the Company for the conduct of its business. Unless such averments are made, the requirements of Section 141 were not satisfied with and, therefore, the High Court was justified in holding that no case was made out against the accused. The only averment made against accused No. 2 is that he was a partner and occupier of the establishment known and styled as M/s. Landscape Developers. It is rightly submitted by learned Counsel that the expression ''occupier'' applies to a factory and admittedly the establishment of the accused is not a factory. Earlier in S.M.S. Pharmaceuticals Ltd. Vs. Neeta Bhalla and Another, it was held that:
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.
In the absence of there being any averment in the complaint in compliance of Section 86A of the Act, that the accused No. 2 was in charge of and was responsible to the firm for conduct of the business of the firm, no process could have been issued against accused No. 2.
Smt. Agni, the learned Counsel on behalf of the respondent has placed reliance on the case of Pfizer Limited Vs. Mazdoor Congress and others, and Sheoratan Agarwal and Another Vs. State of Madhya Pradesh, . In the first case, it was held that a plea taken for the first time in a writ petition under Article 227 could not be allowed to set aside concurrent finding of the Courts below. In the second case, it was held that there is no statutory compulsion that the person in charge or an officer of the company may not be prosecuted unless he be ranged along side the company itself. Both have no application to the facts of this case.
Consequently, this petition deserves to succeed and the notice/process issued against the petitioner/accused deserves to be quashed and set aside.
The learned Sessions Judge is hereby directed to find out as to why the complaint which was filed on 23/06/1998 remained without cognizance being taken until 6/05/2009 and taken appropriate action in the matter.
Petition allowed.