Patni Computers Systems Ltd. vs Deputy Labour Commissioner

K.N. Phaneendra, J.—Heard Sri. Ashok Haranahalli, learned Senior Counsel appearing for the petitioners and the learned HCGP appearing for the Respondent.

The present petition is filed seeking quashing of the entire proceedings in C.C. No. 1044/2010 pending on the file of the Metropolitan Magistrate, Traffic Court-V, Bangalore, in registering the criminal case against the petitioners and issuing summons against them.

Learned Senior Counsel for the petitioners has strenuously contended that the complaint itself is not maintainable.

The learned HCGP has contended that the contract employees also come under the definition of ''Employees'' and the petitioners have not paid bonus to them, therefore, they have committed an offence violating the provisions under Section 11 of the Payment of Bonus Act, 1965 (for short, ''the Act'').

It is also contended by the learned counsel for the petitioners that the Contract Employees are not the employees as per the definition under Section 2(13) of the said Act, therefore, question of payment of any bonus and maintaining any records to that effect does not arise and this has been made clear to the competent authority and in spite of that, the complaint has been filed in order to cause inconvenience and harassment to the petitioners.

Learned counsel for the petitioners also brought to my notice that the name of the independent contractor (agency) from whom he engaged the security guards are termed as ''contract employees''. In fact the said independent contractor has paid the bonus to his employees and Annexure-J produced before the Court clearly establishes this fact. If this petitioner is also forced to pay any bonus, that will amount to double payment to the said employees. More than that, the said persons were engaged by the petitioners through an independent contractor. Therefore, at any stretch of imagination they cannot be called as ''employees'' under the petitioners, as such, the complaint itself is not maintainable.

Learned counsel also contended that the offences alleged are not tenable as the complaint has to be filed within one year as per the provisions of Cr.P.C. The complaint is lodged beyond the time and therefore, the complaint is also barred by limitation. The trial Court has not at all considered this aspect at the time of taking cognizance. When once the complaint is barred by limitation, the court cannot take cognizance of such offences alleged. On these two important aspects, the learned counsel prayed for allowing the petition and quashing the entire proceedings.

I have carefully perused the complaint averments. The Deputy Labour Commissioner lodged a complaint against the petitioners alleging the offences under Sections 11, 26 and 27 of the said Act. The allegations specifically made in the complaint are that on 19.06.2009 the complainant has visited the premises of the petitioner and came to know that the petitioner has not at all maintained the registers pertaining to the employees, particularly the contract labourers and they having not paid the bonus to them. In this regard, they addressed a letter to the petitioner to comply with the directions within seven days. A reply was sent by the petitioner on 25.06.2009, a copy of which is also produced before this court at Annexure-''B''. Thereafter, one more notice was issued on 05.05.2010 and another reply was given by the petitioner on 22.05.2010. In these two letters, the petitioner has made it abundantly clear that (vide letter dated 22.05.2010 under title No. 3), they have not paid bonus to the contract labourers and they have adopted Payment of Bonus Act, 1975 stating that the Payment of Bonus Act stipulates that the independent contractor is the person responsible for the payment of bonus to his workers and the responsibility casts on the principal employer of the labourers i.e., the contractor himself. It is also depicted in the said letter stating that in the instant case it may kindly be appreciated that the private agency is the principal employer of the security guards and hence, the question of payment of bonus to the contract labourers does not arise. It is also made clear that they are not paying any bonus to the contract labourers, therefore, maintaining of any registers in that regard does not arise. Learned counsel contended that, even after receiving the said letter also, the complaint came to be filed.

Now let me see the complaint averments. In the complaint nowhere it is stated that those contract employees have got any direct appointment from the petitioner and at any point of time, the petitioner has paid any salary or wages to the said employees. In this regard, it is worth to mention here the definition of the ''Employee'' as contemplated in the said Act, which reads as follows:

"Section: 2(13) "employee" means any person (other than an apprentice) employed on a salary or wage not exceeding [ten thousand rupees] per mensem in any industry to do any skilled or unskilled manual, supervisory, managerial, administrative, technical or clerical work for hire or reward whether the terms of employment be express or implied;"

(emphasis supplied)

In order to attract the above said provision, a prime condition should be that the employer should pay salary or wage to his employees. Therefore, there should be a direct involvement of the employer in making payment of salary or wage not exceeding Rs. 10,000/- per mensem. Nowhere in the complaint it is categorically stated that the said contract labourers were directly appointed and any appointment order has been issued them in that regard and thereafter, such employees have been paid any salary or wage. Simply it is stated in the complaint that the contract labourers also come within the purview of the definition of ''Employee'' that would not suffice to come to a definite conclusion that the contract labourers also come under the definition of the ''Employee''. Therefore, the court has to see whether any provision under Section 11 has been violated. Section- 11 imposes the responsibility on the employee to pay bonus, which reads as follows:-

"Section- 11: Payment of maximum bonus.-

(1) Where in respect of any accounting year referred to in section 10, the allocable surplus exceeds the amount of minimum, bonus payable to the employees under that section, the employer shall, in lieu of such minimum bonus, be bound to pay to every employee in respect of that accounting year bonus which shall be an amount in proportion to the salary or wage earned by the employee during the accounting year subject to a maximum of twenty per cent of such salary or wage.

(Emphasis supplied)

(2) In, computing the allocable surplus under this section, the amount set on or the amount set off under the provisions of section 15 shall be taken into account in accordance with the provisions of that section."

On a meaningful reading of this provision, the employer is duty bound to pay the bonus to the employees during the accounting year subject to maximum of 20% of such salary or wage. Again the payment of bonus depends upon the nature of work of the employee and he must have been working as an employee on payment of salary or wage directly by the employer so as to attract Section 11 for payment of bonus.

The other two provisions invoked against the petitioners are Sections 26 and 27(4), which read as follows:-

"Sec. 26.- Maintenance of registers, records, etc.- Every employer shall prepare and maintain such registers, records and other documents in such form and, in such; manner as may be prescribed."

"Sec. 27(4).- Any person required to produce any accounts, book, register or other document or to give information by an Inspector under sub-section (1) shall be legally bound to do so."

Section 27(4) is dependent on Section 26. If the employer is bound to maintain records under Section 26, then only question of production of those registers or documents arises, as per Section 27(4). Section 26 says that the employer shall prepare and maintain such registers and other documents in such a form or manner as may be prescribed. The complainant has not shown to the court in the complaint anywhere stating that the employer has to maintain the registers so far as contract labourers are concerned. The petitioner legally requires to maintain the registers only in respect of the employees who were paid salary or wages by the employer. Therefore, in the absence of any such elucidation of facts in the complaint, it cannot be said that the contract labourers, who are employed through some other independent contractor or agency, have provided their services to the petitioner, at any stretch of imagination they cannot be termed as ''Employees'' under the petitioners. In this background, the learned counsel for the petitioner has also drawn my attention to a decision of the High Court of Kerala reported in Cominco Binani Zinc Ltd. Vs. Pappachan, , the relevant Paragraph-2 & 5 read as follows:-

"2. The contention raised by the petitioner is that the canteen was run by contractors like the first respondent, that the employees of the canteen were engaged by those contractors, that they are never considered as employees of the petitioner and that the petitioner is not liable to pay anything other than the actual wages due to the workmen if it is found that the contractors failed to give wages to their employees. It is the specific case advanced by the petitioner that no claim of bonus or gratuity can be made against them under the provisions of the Industrial Disputes Act, Payment of Wages Act or under any other legislation."

xxx xxx xxx xxx xxx xxx xxx

"5. As per Section 46 of the Factories Act, the management is responsible for providing and maintaining a canteen for the use of the workers if there are 250 or more workers in the factory. The petitioner engages more than 250 workers in their factory. So, the petitioner is required to provide and maintain a canteen for the use of the workers. The petitioner has in fact provided the entire infra-structure for running the canteen. They have provided building, utensils, electrical fittings etc. for the said purpose. But they were not running the canteen by themselves. In such a situation, can they be made liable for the claims of workers engaged in the canteen? The answer can only be in the negative because the workers were banking on the contractor for settling the terms and conditions of their employment. The employees have no case that the petitioner had at any time taken part in the conciliation settlements regulating their conditions of service. Nor have they got a case that the petitioner had any disciplinary control over them. The mere fact that the petitioner had the responsibility to provide and maintain a canteen Under Section 46 of the Factories Act, cannot make them the ultimate employer of the workers engaged in the canteen for all purposes. Canteen may be run by independent contractors or by co-operative societies of the workers or may be run by the company itself in discharge of the obligation Under Section 46 of the Factories Act. In the first two categories the workers in the canteen cannot be considered to be the employees of the management. When the management entrusts the responsibility of running the canteen with a contractor the workmen employed and paid by such contractor cannot be treated as workmen of the management. There is no employer-employee relationship between the management and such workmen. All claims of the workmen are to be met by the contractor or the society as the case may be. If the canteen is run by the contractor or cooperative society the employer in relation to the workers engaged in the canteen will be the contractor or the society."

Taking analogy from the said decision it is clear that, either under the Factories Act or under the Payment of Bonus Act, it is responsibility of the management to provide and maintain canteen for the use of the workers if there are 250 or more workers in the factory. In the said case, the petitioners engaged more than 250 workers in their factory, therefore, it is their bounden duty to run canteen or entrust the said matter to any of the independent contractor for running the canteen for the benefit of the employees of the company. In the said case, the Company has engaged the independent contractors to run the canteen. The Labour Department has lodged a complaint stating that the employees in the said canteen being employed by the independent contractors are also deemed to be the employees of the company. Therefore, Company has to pay the bonus, etc. But the court holding that the employees under the independent contractor cannot be termed as ''Employees'' under the said Act, therefore, no offence is attracted.

The learned counsel relied upon the ruling of the Apex Court reported in 2004 (3) SCC 547 [Workmen of the Canten of Coates of India Ltd. Vs. Coates of India Ltd. And others], which reads as under:-

"Labour Law - Industrial Disputes Act, 1947 - S. 2(s) - Employer - employee relationship - Canteen run by contractor in the premises of industrial establishment - Workmen employed in such a canteen whether employees of the establishment or of the contractor - Determination of - Provision in Factories Act requiring a canteen to be provided in the industrial establishment premises, held, not decisive to hold that the workmen employed in such a canteen or workmen of the establishment - Factories Act, 1948, S. 46."

Relying on the said decision, the learned Senior Counsel contended that, the facts and circumstances of the said case applies to the facts and circumstances of the present case. In the present case, the petitioner has engaged some security guards from G4S Security Services (India) Pvt. Ltd. and they are actually the employees of the said private limited company. The servants are taken as Security Guards from the said independent contractor. The petitioner has no direct dealings with those security guards and the salary or wages of the security guards are being paid by the said independent Agency. The petitioner has only entered into contract with the said company and it will pay the contract money to the said agency and whatever the act done or committed by the security guards are deemed to be under the employment of the said contractor or the agency. In order to substantiate this contention, learned counsel has also produced before this court Annexure-J, which is the letter given by the G4S Security Services (India) Pvt. Ltd. to the Labour Officer, Division-III, Karmika Bhavan, Bannerghatta Road, Bangalore, wherein it is categorically stated that the said independent contractor or the Agency has paid the bonus to all of its employees. The complaint does not show that apart from these security guards, any other labourers have been appointed by the petitioners directly in order to bring them within the four corners of Sections 11, 26 and 27, for having not paid any bonus. If the complainant comes to any other labourer having direct contact with the employer and the employer pays any salary or wages to such persons, then it could have been specifically mentioned and the petitioner can be prosecuted under the above said provisions of law. In the absence of such specific allegations or elucidations or the factual matrix in the complaint, particularly the allegations are made that the petitioners have not paid the bonus to the contract labourers, in my opinion, such a bald allegations are not sufficient to draw an inference that the petitioners have committed any offences as alleged. Considering the above said facts and circumstances case and the principles laid down by the Apex Court in the above said ruling, I am of the considered opinion that the charges levelled against the petitioner are not maintainable.

The second leg of the argument of the learned counsel is that the complaint is also barred by limitation. As could be seen from the records, the complainant has visited the employer''s company on 19.06.2009. On that date itself the offences came to the knowledge of the petitioners. The complaint came to be filed on 07.08.2010 and the court has taken cognizance of the offences on 08.10.2010. Admittedly, from the date of knowledge of the offences to the Deputy Labour Commissioner, the complaint is filed after a lapse of one year. The offences under Section 11 of the Act is punishable with imprisonment of six months, which prescribed imprisonment for a term which may extend to six months or fine which may extend to Rs. 1,000/- or with both. Section 26 for non-maintenance of the record and non-production of the records are punishable under Section 28 of the Act, with a punishment extendable upto six months or with fine which may extend to Rs. 1,000/- or with both. Therefore, the punishment does not exceed six months in any of the above said cases. There is no special period of limitation prescribed under the Act. Therefore, this court has to fall back upon Section 468 of Cr.P.C., which prescribes the period of limitation for taking cognizance of the offences. Section 468(2) says that the period of limitation shall be,-

a) six months, if the offence is punishable with fine only;

b) one year, if the offence is punishable with imprisonment for a term not exceeding one year;

c) three years, if the offence is punishable with imprisonment for a term exceeding one year but not exceeding three years.

Section 473 of Cr.P.C. also says under what circumstances the extension of period of limitation can be provided by the Court, which reads as follows:-

"Section- 473: Extension of period of limitation in certain cases,- Notwithstanding anything contained in the foregoing provisions of this Chapter, any Court may make cognizance of an offence after the expiry of the period of limitations, if it is satisfied on the facts and in the circumstances of the case that the delay has been properly explained or that it is necessary so to do in the interests of justice."

If the said provision is meticulously read, only under such circumstances of the case, if the delay is properly explained, then only the court can condone the such delay. Coupled with Section 470 of Cr.P.C. sub-clause (3) says that, whenever previous sanction is required for the purpose of filing any complaint, the period spent for obtaining such previous sanction can be excluded by the court. No other circumstance is narrated in the said provision. But if the reasonable explanation is given, the court can condone the delay. But, in this particular case, it is only stated that for the purpose of taking permission from the higher authorities to file complaint, such delay has been occurred. No application is filed for condonation of delay. The court has not applied its mind to condone the delay, but, it took cognizance and proceeded against the accused. When Section 470(3) only says that previous sanction, if it is required then only such time can be condoned by the court. But, in this particular case, it is not established that any previous sanction or permission of the Government is required for the purpose of filing such complaint. What section 30 of the Act prescribes is that, the authorities who can file the complaint should be an officer of the Government, not below the rank of Regional Labour Commissioner in the case of an officer of the Central Government, not below the rank of a Labour Commissioner in the case of an officer of the State Government specially authorized in this behalf by that Government. Therefore, there is no question of requiring any sanction from the Government. Moreover, as I have already narrated that the offences punishable under Sections 11, 26 and 27 themselves are not attracted the question of limitation also need not be of much importance. Nevertheless, in this particular case, looking from any angle, the complaint is not sustainable and the same is liable to be quashed. Hence, I proceed to pass the following order:-

The petition is allowed. Consequently, the entire proceedings in C.C. No. 1044/2010 pending on the file of the learned Metropolitan Magistrate, Traffic Court-V, Bangalore, is hereby quashed.