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Judgment
K.M. Natarajan, J.—These petitions were filed under S. 482 Crl.P.C., to quash the proceedings against the petitioner in C.C. 3108 of 1986 and 4607 of 1986 on the file of the XI Metropolitan Magistrate, Madras. The first respondent namely, Employees State Insurance Corporation, Madras, represented by its Insurance Inspector, has filed complaints under S. 85(a) punishable under S.85 (i) of the Employees State Insurance Act, 1948 hereinafter referred to as the Act). According to the first respondent, petitioner No. 1 is the Director and petitioner No. 2 is the Manager of Messrs Kamak Plastics Pvt. Ltd., Guindy, Madras and that the said establishment is covered by the said Act. Under S. 40 of the Act, the accused, as the principal employee, should pay in respect of every employer within the time limit specified under Regulation 31 of the Employees State Insurance (General) Regulations 1950. The accused, who recovered amount of Rs. 1,187--95 being the employees'' contributions from the wages of the employees for the period of October 1985 November, 1985, December, 1985 and January, 1986 failed to pay the said amount along with the employer''s contribution of Rs. 2,636-45 totalling Rs. 3,824--40 and hence they have committed an offence under S.85(a) of the Act. The Regional Director, namely, the second respondent herein, has issued sanction for prosecution under S. 86(1) of the Act and the sanction order slated 8th May, 1986 was also enclosed. In G.O. No. 4607 of 1986, the period during which the employees'' contribution was deducted from the wages is February to September 1985 and the amount comes to Rs. 2192-50. The allegation is that the petitioners failed to deposit the same along with their share of the contribution as stipulated under S.40 of the Act, within the time limit prescribed under Regulation 31 of the Employees State Insurance (General) Regulations 1950. Hence, they have committed the offence under S.405, read with Ss.406/409, I.P.C.
The main contention raised in both the petitions is that the petitioners have not received any proceeding from the first respondent and the second respondent with reference to S.86 of the Act. Further, the procedure under S.86 of the said Act has not been complied with. It is also contended that the company is not in arrears of contribution and that it has paid all the dues.
On going through the complaint filed in both the cases, I find that the first respondent has made the necessary allegations for taking cognizance of the offence by the Magistrate. It is clear from Exp.2 to S.405, IPC, as amended by Central Act 38 of 1975, the employer is deemed to be in the position of a trustee and if he makes a default in the payment of such contribution, he must be deemed to have dishonestly used the amount of the said contribution in violation of the directions of law and that the object of the said legislation in enacting S.85B of the E.S.I. Act is clearly to punish the recalcitrant employers. In fact, the petitioners were given a show cause notice and thereafter the case was filed. The question whether the petitioners have paid the or deposited the amount is a matter to be decided during trial and the same cannot be decided in these petitions. In this connection it is worthwhile to quote the decision of the Supreme Court reported in J.P. Sharma Vs. Vinod Kumar Jain and Others, wherein their Lordships held:
The High Court erred in quashing the criminal proceedings under S.482, Crl.P.C., on an erroneous basis when on prima facie being satisfied that the Metropolitan Magistrate had taken cognizance of the alleged offences. The question at this stage, is not whether there was any truth in the allegation made but it is whether on the basis of the allegations, a cognisable offence or offences had been alleged to have been committed. The facts subsequently found out to prove the truth or otherwise of the allegation is not a ground on the basis of which the compliant can be quashed. Taking all the allegations in the complaint to be true, without adding or substracting anything, at this stage, it can be said that a prima facie case for trial had been made out. That is the limit of the power to be exercised by the High Court, under S.482, Crl.P.C. The High Court in the instant case exceeded that jurisdiction.
Applying the ratio laid down in the said case to the facts of the present case, the truth or otherwise of the allegations is not a ground to quash the proceedings and it is a matter to be decided by the trial court.
Next it was contended by the Learned Counsel for the petitioners that the procedure contemplated under S.86 of the Act has not been complied with and hence the prosecution has to be quashed. Prima facie, I do not see any illegality in the procedure adopted in according sanction under S.80 of the Act. The Learned Counsel for the petitioners submitted that before even the complaint was filed, the accused have not received any proceeding from respondents 1 and 2 with reference to S 86 of the Act. It is nowhere contemplated under the Act, that the sanction accorded under S.86 of the Act has to be communicated to the petitioners before ever the complaint is made. In this connection Learned Counsel for the petitioners relied on the decision reported in Commissioner of Income Tax, West Bengal III and Others Vs. Oriental Rubber Works, . That was a case under Ss.132(1), (8), (10) and (12) of the income tax Act, and it was held in that decision:--
The scheme of sub-S.(8), (10) and (12) of S.132 of the Income tax Act, 1961, makes it amply clear that, where books and documents of an assesses seized in a search conducted pursuant to an authorisation issued under sub-S.(1) are retained beyond the period of 180 days from the date of seizure, there is a statutory obligation on the Revenue to communicate to the assessee not merely the Commissioner''s approval but also the reasons recorded by the authorised officer or the I.T.O. on the basis of which the approval has been obtained; and such communication must be made as expeditiously as possible after the passing of the order of approval by the Commissioner. In default of such expeditious communication, the Commissioner''s decision according approval will not become effective and any further retention of books or documents seized ''would become invalid and unlaw.
The said decision is not applicable to the facts of this case, as there is no such provision in the Employees State Insurance Act, 1948, making it obligatory to communicate the decision of the Regional Director regarding the approval to the employer. The question that arises for consideration is whether there is a valid sanction or not. The said sanction has been filed so far as the prosecution under S.85(a) read with S.85(1) of the Act from the competent authority. In C.C. 4607 of 1986, the petitioners were prosecuted for an offence under S.405 read with Ss.406 and 409, I.P.C. Prim facie, I do not find any illegality in the sanction which is now produced before court. Anyhow, it is a matter to be decided after recording evidence before the Magistrate. No other point was urged in these petitions. For all these reasons, lam of the view that the proceedings against the petitioners should go on before the Magistrate and there are no valid grounds to quash the said proceedings. Accordingly both the petitions are dismissed. However, it is open to the petitioners to raise all his contentions before the learned Magistrate.