V. Seetha vs Employees' State Insurance Corporation

Gokulakrishnan, J.—This is petition to quash the proceedings in S. T. R. No. 307 of 1977 on the file of the Court of the Judicial First Class

Magistrate, Coimbatore. The complaint against the petitioner is for an offence u/s 85(a) of the Employees'' State Insurance Act (Act 34 of 1948)

(hereinafter referred to in this judgment as the Act) read with Sections 39, 40, 43 and 44 of the said Act as amended upto date and Regulation 31

the Employees'' State Insurance (General) Regulations, 1950, (hereinafter referred to in this judgment as the Regulations) for failure to pay

combined contribution in respect of the employees'' of the factory known as M/s. Siva Industries, Singanallur, Coimbatore-5 for the sets ended

within the prescribed time limit. The prosecution case is, the accused which is the aforesaid company, had failed to pay the combined contribution

within 21 days of the last day of the respective wage period as required under regulation 31 of the Regulations in respect of their employees for the

sets ended 31-7-1976 amounting to Rs. 3,139-50 and thus the accused had committed an offence punishable u/s 85(a) of the Act. It is further

alleged in the complaint that in view of the provisions of Section 86(3) of the Act, the complaint has been filed regarding the default for the sets

ended 31-7-1976 for which the contribution conies to Rs. 3,139-50. The further allegation in the complaint is that necessary sanction has been

obtained to launch this prosecution. One V. Seetha, Managing Partner of Siva Industries, situated at 844-C Tiruchy Road, Singanallur,

Coimbatore-5 has now come forward with the present petition to quash the proceedings taken on the complaint filed by the Employees'' State

Insurance Corporation, Madras through the manager, Local Office E. S. I. Corporation, Ondipudur, Coimbatore. Her allegation is that the

complaint is barred by limitation as per Section 86(3) of the Act, that the complaint is vague in material particulars in that it does not even specify

the commencement of the period from which the alleged default has been committed in payment of the contribution for the purpose of applying the

provisions of Section 86(3) of the Act, that the Manager of the Local Office of the Emloyees'' State Insurance Corporation, is not competent in the

absence of any authorisation filed in court as referred to in the complaint, to file the complaint, that the Regional Director of the Corporation has no

powers to delegate his function and the authorisation referred to in the complaint is opposed to the provisions of the Act, that there is no proper

sanction as contemplated in the Act and the determination of the amount of contribution is arbitrary and that the proceedings on the basis of an

illegal sanction, cannot be proceeded with. Mr. K. Santhana Gopalan learned Counsel appearing for the petitioner, reiterated before me the points

raised in the petition to quash the proceedings.

Section 86(3) of the Act states:

No court shall take cognizance of any offence under this Act except on a complaint made in writing in respect thereof, within six months of the date

on which the offence is alleged to have been committed.

In this case the offence complained of is non-payment of combined contribution in respect of the employees for the sets ended 31-7-1976. The

complaint was filed on 18-1-1977. According to the learned Counsel, any contribution payable for the period in question except for the period

subsequent to 27-6-1976 will be hit by Section 86(3). The learned Counsel also submitted that there is want of authorisation for filing the

complaint, Section 16 of the Act defines ""Principal Officers."" Section 86(1) deals with the sanction for the prosecution. Section 94-A deals with

delegation of powers. The learned Public Prosecutor has now produced before this Court the necessary sanction accorded to the respective

officers both for filing the complaint and for granting the sanction. I am satisfied that necessary power has been conferred upon the Manager, Local

Office E. S. I. Corporation Ondipudur, Coimbatore, for the purpose of filing the complaint and that the Regional Director of Employees State

Insurance has granted the sanction and he has been duly authorised for the said purpose. Hence I am of the view that the sanction has been

accorded by a competent authority and the complaint has been filed by the proper person.

The offence complained of is that the petitioner herein has not paid the combined contribution for the sets ended 31-7-1976. Regulation 31 of

the Regulations deals with the time limit for the payment of the contribution. The said Regulation runs as follows:

An employer who is liable to pay contribution in respect of any employee shall pay these contributions within the following periods:

(a) within 21 days of the last day of the wage period in which the contribution falls due;

(b) within 14 days of the termination of employment, irrespective of whether the employment is terminated with or without notice;

(c) within 21 days after the termination of the contribution period in respect of every employee, whichever period is earlier:

Provided that, in the case of an exempted employee, the token stamp in respect of any week shall be affixed within such time as the contribution in

respect of that week would have been payable if the provisions of Chap. 5-A of the Act have not been in force.

Explanation : For the purpose of this regulation, the expression ''wage period'' shall have the meaning assigned to it in the First Schedule to the

Act.

Explanation II to para 2 in the First Schedule to the Act defines ''wage period'' as follows:

Wage period means the period in respect of which wages are ordinarily payable whether in terms of the contract of employment, express or

implied or otherwise.

Section 39(3) of the Act mentions that a week shall be the unit in respect of which all contributions shall be payable under this Act. Regulation 31

(a) states that the contribution shall be payable within 21 days of the last day of the wage period in which the contribution falls due.

In the present case though the complaint is for non-payment of the combined contribution, the offence alleged is non-payment of combined

contribution for the sets ended 31-7-1976. The amount determined is Rs. 3,139.50. As per Section 39(3), a week shall be the unit in respect of

which all contributions shall be payable. Hence the complaint as if the contribution has not been paid for the sets ended 31-7-1976 without taking

into consideration Section 39(3) of the Act and a week as a unit as provided thereunder is vague. Further, there is no proper determination of the

contribution payable as per the provisions contained in Section 45-A of the Act. Apart from the fact that the complaint refers to non-payment of

contributions for the sets ended 31-7-1976, the amount of contribution cannot be calculated on the basis of the sets mentioned in Regn. 4, since

the same cannot be the wage period. Regulation 31 only mentions ""wage period"" and the contributions must be paid within 21 days of the last day

of the wage period in which the contribution falls due. Even assuming that one such wage period ends on 31-7-1976, as per Regn. 31 the

contribution for that particular wage period ended on 31-7-1976 ought to have been paid within 21 days from 31-7-1976. If that has not been

paid, the complaint must be preferred within six months thereafter, as per the provisions contained in Section 86(3) of the Act. Hence all the wage

periods prior to 27-6-1976 will be barred by limitation.

In Cr. M. P. No. 7835 of 1976 (D. Balasubramaniam v. State) dated 22nd July 1977 I have held that the nonpayment of the contribution has to

be calculated with reference to each particular wage period and it cannot be construed as a continuing offence. In the said order I have also

rejected the contention of Mr. Santhanagopalan stating that the offence of non-payment of contribution and the offence of failure to send the

contribution cards in time are distinct and different offences and can-not in any way be construed as a single offence.

From the foregoing discussions it will be clear that the complaint as such preferred in this case has neither determined the amount of contribution

payable in accordance with the Act, nor has it made clear as to whether it is. in respect of the wage period ending or of the sets ending on a

particular date. Thus the complaint itself is vague apart from the fact that except for the last ware period or at least only after 27-6-1976. the claim

for non-payment of contributions prior to 27-6-1976 are barred by limitation. Collection of contribution has nothing to do with the prosecution

contemplated under the Act. Since it is a criminal liability, the prosecution must satisfy about the correctness of its allegations in the complaint itself.

No doubt, proof of the allegations can be adduced only at the final hearing of the case. As far as the present case is concerned, the complaint itself

is vague apart from the fact that most of the claim is barred by limitation. Both in the interests of justice and also to avoid harassment to the

petitioner herein, I am of the opinion that the proceedings based on the present complaint have to be quashed. In these circumstances, the petition

is allowed.