IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 24TH DAY OF APRIL, 2019 BEFORE THE HON’BLE MR. JUSTICE ARAVIND KUMAR CRIMINAL PETITION NO.3225/2018 A/W CRIMINAL PETITION NOs.3226/2018, 3227/2018, 3229/2018 BETWEEN:
1. TEJINDER SINGH S/O MALKIT SINGH COO, ARVIND INTERNET (DIVISION OF ARVIND LIMITED) AGE 39 YEARS NOW R/AT 4TH FLOOR, RAHEJA POINT, NO.17/2-6 COMMISSARIAT ROAD, BANGALORE - 560 025.
2. KULIN LAL BHAI S/O SANJAYBHAI SHRENIK BHAI LALBHAI AGED ABOUT 32 YEARS NOW R/AT 4TH FLOOR RAHEJA POINT, NO.17/2-6 COMMISSARIAT ROAD, BANGALROE - 560 025.
... PETITIONERS (COMMON PETITIONERS) (BY SRI. SRINIVAS RAGHAVAN., SR. COUNSEL A/W SRI. NIKHILESH RAO M., ADVOCATE) AND:
STATE OF KARNATAKA THROUGH THE SENIOR LABOUR INSPECTOR 15TH CIRCLE, BENGALURU REPRESENTED BY ITS SPP HIGH COURT BUILDING BANGALORE – 01.
... RESPONDENT (COMMON RESPONDENT) (BY SRI. S. RACHAIAH., HCGP ) THESE CRIMINAL PETITIONS ARE FILED UNDER SECTION 482 CR.P.C PRAYING TO QUASH THE IMPUGNED ORDE DATED:20.08.2016 PASSED BY THE HON'BLE COURT OF THE METROPOLITAN MAGISTRATE TRAFFIC COURT – I AT BANGALORE IN C.C.NOs.27265/2016, 27266/2016, 27263/2016 AND 27268/2016 RESPECTIVELY, AT ANNEXURE-A AND CONSEQUNETLY, QUASH THE ENTIRE PROCEEDINGS IN C.C.NO.27265/2016, 27266/2016, 27263/2016 AND 27268/2016 RESPECTIVELY, BEFORE THE HON'BLE COURT OF THE METROPOLITAN MAGISTRATE TRAFFIC COURT – I BANGALORE.
THESE PETITIONS COMING ON FOR ADMISSION THIS DAY, THE COURT MADE THE FOLLOWING:
O R D E R These petitions are taken up together for consideration and disposed of by this common order.
2. I have heard the arguments of Sri.
Srinivasa Raghavan, learned Senior counsel appearing for petitioners and Sri Rachaiah, learned HCGP appearing for respondent-State and perused the records.
3. Petitioners who are Chief Operations Officer and Directors of ‘Arvind Internet (Division of Arvind Limited)’ are sought to be prosecuted for violation of provisions of Minimum Wages Act, 1948 ( in W.P.No.3225/2018), Karnataka Payment of Wages Act, 1936 read with Karnataka Payment of Wages Rules, 1963(in W.P.No.3226/2018), Karnataka Shops and Commercial Establishments Act, 1961 and Rules 1963 made thereunder (in W.P.No.3227/2018) and The Equal Remuneration Act, 1976 read with Rules 1976 made thereunder (in W.P.No.3229/2018) alleging that on a visit to the unit and during inspection of the premises of the company in the year 2016, it was observed that company had violated certain provisions of the Act and Rules referred to herein above and alleging they had failed to maintain/issue requisite pay slips, wage slips, etc..
4. Main thrust of the arguments of Sri Srinivasa Raghavan, learned Senior counsel appearing for petitioners is two fold:
(i) order taking cognizance is without judicious application of mind by the learned Magistrate; and (ii) even according to the complainant, alleged violation is by the company and without company being made a party, Directors of the company cannot be proceeded with.
5. This Court under similar circumstances in Crl.P.Nos.6420/2017 and 6421/2017 decided on 18.08.2017 (MR RAVI CHANDRA ADUSUMALLI vs STATE OF KARNATAKA) and W.P.Nos.36037- 36039/2017 decided on 10.08.2017 (SRI RAJENDRA BHASKAR HALWE vs STATE OF KARNATAKA) had accepted both the contentions raised in those petitions.
6. In the instant case, order taking cognizance of the offence as can be seen from the order sheet appended to the respective petitions, would disclose that complaint as well as records came to be examined by the learned Magistrate at the time of taking cognizance of the offence. It is trite law that while taking cognizance of the offence, there is no need or necessity for an elaborate order to be passed. If the order taking cognizance would disclose there is subjective satisfaction and objective assessment of the material on record, it would suffice and it would meet the requirement of law. In other words, judicious application of mind has to be discerned from the order. In the instant case, learned Magistrate while issuing summons to the accused persons has examined the complaint and has also perused the records as indicated in the order itself. Hence, there is judicious application of mind by the learned Magistrate. As such, contention raised in that regard cannot be accepted in the instant case and it stands rejected.
7. Insofar as second contention is concerned, learned Senior counsel is right or in other words, company not being made a party in the proceedings before learned Magistrate, prosecution cannot be proceeded with. Under similar circumstances, in the above referred cases (in Crl.P.No.6420/2017), this court while dealing with similar issues had held to the following effect:
“9. Further, allegations made in the complaint and the material relied upon by the complainant in support of the same neither discloses the commission of any offence and they do not make out a case against petitioner. In fact, the intriguing factor which cannot go unnoticed is the company has not been arraigned as an accused in the complaint – Annexure-B, which is the condition precedent to fix vicarious liability on the petitioner as the Director of said company. On this ground also, prosecution cannot be continued against the petitioner. In the absence of allegation or averment in the complaint that offence is committed by the company or petitioner was in-charge and responsible to the company for conduct of its business at the time offence was committed, it would not attract penal provision and Section 22-C of the Minimum Wages Act mandates that proceedings can be initiated against such persons as specified therein viz., persons responsible for committing such offence. The complaint in question does not disclose that alleged offences were committed by the company with the knowledge of the petitioner or with his consent or due to his neglect offence had been committed or he had failed to exercise due diligence to prevent the commission of the alleged offence or had failed to present the same. In that view of the matter, proceedings initiated against petitioner cannot be sustained.”
8. The principles enunciated in the above referred order is squarely applicable to the facts on hand in all force. This view is already upheld by Hon’ble Apex Court in the case of ANEETA HADA vs GOD FATHER TRAVELS AND TOURS PRIVATE LIMITED reported in (2012) 5 SCC 661 whereunder core issue which came up for consideration was whether company could have been made liable for prosecution without company being impleaded as accused? And, whether Directors could have been prosecuted for the offences punishable under the provisions of Negotiable Instruments Act, 1881 without company being arraigned as accused? After analyzing catena of judgments, Hon’ble Apex court has held:
“58. Applying the doctrine of strict construction, we are of the considered opinion that commission of offence by the company is an express condition precedent to attract the vicarious liability of others. Thus, the words “as well as the company” appearing in the Section make it absolutely unmistakably clear that when the company can be prosecuted, then only the persons mentioned in the other categories could be vicariously liable for the offence subject to the averments in the petition and proof thereof.
One cannot be oblivious of the fact that the company is a juristic person and it has its own respectability. If a finding is recorded against it, it would create a concavity in its reputation. There can be situations when the corporate reputation is affected when a director is indicted.”
9. In the light of aforestated position of law, when the facts on hand are examined, it would clearly indicate that respondent-authority without adding company as accused in respect of which authorities had conducted visit and inspected, has sought for prosecution being initiated against its Directors. As such, prosecution against Directors of the company cannot be continued. In other words, even if the prosecution is continued without company being made a party and taken to its logical end and it would not lead to conviction of petitioners and as such, continuation of proceedings would be an abuse of process of law.
Hence, I proceed to pass the following:
ORDER (i) Criminal petitions are allowed and complaints filed by the respondent are hereby quashed.
(ii) However, respondent would be at liberty to initiate proceedings afresh if so advised, in accordance with law, keeping in mind observations made hereinabove.
In view of allowing of criminal petitions, interlocutory applications filed thereunder for stay does not survive for consideration and accordingly, they are rejected.
SD/-
JUDGE *sp