High Court · 2005

IN THE HIGH COURT OF JUDICATURE AT MADRASDated: 18-01-2005Coram; The Honurable Mr. JusticeV.KANAGARAJCrl.O.P.Nos.25095 & 25540/2004&Crl.M.P.Nos.8160 and 8316 20041. Uday Kotak, Vice-Chairman & Managing Director, M/s. Kotak Mahindra Bank Limited, 36-38-A, Nariman Bhavan, Nariman Point, Mumbai-400 021.2. S.Venkatesan, Zonal Controller-South, M/s. Kotak Mahindra Bank Limited, 39, Montieth Road, 1st Floor, CEE BROSS CENTRE, Chennai-600 008.... Petitioners in both the Crl.O.Ps.Vs.State, represented by theLabour Enforcement Officer (Central),Ministry of Labour, Government of India,No.26, Haddows Road,Shastri Bhavan,Chennai-600 006.... Respondents in both the Crl.O.Ps.These Criminal Original Petition are filed underSection 482 of the Code of Criminal Procedure, as stated therein.For Petitioners: Mr. N.V.Srinivasanfor M/s. N.V.S. & AssociatesFor Respondent: P.Kumaresan(ACGSC) https://hcservices.ecourts.gov.in/hcservices/ Common order:-These petitions have been filed under Section 482 ofCr.P.C. praying to call for the records pertaining to C.C.Nos.4337and 4338 of 2004 pending on the file of the Court of IIMetropolitan Magistrate, Chennai and quash the same. 2. The petitioners would submit that the 1st petitioneris working as Vice-Chairman and Managing Director at Mumbai andthe 2nd petitioner is employed as Zonal Controller-South commercialVehicles at Kotak Mahindra Bank Limited at Chennai; that the 2ndpetitioner received a notice dated 31.10.2003 from the respondentalleging non-compliance of caertain provisions of the ContractLabour (Regulation and Abolition) Act, 1970 (hereinafter called asthe 'Act') by the Kotak Mahindra Bank Limited at Chennai; that upondue consideration, it was found that there is no violation of thelegal provisions and consequently it was presumed that the issuewas set at rest by the respondent; that the 2nd petitionersubsequently received summons from the II Metropolitan Magistrate,Egmore, Chennai in C.C.No.4337 and 4338 of 2004 calling upon thepetitioners herein to appear in person before the Court on 9.7.2004in respect of the complaint preferred under Section 23 of the Actfor breach of Sections 7 and 9 of the Contract Labour (Regulationand Abolition) Rules 1971 and under Section 24 for violation of theCentral Rules; that the provisions of the Act are not attracted asthe petitioners have not employed Contract Labour at any point oftime; that the respondent had no jurisdiction under law to file thecomplaints and cause issuance of summons on the petitioners throughtheir local branch at Chennai; that there is no employment of theContract Labour and there was no need for the registration underSection 7 of the Act and Section 9 has no application in thematter; that the inspection report fails to reveal the details ofnames and location of the establishment which was inspected by therespondent and the inspection report under column 5 also has numberof employees over written and corrected and that it can be safelyconstrued that no inspection was conducted by the respondent; thatthe first petitioner is the Vice Chairman and Managing Director ofthe bank who is not based at Chennai and inclusion of his name asthe principal employer by the respondent as an accused is nothingbut motivated; that as per Section 2(g) (iv) of the Act 'PrincipalEmployer' is defined as a person responsible for supervision andcontrol of the establishment; that at no stretch of imagination,the Vice Chairman and the Managing Director can be deemed to be incontrol and supervision of an establishment which is yet to comeinto existence and the same is the case of the 2nd petitioner whois a Zonal Controller for South and hence, they are not responsiblefor the supervision and control of an establishment. https://hcservices.ecourts.gov.in/hcservices/

3. The petitioners would further submit that the KotakMahindra Bank Limited was started very recently under the ReserveBank of India licence and recently a licence was granted foropening the branch at 555, Anna Salai, Chennai-600 018 on 3.10.2004and the licence for starting a branch at CEE BROS Centre, 1stFloor, Montieth Road, Egmore was issued on 18.2.2003; that thepetitioners had issued work order with M/s. N.S.Associates PrivateLimited for interior decoration and for civil and electrical workfor a period of one month for setting up a branch ion Anna Salai;that the petitioners bank purchased Air-conditioners forinstallation in the company and therefore, this cannot be construedas engagement of contract labour for turning out any routinebanking activity; that regarding the contract referred to in theinspection report with M/s. Jayalakshmi Security Service, thevarious High Courts have held that the employment of the people forsafety and security cannot be brought under the purview of the Actand as such the Act itself is not attracted; that the impugnedproceedings are liable to be quashed as for as the petitioners areconcerned, since nowhere in the complaint it is mentioned that thepetitioners were the persons nominated by the Bank; that thecomplaint was premature without affording a reasonable opportunityof hearing and the entire proceedings are contrary to theprinciples of natural justice and the summons issued by therespondent are liable to be quashed and hence the petitionerswould seek the relief extracted supra. 4. During the arguments the learned counsel appearing onbehalf of the petitioners and the Additional Central GovernmentStanding Counsel appearing on behalf of the respondent/complainantbesides reiterating the averments of the petition and denial of thesame contra, they would also cite the relevant portions from thedecided cases by the upper forums and therefore it is relevant totrace the same for proper considerations.5. On the part of the petitioners they would also cite thefollowing decisions, the first being M/S. GAMMON INDIA LIMITED Vs.ASSISTANT COMMISSIONER OF LABOUR, NAGPUR & ANOTHER(1976 LAB I.C.745), wherein the Division Bench of the Bombay High Court dealingwith the Section 7 of the Contract Labour (Regulation andAbolition) Act, 1970 has held "It appears to us that in the present casewhen the work is carried out by the petitioneras a contractor on behalf of Board, the Boardwill be responsible for the control andsupervision of the establishment. By giving acontract to the petitioner, the Board is not https://hcservices.ecourts.gov.in/hcservices/ deprived of its powers of supervision andcontrol over the work made by the petitioner.For the purpose of the Act, it appears to usthat it is the Board alone which is responsiblefor the control and supervision as contemplatedin the sub-clause. It is difficult to see howthe petitioners can be said to be the principalemployer. .... It is difficult to see how thepetitioner can be said to be a PrincipalEmployer appears to us that under the Act onlyone principal employer is contemplated. TheAct was passed to prevent the exploitation ofthe Contract Labour and to introduce betterconditions of work. It provides for regulationof the service conditions of contract labour.The Act intends to abolish the contract labourwherever possible and practicable and where itcannot be abolished altogether. The policy ofthe Act is that the working conditions of thecontract labour should the regulated as toensure payment of wages and provision ofessential amenities." 6. The second judgement cited on the part of the petitionersis one from KIRLOSKAR BROTHERS LIMITED Vs. EMPLOYEES' STATEINSURANCE CORPORATION (1996 (2) SCC 682), wherein the HonourableApex Court dealing with the definition of "employee" and "principalemployer" and the scope and applications as per the ESI Act, 1948,has held "The interpretation has held object that is toprovide certain benefits to employees and theinterpretation must be done in the light ofnot only the objects of the Act but alsoconstitutional, fundamental and human rights."7.The third judgement cited on behalf of the petitioners isone in ADITYA PURI Vs. UNION OF INDIA AND ANOTEHR (2004 LLR 311),wherein the learned single Judge of the Jharkhand High Court hasheld "The petitioner has challenged the impugnedorder on the ground that the premises of thecompany was inspected at Ranchi whereas thispetitioner holds his office at Mumbai and,therefore, he has got no direct nexus with thealleged crime and consequently the cognizancecould not have been taken against him." https://hcservices.ecourts.gov.in/hcservices/

8. The next judgement relied on by the petitioner is one bythe Patna High Court reported in 1986 LAB IC 2003, wherein asingle Judge of the said High Court has held"The prosecution of the proprietor of aproprietary firm or the manager of a collieryunder Section 23 cannot be sustained inabsence of a statement as required by Section25 that he had been incharge of and responsibleto the business at the time of the commissionof such offence. Section 25 would be a bar tothe prosecution. It is further held thereinthat 'The cardinal principle of the criminaljurisprudence, is that if it is a case ofapparent harassment and humiliation, thecontinuation of any proceeding amounted to theabuse of the process of the Court, then in thatcircumstance, the Court has to interfere withthe same.'"9. On the part of the respondent, they would cite a judgementreported in DELHI MUNICIPAL CORPORATION Vs. PURUSHOTAM DASSJHUNJUNWALA & OTHERS (AIR 1983 Supreme Court 158), wherein theHonourable Apex Court has generally held inherent to the facts ofthe case dealt with by it,"In the instant case, a clear averment has beenmade regarding the active role played by therespondents and the extent of theirliability.... In this view of the clearallegations made in paragraph 5 of thecomplaint, we are not in a position to agreewith the High Court that it is a fit case inwhich it should have been exercised itsdiscretion under Section 482 of the CriminalProcedure Code."10.In the second judgement cited by the respondent is fromJ.P.SHARMA Vs. VINOD KUMAR JAIN & OTHERS (AIR 1986 SupremeCourt 833). In this case, the complaint against accusedpersons for offences under Section 120-B IPC and Section 5 ofthe Imports and Exports (Control) Act (18 of 947) was quashedby the High Court under Section 482 of the Cr.P.C. and onappeal, the Honourable Apex Court has held: https://hcservices.ecourts.gov.in/hcservices/ "The grounds upon which the High Court Judgeseems to have quashed the complaint in theinstant case was the subsequent report by the CBIwhich had not yet been proved and considered inthe background of the allegations made andsecondly that some of the parties alleged to bein the conspiracy were not made parties. Theseare no grounds for quashing the criminalproceedings where on prima facie being satisfied,the Magistrate had taken cognizance. Taking allthe allegations in complaint to be true, withoutadding or subtracting anything, at this stage itcannot be said that no prima facie case for trialhad been made out. That is the limit of thepower to be exercised by the High Court underSection 482 of the Code of Criminal Procedure.The High Court in the instant case has exceededthat jurisdiction. The question at this stageis, not whether there was any truth in theallegations made but the question is whether onthe basis of the allegations a cognizable offenceor offences had been alleged to have beencommitted. The facts subsequently found out toprove the truth or otherwise on the allegation isnot a ground on the basis of which the complaintcan be quashed. The truth or otherwise of theallegation made in the complaint would beinvestigated at the time of the trial."11. The third judgement cited by the respondent is onereported from RADHEY SHYAM Vs. KUNJ BEHARI (AIR 1990 SCC 121).In this case, when the High Court quashed the complaint underSections 120-B and 302 IPC on ground that there was inadequacy ofevidence against the accused, the Honourable Apex Court has heldthat 'the High Court's conclusion about the inadequacy of theevidence against respondents 1 to 3, besides being a prematureassessment of evidence, is also attributable to the wrong premiseson which the High Court's reasoning is based'. On suchobservations, the Honourable Apex Court has reversed the findingsof the High Court and restored the charges framed againstrespondents 1 to 3 therein for trial in accordance with law by thetrial Court.12. The last judgement cited by the respondent counsel is onereported in STATE OF U.P. Vs. O.P.SHARMA (1996 SCC Criminal 497),wherein the Honourable Apex Court while dealing with Section 482of Cr.P.C. in the matter of quashing of a Criminal proceedings atinitial stage has held: https://hcservices.ecourts.gov.in/hcservices/ "The High Court should be loath to interfere atthe threshold to thwart the prosecutionexercising its inherent power under Section 482or under Article 226 and 227 of the Constitutionof India that when the FIR containing all theingredients of the offence, the High Court hascommitted grave error of law in quashing thesame." 13. Both the above criminal O.Ps have been filed under Section482 of the Code of Criminal Procedure praying to call for therecords pertaining to C.C.No.4337 and 4338 of 2004 pending fortrial on the file of the Court of II Metropolitan Magistrate,Chennai and quash the same. The averments are generally commonpertaining to the facts and circumstances of the case and the lawon the subject. 14. On the part of the petitioners they would come forward toallege that M/s. Kotak Mahindra Bank Limited is a new venture andthey have been established very recently i.e., in the year 2003 atChennai and the petitioners in both the petitions who are arrayedas first accused and second accused are none other than the ViceChairman and the Managing Director and the Zonal Controller forSouth of the said Bank and that they cannot be dragged into such acase by the respondent without even knowing as to who is the properperson to be prosecuted as per the memorandum and Articles ofAssociation concerned with the said Bank and the petitioners beingthe Vice Chairman and Managing Director and the Zonal Controller,(South), they have been unnecessarily involved in such LabourPractices particularly since they are not based at Chennai, butthey have shown as the accused branding them as Principal Employerin a motivated manner. It would further be argued on the part ofthe petitioners that as per Section 2 (g) (iv) of the said Act 'inany other establishment, any person responsible for the supervisionand control of the establishment' which is relevant forconsideration and since the petitioners being not such personsresponsible for the supervision and control of the establishment,for which different authorities are functioning at differentstages, at no stretch of imagination the Vice Chairman and theManaging Director could be deemed to be in control and supervisionof the particular unit or establishment and therefore they cannotbe dragged into such litigation or prosecutions which is onlymotivated and only to malign and mar the reputation of thepetitioners and the establishment as well they have been madeaccused. On such strong grounds, the petitioners would come forwardto file the above criminal original petitions seeking to quash boththe above proceedings initiated by the respondent. https://hcservices.ecourts.gov.in/hcservices/

15. It would further be contended that the Kotak MahindraLimited was very recently started under the licence of the ReserveBank of India which was granted very recently for running theBranch at Door No.555, Anna Salai, chennai that was only on3.10.2004 and yet another branch at CEE BROSS CENTRE at MontiethRoad, Egmore, Chennai based on the licence issued on 18.2.2003 andthey have only issued the work order with M/s.N.S.AssociatesPrivate Limited for interior decoration and for civil andelectrical work for a period of one month for setting up a Branchin Anna Salai. It would further be argued on the part of thepetitioners that for installation of the air conditioner in thecompany, they have to engage skilled workmen and the same cannot beconstrued as engagement of contract labour for turning out anyroutine banking activity and the contract referred to in theInspection report employing the people for safety and securitymeasures cannot be brought under the purview of the prohibitedlimits of the Act as it has been held time and again by variousUpper Forums of law and therefore on such strong grounds, theywould plead that the impugned proceedings in both the aboveCalendar Cases initiated by the respondents are only liable to bequashed, particularly when the respondent is not able to mentionanywhere in the complaint that the petitioners are the authoritiesnominated by the Bank in charge and responsible for carrying outsuch obligations on behalf of the establishment and therefore wouldseek the relief sought for in both the above criminal originalpetitions. 16. In consideration of the facts pleaded having regard to thematerials placed on record and upon hearing the learned counsel forthe both, what this Court is able to assess is that withoutfollowing any procedures or norms of law regarding as to who arethose principal employers in a banking concern such as that of thepetitioners' company and quite against the dictum of law and thepropositions held by the Upper Forums, particularly by theHonourable Apex Court, the respondent, adopting crude method whichis absolutely bereft of legal force or adherence to the norms oflaw, has filed both complaints against the petitioners and theycannot be allowed to be proceeded against the petitioners sincethey are not the principal employers as required under law nor hasthe respondent anywhere in the complaint made it clear that thepetitioners are in any other manner responsible, within themeaning of the provisions of the law pertaining to the subject oreven on facts of the case or in accordance with the propositionsheld by the Upper Forums regarding the subject. The judgmentscited on the part of the petitioners are pointed to the subjectthat the petitioners cannot be termed as the 'principal employers'so as to be prosecuted under the provisions of the Contract Labour https://hcservices.ecourts.gov.in/hcservices/ (Regulation & Abolition) Act, 1970. Even on facts, no case hasbeen made out for the prosecution of the petitioners company fromthe manner in which it has been assessed by this Court in theforegoing paragraphs. On the contrary the judgments cited on thepart of the respondent are to the effect of the powers of the HighCourt under Section 482 of the Cr.P.C. and that the criminalproceedings cannot be quashed at their threshold. It is worthmentioning the settled law that if the court finds that there areno materials to proceed against the accused persons andcontinuation of the proceedings would only only be an abuse ofprocess of law, the said proceedings are liable only to be quashed.In the above circumstances, the only course left open for thisCourt is undoubtedly to grant the prayer sought for by thepetitioners and hence the following order:In result,(i) Both the above Criminal Original petitions succeed and they are allowed accordingly;(ii) The Calendar Cases registered against thepetitioners in C.C.Nos.4337 and 4338 of 2004pending on the file of the Court of IIMetropolitan Magistrate, Chennai are herebyquashed;(iii) Consequently, all the connected Crl.M.P.Nos. 8160 & 8316 of 2004 are closed.18-01-2005ksSd/Asst.Registrar/true copy/Sub Asst.Registrar https://hcservices.ecourts.gov.in/hcservices/ Copy to: 1. The II Metropolitan Magistrate, Chennai.2. -do- Through The Chief Metropolitan Magistrate, Egmore, Chennai.3. The Labour Enforcement Officer (Central), Ministry of Labour, Government of India, No.26, Haddows Road, Shastri Bhavan, Chennai-600 006.smk (co)dvCommon order inCrl.O.P.Nos.25095 & 25540/2004