M/s. ETA Constructions (India) Pvt. Ltd., No.34, Cathedral Road, Chennai – 600 086 v. State

IN THE HIGH COURT OF JUDICATURE AT MADRASDATED: 28.10.2009C O R A MTHE HONOURABLE MR.JUSTICE K.MOHAN RAMCriminal Original Petition Nos.28237, 28238, 24724 and 24813 of 2004and Crl.M.P.Nos.8049, 8741, 8060 and 8743 of 2004M/s. ETA Constructions (India) Pvt. Ltd.,No.34, Cathedral Road, Chennai – 600 086... Petitioner in Crl.O.P.Nos.28237 & 28238 of 2004/ 2nd AccusedMr. S.M.Sadak Ansari, Director,M/s. ETA Constructions (India) Pvt. Ltd.,No.32, Cathedral Road, Chennai – 600 008... Petitioner in Crl.O.P.Nos.24724 & 24813 of 2004/1st Accused-Vs.-State Represented by theLabour Enforcement Officer (Central)Ministry of LabourGovernment of IndiaNo.26, Haddows Road, Shastri Bhavan,Chennai 600 006 ... Respondent in all the Crl.O.Ps./ComplainantCriminal Original Petitions filed under Section 482 of the CriminalProcedure Code to call for the records in C.C.Nos.4553 and 4552 of2004, 4552,4553 respectively pending on the file of the IIMetropolitan Magistrate, Egmore, Chennai and quash the same againstthe respective petitioners.For Petitioner in all the above Crl.O.Ps. :Mr. T.K.Seshadri, Senior counsel, for, Mr. T.K.BhaskarFor Respondent in all the above Crl.O.Ps.:Mr. S.Haja Mohideen Gisihi, A.C.G.S.C.,- - -C O M M O N O R D E RThe accused 1 and 2 in C.C.Nos.4552 and 4553 of 2004 on thefile of the learned II Metropolitan Magistrate, Egmore, Chennai, havefiled the above Criminal Original Petitions seeking to quash allfurther proceedings therein. https://hcservices.ecourts.gov.in/hcservices/

2. The brief facts which are necessary for the disposal of theabove Criminal Original Petitions are as follows:-The respondent within whose jurisdiction the petitioners'construction site was situated was inspected by the respondent whichrevealed many contraventions under the Contract Labour (Regulationand Abolition) Act, 1970 (Act 37 of 1970), (hereinafter referred toas "the Act") and the Contract Labour (Regulation and Abolition)Central Rules, 1971 (hereinafter referred to as "the Rules"). Therespondent sent a inspection report cum show cause notice in No.34(57)/2003/E1/Dated 13.12.2003 to the second accused calling upon himto show cause why action should not be taken for non-compliance ofthe violations and called upon him to rectify the defects and to sendan explanation within ten days, but the second accused did not submitany reply. In the show cause notice, the second petitioner wasdescribed as a contractor within the meaning of Section 2 (1) (c) ofthe Act. In the show cause notice, the following defects werepointed out:-(i)As per Rule 81 (1) (i) of the Rules, failed to display noticeshowing the rates and wages, hours of work, wage period, rateof payment of wages and address of Inspector havingjurisdiction and date of payment of unpaid wages in English,Hindi and Tamil at work spot.(ii)As per Rule 81 (2) of the Rules, failed to submit the copyof notices required to be displayed at the work spot and to besent to the inspector.(iii)As per Rule 71 of the Rules, failed to send the noticesshowing the wage period and the place and time of disbursementof wages, available at the place of work and its copy not sentto principal employer.(iv)As per Rule 79 of the Rules, failed to display an abstractof the Rules approved by the Chief Labour Commissioner(Central), New Delhi, at work spot in English, Hindi andTamil.(v)As per Rule 75 of the Rules, failed to maintain the registerof persons employed at the work spot.(vi)As per Rule 78 (1) (a) (i) of the Rules, failed to maintainthe musterroll and the register of wages at work spot.(vii)As per Rule 78 (i) (a) (ii) of the Rules, failed tomaintain the register of fine, deductions and advances at thework spot.(viii)As per Rule 78 (1) (a) (iii) of the Rules, failed tomaintain the overtime register at the work spot.(ix)As per Rule 78 (1) (b) of the Rules, failed to issueemployment cards to the workers. https://hcservices.ecourts.gov.in/hcservices/ (x)As per Rule 76 of the Rules, failed to issue wage slips tothe workers.Since the second accused did not send any reply, the respondent filedthe complaints under Section 24 of the Act and the same were taken onfile as C.C.Nos.4552 and 4553 of 2004. As far as the first accusedis concerned, he sought to be prosecuted as the Director of thesecond accused / company, under Section 24 read with Section 25 ofthe Act. Being aggrieved by that, the above Criminal OriginalPetitions have been filed by accused 1 and 2. Identical grounds havebeen raised by both the accused in the above Criminal OriginalPetitions, though separate Criminal Original Petitions have beenfiled by them.3. The contentions put forth by the petitioners are asfollows:-(i) The second accused in the complaint is arrayed as 'M/s. ETAConstructions Pvt. Ltd., Represented by Shri. Ramesh Kumar, Director,No.32, Cathedral Road, Chennai – 600 008'. The said Mr. Ramesh Kumaris neither a Director nor hold any position and not in any wayconnected with the affairs of M/s. ETA Constructions (India) Pvt.Ltd., and therefore the complaint against the second accused istotally misconceived.(ii) Mr. S.S.Iqbal and Mr. Abdul Malick residing at No.18/1,Wallace Garden, I Street, Chennai 600 006 are the Power of AttorneyHolders for Hameedia Agencies. They acting on behalf of the saidHameedia Agencies and in the capacity of a Principal Employer awardeda contract vide their letter dated 01.10.2002 to M/s. ETAConstructions (India) Pvt. Ltd., for constructing a building at DoorNo.14, Haddows Road, Nungambakkam, Chennai – 600 034, as per theapproved plan. In relation to the said contract, they have issuedForm No.V dated 09.12.2002 read with Rule 21 (2) of the Act andRules. On the basis of the application made by the PrincipalEmployer, the Assistant Commissioner of Labour, Government of TamilNadu, issued Certificate of Registration dated 18.12.2002 indicatingthe M/s. ETA Constructions (India) Pvt. Ltd., as the main contractorand Mr. P.Vilvanathan, S/o. Poongavanam, residing at No.32, I Street,Kumaran Colony, Saidapet, Chennai – 600 015, as sub-contractor tocarry out the Civil Construction at Door No.14, Haddows Road,Nungambakkam, Chennai – 600 034, and issued a licence dated25.06.2003. In response to the application made by the PrincipalEmployer dated 07.07.2003, the Member Secretary, CMDA, Chennai – 600008, issued a Completion Certificate for the constructed buildingvide their letter dated 14.07.2003. The respondent / complainantissued four show cause notices to the petitioner / first accused andto M/s. ETA Constructions (India) Pvt. Ltd. In response to the showcause notices issued by the respondent / complainant, the firstpetitioner / first accused and M/s. ETA Constructions Pvt. Ltd.,replied vide their reply dated 19.01.2004 rejecting the variousallegations leveled against the petitioner and the constructioncompany. There has been no contractual relationship between theworkers undertaken civil, electrical and interior works by the third https://hcservices.ecourts.gov.in/hcservices/ accused for Thai Airways on the day on which the respondent /complainant inspected the work place and thereafter requested to dropthe action that has been contemplated against the accused.(iii) The petitioners / accused never engaged workers for ThaiAirways. From the show cause notices it is inferred that the portionof the premises was leased to Thai Airways and Thai Airways hadengaged M/s. Viswanath Associates, the third accused to do the civil,electrical and interior works. Therefore, the first petitioner /first accused and M/s. ETA Constructions (India) Pvt. Ltd., has noconnection with the owner of the premies, Thai Airways and theViswanath Associates. Therefore, the show cause notices andcomplaints made against the first petitioner / first accused and M/s.ETA Constructions (India) Pvt. Ltd., is totally misconceived andpurely upon misinformation. The complaint cannot be attributed toeither the first petitioner / first accused or M/s. ETA Constructions(India) Pvt. Ltd., / second accused.4. A common counter affidavit has been filed by the respondentwherein the various alleged violations committed by the accused hasbeen set out in detail which are stated supra. In the counteraffidavit it is specifically stated that in the show cause noticesthe accused did not send any reply. It is further stated in thecounter affidavit that the second accused is in the business of civilconstruction and it was awarded the contract for the civilconstruction of an office complex in No.14 Haddows Road,Nungambakkam, Chennai 600 034, and apart from the civil constructionin the above mentioned site, the petitioners were also assigned thetask of structural, electrical, architectural, sanitary, plumbing,interior and all other works in relation to the Haddows road site.It is further stated in the counter affidavit that the site engineerof the second accused, company, incharge of the work site in No.14Haddows Road, Nungambakkam, Chennai 600 034, Mr. Mohammed Hussein,brought it to the respondent's notice during the inspection on13.12.2003 that Mr. Ramesh Kumar was a director of the secondpetitioner, company, and only based on that the respondent sought toproceed against Mr.Ramesh Kumar in his capacity as Director,according to Section 25 of the Act. It is further stated in thecounter affidavit that it is not the construction of the buildingthat the respondent seeks to proceed against the petitioners, it isthe works carried out by the petitioners for Thai Airways in HaddowsRoad premises that is the subject matter of the inspection dated13.12.2003 carried out by the respondent. It is further stated thatthe petitioners carried out civil, interior and electrical work forThai Airways while contravening the various provisions of the Act andRules. It is further stated in the counter affidavit that this Courtmay not enter into arena of a disputed question of fact and suchdisputed question of fact can be proved only during the course oftrial. It is further stated that since the allegations contained inthe complaint and the show cause notices, prima facie, constitutesthe ingredients of the offence alleged, the above quash petitions aredevoid of merits and the same are liable to be dismissed.5. Heard the learned counsel on either side. https://hcservices.ecourts.gov.in/hcservices/

6. Mr.T.K.Seshadri, learned senior counsel for Mr. T.K.Bhaskar,learned counsel for the petitioners in all the above CriminalOriginal Petitions, apart from reiterating the contentions put forthin the above quash petitions submitted that Mr.Ramesh Kumar, was atno point of time a share holder or a Director of the second accusedcompany and without even verifying the basic facts the complaintshave been filed. He further submitted that there is absolutely nomaterial to substantiate the allegation that the second accusedcompany was entrusted with the electrical and interior decorationworks by Thai Airways; on the other hand, the owners of the buildingentrusted the civil construction work of the building and the secondaccused had obtained the certificate of registration dated 18.12.2002indicating that the second accused as a main contractor and oneP.Vilvanathan as a sub-contractor to carry out the civil constructionat Door No.14 Haddows Road, Nungambakkam, Chennai 600 034 and issueda licence dated 25.06.2003. He further submitted that in response tothe application made by the Principal Employer dated 07.07.2003, theMember Secretary, CMDA, Chennai – 600 008, issued a CompletionCertificate for the constructed building vide their letter dated14.07.2003. He, by referring to the reply notice dated 19.01.2004,which is made available in the typed set of papers, submitted that adetailed reply was submitted by the second accused but the same hasbeen suppressed in the complaints. He further submitted thatinasmuch as all the relevant provisions of the Act and the Rules havebeen complied with and the same have been detailed in the replynotices, the complaints are not maintainable. 7. Learned senior counsel for the petitioners in all the aboveCriminal Original Petitions submitted that as far as the firstaccused is concerned, except describing him in the cause title ofthe complaints as a Director of the second accused company, there areabsolutely no allegations against the first accused to the effectthat he is incharge of and responsible for the conduct of thebusiness of the second accused company and as such he could not havebeen arrayed as an accused by invoking the provisions contained inSection 25 of the Act.8. In support of the said contentions the learned seniorcounsel for the petitioners based reliance on a number of decisionsand since all those decisions are not necessary, a decision of theApex Court rendered in the case of SABITHA RAMAMURTHY v. R.B.S.CHANNABASAVARADHYA and reported in (2007) 1 Supreme Court Cases (Cri)621 is referred to. In the said decision, while considering thescope of Section 141 of the Negotiable Instruments Act, which issimilar to Section 25 of the Act the Apex Court has observed asunder:-"7. ........ By reason of the said provision, a personalthough is not personally liable for commission of such anoffence would be vicariously liable therefor. Suchvicarious liability can be inferred so far as a companyregistered or incorporated under the Companies Act, 1956 isconcerned only if the requisite statements, which are https://hcservices.ecourts.gov.in/hcservices/ required to be averred in the complaint petition, are madeso as to make the accused therein vicariously liable forthe offence committed by the company. Before a person canbe made vicariously liable, strict compliance with thestatutory requirements would be insisted. Not only theaverments made in para 7 of the complaint petitions do notmeet the said statutory requirements, the sworn statementof the witness made by the son of the respondent herein,does not contain any statement that the appellants were incharge of the business of the company. In a case where thecourt is required to issue summons which would put theaccused to some sort of harassment, the court should insiststrict compliance with the statutory requirements. Interms of Section 200 of the Code of Criminal Procedure, thecomplainant is bound to make statements on oath as to howthe offence has been committed and how the accused personsare responsible therefor. In the event, ultimately, theprosecution is found to be frivolous or otherwise malafide, the Court may direct registration of case against thecomplainant for mala fide prosecution of the accused. Theaccused would also be entitled to file a suit for damages.The relevant provisions of the Code of Criminal Procedureare required to be construed from the aforementioned pointof view."9. On the aforesaid submissions Mr. S.Haja Mohideen Gisthi,learned ACGSC for the respondent was heard. 10. Learned counsel for the respondent submitted that in thecomplaints it has been specifically stated that for the show causenotices served by the respondent, accused 1 and 2 did not sent anyreply and when such an assertion has been made by the respondent, thequestion as to whether a reply notice was sent by accused 1 and 2becomes a disputed question of fact which cannot be gone into in thequash petition, but the same has to be gone into only by the trialcourt, after recording evidence. He further submitted that had theaccused 1 and 2 sent their replies with supporting documents to showthat they have complied with the provisions of the Act and the Rulesalleged to have been violated the complaints would not have beenfiled, but since the petitioners / accused 1 and 2 did not chose tosend any reply with the supporting documents, the complaints werefiled. He further submitted that the allegations contained in thecomplaints clearly establish the ingredients of the offences allegedand as such, a prima facie case is made out and therefore the aboveCriminal Original Petitions are devoid of merits. He furthersubmitted that since the complaints have been filed in a printedformat, unfortunately, the role played by the first accused in thecommission of the offence is failed to be mentioned and that cannotbe a ground for quashing the complaints as far as the first accusedis concerned. 11. I have considered the aforesaid submissions made by thelearned counsel on either side, perused the allegations contained inthe complaints and the show cause notices. https://hcservices.ecourts.gov.in/hcservices/

12. A reading of the allegations contained in the complaintsmakes it clear that there is absolutely no averment in the complaintsthat the first accused is incharge of and responsible for the conductof the business of the second accused company. The first accusedsought to be arrayed as an accused by invoking the provisionscontained under Section 25 of the Act, by reason of the saidprovision, a person although is not personally liable for commissionof such an offence would be vicariously liable therefor. Suchvicarious liability can be inferred so far as a company registered orincorporated under the Companies Act, 1956 is concerned only if therequisite statements, which are required to be averred in thecomplaint petition, are made so as to make the accused thereinvicariously liable for the offence committed by the company. Beforea person can be made vicariously liable, strict compliance with thestatutory requirements would be insisted. A perusal of thecomplaints, in these cases, does not contain any averment to theeffect that the first petitioner / first accused was in charge of andresponsible for the business of the company.13. In the decision reported in (2002) 7 SCC 655 : 2003 SCC(Cri) 151 (Katta Sujatha v. Fertilizers & Chemicals TravancoreLtd.,), while considering the scope of Section 141 of the NegotiableInstruments Act, the Apex Court in paragraph 4 has observed as under:-"However, one thing is clear that the appellant was in noway involved in any of the transactions referred to in thecomplaint and it was not stated that she was in charge ofthe business and was responsible for the conduct of thebusiness of the firm in terms of Section 141 of the Act norwas there any other allegation made against the appellantthat she had connived with any other partner in the matterof issue of cheque."In yet another decision, a Three Judges' Bench of the Apex Court inthe case of S.M.S. Pharmaceuticals v. Neeta Bhalla reported in (2005)8 SCC 89 : 2005 SCC (Cri) 1975 has laid down as under:-"19. In view of the above discussion, our answers to thequestions posed in the reference are as under:-(a) It is necessary to specifically aver in a complaintunder Section 141 that at the time the offence wascommitted, the person accused was in charge of, andresponsible for the conduct of business of the company.This averment is an essential requirement of Section 141and has to be made in a complaint. Without this avermentbeing made in a complaint, the requirements of Section 141cannot be said to be satisfied.(b) The answer to the question posed in sub-para (b) has tobe in the negative. Merely being a Director of a companyis not sufficient to make the person liable under Section141 of the Act. A Director in a company cannot be deemed https://hcservices.ecourts.gov.in/hcservices/ to be in charge of and responsible to the company for theconduct of its business. The requirement of Section 141 isthat the person sought to be made liable should be incharge of and responsible for the conduct of the businessof the company at the relevant time. This has to beaverred as a fact as there is no deemed liability of aDirector in such cases."If the aforesaid principles laid down by the Apex Court are appliedto the facts of these cases, it could be easily held that in theabsence of the necessary averments to show that the first accused wasincharge of and responsible for the conduct of the business of thesecond accused company, the provisions contained in Section 25 of theAct could not have been invoked and the first accused could not havebeen arrayed as an accused. This vital aspect has been failed to benoticed and failed to be kept in mind by the learned Magistrate whiletaking cognizance of the offence alleged against the first accused.Therefore, the Crl.O.P.Nos.24724 and 24813 of 2004 filed by the firstaccused are allowed and all further proceedings as against the firstaccused in C.C.Nos.4552 and 4553 of 2004 on the file of the IIMetropolitan Magistrate, Egmore, Chennai, are hereby quashed.14. As far as the contention of the learned senior counsel forthe petitioners regarding the second accused is concerned, it has tobe pointed out that though the second accused is stated to berepresented by one Ramesh Kumar, as Director, it has to be pointedout that the second accused being a legal entity incorporated underthe Companies Act need not be represented by any person and thereforeeven assuming that the said Ramesh Kumar is not the Director of thecompany it is not going to affect the prosecution as against thesecond accused. 15. The contention of the learned senior counsel for thepetitioners with respect to the second accused cannot be countenancedfor the following reasons:-A perusal of the allegations contained in the complaints andthe show cause notices clearly disclose a prima facie case againstthe second accused. The contention of the learned senior counselthat for show cause notices issued by the first respondent, adetailed reply was sent could not be countenanced, since the same hasbeen disputed by the respondent not only in the complaints, but alsoin the counter affidavit filed in the above Criminal OriginalPetitions. Therefore, such disputed question of fact cannot be goneinto by this Court in the above Criminal Original Petitions. Thoughthe learned senior counsel for the petitioners submitted that all therequirements of the relevant rules have been complied with thatrelates to the civil construction work of the building, but in thecounter affidavit, it has been specifically stated that thedeficiencies pointed out is only with respect to the electrical andinterior works carried out by the second accused for Thai Airways.Whether, Thai Airways, entrusted the work to the second accused andwhether Thai Airways is the principal employer and the second accusedis the contractor as defined under Section 2 (1) (c) of the Act is a https://hcservices.ecourts.gov.in/hcservices/ question of fact to be gone into only by the trial court and thatcannot be gone into by this Court in a quash petition. Therefore,the contentions put forward by the learned senior counsel for thepetitioners cannot be countenanced. The Criminal Original PetitionNos.28237 and 28238 of 2004 filed by the second accused are devoid ofmerits and the same are liable to be dismissed and accordinglydismissed. Consequently, the connected Crl.M.Ps are closed.16. Since the cases are pending from the year 2004, the learnedII Metropolitan Magistrate, Egmore, Chennai, is hereby directed todispose of the same within a period of six months from the date ofreceipt of a copy of this order. Sd/- Asst.Registrar/true copy/ Sub Asst.RegistrarsrkTo1. The Labour Enforcement Officer (Central) Ministry of Labour, Government of India No.26, Haddows Road, Shastri Bhavan, Chennai 600 0062. II Metropolitan Magistrate, Egmore, Chennai3. -do- Thro' The Chief Metropolitan Magistrate, Egmore, Chennai.4. The Public Prosecutor, High Court, Madras.+4 cc to Mr.S.Haja Mohideen Gisthi, Advocate, SR.No.57469 to 57472+1 cc to Mr.T.K.Bhaskar, Advocate, SR.No.57509 Order in Crl.O.P.Nos.28237, 28238, 24724 and 24813 of 2004& Crl.M.P.No.8049, 8741, 8060 and 8743 of 2004 CK {CO}TP/11.11.2009.