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2012 Supreme(Online)(KER) 46760
HIGH COURT OF KERALA
P.S.GOPINATHAN, J
VIJAYAKUMAR – Appellant
Versus
ESI CORPORATION – Respondent
CRIMINAL REVISION PETITION 646/2003
The managing partner of a firm is liable for ESI compliance as defined under the ESI Act, with no excuses for failure to act on behalf of the firm.
Headnote:
ESI - Employer's Liability - ESI Act - Sections 85(a), 85(e), 2(17) - The court confirmed the conviction of the managing partner for failing to submit returns and remit contributions due under the ESI Act, emphasizing the defined responsibilities of the principal employer and the lack of evidence for the defense arguments.
Fact of the Case:
The accused, managing partners of a firm, failed to submit ESI returns and remit contributions. Prosecution was launched under the ESI Act, with the trial court finding the managing partner guilty while not holding other partners accountable due to lack of evidence.
Finding of the Court:
The court upheld the trial court's findings, affirming that the managing partner was responsible for ESI compliance as per the definitions in the ESI Act. Arguments regarding closing of the firm and late remittances were rejected due to insufficient evidence.
Issues: Whether the managing partner was responsible under the ESI Act for failing to submit returns and remit contributions, and whether the other partners could be held accountable.
Ratio Decidendi: Responsibility under the ESI Act is attributed to the principal employer, firmly established by the partnership deed. Without a nomination of another manager, the managing partner is liable for compliance.
Final Decision: The revision petition is partly allowed, confirming conviction but reducing the fines.
O R D E R
Revision petitioners are accused 1 and 5 in C.C.No.473/1996 on the file of the Chief Judicial Magistrate, Thrissur. They along with accused 2 to 4 were prosecuted by the first respondent accusing offences under Section 85 (a), (e) and (g) of the ESI Act, with pleadings that the 5th accused is a partnership firm of which the first accused is the managing partner and accused 2 to 4 are the partners and that the establishment is covered under the ESI Act. Code No. was also provided to the establishment. The accused were bound to submit the return for the period of 1/4/1995 to 30/9/995. But they failed to submit the return till 11/11/1995, the last date. They also failed to remit employers' contribution amounting to Rs.8,712/- for the said period.
2. In response to the process issued, the revision petitioners and other accused entered appearance before the trial court and pleaded not guilty when the particulars of the offences were read over and explained. Therefore, they were sent for trial. On the side of the first respondent, PWs 1 to 3 were examined. Exhibits P1 to P10 were marked. When questioned under Section 313 of the Code of Criminal Procedure, they denied the incriminating evidence and took a plea of total innocence. No oral evidence was adduced. Exhibits D1 to D5 were marked on the defence side. On appraisal of the evidence, the trial court arrived at a finding that the first accused would come within the definition of principal employer as defined under Section 2(17) of the ESI Act. But there is nothing on record to come to a conclusion that accused 2 to 4 are any way responsible for the conduct of the business so as to prosecute them. There was failure on the side of the accused 1 and 5 to submit the return and to remit the contribution as alleged. Consequently, accused 1 and 5 were found guilty for the above offences and they were convicted. The first accused was sentenced to imprisonment till the rising of the court and a fine of Rs.5,000/- and Rs.3,000/- respectively for offences under Section 85 (a) and 85 (e) of the ESI Act with a default sentence of simple imprisonment for 15 days. The 5th accused was also sentenced to a fine of Rs.5,000/- and Rs.3,000/- respectively. No separate sentence was awarded for offence under Section 85 (g). Rs.5,000/- was ordered to be paid to the first respondent as compensation under Section 357 of the Code of Criminal Procedure.
3. Aggrieved by the above conviction and sentence, revision petitioners preferred Crl.A.623/2001. The Third Additional Sessions Judge (Adhoc), Thrissur, by the impugned judgment, while confirming the conviction and sentence, dismissed the appeal. Assailing the legality, correctness and propriety of the above conviction and sentence, this revision petition is preferred. 4. I have heard Adv. Smt. P.S.Preetha, the learned counsel appearing for the revision petitioners and the standing counsel appearing for the first respondent. Perused the judgment impugned.
5. The fact that the first respondent is an establishment covered by the ESI Act is not disputed. The learned counsel for the revision petitioner would argue that the first revision petitioner is not the managing partner. That contention was rightly rejected by the courts below in the light of Exhibit P5 partnership deed, wherein it is specifically stated that the first revision petitioner is the managing partner. The learned counsel for the revision petitioner fairly conceded that neither the other partners nor any person was nominated as manager or the persons responsible for the conduct of the business. So long as there is no nomination, managing partner can not escape. In the above circumstance, the court below had rightly relied upon Exhibit P5, the authenticity of which is not disputed, to come to a conclusion that the first revision petitioner is the managing partner of the firm which is the 2nd revision petitioner and as such he is responsible for the conduct of the business and affairs of
