1. Prosecution of company directors for non-compliance with Minimum Wages Act, 1948 — Complaint filed under Section 22A — Company not arrayed as an accused. (Para 2 , 5 , 6 , 7 )
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2021 Supreme(SC) 660
SUPREME COURT OF INDIA
R. SUBHASH REDDY, SANJIV KHANNA, JJ.
DAYLE DE’SOUZA - APPELLANT
VERSUS
GOVERNMENT OF INDIA THROUGH DEPUTY CHIEF LABOUR COMMISSIONER (C) AND ANOTHER – RESPONDENTS
CRIMINAL APPEAL NO. OF 2021 (ARISING OUT OF SPECIAL LEAVE PETITION (CRL.) NO. 3913 OF 2020)
DECIDED ON : 29-10-2021
Advocates Appeared:
For the Petitioner(s):Sandeep Sudhakar Deshmukh, Advocates
For the Petitioner(s):Sandeep Sudhakar Deshmukh, Advocates
Important Points
Vicarious liability under Section 22C of the Minimum Wages Act requires the company to be arraigned as an accused. Furthermore, the complaint must specifically aver that the director or officer was in charge of and responsible for the conduct of the company's business during the commission of the offence.
Subject
Criminal Law - OFFENCES BY COMPANIES
Act Referred
Headnote
Constitution of India,1950 - Article 21 - Scheduled Employer under Minimum Wages Act, 1948 - Sections 9(1), 22A and 25(1)(a) - Criminal Procedure Code,1973 - (a) to Sections 200, 319 and 482 - Foreign Exchange Regulation Act, 1947 - Sections 23-C(1) and 23-C(2) - Drugs Act, 1940 - Section 27 - Minimum Wages Act, 1948 – Section 22C Seeking quash criminal case - Agreement for Servicing and Replenishment of Automated Teller Machines - Alleging non-compliance with the provisions of the Minimum Wages Act, 1948 Minimum Wages (Central) Rules, 1950 Company responded claiming that they neither manage nor work at ATM - Labour Enforcement Officer (Central), informed appellant and that they were required to appear in court - Labour Enforcement Officer (Central) filed a criminal complaint before Court of Chief Judicial Magistrate under Section 22A of Act - Work of said Employer is regulated - Government of India and they are Scheduled Employer under Minimum Wages Act, 1948 and Minimum Wages (Central) Rules, 1950 - work of said Employer is regulated under Government of India and they are Scheduled Employer under Minimum Wages Act, 1948 and Minimum Wages (Central) Rules, 1950 – Held, Courts duty not to issue summons in a mechanical and routine manner - Entire purpose of laying down a detailed procedure under Chapter XV of the 1973 Code gets frustrated - Proviso (a) to Section 200 of the 1973 Code, there may lie an exemption from recording pre-summoning evidence when a private complaint is filed by a public servant in discharge of his official duties - Duty of Magistrate to apply his mind to see whether on the basis of the allegations made and evidence, a prima facie case for taking cognizance and summoning accused is made out or not - Section 200 of Code requiring complainant and the witnesses to be examined, is to find out whether there are sufficient grounds for proceeding against the accused and to prevent issue of process on complaints which are false or vexatious or intended to harass the persons arrayed as accused - complainant is a public servant or court, clause (a) of proviso to Section 200 of Code raises an implied statutory presumption that complaint has been made responsibly and bona fide and not falsely or vexatiously - On account of such implied presumption, where complainant is a public servant, statute exempts examination of the complainant and the witnesses – Appeal is allow.
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Table of Contents
2. Petition for quashing of criminal complaint under Section 482, Code of Criminal Procedure, 1973 — Challenge to the maintainability of prosecution against directors. (Para 4 )
3. Vicarious liability requires specific averments of being in-charge of business or proof of consent/neglect — Summoning orders must not be issued mechanically. (Para 10 , 11 , 12 , 14 , 16 , 31 , 32 )
4. Arraigning the company as an accused is a condition precedent for maintaining prosecution against its officers under vicarious liability provisions. (Para 22 , 25 , 26 )
5. Appeal allowed — Summoning order and criminal proceedings against the accused directors quashed. (Para 33 , 34 )
6. What are the requirements to fasten vicarious liability on a person under Section 22C(1) of the Minimum Wages Act, 1948?
The person must be in-charge of and responsible to the company for the conduct of its business at the time of the offence. Mere status as a director is insufficient; specific averments of overall control of day-to-day business are required. (Para 10 , 12 , 16 )
7. Under what circumstances can a director or officer be held liable under Section 22C(2) of the Minimum Wages Act, 1948?
Liability arises if it is proved that the offence was committed with the consent or connivance of, or is attributable to any neglect on the part of, the director, manager, secretary, or other officer. (Para 11 , 17 )
8. Is it mandatory to arraign the company as an accused to prosecute its officers under vicarious liability?
Yes. Arraigning the company as an accused is imperative because vicarious liability is a deeming fiction that presupposes the commission of the offence by the company itself. (Para 22 , 25 , 26 )
9. What is the duty of a Magistrate when issuing a summoning order in a criminal complaint?
The Magistrate must not issue summons mechanically but must apply their mind to determine if a prima facie case exists based on allegations and evidence to prevent harassment. (Para 31 , 32 )
JUDGMENT :
SANJIV KHANNA, J.
Leave granted.
2. The appellant, Dayle De’Souza, is a director of M/s. Writer Safeguard Pvt. Ltd. (hereinafter referred to as ‘the Company’). In 2009, the Company had entered into an agreement titled “Agreement for Servicing and Replenishment of Automated Teller Machines” with M/s. NCR Corporation India Private Ltd., the latter having earlier entered into an agreement with the State Bank of India for maintenance and upkeep of the State Bank of India’s ATMs. On 19th February 2014, the Labour Enforcement Officer (Central) had inspected the State Bank of India’s ATM at AST, Komal Chand Petrol Pump, Civil Lines, Sagar, Madhya Pradesh (hereinafter referred to as ‘the ATM’). On 06th March 2014, a notice was issued by the Labour Enforcement Officer (Central) to the appellant and one Vinod Singh, Madhya Pradesh head of M/s. Writer Safeguard Pvt. Ltd. alleging non-compliance with the provisions of the Minimum Wages Act, 1948 (for short, ‘the Act’) and Minimum Wages (Central) Rules, 1950 (for short, ‘the Rules’) at the ATM. On 02nd April 2014, the Company responded claiming that they neither manage nor work at the ATM. After more than four months, the Labour Enforcement Officer (Central), by letter dated 08th August 2014, informed the appellant and Vinod Singh that they were required to appear in the court on 14th August 2014. On 14th August 2014, the Labour Enforcement Officer (Central) filed a criminal complaint before the Court of the Chief Judicial Magistrate, Sagar, Madhya Pradesh, under Section 22A of the Act. We shall refer to the contents of the complaint later.
3. On the date of presentation of the complaint, that is, 14th August 2014, the Judicial Magistrate, First Class, Sagar, Madhya Pradesh took cognisance of the offence and issued a bailable warrant against the appellant and Vinod Singh in Criminal Case No. 3398/2014. On 01st August 2015, the Company submitted a detailed representation to the Deputy Chief Labour Commissioner (Central), Marhatal, Jabalpur, Madhya Pradesh denying the contents of the notice dated 06th March 2014.
4. Thereafter, on 01st August 2015, the appellant filed a petition M.Cr.C. No. 846/2016 under Section 482 of the Code of Criminal Procedure, 1973 (‘the Code’, for short) before the High Court of Madhya Pradesh at its Principal Seat at Jabalpur for quashing the complaint in Criminal Case No. 3398/2014. By the impugned order in M.Cr.C. No. 846/2016 dated 20th January 2020, the High Court dismissed the petition as sans merit. Hence, the present appeal.
5. Upon perusal of the complaint in question, which is placed on record, we note that two individuals have been enlisted as accused, namely: (i) Dayle De’Souza – the appellant before us, who as per the cause-title is stated to be a director of M/s. Writer Safeguard Pvt. Ltd. and resident of Writer House located in Mumbai, Maharashtra; and (ii) Vinod Singh, who it is stated is the Madhya Pradesh head of M/s. Writer Safeguard Pvt. Ltd. and a resident of Bhopal, Madhya Pradesh. The Company is not enlisted as an accused in the complaint and has not been summoned to stand trial.
6. The complaint, with reference to the two accused, in paragraph 3 states:
“(3) That the accused persons are Contractor who were getting work of cash loading and security of cash through labours and they are responsible for employment and payment of labours employed in said work under said Act, who is Employer under Part 2 (E) of the Minimum Wages Act, 1948.”
It is also alleged in the complaint:
“(4) That the work of said Employer is regulated under Notification No.- S.O. 1284 (E) dated 20.05.2009 of the Government of India and they are Scheduled Employer under Minimum Wages Act, 1948 and Minimum Wages (Central) Rules, 1950.”
7. The complaint states that the inspection on 19th February 2014 had revealed violation of Rules 21(4), 22, 25(2), 26(1) and 26(5) on account of failure to keep and display, as the case may be, the Fine Register Form-1, Register Form-2, the n
