| SooperKanoon Citation | sooperkanoon.com/131624 |
| Subject | ;Labour and Industrial |
| Court | Patna High Court |
| Decided On | Sep-24-1998 |
| Case Number | Cr. M.C. No. 1386/1996 |
| Judge | S.K. Chattopadhyaya, J. |
| Acts | Factories Act, 1948 - Sections 2 and 92; Code of Criminal Procedure (CrPC) - Sections 482 |
| Appellant | Mishra A.K. and ors. |
| Respondent | State of Bihar and ors. |
| Appellant Advocate | Kameshwar Prasad and Sunil Kumar Sinha, Advs. |
| Respondent Advocate | Dilip Jerath and P.D. Agrawal, Advs. |
S.K. Chattopadhyaya, J.
1. The order taking cognizance dated December 8, 1995 under Section 92 of the Factories Act, 1948 has been impugned by the petitioners by invoking the jurisdiction of this Court under Section 482 of the Code of Criminal Procedure.
2. One Sachita Nand Singh, opposite party No. 2, being Factory Inspector of Ranchi Anchal No. 1. filed a complaint on July 5, 1995 in the Court of Chief Judicial Magistrate, Ranchi. showing the petitioner Nos. 1 to 9 as the members of the Board of Directors and petitioner No. 10 as Manager of the Factory, Foundry Forge Plant of H.E.G. Ltd. Ranehi. It is alleged that though the Bihar Government issued a notification dated February 13, 1989 to the effect that 'occupier' of the Foundry Forge Plant (hereinafter referred to as 'the Plant') should employ 5 qualified Safety Officers and even this Court by its order dated February 23, 1995 passed in CWCJ No. 8387/1994 (R) directed the Chief Inspector of Factories to take steps for appointment of qualified officers, Chief Inspector of Factories by his letters dated March 13 and 15, 1995 directed the management to appoint 5 regular qualified safety officers but the same was not complied with. As the Foundry Forge Plant is a factory of Heavy Engineering Corporation Ltd., Ranchi and since presently no Director has been appointed by the Central Government as 'occupier' of the factory, all the directors of the factory being 'occupiers' and petitioner No. 10 as Manager of the concerned factory are responsible for violation of the provisions of Section 48B of the Factories Act, 1948 read with Rule 62-B of the Bihar Factories Rules. On the basis of said report, by the impugned order the learned Chief Judicial Magistrate, Ranchi took cognizance of the offence as aforesaid and hence this application.
3. Mr. Kameshwar Prasad, learned Sr. counsel appearing on behalf of the petitioners urged that as the petitioners Nos. 2,3,5,6 and 7 were appointed by the Government of India as part time Directors of the Board of Directors of the Heavy Engineering Corporation Ltd., they were only required to attend meetings and decide such matters of the company as are placed for decision before the Board and they were not in any way involved in day-to-day affairs of the management of the company which will appear from the appointment letters annexed as Annexure 2 series to this application. According to him, when the complainant himself has admitted that till date no Director has been appointed as 'occupier' of the factory by the Central Government, he could not have prayed for taking cognizance against all the members of the Board without specifying as to which of the Director/ Directors was/were responsible for day-to-day affairs as occupier of the factory. Referring to the registration certificate and licence (Annexure 3) Mr. Prasad contends that the factory is registered under the Act and the licence will show that Sri. J. P. Pandey has been shown as 'occupier' of the said factory. Similarly defending the cause of petitioner No. 10, I. AH, he contends that no prosecution lies against this petitioner also inasmuch as being Senior Deputy General Manager (Operation), Incharge Foundry Forge Plant, he has admittedly not been shown as 'occupier' of the factory in the licence. Referring to the allegations made against the petitioners for non-appointing 5 qualified safety officers, learned counsel has referred to various documents in support of his contention that the allegations levelled against the petitioners are devoid 'of merit. But, in my opinion, at this stage this Court will not probe into the matter for coming to a conclusion as to whether the allegations levelled against the petitioners were correct or not. The only question that has to be considered as to whether in the facts and circumstances of the case the petitioner Nos. 1 to 9 who are admittedly the members of the Board of Directors and petitioner No. 10 being Senior Deputy General Manager (Operation) will be said to be the 'occupiers' of the factory.
4. Mr. P.D. Agrawal and Mr. Dilip Jerath, learned counsel appearing on behalf of the opposite parties and intervenor respectively, countering the argument of Mr. Prasad, have submitted that in view of Section 2(n) of the Act, all the petitioners either being members of the Board of Directors or the General Manager must be deemed to be the occupiers of the factory when admittedly by the time the complaint was filed, and no particular individual was appointed by the Central Government as 'occupier'. In this connection the learned counsel have led much emphasis on Section 101 of the Act. They have strongly relied on the decision of the Supreme Court in the case of J.K. Industries Ltd. v. Chief Inspector of Factories and Boilers, (1997-I-LLJ-722)(SC) wherein it has been held that under the Act only one of the Directors, the directing mind and will of the company, its alter ego, can be nominated as an occupier for the purpose of the Act.
5. In the case of J.K. Industries (supra), the point for consideration before their Lordships was whether in the case of a company which owns or runs the factory, is it only a Director of the company who can be notified as the occupier of the factory within the meaning of proviso (ii) to Section 2(n) of the Act, or whether the company can nominate any other employee to be the occupier by passing a resolution to the effect that the said employee shall have 'ultimate control over the affairs of the factory'. Answering the question, their Lordships held inter alia, that in the case of a company, which owns a factory, it is only one of the Directors of the company who can be notified as the occupier of the factory for the purposes of the Act and the company cannot nominate any other employee to be the occupier of the factory. It was also held that where the company fails to nominate one of its Directors as the occupier of the factory, the Inspector of Factories shall be at liberty to proceed against any one of the Directors of the company, treating him as the deemed occupier of the factory, for prosecution and punishment in case of any breach or contravention of the provisions of the Act or for offences committed under the Act.
6. However, recently in the case of Indian Oil Corporation Ltd v. The Chief Inspector of Factories and Ors., (1998-II-LLJ-604)(SC) the question arose as to who would be deemed occupier as contemplated under Section 2(n), Clauses (ii) and (iii) of the Act. According to their Lordships, if ultimate control is the litmus test, it is necessary to find out whether the Central Government has the ultimate control over the affairs of the factories of the Corporation or it is the Corporation itself which possesses such control. In this context the following observation made in the case ofJ.K. Industries (supra), was taken note of by their Lordships:-
'By the Amending Act of 1987 it appears that the legislature wanted to bring in a sense of responsibility in the minds of those who have the ultimate control over the affairs of the factory, so that they take proper care for maintenance of the factories and the safety measures therein ..... Proviso (ii) was introduced by the Amending Act, couched in a mandatory form - 'any one of the Directors shall be deemed to be the occupier' - Keeping in view the experience gained over the years as to how the Directors of a company managed to escape their liability, for various breaches and defaults committed in the factory by putting up another employee as a shield and nominating him as the 'occupier' who would willingly suffer penalty and punishment..... Proviso (ii) now makes it possible to reach out to a Director of the company itself, who shall be prosecuted and punished for breach of the provisions of the Act, apart from prosecution and punishment of the Manager and of the actual offender.'
7. Having referred to those observations, their Lordships were of the opinion that those were made by the Court while considering constitutional validity and correct interpretation of Clause (ii) of the First proviso to Section 2(n) of the Act. Their Lordships have referred the same as they are also relevant for construing the true ambit and width of Clauses (ii) and (iii) of that provision. In paragraph 11 of the judgment, their Lordships held as follows:-
'In Som Prakash Rekhi v. Union of India and Anr., (1981-I-LLJ-79)(SC) this Court has held that corporations are one species of legal persons invented by the law and invested with a varieties of attributes so as to achieve certain purposes sanctioned by the law. The characteristics of corporations, their rights and liabilities, functional autonomy and juristic status, are jurisprudentially recognised as of a distinct entity even where such corporations are State agencies or instrumentalities. But merely because a company or other legal person has functional and jural individuality for certain purposes and in certain areas of law, it does not necessarily follow that for the effective enforcement of fundamental rights under our constitutional scheme, Court should not scan the real character of that entity; and if it is found to be a mere agent or surrogate of the State, in fact owned by the State, in truth controlled by the State and in effect an incarnation of the State, Constitutional lawyers must not blink at these facts and frustrate the enforcement of fundamental rights despite the inclusive definition of Article 12 that any authority controlled by the Government of India is itself State. The true test is functional, not how the legal person is born but why it is created. Apart from discharging functions or doing business as the proxy of the State, wearing the corporate mask there must be an element of ability to affect legal relations by virtue of power vested in it by law. After taking into consideration the fact that control by the Government over the Corporation is writ large in the Act in the factum of being a Government company and the circumstances under which the Bharat Petroleum Corporation Limited was made a Corporation, this Court further held that they emphasise the fact that it 'is not a mere company but much more than that and has a statutory favour in its operation and functions, in its powers and duties and in its personality itself, apart from being functionally and administratively under the thumb of the Government'. It was also observed that a 'commercial undertaking although permitted to be run under our constitutional scheme by Government, may be better managed with professional skills and on business principles, guided, of course, by social goals, if it were administered with commercial flexibility and celerity free from departmental rigidity, slow motion procedures and hierarchy of officers.....
Welfare States like ours called upon to execute many economic projects readily resort to this resourceful legal contrivance because of its practical advantages without a wee bit of diminution in ownership and control of the undertaking. The true owner is the State, the real operator is the State and the effective Controllerate is the State and accountability for its actions to the community and to Parliament is the State ..... The core fact is that the Central Government, through this provision, chooses to make over for better management, its own property to its own offspring. A Government Company is a mini-incarnation of Government itself, made up of its blood and bones and given corporate shape and status for defined objectives, not beyond.'
After discussing various other judgments of the Supreme Court and accepting the argument that Corporation is a legal entity, has a separate and independent existence of its own and the right to manage the affairs of the Corporation including the right to set up and run the factories vests in the Board of Directors, did not agree with the contention that the ultimate control over the factories of the Corporation lies with the Corporation and not with the Central Government. According to their Lordships, 'It will not be proper to adopt this narrow approach while construing the scope and ambit of Clauses (ii) and (iii) of the first proviso to Section 2(n). The approach which deserves to be adopted is one which would achieve the object of the provision and, therefore, the same approach which was adopted by this Court in Som Prakash Rekhi 's case (supra), is to be preferred over the narrow approach which is the basis of the contention raised on behalf of the contesting respondents. Thus, interpreting the intention of the legislature their Lordships have held that if it is a case of a factory in fact and in reality owned or controlled by the Central Government or the State Government or any local authority then in case of such a factory the person or persons appointed to manage the affairs of the factory shall have to be deemed to be the occupier, even though for better management of such a factory or factories a corporate form is adopted by the Government.
8. If in this background the facts of the present case are discussed, it would be seen that the licence issued by the Factory Inspection Department of Government of Bihar mentioned the name of Sri. J.P. Pandey as the occupier. Admittedly this licence was to expire on December 31, 1995 and the complaint was filed on July 5, 1995, which fact will indicate that on the date of filing of the complaint Sri. J.P. Pandey was the occupier of the factory namely, M/s. Foundry Forge Plant of H.E.C. Ltd., Ranchi. In such view of the matter, in my opinion, the learned Chief Judicial Magistrate could not have taken congnizance against the petitioners who are either the members of the Board of Direclors or the Senior Deputy General Manager (Operation).
9. From the impugned order taking cognizance it docs not appear that before taking cognizance of the offence under Section 92 of the Act and directing the petitioner to appear before him the learned Magistrate has applied his judicial mind to the facts and circumstances as well as the law involved in the case. Impugned order shows that the same is a type of form where something has been typed and some portions remain blank on which the learned Magistrate has only filled up the blank by inserting the designation of the complainant, section on which cognizance has been taken and the name of the petitioners. Even delay had been condoned in filing the prosecution report without any reasoned order, which is apparent on the fact of the order. It has not been disputed at the Bar that before taking cognizance the learned Magistrate must be prima facie satisfied that the accused have committed such offence. On this ground also in my view, the impugned order cannot be sustained in law.
10. Though points of absence of sanction and limitation have been urged, but in view of my findings aforesaid these are not required to be gone into.
Having considered the facts and circumstances, I am of the opinion that the impugned order taking congnizance dated December 8, 1995 cannot be sustained in law and accordingly it is set aside. I direct the opposite party Nos. 1 and 2 to accept the person appointed by the Central Government to manage the affairs of the factory namely, M/s. Foundry Forge Plant of H.E.C. Ltd., Ranchi as the occupiers of the factory for the purpose of Section 2(n) of the Act.