IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 07.06.2011 CORAM THE HONOURABLE MR.JUSTICE K.CHANDRU W.P.NOs.23618 and 23619 of 2003 and W.P.M.P.Nos.29182 and 29183 of 2003 1.M/s.Jawahar Mills Limited, situated at No.4, Nehru Nagar, Post Box No.5, Salem-636 005 represented by its Managing Director. 2.P.L.Vivekanandan Managing Director of M/s.Jawahar Mills Limited, situated at No.4, Nehru Nagar, Post Box No.5, Salem-636 005 .. Petitioners in both writ petitions Vs. 1.The Regional Director, Employees' State Insurance Corporation, No.143,Sterling Road, Nungambakkam, Chennai-600 034. 2.The Manager, Employees' State Insurance Corporation, Local Office at Salem. 3.The Judicial Magistrate-II, Salem District. .. Respondents in both writ petitions W.P.Nos.23618 and 23619 of 2003 are preferred under Article 226 of the Constitution of India praying for the issue of a writ of prohibition prohibiting the third respondent from proceeding with the criminal prosecution under Sections 85(a) and 85(e) of the Employees' State Insurance Corporation Act, 1948 against the petitioners herein in C.C.Nos.172 and 173 of 2003 respectively pending on the file of the third respondent. For Petitioners : Mr.H.Balaji in both W.Ps. For Respondents : Mr.K.C.Ramalingam for RR1 and 2 in both W.Ps. - - - - https://hcservices.ecourts.gov.in/hcservices/ COMMON ORDER The petitioners are the management of M/s.Jawahar Mills Limited represented by its Managing Director. In the first writ petition, the petitioners seek by way of writ of prohibition prohibiting the learned Judicial Magistrate-II, Salem from proceeding with the criminal prosecution under Sections 85(a) and 85(e) of the Employees' State Insurance Act in respect of C.C.No.172 of 2003. In the second writ petition, the very same petitioners sought a similar prayer prohibiting the criminal prosecution in C.C.No.173 of 2003 on the file of the learned Judicial Magistrate No.2, Salem. 2.Both the writ petitions were admitted on 25.08.2003. Pending further orders, an interim injunction was granted. The case of the two petitioners was that their mill had become a sick industry. It was referred for framing of a scheme by the BIFR. The BIFR took up the case as case No.335/1999 and that the rehabilitation proposal was pending. If at that time any recovery was made by the ESI authorities either against the mill or against the individual Directors, they may be put to grave hardship. Under Section 22 of the SIC Act, recovery proceedings will have to be kept in abeyance. They delay in payment of contributions is only due to general recession in the industry. 3.It must be noted that the issue relating to the effect of Section 22 of the SIC Act and the immunity claim made thereunder was determined by a Full Bench of this Court in Gowri Spinning Mills (Private) Ltd., (rep. by Managing Director), Dharmapurai Vs. Assistant Provident Fund Commissioner, Salem and another reported in 2006 (4) LLN 441 wherein it was held in paragraphs 31 and 32 as follows: 31. In Poysha Inds.Co. Ltd. V. Collector, Ghaziabad, [1988 (79) FLR 167] (All), a learned single Judge of the Allahabad High Court held as follows: - "In the present case the recovery related to claim for wages by the workmen. Admittedly, the petitioner-company has not terminated the relationship of master and servant between the company and its workmen. No case has been made out of lay-off and lock-out or retrenchment or closure. Therefore, so long relationship of master and servant between the company and its workmen continues, the employer is bound to pay wages to the workmen even if the employer for some reason does not feel inclined to get actually the work done by the workmen. In respect of such payment the employer cannot dispute its liability because of the sickness of the Unit or pendency of the scheme for rehabilitation. Therefore, I am of the opinion that the https://hcservices.ecourts.gov.in/hcservices/ proceedings for recovery of such wages is not covered by Section 22 of the said Act of 1985. Relying on the principle laid down in the case of Shri Chamundi Mopeds Limited (supra), I find that in case of such proceeding no consent from the B.I.F.R is required. Contrary interpretation of law will result in compelling the present workmen to continue to discharge duties without any payment of wages and this also cannot be the intention of the legislature. If the purpose of the said Act of 1985 is to rehabilitate the company itself, the same cannot mean that the workmen are to be compelled to continue without payment of wages as workmen are important constituent of the industrial unit. The said Act cannot be interpreted to mean that it saves only the employer and not the employees. Such an interpretation will not only leave the workmen to starve but also will lead to slavery." 32.A Division Bench of the Karnataka High Court in the case of Indian Plywood Manufacturing Company Ltd. v. Commissioner of Labour and others, [2000 (2) L.L.N 677(Kar)], following the decision of the Allahabad High Court in the case of Modi Industries case [1999 (4) L.L.N. 892] (vide supra) held that the impugned notice and recovery certificate under Section 33(c) of the Industrial Disputes Act cannot be regarded as governed by Section 22(1) of the SICA. Similar is the view of the Uttranchal High Court in Uptron India Ltd. v. Presiding Officer, Labour Court [2004 -2-LLJ page 378] and that of the Madhya Pradesh High Court in Kedia Distilleries Ltd., Indore, and another v. General Secretary, Chhatisgarh Chemical Mill Majdoor Sangh, Rajnandgaon, and others [2000 (4) L.L.N. 473]." 4.Thus, the full bench had negatived the claim of such immunity. In the present case, no scheme had been framed. The petitioners cannot challenge the executive proceedings including the prosecution launched against the petitioners mill and its Managing Director. If at all the petitioners will have to stand trial before the appropriate criminal court and establish their innocence. The general industrial recession cannot be a ground to forestall the execution machinery having been set in motion. 5.In fact, the subsequent facts of the Mill were brought out in the case filed by the Indian Overseas Bank in W.P.Nos.11177 and 23748 of 2008. It was told to this court that the petitioners' mill had sold the property to some other purchaser who also defaulted in making payments towards ESI and EPF. https://hcservices.ecourts.gov.in/hcservices/ 6.In this context, it is worthwhile to refer to a decision of the Supreme Court wherein it had been held that violation of labour laws cannot be viewed by the court lightly and if an employer is found guilty, he should be punished. The Supreme Court's decision in People's Union for Democratic Rights v. Union of India reported in (1982) 3 SCC 235 is to the point. In paragraph 7 of its judgment it was held as follows: "7......If violations of labour laws are going to be punished only by meagre fines, it would be impossible to ensure observance of the labour laws and the labour laws would be reduced to nullity. They would remain merely paper tigers without any teeth or claws. We would like to impress upon the Magistrates and Judges in the country that violations of labour laws must be viewed with strictness and whenever any violations of labour laws are established before them, they should punish the errant employers by imposing adequate punishment." 7.In the light of the above, both the writ petitions will stand dismissed. However, there will be no order as to costs. Consequently connected miscellaneous petitions stand closed. vvk Sd/- Asst. Registrar //True Copy// Sub Asst. Registrar To 1.The Regional Director, Employees' State Insurance Corporation, No.143,Sterling Road, Nungambakkam, Chennai-600 034. 2.The Manager, Employees' State Insurance Corporation, Local Office at Salem. 3.The Judicial Magistrate-II, Salem District. + 1 cc to Mr. K. C. Ramalingam, Advocate SR No.33034 VD(CO) SR/17.6.2011 ORDER IN W.P.NOs.23618 and 23619 of 2003 https://hcservices.ecourts.gov.in/hcservices/