IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD (Special Original Jurisdiction) MONDAY, THE NINTEENTH DAY OF OCTOBER TWO THOUSAND AND NINE PRESENT HON’BLE SRI JUSTICE K.C.BHANU CRIMINAL APPEAL No.883 OF 2001 Between: G. Ravinder Rao ..... Appellant AND 1. The Sate of Andhra Pradesh, Rep. by its Public Prosecutor, High Court of A.P., Hyderabad. 2. E.S.I. Corporation having its Regional Office at 5-9-23, Hill Fort Road, Hyderabad Rep. by its Insurance Inspector ..... Respondents The Court made the following: JUDGMENT: The Criminal Appeal, under Section 374 (2) of the Code of Criminal Procedure, 1973, is directed against the judgment, dated 16.05.2001, in C.C.No.137 of 1999, on the file of the learned Special Judge for Economic Offences, Hyderabad, whereunder and whereby, the appellant/A2 was found guilty of the offence punishable under Section 85 (g) of the Employees State Insurance Act, 1948 (for short ‘the Act’), and accordingly convicted and sentenced to pay a fine of Rs.4,000/-, in default to suffer Simple Imprisonment for a period of two months. 2. The brief facts that are necessary for the disposal of the present appeal may be stated as follows: P.W.1, who was the Inspector of Employees’ State Insurance Corporation, Hyderabad, visited M/s. Kranthi Automobiles, Bellampally Road, Mancherial, Adilabad District, on 07.09.1994 and recommended for coverage of the unit of A1 with effect from 01.06.1994 having found that A1 employed more than 10 persons as on 01.06.1994. Thereafter, A1’s firm failed to remit the contribution as required to be paid under Section 40 of the Act covering the period from 01.06.1994 to 31.03.1995 to a tune of Rs.11,344/- and thereby violated Section 85 (a) of the Act. The proceedings under Section 45 (a) of the Act was issued against the accused, but the accused failed to give explanation to the show cause notice issued to them. Hence, the complaint. 3. When a charge under Section 85 (a) of the Act was framed, read over and explained to him in Telugu, he pleaded not guilty and claimed to be tried. 4. To substantiate the charge, the prosecution examined P.Ws.1 and 2 and got marked Exs.P1 to P11. 5. After closure of the prosecution evidence, appellant/A2 was examined under Section 313 of the Code of Criminal Procedure, 1973, with reference to the incriminating material found against him in the evidence of prosecution witnesses. He denied the same. On behalf of the appellant/A2, D.W.1 was examined and Exs.D1 to D3 were marked. 6. After considering the evidence on record, the trial Court convicted and sentenced the accused as above. Aggrieved thereby, A2 filed this Criminal Appeal. 7. Now the point for determination is whether the second respondent/complainant proved its case beyond all reasonable doubt against the appellant/A2 for the violation of Section 85 (g) of the Act, punishable under Section 85 (ii) of the Act and whether the judgment of the trial Court is correct, legal and proper? 8. The contention raised by the learned counsel appearing for the appellant/A2 is that the appellant/A2 was not correctly described in the cause title; that A2 is not the Managing Partner of A1’s firm; that the copy of Ex.D1-Partnership Deed, dated 01.04.1994, discloses that the present appellant was not the Managing Partner of A1’s firm, and only a sleeping partner and hence, he prays to set aside the conviction and sentence recorded against the appellant/A2. 9. On the other hand, learned counsel appearing for the second respondent herein contended that all the correspondence including the show cause notice has been received by the appellant/A2; that therefore, he was also actively participating in the affairs of A1’s firm; that after elaborate consideration of the evidence on record, the trial Court rightly found the appellant/A2 guilty; and therefore, absolutely there are no grounds to interfere with the same. 10. The Criminal Appeal is dismissed in so far as the third respondent is concerned, as the appellant failed to comply with the conditional order, dated 20.04.2009, to furnish the correct address of the third respondent. 11. The only question is whether the conviction and sentence of the appellant/A2 can be set aside on the ground that he was not actively participating in the affairs of A1’s firm. Under explanation to Section 86A of the Act, the word “Director” has been defined which reads as follows: ““director” in relation to – (a) a company, other than a firm, means the managing director or a whole-time director; (b) a firm means a partner in the firm.” 12. It is not in dispute that the appellant/A2 was a partner of A1’s firm. No doubt, the other two persons were not prosecuted who are the Managing Partners of A1’s firm. That cannot be a ground to acquit the accused. Admittedly, it is not in dispute that the employer’s contribution has not been remitted covering the period from 01.06.1994 too 31.03.1995 to a tune of Rs.11,344/-. Therefore, a show cause notice was issued to the appellant/A2. He received the same under acknowledgment. Thereafter, he has not replied to the show cause notice. Therefore, the complaint was lodged. 13. No doubt, A1 paid the employer’s contribution after lapse of time. But admittedly, there was a delay in making the contributions. Therefore, violation under Section 85 (g) of the Act has been made punishable under Section 85 (ii) of the Act. The only question to be considered is whether the partner is liable for prosecution in view of the definition under Section 85 (a) of the Act coupled with Section 2 (a) of the Indian Partnership Act, 1932. It is clear that every partner of the partnership firm is liable for the offence. Section 2 (a) of the Indian Partnership Act, 1932, defines, the ‘act of a firm’ which means any act or omission by all the partners or by any partner or agent of the firm which gives rise to a right enforceable by or against the firm. Therefore, an act of a partner is an act of the firm. Therefore, all the partners are liable if any violations are committed by the firm. 14. Learned counsel appearing for the appellant/A2 relied upon a decision reported in K.K.A. Nambiar v. Employees’ State Insurance Corporation, Bangalore[1], wherein it was held thus: “While the principal employer will be strictly liable, the partners can be made liable if there are averments in the complaint that they have also participated in the commission of the offence. No such averments have been made in the complaint. Mr. Papanna, learned counsel for the respondent was not able to show from the complaint that there were specific averments against the partners. In the peculiar facts and circumstances of the case the continuation of the trial against the partners without prosecuting the principal employer, is in my view misdirected and is an abuse of the process of law. In these circumstances the prosecution as against the partners stands quashed. The proceedings in C.C. No. 8007/95 on the file of the IVth Additional Chief Metropolitan Magistrate, Bangalore are accordingly quashed. This petition is allowed.” 15. Section 86A of the Act reads as follows: “Offences by companies: (1) If the person committing an offence under this Act is a company, every person, who at the time of the offence was committed was incharge of, and was responsible to, the company for the conduct of the business of the company, as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly: Provided that nothing contained in this sub- section shall render any person liable to any punishment, if he proves that the offence was committed without his knowledge or that he exercised all due diligence to prevent the commission of such offence. (2) Notwithstanding anything contained in sub-section (1), where an offence under this Act has been committed with the consent or connivance of, or is attributable to, any neglect on the part of, any director or manager, secretary or other officer of the company, such director, manager, secretary or other officer shall be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly.” 16. If the prosecution shows that partner in the firm was incharge of, and was responsible to, the firm, for the conduct of the business of the firm, he shall be deemed to be guilty of the offence. If really, the appellant/A2 was not a partner, he would not have received the show cause notice got issued by P.W.1 under Ex.P5-show cause notice, dated 02.11.1995. He also signed on Exs.P6 and P7-Postal acknowledgements for Ex.P5. As a matter of fact, the appellant/A2 himself produced D.W.1 as witness. If really, the appellant/A2 was not the person incharge of and responsible for, the affairs of the firm, he would have challenged Ex.P5-show cause notice, dated 02.11.1995, under Section 75 of the Act before the competent Court. Therefore, the burden placed on the complainant has been discharged. If the offence was committed by the company without the knowledge of the appellant/A2, then Proviso to 86A of the Act would come to rescue in not imposing any punishment. There is no such evidence that the offence was committed without his knowledge or that he exercised all the due diligence to prevent commission of the said offence. 17. Admittedly, A1’s firm has not paid the amount due for the relevant period. Therefore, the trial Court, after elaborate consideration of evidence on record, rightly found the appellant/A2 guilty and the said order does not suffer from any infirmities so as to call for interference by this Court. Hence, the Criminal Appeal is devoid of merit and is liable to be dismissed. 18. Accordingly, the Criminal Appeal is dismissed, confirming the judgment, dated 16.05.2001, in C.C.No.137 of 1999, on the file of the learned Special Judge for Economic Offences, Hyderabad. ______________ (K.C.BHANU, J) Date: 19th October, 2009. KL [1] 1998 (3) RCR (Criminal) 271