IN THE HIGH COURT OF JUDICATURE OF ANDHRAPRADESH AT HYDERABAD HONOURABLE SRI JUSTICE SAMUDRALA GOVINDARAJULU CRIMINAL PETITION No.2282 of 2007 DATE:21.06.2010 Between: Dr.C.Dayakar Reddy …… Petitioner/Accused. And: The State of Andhra Pradesh rep. by Public Prosecutor and another. …..Respondents HONOURABLE SRI JUSTICE SAMUDRALA GOVINDARAJULU CRIMINAL PETITION No.2282 of 2007 ORDER: The petitioner/A-2 is accused of offence punishable under Section 85(a) of the Employees State Insurance Act, 1948 in P.C. No.45 of 2005 on the file of Judicial Magistrate of the First Class to try offences under the E.S.I.Act and Chairman, Industrial Tribunal-1, Hyderabad. A-2 is Chairman of M/s.C.D.R Health Care Limited. A-1 in this case is described as follows: “M/s.CDR Health Care Limited, Unit: Siddartha Hospitals Limited, 220, Somasundaram Street, S.D.Road, Secunderabad Rep. By its Chairman”. As described in the complaint, A-1 includes two companies namely C.D.R Health Care Limited and Siddartha Hospitals Limited. In the complaint, the 2nd respondent-corporation which is the complainant did not explain as to how two limited companies are included in the description of A-1. Violation alleged by A-1 is non payment of E.S.I contribution relating to the unit at Secunderabad. Even though it was stated in para-6 of the complaint that the accused is principal employer of the company, it is not specified as to which company is that company out of the two companies mentioned in the description of A-1. 2) It is contended by the petitioner’s counsel that C.D.R Health Care Limited has got several franchises at several places including Hyderabad, Secunderabad and Visakhapatnam and that using name and goodwill of ‘C.D.R’, several local hospitals run their hospitals under the banner of ‘C.D.R hospitals’ and that in the same way at Secunderabad, Siddartha Hospitals Limited was running its hospital as franchisee of C.D.R Health Care Limited and naming it as C.D.R Hospital. It is further contended that each franchsee is a separate unit and that liability of each unit under the E.S.I. Act has to be determined with reference to number employees employed in that particular unit. Though two counsel appeared one after other for the 2nd respondent- corporation, none of them could explain why two companies are shown in the description of A-1 and role of each of the companies. When Siddartha hospital Limited is a franchisee of C.D.R Health Care Limited, in case there is any liability under Section 85(a) of the E.S.I.Act, then it is open to the corporation to prosecute Siddartha Hospitals Limited and the principal employer therein; but the corporation cannot prosecute A-2 who is Chairman of C.D.R Health Care Limited. Hence, this Court finds that prosecution of A-2 in this case does not lie and he was being harassed even though he had no role as principal employer in Siddartha Hospitals Limited which is an independent company from C.D.R Health Care Limited. 3) Hence, the petition is allowed quashing proceedings in P.C. No.45 of 2005 in the lower Court in so far as the petitioner/A-2 is concerned. _______________________________ SAMUDRALA GOVINDARAJULU, J June 21, 2010 KSH