IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 26.11.2010 CORAM THE HONOURABLE MR. JUSTICE G.M. AKBAR ALI CRL.O.P.Nos.6812 and 6813 of 2010 M/s YES Bank Limited rep by Shri Rana Kapoor Chairman-cum-Managing Director Nehru Centre, 9th floor, Discovery India Dr.A.B.Road, Worli Mumbai-400 018 .. Petitioner in both the petitions vs. State rep by Labour Enforcement Officer (Central) Government of India No.26, Haddows Road Shastri Bhavan Chennai-600 006 .. Respondent in both the petitions Criminal Original Petitions filed under Section 482 Cr.P.C. for the reliefs as stated therein. For petitioner : Mr.B. Kumar, Senior Counsel for Mr.V. Adhivarahan For respondent : Mr.M. Devendran C O M M O N O R D E R The petitions are filed seeking a direction to call for the records in C.C.Nos.18382 and 18379 of 2005 on the file of the learned II Metropolitan Magistrate, Egmore, Chennai and quash the same. 2. The petitioner is the first accused in both the cases in a complaint filed under Sec.23 of The Contract Labour (Regulation and Abolition act 1970) (hereinafter called as "Act") for the breach of Sec.7 of the Act. The Labour Enforcement Officer filed the complaint stating that he inspected the premises of the petitioner on 27.5.2005 at 11.30 hours and found engaging contract labours without obtaining certificate of registration from the Assistant Labour Commissioner and thereby contravened Sec.7 of the Contract Labour Act 1970 punishable under penal section 24 of the Act. The complaint was taken on file by the II Metropolitan https://hcservices.ecourts.gov.in/hcservices/ Magistrate Egmore, Chennai in C.C.Nos.18382 and 18379 of 2005 and on issuance of summons, the petitioner appeared. Aggrieved by taking cognizance, the first accused is before this Court to quash the proceedings on the following grounds: "a) The Contract Labour (Regulation and Abolition) Act, 1970 (hereinafter referred to as the Act) is not applicable to the accused as the petitioner is not an "Establishment" as per Section 2(e) of the Act when the offences were alleged to be commenced i.e., during May 2005 (27.5.2005) as the petitioner commenced commercial operations only in October 2005. (b) The Provisions of Contract Labour (Regulation and Abolition) Act, 1970 (hereinafter referred to as the Act) and the allegation of offences alleged to be committed by the petitioner has no legal basis since the Wooden interior/Electrical interior work being done by service providers is not a "Contract of Service", but "Contract for Service" and as such the Act is inapplicable as per the decision of the Supreme Court in the case of workman of Nilgiri Co-operative Marketing Society Ltd vs State of Tamilnadu and others reported in 2004 (3) SCC 514. (c) The Act is not applicable to the present case as the wooden interior / electrical interior work being done by service Providers is of casual/intermittent nature as per Section 5(a) of the Act. (d)Since the wooden interior/electrical interior being done by a service provider is under "contract for service" over which Yes Bank has no supervisory powers or control, the Bank doesn't come within the ambit of the Act. 3. Mr.B. Kumar, learned Senior Counsel for the petitioner submitted that the petitioner is not the principal employer as defined in the Sec.2(g) of the Act. The learned senior counsel also submitted that the petitioner is banking establishment which is not covered under the definition 2(e) of the Act. The learned senior counsel would also draw the attention of this court to the term "workmen" as defined in 2(i) of the Act. https://hcservices.ecourts.gov.in/hcservices/ 4. The learned counsel submitted that the petitioner is a banking establishment who entrusted the work of interior decoration to a service contractor who had employed some labourers and therefore, the petitioner has not committed any offence. According to the learned senior counsel, the private complaint is only an abuse of process of court which has to be quashed. 5. On the contrary, Mr.M. Devendran, learned counsel for the respondent submitted that the petitioner has awarded a contract under their letter dated 2.5.2005 entrusting a labour work in their building. Therefore, it is an establishment falling under the purview of Sec.2(e) of the Act. The learned counsel submitted that the contractor has agreed to provide certain services enumerated under Sec.2(c) of the Act and the petitioner has full control over the establishment and therefore, liable to observe the provisions under Sec.7 of the act. The learned counsel pointed out that the petitioner is a principle employer under the Act and liable to obtain certificate of registration. Therefore, the petitioner has contravened the penal provisions and therefore, liable for prosecution. 6. Heard and perused the materials available on record. 7. The petitioner is a private bank and a company incorporated and represented by the Chairman cum Managing Director. The petitioner has awarded a contract to one Kriticons Limited for interior works to be done at their branch office in the ground floor of Door No.143, Nungambakkam High Road, Chennai. They have also entrusted the electrical works to one Cap Electromac Private Limited. The Labour Enforcement Officer (Central), Chennai inspected the premises on 27.5.2003 at 11.30 hours. He found that 25 workmen employed through contractors viz., Kriticons Limited and the Cap Electromac Private Limited were working. The Labour Enforcement Officer found that the petitioner contravened the provision under Sec.7 of the Act for failure to obtain certificate of registration and also failure to maintain register of contract labours in Form XII which is violation of Rule 74 and also failure to intimate the commencement of labour contractors which is violative of Rule 81(3). 8. The petitioners would submit that they are not an establishment as defined under Sec.2(e) of the Act when the offences were alleged to have been committed. According to the petitioner, they commenced their commercial operation only in October 2005. Secondly, the interior work being done by a service provider is not a contract of service and as such, the act is not applicable. Thirdly, as the number of labour are less than 20, the provisions of the Act is not applicable. 9. The Contract Labour Regulation and Abolition Act, 1970 is an act to regulate the employment of contract labour in certain establishment and to provide for the abolition of contract labour. The act was passed to prevent the exploitation of the contract labour and to introduce better conditions of work. It provides for regulation of the service conditions of contract labour. The act https://hcservices.ecourts.gov.in/hcservices/ intends to abolish the contract labour wherever and practicable and where it cannot be abolished altogether. The policy of the act is that the working condition of the contract labour should be regulated so as to ensure payment of wages and provision of essential amenities. 10. Chapter 7 of the Act deals with registration of establishment employing contract labour. Sec.7 reads as follows: 7. Registration of certain establishment:(1) Every Principal employer of an establishment to which this Act applies shall, within such period as the appropriate Government may, by notification in the Official Gazette, fix in this behalf with respect to establishments generally or with respect to any class of them, make an application to the registering officer in the prescribed manner for registration of the establishment: Provided that the registering officer may entertain any such application for registration after expiry of the period fixed in this behalf, if the registering officer is satisfied that the applicant was prevented by sufficient cause from making the application in time; (2) If the application for registration is complete in all respects, the registering officer shall register the establishment and issue to the principal employer of the establishment a certificate of registration containing such particulars as may be prescribed. 11. Sec.9 reads as follows: 9. Effect of non-registration:- No principal employer of an establishment, to which this Act applies, shall (a) in the case of an establishment required to be registered under section 7, but which has not been registered within the time fixed for the purpose under that section. (b) in the case of an establishment the registration in respect of which has been revoked under section 8, https://hcservices.ecourts.gov.in/hcservices/ employ contract labour in the establishment after the expiry of the period referred to in clause(a) or after the revocation of registration referred to in clause (b), as the case may be. 12. Sec.10 prohibits employment of contract labour. Chapter 6 deals with penalties and procedures. Sec. 24 reads as follows: "24. Other offences: If any person contravenes any of the provisions of this Act or of any rules made thereunder for which no other penalty is elsewhere provided, he shall be punishable with imprisonment for a term which may extend to three months, or with fine which may extend to one thousand rupees, or with both". 13. Rule 74 of The Contract Labour (Central) Rules 1971 reads as follows: "74. Register of contractors: Every principal employer shall maintain in respect of each registered establishment a register of contractors in Forms XII. 14. Rule 81(3) reads as follows: "Every principal employer shall, within fifteen days of the commencement or completion of each contract work under each contractor, submit a return to the Inspector, appointed under Section 28 of the Act, intimating the actual dates of the commencement or, as the case may be, completion of such contract work in Form VI-B. 15. According to the petitioner, he was not the principal employer as defined in 2(g)(4) of the Act. It is also further contended that the Banking Company viz., Yes Bank Limited is not an establishment as defined in the Act and it is also contended that the petitioner who is the Chairman cum Managing Director whose office is at Mumbai is not the person directly connected or have control over the labourers engaged by the Contractor at Chennai. https://hcservices.ecourts.gov.in/hcservices/ 16. Sec.2 (g)(iv) of the Act reads as follows: "(iv) in any other establishment, any person responsible for the supervision and control of the establishment". 17. Under Sec.2(e) establishment means (i) any office or department of the Government or a local authority, or (ii) any place where any industry, trade, business, manufacture or occupation is carried on; 18. The scheme of Sec.7 is that every principal employer of an establishment, employing contract labour shall register within such period with the registering authority. Such registered establishment shall maintain a register of contractors under Rule 74. Under Rule 81, such principal employer shall submit a return to the Inspector appointed under the Act. 19. On inspection dated 27.5.2005, the Labour Enforcement Officer, Central Chennai, found the premises of Yes Bank Limited at Chennai is a principal employer under 2(g) and they have not registered as per Sec.7 and not maintained a register and submitted a return under Rules 74 and 81. 20. Under 2(g)(iv), the Principal Employer means any persons responsible for the supervision and control of the establishment. Therefore, at no stretch of imagination, it could be said that the petitioner who is the Chairman cum Managing Director, whose office is at Mumbai is a person responsible for the supervision and control of the establishment at Chennai. 21. It is admitted that in order to open a new Branch at Chennai, the bank has engaged two contractors viz.,Kriticons Limited for interiors and Cap Electromac Private Limited for electrical work. Admittedly, those contractors have employed labours. 22. In 1976 LAB I.C 74 (Gammon India Limited Vs Assistant Commissioner of Labour, Nagpur and another) the Division Bench of Bombay High Court while dealing with Section 7 of the Act held as follows: ""It appears to us that in the present case when the work is carried out by the petitioner as contractor on behalf of Board, the Board will be responsible for the control and https://hcservices.ecourts.gov.in/hcservices/ supervision of the establishment. By giving a contract to the petitioner, the Board is not deprived of its powers of supervision and control over the work made by the petitioner. For the purpose of the Act, it appears to us that it is the Board alone which is responsible for the control and supervision as contemplated in the Sub- Clause. It is difficult to see how the petitioner can be said to be a Principal Employer appears to us that under the Act only one principal employer is contemplated. The Act was passed to prevent the exploitation of the Contract Labour and to introduce better conditions of work. It provides for regulation of the service conditions of contract labour. The Act intends to abolish the contract labour wherever possible and practicable and where it cannot be abolished altogether. The policy of the Act is that the working conditions of the contract labour should be regulated as to ensure payment of wages and provision of essential amenities." 23. In Aditya Puri vs Uniion of India and another (2004 LLR 311), a Single Judge of Jharkhand High Court held as follows: "7. The petitioner has challenged the impugned order on the ground that the premises of the company was inspected at Ranchi whereas the petitioner holds his office at Mumbai, and therefore, he has got no direct nexus with the alleged crime and consequently, the cognizance could not have been taken against him". 24. Following the above judgments, a learned single Judge of this court in Crl.O.P.No.25095 and 25540 of 2004 has held as follows: "15. It would further be contended that the Kotak Mahindra Limited was very recently started under the licence of the Reserve Bank of India which was granted very recently for running the Branch at Door No.555, Anna Salai, Chennai that was https://hcservices.ecourts.gov.in/hcservices/ only on 3.10.2004 and yet another branch at CEE BROSS CENTRE at Montieth Road, Egmore, Chennai based on the licence issued on 18.2.2003 and they have only issued the work order with M/s N.S. Associates Private Limited for interior decoration and for civil and electrical work for a period of one month for setting up a branch in Anna Salai. It would further be argued on the part of the petitioners that for installation of the air conditioner in the Company, they have to engage skilled workmen and the same cannot be construed as engagement of contract labour for turning out any routine banking activity and the contract referred to in the Inspection report employing the people for safely and security measures cannot be brought under the purview of the prohibited limits of the Act as it has been held time and again by various Upper Forums of law and therefore on such strong grounds, they would plead that the impugned proceedings in both the above Calendar cases initiated by the respondents are only liable to be quashed, particularly when the respondent is not able to mention anywhere in the complaint that the petitioners are the authorities nominated by the Bank in charge and responsible for carrying out such obligations on behalf of the establishment and therefore would seek the relief sought for in both the above criminal original petitions. 25. To attract the provisions of the Act, the establishment must be employing contract labours and the principal https://hcservices.ecourts.gov.in/hcservices/ employer means the person responsible for the supervision and control of the establishment. The establishment which is required to register and maintain the register is the the person who actually employ the contract labourers. Therefore, the petitioner cannot be termed as principal employer as he was not directly responsible for supervision and control and the banking company is not the establishment which is required to register under Sec.7 of the Act as it has issued a work order for interior decoration and electrical work with two independent contractors who have engaged skilled workmen and the same cannot be construed as engagement of contract labour by the bank for any routine banking activity. 26. It is also pertinent to note that the banking company has not even started business at the said premises as the premises was under process of interior and electrical work. Therefore, I am of the considered view that there is no material to proceed against the petitioner and the continuation of the proceedings would only be an abuse of process of law and it is a fit case to exercise the jurisdiction under Sec.482 Cr.P.C. 27. In the result, both the criminal original petitions are allowed and the proceedings in C.C.Nos.18382 and 18379 of 2005 on the file of the learned II Metropolitan Magistrate, Egmore, Chennai are quashed as far as the petitioner is concerned. Sd/- Asst.Registrar /True Copy/ Sub.Asst.Registrar sr To 1. II Metropolitan Magistrate, Egmore, Chennai 2. -do- Through The Chief Metropolitan Magistrate Egmore, Chennai 2. Labour Enforcement Officer (Central) Government of India No.26, Haddows Road Shastri Bhavan, Chennai-600 006 + 1 cc to Mr.M.Devendran, Advocate Sr.84528 + 2 cc to Mr. V. Adhivarahari, Advocate SR.84528 Crl.O.P.Nos. 6812 and 6813 of 2010 TRM(CO) Eu 10.12.10 https://hcservices.ecourts.gov.in/hcservices/