IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE M.SASIDHARAN NAMBIAR THURSDAY, THE 9TH JULY 2009 / 18TH ASHADHA 1931 Crl.MC.No. 1732 of 2009() ----------------------------------- CC.27/2009 of CHIEF JUDICIAL MAGISTRATE COURT, THRISSUR .................... PETITIONER/2ND ACCUSED ---------------------------------------- SUBIN MATHEW, AGED 38 YEARS, S/O.C.M.MATHEW, CHURAPUZHA, KALALIKAD P.O., MOOVATTUPUZHA, PARTNER, M/S.GENERAL BUSINESS MACHINES, 37/2939/B SECOND FLOOR, BANERJI ROAD, KOCHI-682 031. BY ADV. MR.K.S.HARIHARAPUTHRAN MR.GEORGE MATHEW RESPONDENTS/COMPLAINANT/ACCUSED 1, 3 & STATE ------------------------------------------------------------------------------- 1. E.S.I. CORPORATION, REP. BY THE E.S.I. INSPECTOR (LEGAL), REGIONAL OFFICE, THRISSUR, NORTH SWARAJ ROUND, THRISSUR. 2. C.M. MATHEW, MANAGING PARTNER, M/S.GENERAL BUSINESS MACHINES, REPRESENTED BY C.M.MATHEW, MANAGING PARTNER, 37/2939/B SECOND FLOOR, BANERJI ROAD, KOCHI-682 031. 3. M/S.GENERAL BUSINESS MACHINES, REPRESENTED BY C.M.MATHEW, MANAGING PARTNER, 37/2939/B SECOND FLOOR, BANERJI ROAD, KOCHI-682 031. 4. STATE OF KERALA REP. BY PUBLIC PROSECUTOR, HIGH COURT OF KERALA, ERNAKULAM. R4 BY PUBLIC PROSECUTOR MR.GIKKU JACOB R1 BY ADV. MR.P.SANKARANKUTTY NAIR, SC, ESI CORPN . THIS CRIMINAL MISC. CASE HAVING COME UP FOR ADMISSION ON 09/07/2009, THE COURT ON THE SAME DAY PASSED THE FOLLOWING: rs. M.Sasidharan Nambiar, J. -------------------------- Crl.M.C.No.1732 of 2009 -------------------------- ORDER Petitioner was the second accused in C.C.No. 227/1999 on the file of Chief Judicial Magistrate's Court, Thrissur, now pending as C.C.No.27/2009. First respondent lodged Annexure-A1 complaint against the third accused Firm, first accused, being its Managing Partner and petitioner/second accused, the Partner alleging that they committed offences under Sections 85(a) and (g) of Employees' State Insurance Act, 1948 (hereinafter referred to as 'the Act'). 2. The case is that first accused is the Managing Partner and petitioner is the Partner of third accused Firm, which is a factory coming within the purview of the Act and though third accused is bound to pay contributions of the employees to the Provident Fund as provided under Section 40 of the Act, Rs.1,25,009/-, the amount CRMC 1732/09 2 which should have been paid as contribution for the period from 1.11.1996 to 30.9.1996, was not paid and therefore, all the accused committed offence under Sections 85(a) and (g) of the Act. As petitioner was not available for trial, the case as against him was split up and accused 1 and 3 were tried by the Chief Judicial Magistrate in C.C.No. 227/1999. 3. As is clear from Annexure-A3 judgment of learned Chief Judicial Magistrate, first accused, Managing Partner pleaded guilty on his behalf as well as on behalf of third accused Firm. Learned Magistrate, therefore, found them guilty for the offence under Sections 85(a) and (i) of the Act and convicted and sentenced them to pay a fine of Rs.5,000/- each and on failure, first accused was sentenced to undergo simple imprisonment for fifteen days. He was further sentenced to undergo imprisonment till rising of the court. This petition is filed by the second accused under CRMC 1732/09 3 Section 482 of Code of Criminal Procedure to quash the case as against him contending that petitioner was not involved in the day-to-day affairs of third accused Firm and it was the first accused, Managing Partner, who was responsible for the affairs of third accused Firm and the Firm had ultimately wound up after incurring huge loss and petitioner left India in search of employment for his livelihood and in such circumstances, he could not appear before the trial court, which caused the case to be split up. It is contended that as petitioner is not liable for day-to-day affairs of the Firm, the case as against him is to be quashed. 4. First respondent filed a counter affidavit disputing the claim of the petitioner and contended that being a Partner, petitioner would also be a principal employer and therefore, the case as against him cannot be quashed. 5. The fact that contributions payable under Section 40 of the Act by third accused Firm, for CRMC 1732/09 4 the period from 1.11.1996 to 30.9.1997, were not paid is not disputed. In fact, first accused, Managing Partner, on behalf of third accused Firm, had already admitted the prosecution case and pleaded guilty. Therefore, the only question to be considered is whether petitioner could be prosecuted for the offence. 6. Section 40 provides that principal employer shall pay, in respect of an employee, employer's contribution as well as employee's contribution. Principal employer is defined under Section 2(17) of the Act as in a factory, the owner or occupier of the factory and includes the managing agent of such owner or occupier, the legal representative of a deceased owner or occupier and where a person has been named as the manager of the factory under the Factories Act, 1948, the person so named and in any other establishment, any person responsible for the supervision and control of the establishment. True, when factory is owned by third accused Firm, all CRMC 1732/09 5 the partners of the Firm could be framed as owners. At the same time, when there is a Managing Partner, who is responsible for the business and affairs of the firm, it is the Managing Partner, who is responsible for payment of contributions payable by the Firm and in such a case, who is only a partner, will not be the principal employer. Hence, for the reason that petitioner is a partner of the Firm at that time, he cannot be prosecuted for the failure to pay contributions under Section 40 of the Act. When there is a Manager for a factory, who is responsible for payment of contributions, the principal employer, as defined under Section 2(17), could only be that Manager and not the owner of the factory. Similarly, when owner of the factory is a Firm and Firm is managed by a Managing Partner, the principal employer could only be that Managing Partner, who is managing the affairs of the Firm and in that capacity, who is liable to pay contributions as provided under Section 40 of the CRMC 1732/09 6 Act. Therefore, petitioner cannot be prosecuted for the offence under Section 85(a) for non payment of contributions. Being a principal employer, it is the duty of the first accused to pay contributions and he already stands convicted. In such circumstances, further prosecution of the petitioner for offence under Section 85(a) is only an abuse of process of the court and is to be quashed. But, petitioner is liable to be prosecuted for the other offences alleged. Petition is allowed in part. Prosecution of the petitioner for the offence under Section 85(a) of the Act is quashed. But, it is made clear that petitioner can be prosecuted for other offences. 9th July, 2009 (M.Sasidharan Nambiar, Judge) tkv