IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE M.SASIDHARAN NAMBIAR MONDAY, THE 2ND NOVEMBER 2009 / 11TH KARTHIKA 1931 Crl.MC.No. 3244 of 2009 --------------------------------------- ST.681/2007 of JUDL.MAGISTRATE OF FIRST CLASS-II, KOLLAM .................... PETITIONERS/ACCUSED: 1. FR.GEORGE ROBEIRO (ADMINISTRATOR), PRINCIPAL EMPLOYER, M/S.BISHOP JEROME TRUST, COMMERCIAL COMPLEX, B.J.NAGAR, KOLLAM, RESIDING AT BISHOP HOUSE, THANGASSERI, KOLLAM. 2. M/S.BISHOP JEROME TRUST, COMMERCIAL COMPLEX, B.J.NAGAR,KOLLAM, REP.BY FR.GEORGE ROBEIRO (ADMINISTRATOR), PRINCIPAL EMPLOYER. BY ADV. SRI.P.B.SURESH KUMAR SRI.K.P.SUJESH KUMAR SRI.K.N.SASIDHARAN NAIR SMT.SANDHYA RADHAKRISHNAN SMT.M.SRUTHY RESPONDENTS/STATE AND THE COMPLAINANT: 1. STATE OF KERALA, REP.BY PUBLIC PROSECUTOR, HIGH COURT OF KERALA,ERNAKULAM. 2. E.S.I.CORPORATION, REP.BY THE MANAGER, BRANCH OFFICE, E.S.I.CORPORATION, KOLLAM. R1 BY PUBLIC PROSECUTOR SRI.SU.NAZAR R2 BY SC SMT.T.D.RAJALAKSHMI THIS CRIMINAL MISC. CASE HAVING COME UP FOR ADMISSION ON 02/11/2009, THE COURT ON THE SAME DAY PASSED THE FOLLOWING: M.Sasidharan Nambiar, J. -------------------------- Crl.M.C.No.3244 of 2009 -------------------------- ORDER Petitioners are the accused in S.T.No.681/2007 on the file of Judicial First Class Magistrate's Court-II, Kollam, taken cognizance for the offences under Sections 85(a), (e) and (g) of Employees' State Insurance (ESI) Act on Annexure-A1 complaint filed by the second respondent. First petitioner is the principal employer of the second petitioner, a Charitable Trust. By Annexure-A1 Inspection Observation Report, it was found that second petitioner Establishment is covered under the ESI Act and Rs.1,36,105/- was the contribution, which should have been paid for the period from April 2004 to October 2006. Based on Annexure-A1, Annexure-A2 notice of demand was sent to the petitioners demanding Rs.1,35,961/- with interest of Rs.27,671/- to be paid within fifteen days of receipt of the notice. Annexure- A2 is dated 14.6.2007. Annexure-A3 visit note issued by the Recovery Officer of the second respondent establishes that Rs.1,63,657/- drawn in an account CRMC 3244/09 2 maintained in State Bank of India, Jerome Nagar, Kollam for the amount demanded under Annexure-A2 was issued on 20.6.2007. Annexure-A4 ledger extract of the said account establishes that the said cheque was encashed by the second respondent on 30.7.2007. Annexure-A5 statements of returns were also submitted by the petitioners, which is seen acknowledged by the ESI Corporation. Annexure-A7 complaint was filed on 14.8.2007, subsequent to the encashment of the cheque issued by the petitioners for the amount demanded under Annexure-A2 notice, without disclosing that the contributions as demanded under Annexure-A2 was received. This petition is filed under Section 482 of Code of Criminal Procedure to quash the proceedings contending that in view of payment of the amount as per the demand under Annexure-A2, as evidenced by Annexure- A3 and submission of returns, continuation of the proceedings is only an abuse of process of the court. 2. Learned counsel appearing for the petitioners and second respondent were heard. 3. Learned counsel appearing for the petitioners submitted that as is clear from Annexure-A1, the establishment is covered for the first time from April CRMC 3244/09 3 2004 onwards and the contributions demanded under Annexure-A2 was paid on 20.6.2007 itself, evidenced by Annexure-A3, which is seen encashed on 30.7.2007 by Annexure-A4 statement and in such circumstances, continuation of the proceedings is not in the interest of justice. Learned counsel also pointed out that submission of the returns and the declarations as provided under the Regulation are for verification of the correctness of the contributions paid towards ESI Corporation and when Annexure-A1 report shows that amount was worked out by the officers of the second respondent, submission of the returns and declarations are only formal and in such circumstances, it is not in the interest of justice to continue the proceedings. 4. Learned counsel appearing for the second respondent argued that payment of the contributions was not made in time and as provided under Section 44 of ESI Act, petitioners did not furnish the returns and in such circumstances, the case cannot be quashed and petitioners are entitled to raise all the contentions before the learned Magistrate. 5. It is the admitted case that second petitioner establishment was not a covered establishment under the CRMC 3244/09 4 ESI Act prior to the inspection conducted, based on which Annexure-A1 observation note was prepared. It is by Annexure-A2 notice of demand, for the first time, contributions under the ESI Act was demanded from the petitioners. Annexure-A3 establishes that within fifteen days from the date of receipt of Annexure-A2 demand notice, cheque for the entire amount as demanded under Annexure-A2 notice was paid by the petitioners. Annexure-A4 establishes that cheque was also encashed, though only on 30.7.2007, petitioners cannot be made liable for the delayed encashment of the cheque as petitioners have already given the cheque, as is clear from Annexure-A3. In such circumstances, continuation of the proceedings for the offence under Section 85(a) of ESI Act is only an abuse of process of the Court and is to be quashed. 6. Sub-section (e) of Section 85 of ESI Act provides that failure or refusal to submit any return required by the Regulation or making a false return is an offence. Similarly, sub-section (g) of Section 85 provides that a person is guilty of any contravention of or non compliance with any of the requirements of the Act or the Rules or the Regulations in respect of CRMC 3244/09 5 which no special penalty is provided. 7. Regulation 11 of ESI (General) Regulations provides that employer in respect of a factory or an establishment shall require every employee in such factory or establishment to furnish and such employees shall on demand furnish to him either before or on the appointed day, correct particulars for the purpose of Form I and such employer shall enter the particulars in the declaration form including the temporary identification certificate and obtain the signature or the thumb impression of such employee. Regulation 26 of provides for return of contributions to be sent to appropriate office. By clause (1), every employer shall sent a return of contributions in quadruplicate in Form V along with receipted copies of challans for the amounts deposited in the Bank to the appropriate office by registered post or messenger, in respect of all employees for whom contributions were payable in a contribution period, so as to reach that office within the period stipulated therein. 8. As rightly pointed out by the learned counsel appearing for the petitioners, evidently, the purpose of submitting return of contributions is to verify the CRMC 3244/09 6 correctness of the contributions payable and paid. As far as the present case is concerned, when the very contribution payable under Annexure-A2, was based on a personal inspection conducted by the officers of ESI Corporation, submission of return and declarations are all formal in nature. In such circumstances, continuation of the proceedings under Sections 85 (e) and (g) of ESI Act is not in the interest of justice. On the facts and circumstances of the case, continuation of the proceedings is not in the interest of justice, as ultimately, on the facts, there cannot be a successful prosecution. Hence, to secure justice, it is necessary to quash the proceedings. Petition is allowed. S.T.No.681/2007 on the file of Judicial First Class Magistrate's Court-II, Kollam is quashed. 2nd November, 2009 (M.Sasidharan Nambiar, Judge) tkv