EMPLOYEES STATE INSURANCE CORPORATION  versus A. K. ABDUL SAMAD & ANR.
[2016] 2 S.C.R. 150, Supreme Court of India, 2016
Outcome: Unknown
Segment: Ratio
[2016] 2 S.C.R. J 50 
A 
EMPLOYEES STATE INSURANCE CORPORATION 
B 
c 
D 
E 
F 
G 
H 
v. 
A. K. ABDUL SAMAD & ANR. 
(Criminal Appeal Nos. I 065-1066 OF 2005) 
MARCH 10, 2016 
[DIPAK MISRA AND SHIVA KIRTI SINGH, JJ.) 
Employees' State Insurance Corporation Act, 1948: 
s.85(a)(i){b) - Whether the court has been given judicial discretion 
only to reduce the sentence of imprisonment for any term lesser 
than six months or whether it also has discretion to levy no fine or 
a fine of less than five thousand rupees - Held: The courts have no 
discretion to reduce the fine amount once the offence has been 
established- The discretion as per proviso is confined only in respect 
of term of imprisoninent . 
Interpretation of statutes: When the wordings of the Statute 
are clear, no interpretation is required unless there is a requirement 
of saving the provisions from vice of u11co11stitutionality or absurdity. 
Allowing the appeals, the Court 
HELD: Section 85(a)(i)(b) prescribes punishment for a 
particular offence as imprisonment which shall not be less than 
six months and the convict shall also be liable to fine of five 
thousand rupees. The proviso however empowers the court that 
it may, "for any adequate and special reasons to be recorded in 
the judgment, impose a sentence of imprisonment for a lesser 
term". The object of creating offence and penalty under the Act 
of 1948 is clearly to create deterrenc'e against violation of 
provisions of the Act which are beneficial for the
employees. Non-
payment of contributions is an economic offence and therefore 
the Legislature has not only fixed a minimum term of 
imprisonment but also a fixed amount of fine of five thousand 
rupees under Section 85(a)(i)(b) of the Act. There is no discretion 
of awarding less than the specified fee, under the main provision. 
It is only the proviso which is in the nature of an exception 
whereunder the court is vested with discretion limited to 
imposition of imprisonment for a lesser term. Conspicuously, no 
150
EMPLOYEES STATE INSURANCE CORPORATION v. A. K. 
151 
ABDUL SAMAb 
words are found in the proviso for imposing a lesser fine than 
A 
that of five thousand rupees. In such a situation the intention of 
the Legislature is clear and brooks no interpretation. The law is 
well settled that when the wordings of the Statute are clear, no 
interpretation is required unless there is a requirement of saving 
the provisions from vice of unconstitutionality or absurdity. 
B 
Neither of the twin situations is attracted herein. Hence the 
amount of fine has to be Rupees five thousand and the courts 
have no. discretion to reduce the same once the offence has been 
established. 
[Paras 1, 8 and 9] (152-B-C; 156-C-F] 
Sebastian (ji) Kunju v. State 1992 ·cri LJ 3642; Tetar 
Gope v. Ganauri Gope AIR 1968 Pat 287;Surinder 
Kumar v. State (1987) 1 SCC 467;Pa/aniappa 
Gounder v. State of Tamil Nadu (1977) 2 SCC 634:1977 
(3) SCR 132; Zunjarrao Bhikaji Nagarkar v. Union of 
India (1999) 7 SCC 409:1999 (1) Suppl. SCR 87; 
Rajasthan Pharmaceutical Laboratory v. State of 
Karnataka (1981) 1 SCC 645: 1981 (2) SCR 604; 
Chern Taong Shang v. S.D. Ba/jal (1988) 1 SCC 507: 
1988 (2) SCR 641 - referred to. 
Case Law Reference 
1992 Cri LJ 3642 
referred to. 
Para2 
Am 1968 Pat 287 
referred to. 
Para2 
(1987) 1 sec 467 
referred to. 
Para2 
1977 (3) SCR 132 
referred to. 
Para2 
' 
1999 (1) Suppl. SCR 87 
referred to. 
Para4 
1981 (2) SCR 604 
referred to. 
Para4 
1988 (2) SCR 641 
referred to. 
Paras·
CRIMINAL APPELLATE JURISDICTION : Criminal Appeal 
Nos. I 065-1066 of2005 
c 
D 
E 
F 
From the Judgment and Order dated 09.01.2004 of the High Court 
G 
ofKarnataka at Bangalore in Criminal Revision Petitions No. 1326 and 
1327 of2002 
Mahesh Srivastava, Vaibhav M. Srivastava, P. N. Puri, Advs., for 
the Appellant. 
H
152 
SUPREME COURT REPORTS 
[2016] 2 S.C.R. 
A 
P. B. Suresh, Vi pin Nair, Udayaditya Banerjee, Prithu Garg, Mis. 
B 
c 
D 
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F 
G 
H 
Temple Law Firm, Advs. for the Respondents. 
The Judgment of the Court was delivered by 
SHIVA KIRTI SINGH, J. I. The question of law deserving 
adjudication in these appeals arises out of Section 85(a)(i)(b) of the 
Employees' State Insurance Corporation Act (for brevity, 'the Act'). 
The aforesaid statutory provision prescribes punishment for a particular 
offence as imprisonment which shall not be less than six months and the 
convict shall also be liable to fine of five thousand rupees. The proviso 
however empowers the court that it may, "for any adequate and special 
reasons to be recorded in the judgment, impose a sentence of 
imprisonment for a lesser term;". The question to be answered is whether 
the court has been given judicial discretion only to reduce the sentence 
of imprisonment for any term lesser than six months or whether it also 
has discretion to levy no fine or a fine of less than five thousand rupees. 
2. The facts of the case lie in a very narrow compass. The case 
arises out of criminal proceedings initiated by the appellant- Employees 
State Insurance Corporation -under Section 85 of the Act for conviction 
and punishment of the respondents for failure to pay contributions required 
by the Act. Both the respondents faced trial before the Special Court 
for Economic Offences, Bangalore and were found guilty and were
inflicted with imprisonment till rising of the Court and fine of Rs. I 000/-. 
According to appellant, the fine amount could not have been reduced 
and ought to have been Rs.5000/- as per mandate of law. Hence tlie 
Corporation preferred Revision Petitions before the High Court of 
Karnataka at Bangalore. By the impugned judgment and order under 
appeal dated 09'" January 2004, the Division Bench of the High Court 
dismissed Criminal Revision Petition Nos.1326 and 1327 of2002 by 
placing reliance on judgments of Kerala High Court and Patna High 
Court respectively in the case of Sebastian (ti) Kun.in v. State 1992 Cri 
LJ 3642 and Tctar Gope v. Gunauri Gope AIR 1968 Pat 287 as well 
as two Supreme Court judgments in the case of Surinder Kumar v. 
State (1987) I SCC 467 and Paianiappa Gounder v. State of Tamil 
Nadu ( 1977) 2 SCC 634. 
3. Before adverting to the submissions and the case law cited by 
the rival parties, it would be useful to notice relevant part of Section 85 
which is as under:
EMPLOYEES STATE INSURANCE CORPORATION v. A. K. 
153 
ABDUL SAMAD [SHIVA KIRT! SINGH, J.] 
"85. Punishment for failure to pay contributions, etc. - If any 
A 
person -
(a) fails to pay any contribution which under this Act he is liable to 
pay, or 
(b) ........... . 
(c) ........... . 
(d) ........... . 
(e) .•.......... 
(t) ........... . 
(g) ........... . 
he shall be punishable 
(i) where he commits an offence under clause (a), with 
imprisonment for a term which may extend to three years but-
( a) which shall not be less than one year, in case of failure to pay 
B 
c 
the employee's contribution which has been deducted by him from 
D 
the employee's wages and shall also be liable to fine often thousand 
rupees; 
(b) which shall not be less than six months, in any other case and 
shall also be liable to fine of five thousand rupees: 
Provided that the court may, for any adequate and special reason 
to be recorded in the judgment, impose a sentence of imprisonment 
for a lesser term; 
(. ') 
" 
II • • • • • • • • • •. • 
E 
4. Learned counsel for the appellant has relied upon judgment of 
this Court in the case of Zunjarrao Bhikaji Nagarkar v. Union of F 
India (1999) 7 SCC 409. In that case not imposing appropriate penalty 
as required by law was one of the charges against the delinquent employee 
in a departmental proceeding. In the context of the charge, in paragraphs 
37, 38 and 39 of the Report, the judgment of a Single Judge of Patna 
High Court in the case of Tetar
Gope (supra) was noticed along with 
its view that expression "shall also be liable to fine" in Section 325 of the 
G 
Indian Penal Code does not mean that a sentence of fine must be imposed 
in .every case of conviction for that offence. That view of Patna High 
Court was noticed and then this Court over-ruled it as incorrect by holding 
that the language of the Section made the sentence of both, imprisonment 
and fine imperative and only the extent of fine has been left to the 
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SUPREME COURT REPORTS 
[2016) 2 S.C.R. 
A discretion of the Court. Forth is view, strength was derived from judgment 
in the case of Rajasthan Pharmaceutical Laboratory v. State of 
Karnataka (1981) I SCC 645 wherein a similar expression- "shall also 
be liable to fine" used under Section 34 of the Drugs & Cosmetics Act, 
1940 was analysed in the light of Section 27 of the said Act, in paragraph 
B 
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38 of the Report which is as follows: 
"38. 
We do not think that the view expressed by the Patna 
High Court is correct as it would appear from the language of the 
section that sentences of both imprisonment and fine are 
imperative. It is the extent of fine which has been left to the 
discretion of the court. In Rajasthan Pharmaceutical Laboratory 
v. State of Karnataka, ( 1981) I SCC 645 : 1981 SCC (Cri) 244 
this Court has taken the view that imprisonment and fine both are 
imperative when the expression "shall also be liable to fine" was 
used under Section 34 of the Drugs and Cosmetics Act, 1940. In 
that case, this Court was considering Section 27 of the Drugs and 
Cosmetics Act, 1940, which enumerates the penalities for illegal 
manufacture, sale, etc., of drugs and is as under: 
'27. 
Whoever himself or by any other person on his behalf 
manufactures for sale, sells, stocks or exhibits for sale or 
distributes-
( a) any drug-
(i). 
• 
• 
(ii) without a valid licence as required under clause (c) of 
Section 18, 
shall be punishable with imprisonment
for a term which shall 
not be less than one year but which may extend to ten years 
and shall also be liable to fine: 
Provided that the court may, for any special reasons to be 
recorded in writing, impose a sentence of imprisonment ofless 
than one year; 
• 
• 
. 
.. 
In view of language of Section 27(a)(ii) it was held that award of 
imprisonment and fine, both are imperative. The proviso to aforesaid 
Section 27 is similar in tone and tenor as the proviso to Section 85(i)(b) 
H of the Act. In both the provisos there is no discretion vested in the Court
EMPLOYEES STATE INSURANCE CORPORATION v. A. K. 
155 
ABDUL SAMAD [SHIVA KIRT! SINGH, J.] 
to do away with the fine. Additionally, under the8.ct, a minimum fine is 
A 
mandated by an explicit and specific provision. 
5. In the-case of Chern Taong Shang v. S.D. Baijal ( 1988) I 
SCC 507 this Court had the occasion to consider the meaning and 
implication of a clause··- "shall also be liable to confiscation'', occurring 
in Section 13 of Maritime Zones of India (Regulation of Fishing by 
Foreign Vessels) Act, 11981. Looking at the legislative intent to provide 
deterrent punishment with a view of prohibit illegal fishing in exclusive 
economic zones of India,· Section 13 was held to be mandatory and 
therefore conviction had to follow penalty of confiscation once the offence 
was established. 
B 
c 
6. Per contra, learned counsel for the respondents has supported 
the impugned judgment which has held in favour of availability of judicial 
discretion to impose a fine of even less than Rupees five thousand in 
view of several judg:ments dealing with cases under the Indian Penal 
Code wherein the word "shall" has been interpreted as an equivalent of 
the word "may". Th'e submission is that if"shall" is read as "may" then 
D 
the clause "and shall also be liable to fine of five thousand rupees" will 
evidently be directo1ry in nature and shall vest judicial discretion in the 
court to levy or not 1to levy fine which at the maximum can be Rupees 
five thousand. In support of this
stand reliance has been placed upon 
two judgments of this Court arising out of convictions under Section 302 
of the !PC. In the case of Palaniappa Gounder (supra) the Court was 
called upon to decide 1the propriety of a particular quantum of fine in the 
context ofSection 357( I )(c) of the Code of Criminal Procedure providing 
for compensation to the victim of a crime. In the case of Surinder 
Kumar (supra) this Co1urt again had the occasion to consider the propriety 
of imposition of fine in a case of conviction under Section 302 of the 
JPC. In the facts of tlliat case the Court affirmed the conviction and 
imprisonment for life b'ut set aside the tine of Rs.500/;. 
7. As noticed earllier, the interpretation given by Patna High Court 
E 
F 
in the case of Tetar Gope {supra), on which learned counsel for the 
respondents has placed reliance has already been over-ruled by this 
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Court in the case of Zuinjarrao Bhikaji Nagarkar (supra). The 
remaining judgment ir1 the case of Sebastian (iiJ Kun.in (supra) also 
arose out of conviction under Section 302 of the IPC. In paragraph I I 
of that judgment, the K~:rala High Court has placed reliance upon judgment 
of Patna High Court in the ,;ase of Tetar Gope (supra). 
H
156 
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SUPREME COURT REPORTS 
[2016] 2 S.C.R. 
8. In our considered view, the clause '"shall also be liable to fine", 
in the context of Indian Penal Code may be capable of being treated as 
directory and thus conferring on the court a discretion to impose sentence 
of fine also in addition to imprisonment although such discretion stands 
somewhat impaired as per the view taken by this Court in the case of 
Zunjarrao Bhikaji Nagarkar (supra). But clearly no minimum fine is 
prescribed for the offences under the I PC nor that Act was enacted 
with the special purpose of preventing economic offences as was the 
case in Cheri! Taong Shang (supra). The object of creating offence 
and penalty under the Employees' State Insurance Act, I 948 is clearly 
to create deterrence against violation of provisions of the Act which are 
beneficial for the employees. Non-payment of contributions is an 
economic offence and therefore the Legislature has not only fixed a 
minimum term of imprisonment but also a fixed amount of fine of five 
thousand rupees under Section 85(a)(i)(b) of the Act. There is no 
discretion of awarding less than the specified fee, under the main 
provision. It is only the proviso whicl1 is in the nature of an exception 
whereunder the court is vested with discretion limited to imposition of 
imprisonment for a lesser term. Conspicuously, no words are found in 
the proviso for imposing a lesser fine than that of five thousand rupees. 
In such a
situation the intention of the Legislature is clear and brooks no 
interpretation. The law is well settled that when the wordings of the 
Stature are clear, no interpretation is required unless there is a requirement 
of saving the provisions from vice of unconstitutionality or absurdity. 
Neither of the twin situations is attracted herein. 
9. Hence the question is answered in favour of the appellant and 
it is held that the amount of fine has to be Rupees five thousand and the 
courts have no discretion to reduce the same once the offence has been 
established. The discretion as per proviso is confined only in respect of 
term of imprisonment. 
IO. Accordingly the appeals are allowed. The respondents shall 
now be required to pay a fine of Rupees five thousand. If they have 
already paid the earlier imposed fine of Rs. I 000/-, they shall pay the 
balance or otherwise the entire fine of Rs.5000/- within six weeks and in 
defaultthe fine shall be realised expeditiously in accordance with law by 
taking recourse to all the available machinery. 
Devika Gujral 
Appeals allowed.