EMP.STATE INSURANCE CORPORATION Vs. A.K.ABDUL SAMAD & ANR.
CODE OF CRIMINAL PROCEDURE, 1973 (CrPC)
Section 357 - Order to pay compensation
Supreme Court of India (Division Bench (DB)- Two Judge)
Appeal (Crl.), 1065-1066 of 2005, Judgment Date: Mar 10, 2016
REPORTABLE
IN THE SUPREME COURT OF INDIA
CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPEAL NOS.1065-1066 OF 2005
Employees State Insurance Corporation …..Appellant
Versus
A.K. Abdul Samad & Anr. …..Respondents
J U D G M E N T
SHIVA KIRTI SINGH, J.
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.
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.1000/-. According to appellant, the
fine amount could not have been reduced and ought to have been Rs.5000/- as
per mandate of law. Hence the Corporation preferred Revision Petitions
before the High Court of Karnataka at Bangalore. By the impugned judgment
and order under appeal dated 09th January 2004, the Division Bench of the
High Court dismissed Criminal Revision Petition Nos.1326 and 1327 of 2002
by placing reliance on judgments of Kerala High Court and Patna High Court
respectively in the case of Sebastian @ Kunju v. State 1992 Cri LJ 3642 and
Tetar Gope v. Ganauri Gope AIR 1968 Pat 287 as well as two Supreme Court
judgments in the case of Surinder Kumar v. State (1987) 1 SCC 467 and
Palaniappa Gounder v. State of Tamil Nadu (1977) 2 SCC 634.
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 :
“85. Punishment for failure to pay contributions, etc. – If any person –
fails to pay any contribution which under this Act he is liable to pay, or
…. …. ….
…. …. ….
…. …. ….
…. …. ….
…. …. ….
…. …. ….
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-
which shall not be less than one year, in case of failure to pay the
employee’s contribution which has been deducted by him from the employee’s
wages and shall also be liable to fine of ten thousand rupees;
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) …. …. ….”
Learned counsel for the appellant has relied upon judgment of this Court in
the case of Zunjarrao Bhikaji Nagarkar v. Union of 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 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 discretion of the Court. For this view,
strength was derived from judgment in the case of Rajasthan Pharmaceutical
Laboratory v. State of Karnataka (1981) 1 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 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) 1 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 of less 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)
of the Act. In both the provisos there is no discretion vested in the
Court to do away with the fine. Additionally, under the Act, a minimum
fine is mandated by an explicit and specific provision.
In the case of Chern Taong Shang v. S.D. Baijal (1988) 1 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,
1981. 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.
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
judgments dealing with cases under the Indian Penal Code wherein the word
“shall” has been interpreted as an equivalent of the word “may”. The
submission is that if “shall” is read as “may” then the clause “and shall
also be liable to fine of five thousand rupees” will evidently be directory
in nature and shall vest judicial discretion in the court to levy or not to
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 IPC. In the case of
Palaniappa Gounder (supra) the Court was called upon to decide the
propriety of a particular quantum of fine in the context of Section
357(1)(c) of the Code of Criminal Procedure providing for compensation to
the victim of a crime. In the case of Surinder Kumar (supra) this Court
again had the occasion to consider the propriety of imposition of fine in a
case of conviction under Section 302 of the IPC. In the facts of that case
the Court affirmed the conviction and imprisonment for life but set aside
the fine of Rs.500/-.
As noticed earlier, the interpretation given by Patna High Court in the
case of Tetar Gope (supra), on which learned counsel for the respondents
has placed reliance has already been over-ruled by this Court in the case
of Zunjarrao Bhikaji Nagarkar (supra). The remaining judgment in the case
of Sebastian @ Kunju (supra) also arose out of conviction under Section 302
of the IPC. In paragraph 11 of that judgment, the Kerala High Court has
placed reliance upon judgment of Patna High Court in the case of Tetar Gope
(supra).
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 IPC nor that Act was enacted with the special
purpose of preventing economic offences as was the case in Chern Taong
Shang (supra). The object of creating offence and penalty under the
Employees’ State Insurance Act, 1948 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 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 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.
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.
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.1000/-, they shall pay the balance or otherwise
the entire fine of Rs.5000/- within six weeks and in default the fine shall
be realised expeditiously in accordance with law by taking recourse to all
the available machinery.
.…………………………………….J.
[DIPAK MISRA]
……………………………………..J.
[SHIVA KIRTI SINGH]
New Delhi.
March 10, 2016.
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