Case Law Details

Case Name : Employees State Insurance Corporation Vs A.K. Abdul Samad & Anr. (Supreme Court of India)
Appeal Number : Criminal Appeal Nos.1065-1066 of 2005
Date of Judgement/Order : 10/03/2016
Related Assessment Year :
Courts : Supreme Court of India (343)

Brief of the Case

The Supreme Court held In the case of Employees State Insurance Corporation vs. A.K. Abdul Samad & Anr. that 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 where under the court is vested with discretion limited to imposition of imprisonment for a lesser term.  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.  The discretion as per proviso is confined only in respect of term of imprisonment.

Facts of the Case

The question raised is as below-

-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 u/s Section 85(a) (i) (b) of the Employees’ State Insurance Corporation Act.

Contention of the Appellant

The ld counsel of 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, the judgment of a Single Judge of Patna High Court in the case of Tetar Gope   AIR 1968 Pat 287 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.

Above 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 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.

Contention of the Respondent

The ld counsel of the respondent has supported the impugned judgments 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 (1977) 2 SCC 634 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 (1987) 1 SCC 467 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/-.

Held by Supreme Court

The Supreme Court held that 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 where under 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 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, appeal of the appellant allowed.

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Posted Under

Category : Corporate Law (2206)
Type : Judiciary (8910)