2003 (2) TMI 549 - HC - Indian Laws

Revision petition allowed, conviction quashed, petitioner acquitted. Errors recognized for future correction.

The revision petition was allowed, resulting in the quashing of the conviction and sentence. The petitioner was acquitted, ordered for immediate release ... Definition of 'factory' under the E.S.I. Act - non-application of State Government notification under the Factories Act to the E.S.I. Act - burden of proof in criminal prosecution of employer status - presumption from non-response to statutory notice is rebuttable - subordinate appellate court cannot suspend sentence by directing surrender after pronouncement (functus officio)Definition of 'factory' under the E.S.I. Act - non-application of State Government notification under the Factories Act to the E.S.I. Act - Ajanta Hotel is not established to be a 'factory' within the meaning of Section 2(12) of the E.S.I. Act. - HELD THAT: - The Court examined the statutory definition in Section 2(12) of the E.S.I. Act and the evidence of the complainant who admitted seeing only two or three workers. The numerical thresholds in Section 2(12) (ten or more with aid of power; twenty or more without) are material and, on the admitted evidence, are not met. The Sessions Judge erred in importing the State Government's power under Section 85 of the Factories Act to treat premises as a factory, because there is no provision in the E.S.I. Act adopting that notification power and no notification was produced. Thus an establishment may be a 'factory' under the Factories Act without necessarily being a 'factory' under the E.S.I. Act; the trial and appellate courts misapplied the Factories Act to the E.S.I. Act in absence of any notification or statutory borrowing of that definition. [Paras 8]The establishment (Ajanta Hotel) was not proved to be a 'factory' for the purposes of the E.S.I. Act; provisions of the E.S.I. Act do not apply.Burden of proof in criminal prosecution of employer status - presumption from non-response to statutory notice is rebuttable - Petitioner was not shown beyond reasonable doubt to be the proprietor or principal employer of the establishment. - HELD THAT: - The Court held that the prosecution failed to produce satisfactory documentary or other evidence to establish the petitioner as owner, occupier, managing agent or person in supervisory control as required by the definition of 'principal employer'. The Sessions Judge impermissibly relied on an inference from alleged non-reply to a notice and on preponderance of probability; in a criminal prosecution the fact of being principal employer must be proved beyond reasonable doubt. The complainant's evidence only stated he went to the 'hotel of accused' and adduced no registration, licence or other records to demonstrate proprietorship or control, and the accused consistently stated his son ran the hotel. [Paras 9]There is no satisfactory evidence to establish the petitioner as principal employer; conviction cannot stand on that ground.Subordinate appellate court cannot suspend sentence by directing surrender after pronouncement (functus officio) - A subordinate appellate court, after confirming conviction and sentence, cannot effectively suspend the sentence by directing the accused to surrender at a later date; once presence is secured and conviction confirmed the court becomes functus officio. - HELD THAT: - The Court reviewed the proviso to Section 387 Cr.P.C. in the context of Sections 353(5) and 353(6) and earlier authority of this High Court. It held that the proviso is to be read subject to the obligation of subordinate appellate courts to secure the presence of the accused for pronouncement of judgment except in acquittal or fine-only cases. Where conviction with substantive sentence is confirmed, the appellate court cannot grant time to surrender which in effect suspends execution; the proper course is execution of its order, leaving the accused to seek suspension or bail from the High Court. The Sessions Judge's operative direction to surrender after a week amounted to an impermissible suspension and was procedurally incorrect. [Paras 14, 15, 16]The direction to the accused to surrender after a week was procedurally incorrect; subordinate appellate courts must not grant such suspension when confirming conviction and sentence.Acquittal and refund of fine - Conviction and sentence (as modified by the Sessions Judge) are quashed and set aside; petitioner is acquitted and fine paid is to be refunded. - HELD THAT: - Because the establishment was not proved to be a 'factory' under the E.S.I. Act and the petitioner was not established as principal employer beyond reasonable doubt, the Court held the E.S.I. Act inapplicable and the conviction unsafe. Consequently, the revision petition succeeds on merits and the trial and appellate findings of guilt are reversed. The Court ordered acquittal, release if not detained in other matters, and refund of the fine paid. [Paras 11]Conviction and sentence quashed; petitioner acquitted and fine to be refunded.Final Conclusion: Revision petition allowed. Conviction and sentence set aside; petitioner acquitted and fine refunded. Observations made to correct subordinate appellate practice concerning directions to surrender after confirmation of conviction. Issues Involved:1. Applicability of the term 'factory' under the E.S.I. Act.2. Sufficiency of evidence to establish the petitioner as the principal employer.3. Legal implications of the Sessions Judge's order regarding the surrender of the petitioner.Detailed Analysis:1. Applicability of the term 'factory' under the E.S.I. Act:The primary issue was whether 'Ajanta Hotel' qualifies as a 'factory' under Section 2(12) of the Employees' State Insurance (E.S.I.) Act. The definition specifies that a 'factory' must have ten or more persons employed with the aid of power, or twenty or more without the aid of power, on any day of the preceding twelve months. The complainant admitted seeing only two or three workers, which does not meet the statutory requirement. The Sessions Judge erroneously relied on the Factories Act, 1948, and Section 85 thereof, which allows the State Government to declare certain premises as factories irrespective of the number of employees. However, no such declaration was produced, and the E.S.I. Act does not incorporate this provision. Therefore, 'Ajanta Hotel' does not qualify as a 'factory' under the E.S.I. Act, negating the applicability of the Act.2. Sufficiency of evidence to establish the petitioner as the principal employer:The prosecution failed to provide sufficient evidence to prove that the petitioner was the principal employer of 'Ajanta Hotel.' The Sessions Judge presumed the petitioner to be the proprietor because he did not respond to a notice from the Joint Director. However, the complainant admitted that only the petitioner's son was present on two inspection occasions, and both were present on another occasion. The accused claimed his son ran the hotel, and no documents were produced to prove otherwise. The definition of 'principal employer' under Section 2(17) of the E.S.I. Act includes the owner, occupier, or any person responsible for supervision and control. The complainant's statement, 'I went to the hotel of accused,' was insufficient to establish the petitioner's capacity as the principal employer beyond a reasonable doubt.3. Legal implications of the Sessions Judge's order regarding the surrender of the petitioner:The Sessions Judge's order directed the petitioner to surrender his bail bond before the Trial Court to undergo the remaining sentence, which effectively suspended the sentence. This was contrary to the judgment in *Dilip v. State of Maharashtra*, where it was held that the lower appellate court has no power to suspend the sentence after confirming the conviction. The appellate court becomes functus officio (having no further authority) upon confirming the conviction and cannot grant bail or suspend the sentence. The correct procedure would be for the accused to seek suspension of the sentence and bail from the High Court.Conclusion:The revision petition was allowed, and the conviction and sentence were quashed. The petitioner was acquitted and ordered to be released immediately if not required in any other case. The fine paid by the petitioner was to be refunded. The Sessions Judge's procedural error regarding the surrender order was noted for future rectification.