Delegated sanction and company-offence liability upheld; exemption cancellation did not bar prosecution for breach of conditions.

Power to specify the authority competent to grant prosecution sanction was delegable under the Act, and sanction granted by the Labour Commissioner pursuant to valid central and state delegation was therefore lawful. Directors were liable under the company-offence deeming provision because the complaint, evidence, and statutory return showed them to be in ultimate control of the establishment and responsible for its business. Cancellation of exemption was only an administrative withdrawal of a privilege and did not bar prosecution or punishment for contravention of exemption conditions. The acquittal was set aside and the trial court convictions and sentences were restored.

---

---

Issues: (i) whether sanction for prosecution granted by the Labour Commissioner, Uttar Pradesh, pursuant to delegation under the Act was valid; (ii) whether the directors were liable as persons in charge of and responsible to the company for the conduct of its business; (iii) whether cancellation of exemption under the Act barred prosecution under the penal provision for contravention of the conditions of exemption.

Issue (i): whether sanction for prosecution granted by the Labour Commissioner, Uttar Pradesh, pursuant to delegation under the Act was valid.

Analysis: The power to specify the authority competent to accord sanction under the penal provision was capable of being delegated by the Central Government under the delegation provision of the Act. The Central Government had delegated that power to the State Government, and the State Government had in turn specified the Labour Commissioner as the competent authority. The contrary view could not prevail in the face of the delegation and the subsequent specification.

Conclusion: The sanction was valid and the prosecution was maintainable.

Issue (ii): whether the directors were liable as persons in charge of and responsible to the company for the conduct of its business.

Analysis: The complaint, the evidence, and the statutory return in prescribed form showed that the respondents were directors having ultimate control over the affairs of the establishment and were described as being in charge of and responsible for the conduct of its business. The factual basis for fastening liability on them was therefore established for the purposes of the deeming provision governing offences by companies.

Conclusion: The respondents were liable under the deeming provision applicable to offences by companies.

Issue (iii): whether cancellation of exemption under the Act barred prosecution under the penal provision for contravention of the conditions of exemption.

Analysis: Cancellation of exemption under the exemption-cancellation provision was only an executive withdrawal of the privilege and did not amount to a penal consequence within the meaning of the penal provision. Treating it as an alternative penalty would make the penal provision redundant, and the cancellation order did not impose punishment on the directors.

Conclusion: Cancellation of exemption did not bar prosecution or punishment under the penal provision.

Final Conclusion: The acquittal was set aside and the convictions and sentences recorded by the trial court were restored.

Ratio Decidendi: Where the Act permits delegation of the power to specify the sanctioning authority, a State authority validly specified under such delegation can lawfully accord sanction for prosecution, and cancellation of an exemption is not a substitute for or bar to criminal punishment for breach of the exemption conditions.

---