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A division bench of Justices R Subhash Reddy and Sanjiv Khanna of Supreme Court has opined that though law enforcement authorities are often empowered to take stringent including penal action to ensure observance and check defiance, "the requirement and need to balance the law enforcement power and protection of citizens from injustice and harassment must be maintained."

Observing thus, the court said, criminal law should not be set into motion as a matter of course or without adequate and necessary investigation of facts on mere suspicion, or when the violation of law is doubtful.

The bench further said it is the duty and responsibility of the public officer to proceed responsibly and ascertain the true and correct facts.

“Execution of law without appropriate acquaintance with legal provisions and comprehensive sense of their application may result in an innocent being prosecuted”, remarked the Bench.

Furthermore, the Court held it is equally the court's duty not to issue summons in a mechanical and routine manner. If so done, the entire purpose of laying down a detailed procedure under Chapter XV of the 1973 Code gets frustrated, it added.

Facts

The Court was hearing an appeal filed by Dayle De’Souza, Director of M/s. Writer Safeguard Pvt. Ltd. against whom a criminal complaint was filed the Labour Enforcement Officer (Central) alleging non-compliance with the provisions of the Minimum Wages Act, 1948 and Minimum Wages (Central) Rules, 1950.

After more than four months, the Labour Enforcement Officer (Central), informed the appellant and Vinod Singh that they were required to appear in the court.

Safeguard Pvt. Ltd. had entered into an agreement titled “Agreement for Servicing and Replenishment of Automated Teller Machines” with M/s. NCR Corporation India Private Ltd., which had earlier entered into an agreement with the State Bank of India for maintenance and upkeep of the State Bank of India’s ATMs.

The Labour Enforcement Officer (Central) had inspected the State Bank of India’s ATM at Sagar, Madhya Pradesh and had then issued notice to the appellant and one Vinod Singh, who was the Madhya Pradesh head of M/s. Writer Safeguard Pvt. Ltd. alleging non-compliance of the statutory provisions.

It was found by the Court that the said Company was not enlisted as an accused in the complaint and had not been summoned to stand trial.

Relying on sub-section (1) to Section 22C of the Act of 1948, the Court found that where an offence was committed by a company, every person who at the time the offence was committed was in-charge of and was responsible to the company for the conduct of the business, as well as the company itself shall be deemed to be guilty of the offence.

“By necessary implication, it follows that a person who do not bear out the requirements is not vicariously liable under Section 22C(1) of  the Act”, said the Court.

The proviso to the said Section, which was in the nature of an exception, stated that a person who is liable under sub-section (1) shall not be punished if he proves that the offence was committed without his knowledge or that he had exercised all due diligence to prevent the commission of such offence.

That being said, the Court pointed out that the proviso being an exception could not be made a justification or a ground to launch and initiate prosecution without the satisfaction of conditions under sub-section (1) of Section 22C of the Act.

Referring to sub-section (2), the Court further noted that a person cannot be prosecuted and punished merely because of their status or position as a director, manager, secretary or any other officer, unless the offence in question was committed with their consent or connivance or is attributable to any neglect on their part.

This prompted the Court to remark that the onus under sub-section (2) to Section 22C was on the prosecution and not on the person being prosecuted.

It was also clarified that vicarious liability was attracted when the offence was committed with the consent, connivance, or is attributable to the neglect on the part of a director, manager, secretary, or other officer of the company.

Yet another difficulty for the prosecution in the present case, as per the Court was that the Company has not been made an accused or even summoned to be tried for the offence.

“…a company being a juristic person cannot be imprisoned, but it can be subjected to a fine, which in itself is a punishment. Every punishment has adverse consequences, and therefore, prosecution of the company is mandatory. The exception would possibly be when the company itself has ceased to exist or cannot be prosecuted due to a statutory bar. However, such exceptions are of no relevance in the present case. Thus, the present prosecution must fail for this reason as well”, opined the Court.

Decision 

While quashing the impugned complaint, the Court referred to the importance of the summoning order, and emphasised that the initiation of prosecution and summoning of an accused to stand trial has serious consequences.

“They extend from monetary loss to humiliation and disrepute in society, sacrifice of time and effort to prepare defence and anxiety of uncertain times”, said the Bench.

While concluding, the court relied on proviso (a) to Section 200 of CrPC, and said that there may lie an exemption from recording pre-summoning evidence when a private complaint is filed by a public servant in discharge of his official duties; however, it is the duty of the Magistrate to apply his mind to see whether on the basis of the allegations made and the evidence, a prima facie case for taking cognizance and summoning the accused is made out or not.

Cause Title: Dayle De’Souza v Government Of India Through Deputy Chief Labour Commissioner (C) And Another