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Crl.A. Nos.1065-1066 of 2005

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.

1. 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.

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2. 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.

3. 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 :

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“85. Punishment for failure to pay contributions, etc. – If any person –

(a) fails to pay any contribution which under this Act he is liable to pay, or  

(b) …. …. …. (c) …. …. …. (d) …. …. …. (e) …. …. …. (f) …. …. …. (g) …. …. ….

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-

(a) 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;

(b) 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) …. …. ….”

4. 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

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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--

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(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.  

5. 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.

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6. 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/-.

7. 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

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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).

8. 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

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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.

9. 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.

10. 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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