TMI Blog1966 (2) TMI 81X X X X Extracts X X X X X X X X Extracts X X X X ..... , the company as well as the directors filed appeals before the Assistant Judge, Nagpur. The Assistant Judge dismissed the appeals. The learned Assistant Judge maintained the convictions of the company as well as the directors, but modified the sentences by imposing fine of ₹ 50 on each of the accused in all the cases. (4) The Central Hindustan Orange and Cold Storage Company, which was one of the accused in all the six cases has now filed these six revision applications challenging its convictions in those cases. (5) The prosecutions were on the basis of the report or complaint made by the Provident Fund Inspector alleging that the applicant company as well as the directors, were guilty of offences under the Employees' Provident Funds Act in not paying the provident fund contributions of the employees of the company and the employer's share thereof for the period July to September 1962 and October to December 1962, for not filing the returns for the said periods as contemplated by the Employeers' Provident Funds Act, 1952. The applicantcompany has been registered under the Factories Act and is doing business in the name of the Central Hindustan Orange and C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the complaints have been filed by the Provident Fund Inspector appointed under section 13 of the Act before the trial Magistrate. The complaint or the report is in writing. It is also stated inthe complaint or report that sanction has required by section 14(3) of the Act for the prosecution has been granted by the Under Secretary to the Government of Maharashtra, Industries and Labour Department, by his sanction dated 5th April 1963. A copy of the said sanction has also been filed along with each of the complaints. (9) The learned counsel for the applicant company contends, however, that this sanction is of no effect so far as the company is concerned. The sanction which is at Exh. 12 states that the authority concerned was satisfied from the report dated 20-2-1963 by the Regional Provident Fund Commissioner that Shriman Chandra Chur, Director of the Central Hindustan Orange and Cold Storage Company, (hereafter described as CHOCS), Shri Pashupatinath Mahtha, Director, CHOCS, Shri Kirtimant Rao, Director CHOCS, Shri B. Y. Solao, Director, CHOCS, Sri Lal Chakra Dhar Singh, Director CHOCS and Shri R. D. Wagle, Director, CHOCS (1) failed to pay contributions amounting to ₹ 3, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not made, the returns were not filed and the administrative charges were not paid and hence, he felt himself satisfied that the report should be made to the Court for the prosecution of the six directors named therein. It appears that on going through the report and finding that the breaches were committed by these six directors who were in charge of the business of the company, the authority found that there was a prima facie case against these persons and it was satisfied about the breaches committed by them with respect to the said company. The satisfaction which the authority had was based on the report of the Regional Provident Fund Commissioner and this satisfaction would not be a subject of challenge in this Court. It was for the authority to be satisfied that there was a case to be reported and whether to give sanction for the making of the report or not. It is its satisfaction and this Court will not go into the question as to whether that satisfaction was proper or not, or based on sufficient material or not unless it is shown that the sanction was given mala fide, which is not the case here. (12) The second question relating to this sanction is of greater importance. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... may be in charge, to deduct the necessary amounts from the salaries of the employees and deposit the same along with the employer's contribution with the Government as well as to submit the periodical returns and pay the administrative charges. The affairs of the company are managed by certain persons the company being an incorporated body and has to act though somebody only. If these directors were responsible for observing the provisions on behalf of the Company, the directors also would be liable for the breach. The primary duty being that of the Company, the company is undoubtedly liable for the observance of the various requirements. When therefore, while giving the sanction the various offences that have been committed have been given and when the sanction for the prosecution of the six person describing them as directors of the company has been given there is a sufficient indication for the prosecution of the company also for the various offences under the provisions of the Act. The sanction, therefore, could be construed not only,as against the six individuals in their capacity as directors, but also against the company itself through these various directors. The sancti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rticular offence has been committed without specifying the public servant, who is guilty of the same. Similarly, in prosecution under s. 6 of the Prevention of Corruption Act, it also says that Court shall not take cognizance of an offence punishable under certain provisions of that Act alleged to have been committed by a public servant except with the previous sanction etc. The wording of this section also shows that the public servant who is alleged to have committed an offence has got to be mentioned while granting the sanction. Comparing these provisions with the provisions of section 14(3) of the Act, we find that reference of an offender is absent from section 14(3), Under section 197 of the Code of Criminal Procedure, as also under section 6 of the Prevention of Corruption Act, it will be found that unless the sanction specifies the offence and the person who has committed the offence, the Court will not be empowered to take cognizance; whereas under section 14(3) of the Act as soon as there is a report in writing by an Inspector stating the facts constituting that offence to the Court and there is a previous sanction for such report the Court is empowered to take cognizance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... making the report of the offences. In this case, we find that there is a sanction from the appropriate authority for making the report to the Court and this sanction was sufficient to enable the Court to take cognizance of the offences. I, therefore, hold that the sanction which has been granted in this case by the appropriate authority under section 14(3) of the Act is a valid sanction so far as the company also is concerned. I also hold that even though the sanction may not be effective so far as the company is concerned, the Magistrate was not in error in taking cognizance of the case against the company also on the report in writing of the Inspector which also mentioned the name of the company as one of the offenders. With regard to the question regarding validity of the sanction Mr. Gadkari appearing on behalf of the non-applicant has urged that this question regarding the validity of the previous sanction was not raised by the accused-applicant before the trial Magistrate and was raised for the first time before the appellate Court. The contention of Mr. Gadkari is correct. However, I find that the question in the form in which it has been raised by the learned counsel for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pointed out, the company stopped preparing or producing anything at the moment when it leased out the canning portion to the society. Thereby no manufacturing unit was in existence with this company any time after 1953, when the same was leased out to Chocs Canning Private Ltd. This letter was written by the Resident Director on behalf of the company when the company was required by the Regional Provident Fund Commissioner to implement the provisions of the Act. The company was denying its liability for implementing the provisions of the Act and the ground on which it was doing so, was stated in this letter Exh. 16. The letter says, Having seen that the company has only old storage business, the company most humbly states that it should not be covered under the provisions of this Act and requested for its being exempted from the provisions of the Act. It may be stated at this stage, that this letter was sent on behalf of the company at the time when the prosecution has already been started against the applicant and the other directors. It is, however, stated that besides the cold storage the company is also carrying on manufacture of ice, though the manufacture of ice was not s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 1 of the Act, therefore, requires that there must be either an application made to the Central Government that the employer and the majority of employees have agreed that the provisions of the Act should be made applicable to the establishment, or it may otherwise appear to the Central Government that the employer and the majority of employees have agreed that the provisions of the Act should be made applicable to that establishment and when it so appears to the Central Government, then the Central Government may apply the provisions of the Act by issuing a notification in the official Gazette. It is not the case of any party that any application was made to the Central Government or it otherwise appeared to the Central Government that the provisions of the Act should be made applicable to the establishment. It is also not the case of any party that there has been a notification in the official Gazette in this matter. Unless these conditions are satisfied, the provisions of sub-section (4) of section 1 of the Act will not come into play and the provisions of the Act cannot be made applicable to any establishment under this provision. The reference to sub-section (4) of section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... business, therefore, of the manufacture of ice is a manufacturing process and as such this part of the establishment is undoubtedly a factory. it is also contended by Mr. Moharir that the cold storage establishment is a part of this factory and as such, it would also amount to a factory within the meaning of the Act. It is further contended that in the cold storage also the potatoes which are stored therein are treated in the sense that potatoes under ordinary atmospheric conditions are kept in the cold storage and cooled to a particular temperature with a view to preserve them for a period of time. As such this amounts to treating the potatoes and this activity would come within the term manufacture and as in these premises this process is going on, it is a factory. It is, therefore, contended that the whole unit consisting of the ice manufacturing plant and the cold storage amount to a factory. On this premise an argument is based on behalf of the applicant-company that this being a factory, the provisions of the Act will apply only if this factory is shown to be engaged in an industry specified in Schedule I to the Act and the only head under which it can possibly come is fru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... period. But mere cooling would not amount to making it into a frozen vegetable unless and until it is nearly dead or dormant. The vegetables are frozen for particular purposes, a pretty long period and are required to be sent out for marketing, it becomes necessary to lower down the temperature of the vegetables to a very great extent. In ordinary cooling that is not so. They are only preserved for the time being as long as they are not required for actual use. What is actually required to be done for freezing the potatoes has been described by Morris B. Jacobs in his book. 'The Chemistry and Technology of Food and Food Products' Vol. III p. 1836. He says: Potatoes of the early crop cured and held from 50 to 70 F. at a humidity of 85 to 90 per cent, but the holding period is shorter than for the late crop. While the greater part of the late crop is held in common storage, potatoes for use in the spring and early summer are refrigerated to about 40 F. The humidity should be from 85 to 90 per cent. So held, they will remain dormant for from 5 to 8 months. At 40 F, they will accumulate sugar making the potato unsuited for French frying or chipping. Such stock should be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s above it, refers to the preservation industry. Some of the articles in item Nos. (i) to (viii) cannot be termed either as fruits or vegetables and even then by virtue of the explanation given, they have been brought under fruit and vegetable . he, therefore, contends that the item No. (ix) which cannot be related to any of the eight items must relate back to the heading, namely, Fruit and Vegetable Preservation Industry and according to him, this item No. (ix) therefore, relates to an industry which is engaged in preservation of vegetables and as such,. they fall under that heading in Schedule I. He contends that the explanation does not control the scope of the original item, namely, Fruit and Vegetable Preservation Industry, which has got to be given its natural meaning and if that natural meaning is given to the same, then it would mean that the industry which carries on the business of preserving vegetables would be covered by the item No. (ix) in this explanation. The learned counsel has also referred to certain authorities in the matter of interpreting the explanation. One such case is In re H. V. Jagdesh, . The question employee of the Indian Airlines Corporation, which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ces to the best advantage and in particular, to ensure that the services are provided at reasonable charges. In view of this it was held that the Indian Airlines Corporation was engaged in the trade of air transport service. It may be noted that Explanation 4 given to this clause Twelfth only sought to widen the scope of the industry by defining Corporation engaged in any trade or industry. This definition was an inclusive definition and was added for the purposes of including a banking, insurance or financial Corporation, a river valley Corporation and corporation for supplying power, light or water to the public. The clause Twelfth, therefore, had to be incidentally construed in order to find out whether any employee of a particular trade or industry would come within the meaning of a public servant and by explanation 4 some other Corporation were specifically included. Therefore, the meaning had to be given to the word trade in clause Twelfth to Section 21, Indian Penal Code. The explanation given in the present Act to the heading Fruit and Vegetable Preservation Industry is not of such an inclusive type. The explanation says that Fruit and Vegetable Preservation Indust ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imary character and which is of a secondary character. In the absence of any such material it is not possible to say whether the cold storage activity amounts to a factory or not. There,. is however, some material on record to show and which consists of the application made by the company itself that after the canning department was leased out from the year 1953 what was left with the company was only the cold storage and in the application which is of the year 1964, that is of a date later than the filing of the complaint, the company asserts that the only business they were carrying on was that of the cold storage. Before going to the question whether the cooling of potatoes amounts to 'manufacture' within the meaning of Section 2(ia) of the Act and if such manufacturing process is going on in the premises so as to make it a factory, I would like to deal with the provisions of Section 1(3)(b) of the Act (21-A) It is contended by Mr. Moharir that Section 1(3)(b) of the Act relates only to non-factory industries as opposed to factory industries stated to be covered by Section 1(3)(a) of the Act. For this purpose, a strong reliance has been placed on the word non-factory ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -factories with respect to which the Central Government may issue a notification. In that sense they could be said to be mutually exclusive of each other but not in the sense in which the learned counsel for the applicant wants that to be. This view is supported by the decision in Provident Fund Inspector v. Kerala Janatha Printers and Publishers (P.) Ltd., , wherein their Lordships of the Kerala High Court said: By Clause (a) of sub-section (3) of Section 1 of the Act only factories employing twenty or more men engaged in specified industries are brought within the Provident Funds Act. to all other establishments, factory or non-factory, whether engaged in industry or otherwise, the Act may be applied by resorting to notification under Clause (b) of sub-section (3) of Section 1. Factories engaged in industries other than those mentioned in Schedule I may also be brought within the ambit of the Act by a notification under S. 4 thus adding to Schedule I. On the reading of the two Cls. (a) and (b) of sub-section (3) of Section 1 of the Act together, it is thus clear that Clause (b) refers to all the factories which are not included in Schedule I and other establishments which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or kerosene oil and other articles different conditions may be necessary, but still all these places are the places for storing the various commodities and irrespective of the conditions which may be obtaining in each of these places, they would all be called storages because what is done there is that actually the goods or commodities are stored or kept for a length of time. Just as in a commodity like, say cotton seed, certain precautions have got to be taken, similarly in commodities like potatoes in order that they may not decay early and may remain useful for a pretty long time, it is necessary to store them in certain cool places. There are certain medicines to which nothing will happen if they are placed in ordinary atmosphere. There are other medicines which will decay or deteriorate or lose their efficacy if they are stored or placed in a ordinary atmosphere and need to be stored in a cool place -may be a natural cool place or an artificially cooled place, but still such a place will remain a storage and nothing but a storage. In this case we find that potatoes, in order to keep them marketable for a long period, are required to be placed in a cool place having a temperatu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notification dated 7-3-62. In view of this, it is clear that by virtue of the provisions of Section 1(3)(b) of the Act read with the notification 7-3-62, the Act is made applicable to the applicant company since 30-4-1962. In view of this, it is in fact not necessary to find out whether the cold storage in issue is a manufacturing process or not and whether that part of the establishment is a factory of not. (23) Since the applicant company is thus covered by the Act and since admittedly the applicant company has not deposited the amount deducted from the employees' salaries as well as their own contributions therefor, nor filed any returns as required by the Act. nor did they pay any administrative charges, they are guilty of the breaches of those requirements. The learned Assistant Judge agreeing with the trail Magistrate, though on different grounds, has held that the applicant company along with other directors are guilty of the offences mentioned in the complaint. It is also not necessary in this respect to consider the question regarding the provisions of Section 19-A of the Act. The Provident Fund Authority has initiated the prosecution for offences committed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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