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
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.
REPORTABLE
IN THE SUPREME COURT OF INDIA
CRIMINAL APPELLATE JURISDICTION
CRIMINAL APPEAL NOS.1065-1066 OF 2005
Employees State Insurance Corporation Vs A.K. Abdul Samad & Anr.
Dated;March 10, 2016.
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.
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 :
“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
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--
(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.
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
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
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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