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Sholapur Spinning and Weaving Company, Ltd. Vs. Maruf B.M. (Government Labour Officer) - Court Judgment

LegalCrystal Citation
SubjectLabour and Industrial
CourtMumbai High Court
Decided On
Case NumberRevision Application (I.C.) No. 1 of 1958
Judge
Reported in(1958)IILLJ123Bom
ActsBombay Industrial Relations Act - Sections 3, 3(14), 46(5), 47, 88(2), 106, 106(2) and 107; Indian Companies Act, 1956 - Sections 291
AppellantSholapur Spinning and Weaving Company, Ltd.
RespondentMaruf B.M. (Government Labour Officer)
Excerpt:
.....and dearness allowance as per award of industrial court - whether general manager, director and occupier liable under section 106 on ground of illegal change in section 46 (5) - applicants contended that only company was party to award which alone could be prosecuted - no personal liability of applicants for actions of company - director who had management and control of company can be proceeded against for act or omission which would amount to infringement of section 106 - held, complaint against accused applicants maintainable. - [couto; m.l. pendse, jj.] in the first instance the order passed under s. 132(5) is an order of a summary nature and does not conclude the rights of the petitioners, because while passing the assessment order, it is always open to the petitioners to..........of the arguments sri narayanaswami urged that it would not be right to hold the general manager or director liable to punishment for an offence if the company's financial condition is such that it cannot pay wages. but s. 106 does not make mens rea an essential ingredient of the offence. if an employer commits an illegal change, he is liable to be punished for the offence and the consideration urged by sri narayanaswami would have relevancy only on the question of sentence. 6. next it was urged by sri narayanaswami that if the definition of 'employer' given in s. 3(14) is imported in s. 106, there would be an absurdity, for s. 3(14) includes also in the definition of employer 'an association or a group of employers' and so the millowners' association would be liable if wages are not paid.....
Judgment:
ORDER

1. This is an application in revision under S. 88(2) of the Bombay Industrial Relations Act against an order of the Judge, Second Labour Court, Bombay, rejecting the contention of the applicants (accused 2 and 3 in the case) that they were not liable to be made accused in this criminal case.

2. The facts out of which this application has arisen are that the Government labour officer, Sholapur, made a report against the Sholapur Spinning and Weaving Company, Ltd., Sri V. H. Mehta, the general manager of the company (applicant 1 in this application), and Sri Gokulchand Dwarkadas Murarka, described as occupier and director of the company (applicant 2 in this application), in which it was stated that these accused had committed an offence punishable under S. 106 of the Bombay Industrial Relations Act in that they had made an illegal change by not paying wages and dearness allowance for the month of January 1958 to the employees of the mill as per an award of the industrial court in References Nos. 10 and 11 of 1946. By that award the company had to pay standard wages and dearness allowance to its employees from 1 January 1947. The labour officer stated that the company, the general manager and the director and occupier were responsible for the payment of the awarded wages and dearness allowance and by not doing so they had committed an illegal change as defined in S. 46(5) of the Act and were therefore liable to punishment under S. 106 of the Bombay Industrial Relations Act.

3. Before the labour court an objection was raised on behalf of the applicants (accused 2 and 3 in the case) that they were not liable to be prosecuted under S. 106 as it was the company which was the party to the award and which alone could be prosecuted, and the general manager and the director and occupier were not parties to the award. The learned labour judge rejected these contentions holding that the award was binding on employer as well as employer's agents in view of the definition of the word 'employer' in Clause (14) of S. 3 of the Act. He went on to observe that the object of defining 'employer' so as to include an agent seems to be that an employee or a union of employees may look to someone, a human being, on whom the liability can be imposed and to whom the penal sections including that of imprisonment prescribed under S. 106(2) could be applied.

4. In this revision application it has been urged that the applicants were not parties to the award and so the award is not binding on them, that only the company can be prosecuted for the alleged offence, that there is no personal liability against the applicants for the actions of the company, that when the award is not binding on the applicants they cannot be liable for contravention of it and merely because there is a definition of 'employer' in the Act which is an inclusive definition, it cannot be said that all persons who are covered by the definition would be bound by the award. In my opinion, the complaint against the applicants is maintainable. Section 94 of the Bombay Industrial Relations Act lays down, inter alia, that an award of the industrial court shall be binding on all parties to the industrial dispute who appeared or were represented before it. Sub-section (c) lays down that the award shall be binding, in the case of an employer who is a party to the proceeding before such court in respect of the undertaking to which the dispute relates, on his successors, heirs or assigns in respect of the undertaking to which the dispute relates, no his successors, heirs or assigns in respect of the undertaking to which the dispute relates. Sri Narayanaswami who has appeared for the applicants has put great reliance on this section and urged that the award is binding on the company only and not on the general manager or the occupier and director. But it has to noted that S. 106 does not say that 'a party to the award' who makes an illegal change shall, on conviction, be punishable, etc. The words are :

Sub-section (1). - 'Any employer who makes an illegal change shall, on conviction be punishable with fine which may extend to Rs. 5,000.'

Sub-section (2). - 'Any employer who contravenes the provisions of S. 47 shall, on conviction, be punishable with imprisonment which may extend to three months, or for every day on which the contravention continues, with fine which may extend to Rs. 5,000, or with both.'

The word 'employer' is defined in Clause (14) of S. 3 of the Act to include, among others, 'an agent of an employer.' It is not disputed that the general manager and director and occupier are agents of the company within the meaning of the definition but what is urged is that they are not parties to the award. It seems to me that it is not correct to say that an award to which a company is a party is not binding on its directors or managing agent or general manager. An employer contravening the provisions of S. 47 is punishable with a substantive sentence of imprisonment and it is difficult to support the view that the word 'employer' in S. 106, in the case of a limited company, means only the company as a legal entity and not its agents who have the management and control of the mill and by whose acts the company is bound, and that these agents are not bound by the award. Applicant 2 is alleged to be the occupier and director of the undertaking. The word 'occupier' is defined in the Factories Act to mean the person who has ultimate control over the affairs of the factory; the normal meaning of the word occupier in respect of an undertaking is the person who has possession and control of the undertaking.

There is also another section viz., S. 107, which lays down that an employer who acts in contravention of a standing order shall be punishable with fine which may extend to Rs. 500. Can it be said that standing orders are binding only on a company as a legal entity and not on its agents managing the affairs of the company As observed in Salmond's Jurisprudence.

'A corporation, having neither souls nor body, cannot act save through the agency of some representative in the word of real men.'

5. If in spite of the definition of the word 'employer' in S. 3(14) and the words in S. 106, quoted above, it is held that in respect of a corporation the person who actually makes the illegal change is not liable, S. 106 would not be of much use. If the true interpretation of these sections is as urged on behalf of the applicants, we would have to give effect to it, but I am of the opinion that the correct interpretation is that which I have given above. In the course of the arguments Sri Narayanaswami urged that it would not be right to hold the general manager or director liable to punishment for an offence if the company's financial condition is such that it cannot pay wages. But S. 106 does not make mens rea an essential ingredient of the offence. If an employer commits an illegal change, he is liable to be punished for the offence and the consideration urged by Sri Narayanaswami would have relevancy only on the question of sentence.

6. Next it was urged by Sri Narayanaswami that if the definition of 'employer' given in S. 3(14) is imported in S. 106, there would be an absurdity, for S. 3(14) includes also in the definition of employer 'an association or a group of employers' and so the Millowners' Association would be liable if wages are not paid by a mill company. In my opinion, that does not follow. The Millowners' Association has not the conduct and management of the mills of its members; and if wages in a mill are not paid, the Millowners' Association would not be guilty of making an illegal change. Sri Narayanaswami has pointed out that it would be a hardship if all directors of a company become liable under S. 106 for default of a company. But no person required to be director against his will, and subject to the provisions of the articles a director is entitled to resign his office. It would therefore be open to a director to resign if he feels that the affairs of the company are conducted in a manner which infringes the law regulating employer-employee relations. Section 291 of the Indian Companies Act, 1956, gives power to the board of directors of a company to exercise such powers and to do all such acts and things as the company is authorized to act and do, except when the authority of a general meeting is required for doing any act or thing. Now in the present case the labour officer has made a report not against all the directors but against applicant 2 as the 'occupier and director' and it is stated in the report that the company and the general manager and the 'occupier and director' were responsible for the payment of wages according to the award and have committed an illegal change by non-payment. Whether or not all directors would be liable, there can be no question that a director who has the management and control of the company's mill can be proceeded against for an act or omission which would amount to an infringement of S. 106 of the Act.

7. For the foregoing reasons I, reject the contentions urged on behalf of the applicants and hold that the complaint against the accused applicants is maintainable. The revision application is dismissed.


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