M.K. Shah, J.
1. This is an appeal by the State against the order of acquittal passed by the learned Judicial Magistrate, First Class, Bhavnagar on 31-1-1977 in Summary Case No. 142 of 1976 acquitting the respondent-original accused for the offence under Section 92 of the Factories Act ('the Act').
2. The accused is the Managing Director of a company called PoJysteer (India) Limited, Bhavnagar, The complainant-factory inspector K.N. Gandhi visited the factory premises of the company on 12-11-1975 and found that the factory was closed. On going through the records, he learnt that a worker named S.Y. Vaishnav who had worked in the year 1975 had not been paid the amount of leave with wages though his employment was terminated with effect from 20-10-1975. As provided in Section 79 of the Act, such payment of leave with wages in respect of a retrenched worker has to be paid on or before the second working day, which in the instant case would be 21st Oct. 1975 as the worker's services were terminated on 20-10-1975 and this, therefore, amounted to a breach of the provisions contained in Section 79 of the Act and he, therefore, filed a complaint against the accused.
3. The accused was tried before the learned Magistrate for the offence under Section 92 of the Act. The learned Magistrate on the evidence led before him, came to the conclusion that the factory was closed on 20-10-1975 and that liquidation proceedings had been taken and that there was no dispute that before the day of the incident, that is before 20-10-1975, the Official Liquidator had been appointed in respect of the said company. It was also a fact that the accused had informed the Government about the closure of the factory and retrenchment of the workers. In the opinion of the learned Magistrate, by virtue of the provisions of Section 491 of the Companies Act, 1956, on the appointment of a liquidator, all the powers of the Board of Directors and of the managing or the whole time directors, managing agent, secretaries and treasurers, and manager, if there be any of these, shall cease, except for the purpose of giving notice of such appointment to the Registrar in pursuance of Section 493 or in so far as the company in general meeting or the liquidator may sanction the continuance thereof, and that, therefore, the accused or any director of the company had no authority to make any such payment after the appointment of the Liquidator and this was also evident from the fact that, as per the order passed by the High Court in Company Petition No. 31 of 1975 dated 23-10-1975, the Bunk of India was directed to advance an amount of Rs. 3,00,000/-for the purpose of making payment to the workers for arrears of wages which indicated that the accused was not in charge of the management of the company. He, therefore, passed the impugned order of acquittal, aggrieved by which order, the State has preferred this appeal.
4. Mr. A.H. Thaker, the learned Public Prosecutor appearing for the State submits that there is no material on record showing that, in fact, the Liquidator was appointed, as is assumed by the learned Magistrate and the learned Magistrate was, therefore, in error in basing his order of acquittal on such an assumption which was without any foundation. It is true, there is no material on record showing that any Liquidator was appointed for the company. What transpires from the perusal of the orders passed in Company Petition No. 31 of 1975 dated 18-10-1976 and dated 23-10-1975 is that in the company petition the High Court passed some interim orders after some discussion with the concerned parties and they do not disclose that any Liquidator was appointed, though winding up proceedings had commenced by virtue of the said company petition having been filed by one Swaroopchand Shroff of Calcutta in this Court. But as pointed out by Mr. Ravani, the learned Advocate appearing for the accused, in the instant case, no offence could be committed by the accused because the requirements of Section 79(11) have not been fulfilled.
5. In order to bring the case within the purview of Sub-section (11) of Section 79, it has to be shown that the worker concerned had worked for 240 days or more in the factory during a calendar year entitling him leave with wages for a number of days calculated at the prescribed rates. It has then to be shown that the services of such a worker are terminated by the occupier before he has taken the entire leave to which he is entitled or if having applied for and having not been granted such leave, such worker quits his employment before he has taken leave; and, it these requirements are fulfilled, then it is enjoined on the occupier to make payment of the amount for the leave with wages, to be paid to him by the occupier, before the expiry of the second working day after termination of his service, as aforesaid.
6. Now, in the instant case, apart from the question whether the concerned worker had worked for 210 days or more in the calendar year concerned and whether his services were terminated before he had taken the entire leave admissible to him, it is established position that on 20-10-1975, the factory was closed and had continued to remain closed up to 12-11-1975, when the inspector visited the same. The Inspector himself, in his evidence, says that he found that the factory was closed on 20-10-1975. There is also a letter on record (ex. 7) written by the company to the Secretary to the Government of Gujarat, Labour Department, on 27-10-1975 giving intimation that all the employees of the factory had been retrenched on and from 20-10-1975. The order of the High Court passed in the aforesaid company petition also is on the footing that the company was closed, was not working and therefore, interim arrangement had to be made for payment to the workers. In such circumstances, it cannot be said that by default of payment on 21-10-1975, on which day, the company was closed and not working, the accused had committed breach of the provisions contained in Sub-section (11) of Section 79 of the Act, by failure to make payment to the worker, whose services were terminated on 20-10-1975, on the second working day after termination.
7. Mr. Thaker submitted that: 'working day' as it appears in Sub-section (11) should be construed as a day which is not either a Sunday or a declared holiday, because otherwise, if in fact, the factory is closed for a long period by strike, lock out or for any other reasons, the worker whose services are terminated will not be entitled to get the leave wages since there would be no working day for the factory during such a period. I am unable to accept this contention of Mr. Thaker. The intention of the legislature in enacting the said provisions seems to enjoin upon the occupier to make payment on a day on which the factory is working, providing punishment for breach if payment is not made on the second working day after termination of the service. When provisions which are penal in nature are to be interpreted, a strict construction has to be placed thereon keeping in view the fact that the breach results in inflictment of punishment which may include not only fine but imprisonment also, as provided in Section 92 of the Act. Again, it should be noted that the worker's right to get leave wages is not taken away but the remedy will he elsewhere. Sub-section (11) provides for penal consequences if payment is not made by a particular day viz. the second working day after termination without affecting the right of the aggrieved worker to recover the amount in accordance with law. In the instant case, it would be seen that the factory was closed, no work of the, company was done, the management had no funds to pay the arrears of wages to the workers and in such circumstances, in order that the workers were not starved and put to unbearable hardship, the High Court approved the scheme of providing funds by the Bank for the specific purpose of giving priority to the payment of wages to the workers. In such circumstances, it would be difficult to hold that mere non-payment of leave wages to which the workers would be entitled by virtue of his termination of service on the second day of the termination of service would constitute an offence punishable under Section 92 read with Section 79(11) of the Act.
8. Thus, on grounds and for reasons different then those which weighed with the learned Magistrate, the order of acquittal passed by him is found to be maintainable and will have to be confirmed. The result will be the following order: Appeal dismissed.