For natural-gas transportation, the State Government was appropriate authority; Central inspector’s prosecution was unauthorized.

The appellant, a Labour Enforcement Officer (Central), inspected the worksite of Gujarat State Petronet Ltd. (“GSPL”) at Amboli, Ankleshwar, on 17 October 2001 and allegedly found 552 contract labourers employed without registration under Section 7(1) of the Contract Labour (Regulation and Abolition) Act, 1970 (“the Act”).

After issuing inspection and show-cause notices, the Regional Labour Commissioner sanctioned prosecution, and the appellant filed Criminal Case No. 2277 of 2002 against Y.S. Navathe, Senior Manager of GSPL.

The Judicial Magistrate, First Class, Ankleshwar acquitted the accused on 6 February 2007, holding that, at the relevant time, the State Government—not the Central Government—was the appropriate government and that the appellant lacked authority to inspect or prosecute the establishment.

The appellant challenged the acquittal under Section 378 of the Code of Criminal Procedure, 1973.

Whether the Central Government was the “appropriate Government” under the Act in respect of GSPL’s activities involving the transportation of natural gas at the time of the inspection on 17 October 2001?

Whether the inspection, notice and prosecution initiated by the Labour Enforcement Officer (Central) for alleged non-registration under Section 7(1) of the Act were legally maintainable?

Whether the acquittal recorded by the trial Court disclosed any manifest illegality, perversity or other ground warranting appellate interference?

Whether prosecution against the respondent employee was maintainable without impleading GSPL as an accused?

The Court applied Section 7(1) of the Contract Labour (Regulation and Abolition) Act, 1970, which requires the principal employer of a covered establishment to obtain registration.

Section 9, which prohibits employment of contract labour by an unregistered establishment.

Section 24, which prescribes punishment for contraventions for which no specific penalty is provided.

The Court applied the provisions defining the appropriate government and inspection framework under the Act read with Section 2(a) of the Industrial Disputes Act, 1947.

The Court considered Notification S.O. 72(E) dated 16 January 2001 concerning industries engaged in the manufacture or production of mineral and hydrocarbon oils, but held that it did not cover GSPL’s transportation activity.

On appeals against acquittal, the Court relied on Chandrappa v. State of Karnataka, (2007) 4 SCC 415, reaffirmed in Rajesh Prasad v. State of Bihar, (2022) 3 SCC 471, Babu Sahebagouda Rudragoudar v. State of Karnataka, (2024) 8 SCC 149, and Ramesh v. State of Karnataka, (2024) 9 SCC 169, for the principles that an appellate court may reappreciate the evidence but must respect the reinforced presumption of innocence and should not interfere where two reasonable views are possible.

The Court found that GSPL was not engaged in manufacturing natural gas or any other covered product; its activity at the relevant site was limited to constructing a pumping station for transporting natural gas.

The notification relied upon by the appellant concerned industries engaged in the manufacture or production of specified mineral and hydrocarbon oils and contained no provision bringing transportation of natural gas within Central Government jurisdiction.

Since the Central Government was not the appropriate government on the inspection date, the appellant, as a Labour Enforcement Officer (Central), lacked authority to conduct the inspection and initiate the resulting prosecution.

The Court further noted that the respondent had produced permissions obtained under the State labour laws and that the prosecution had not otherwise established the accusation beyond reasonable doubt.

The Court also accepted the respondent’s contention that prosecution of an employee without impleading the company was not maintainable in the circumstances of the case.

Applying the restrictive appellate standard applicable to acquittals, the Court held that the trial Court’s view was a reasonable one and did not suffer from manifest illegality or perversity.

Finding no error in the trial Court’s acquittal and no credible evidence proving the offence beyond reasonable doubt, the Court dismissed the appeal and confirmed the judgment and order dated 6 February 2007.

The respondent’s bail bond was cancelled, and the record and proceedings were directed to be returned to the trial Court.