Punjab and Haryana High Court quashes proclamation proceedings for skipping mandatory warrant stage against ESI Act accused

The petitioner invoked Section 482 Cr.P.C. seeking quashing of an ESI complaint under Section 85(g) of the Employees’ State Insurance Act, 1948 (“ESI Act”), pending before the Chief Judicial Magistrate, Chandigarh, together with the summoning order dated 22.08.2022 and proceedings initiated under Section 82 Cr.P.C.

The complaint alleged failure to produce records of M/s Busicon and proceeded against the petitioner as the legal representative of his deceased father, who was the sole proprietor of the concern and died on 05.02.2020.

The petitioner contended that he had no role in the concern’s affairs, was not its proprietor or principal employer, and that the business had been managed under a General Power of Attorney granted to Harbachan Singh.

Separately, the Chief Judicial Magistrate initiated proclamation proceedings under Section 82 Cr.P.C. merely after a notice was returned unexecuted, without any preceding issuance of bailable or non-bailable warrants.

Whether the complaint under Section 85(g) of the ESI Act and the summoning order were without jurisdiction because the issue of the petitioner’s status and liability as a principal employer or legal representative was allegedly triable only by the Employees’ Insurance Court under Section 75 of the ESI Act?

Whether the petitioner could be proceeded against in connection with the proprietorship concern of his deceased father, notwithstanding his contention that he had no role in its management?

Whether proceedings under Section 82 Cr.P.C. could validly be initiated solely on the return of notice unexecuted, without prior issuance of a warrant and a judicial finding that the petitioner had absconded or was concealing himself?

The Court applied Section 2(17) of the ESI Act, which defines “principal employer,” including, in a factory, the legal representative of a deceased owner or occupier and, in any other establishment, the person responsible for its supervision and control.

Section 75 of the ESI Act confers jurisdiction upon the Employees’ Insurance Court over specified adjudicatory disputes, including the question of who is or was the principal employer.

However, Section 86(2) expressly provides that offences punishable under Section 85 are to be tried by a Court of a Judicial Magistrate First Class; the civil or adjudicatory powers granted to the Employees’ Insurance Court under Section 78 do not confer criminal trial jurisdiction.

Under Section 82 Cr.P.C., issuance of a warrant is a prerequisite; the Court must have reason to believe that the person has absconded or is concealing himself to evade execution of the warrant, and the proclamation must comply with the statutory publication and notice requirements.

The Court considered Mohan Dass v. Regional Director, Employees’ State Insurance Corporation, Jaipur, 1964 Cri.L.J. 612, and Regional Director, ESI Corporation, Delhi v. Ram Lakhan Pandey, 1960 PLR 517, concerning matters within Section 75, but found them inapplicable to the criminal prosecution at issue.

It distinguished Biresh Bhattacharjeet v. Employees’ State Insurance Corporation, 2017(1) CLR 119, as relating to prosecution of company directors without impleading the company.

The Court held that the petitioner’s jurisdictional objection was misconceived because the complaint concerned an offence under Section 85(g) of the ESI Act, and Section 86(2) specifically vested jurisdiction to try such offences in a Judicial Magistrate First Class.

Although the identity or liability of a principal employer may constitute a matter for the Employees’ Insurance Court under Section 75, that did not displace the criminal jurisdiction expressly conferred by Section 86(2).

The Court further observed that the petitioner was the son and legal representative of the deceased sole proprietor; the alleged power of attorney in favour of Harbachan Singh could not establish continuing authority after the principal’s death, and the existence of other siblings or their non-prosecution did not automatically exempt the petitioner from proceedings.

These matters did not warrant quashing at the threshold.

In contrast, the proclamation proceedings were legally defective: the Chief Judicial Magistrate had proceeded from the unexecuted notice directly to Section 82 Cr.P.C., without first issuing a warrant or recording a sustainable satisfaction that the petitioner had absconded or was concealing himself to evade execution.

Mere non-service of notice could not trigger the coercive jurisdiction under Section 82 Cr.P.C.

The Court declined to quash the ESI complaint or the summoning order, holding that the complaint under Section 85(g) was instituted before the competent criminal Court in accordance with Section 86(2) of the ESI Act.

However, the proceedings under Section 82 Cr.P.C., including the order declaring the petitioner a proclaimed person, were quashed and set aside for want of the mandatory prior warrant and requisite judicial satisfaction.

The petitioner was directed to surrender before the Trial Court and apply for regular bail; the Trial Court was directed to decide the application expeditiously, preferably within seven days of filing.