The Supreme Court held that 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 where under the court is vested with discretion limited to imposition of imprisonment for a lesser term. No words are found in the proviso for imposing a lesser fine than that of five thousand rupees therefore, no interpretation is required unless there is a requirement of saving the provisions from vice of unconstitutionality or absurdity.
The question of law arose in instant appeals pertained to Section 85(a)(i)(b) of the Employees’ State Insurance Corporation Act (Act). The 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 in the instant matters was to determine as to 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.
The instant case arose out of criminal proceedings initiated by the ESIC under Section 85 of the Act for conviction and punishment of the Respondents for failure to pay contributions required by the Act. Respondents after having found guilty were inflicted with imprisonment till rising of the Court and fine of Rs.1000/-.
It was contended by ESIC that the fine amount could not have been reduced and ought to have been Rs.5000/- as per mandate of law. High Court vide its impugned judgment dismissed the Revision Petitions filed by ESIC against which ESIC moved present petitions before the Apex Court.
Respondents supported the impugned judgment on the ground of availability of judicial discretion power to impose a fine of even less than what is prescribed.
It was observed that 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 where under the court is vested with discretion limited to imposition of imprisonment for a lesser term. Although, as apparent, 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 when wordings of the Statute are clear, no interpretation is required unless there is a requirement of saving the provisions from vice of unconstitutionality or absurdity.
Accordingly, it was 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.
[ESIC vs. A.K. Abdul Samad & Anr.]
SC, 10.03.2016
Criminal Appeal Nos. 1065-1066 of 2005