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2016 (3) TMI 1488 - SC - Indian LawsJudicial discretion of the Court to reduce the sentence of imprisonment for any term lesser than six months - discretion also to levy no fine or a fine of less than five thousand rupees - HELD THAT - The clause shall also be liable to fine in the context of Indian Penal Code may be capable of being treated as directory and thus conferring on the court a discretion to impose sentence of fine also in addition to imprisonment although such discretion stands somewhat impaired as per the view taken by this Court in the case of Zunjarrao Bhikaji Nagarkar 1999 (8) TMI 142 - SUPREME COURT . But clearly no minimum fine is prescribed for the offences under the Indian Penal Code nor that Act was enacted with the special purpose of preventing economic offences as was the case in Chern Taong Shang 1988 (1) TMI 350 - SUPREME COURT . 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 whereunder the court is vested with discretion limited to imposition of imprisonment for a lesser term. 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. Conclusion - The court s discretion under the proviso is limited to imposing imprisonment for a lesser term than six months not to reducing or waiving the fine. Appeal allowed.
1. ISSUES PRESENTED and CONSIDERED
The core legal questions considered by the Court were: (a) Whether the Court has judicial discretion only to reduce the sentence of imprisonment prescribed under Section 85(a)(i)(b) of the Employees' State Insurance Corporation Act to a term lesser than six months, or whether it also has discretion to impose no fine or a fine of less than the statutorily mandated amount of five thousand rupees. (b) The interpretation of the phrase "shall also be liable to fine of five thousand rupees" in the context of the statutory provision and whether the fine is mandatory or discretionary. 2. ISSUE-WISE DETAILED ANALYSIS Issue: Judicial discretion in imposing fine under Section 85(a)(i)(b) of the Employees' State Insurance Corporation Act. Relevant legal framework and precedents: Section 85(a)(i)(b) of the Act prescribes punishment for failure to pay contributions: imprisonment for a term not less than six months and a fine of five thousand rupees. The proviso permits the court to impose imprisonment for a lesser term for adequate and special reasons recorded in the judgment but is silent on any discretion regarding the fine. Precedents considered include:
Court's interpretation and reasoning: The Court emphasized the clear legislative intent behind Section 85 to create deterrence against non-payment of contributions, an economic offence affecting employees' welfare. The provision mandates both a minimum imprisonment term and a minimum fine, with the proviso only allowing reduction of imprisonment term for special reasons. The Court found no language in the proviso or main provision permitting reduction or waiver of the fine. The Court distinguished the Indian Penal Code cases relied upon by the respondents, noting that unlike the Employees' State Insurance Act, the IPC does not prescribe minimum fines nor is it enacted with the same economic deterrence purpose. The Court also relied on the principle that when statutory language is clear and unambiguous, no interpretation is required unless to avoid unconstitutionality or absurdity, neither of which applied here. Regarding the Patna High Court's earlier interpretation in Tetar Gope, the Court reaffirmed its overruling in Zunjarrao Bhikaji Nagarkar, holding that "shall also be liable to fine" imposes a mandatory obligation to impose the fine, though the extent of fine may be subject to judicial discretion where the statute so permits. However, under Section 85(a)(i)(b), the fine amount is explicitly fixed, leaving no room for discretion. Key evidence and findings: The factual matrix involved conviction of respondents for failure to pay contributions, with the trial court imposing imprisonment till rising of the court and a fine of Rs. 1000, less than the statutory minimum fine of Rs. 5000. The appellant challenged the reduction of fine, asserting the statutory mandate. The High Court dismissed the revision petition relying on IPC precedents that allowed discretion in imposing fines. The Supreme Court, however, found the High Court's reliance misplaced given the distinct statutory context and purpose. Application of law to facts: The Court applied the statutory language strictly, holding that the trial court erred in imposing a fine less than the prescribed minimum. The proviso's exception to reduce imprisonment did not extend to fines. Thus, the respondents were liable to pay the full fine of Rs. 5000 as mandated. Treatment of competing arguments: The respondents' argument that "shall" should be read as "may" to confer discretion on the court was rejected. The Court distinguished the IPC cases cited, noting that the Employees' State Insurance Act was enacted with a special purpose to deter economic offences and explicitly prescribed minimum fines. The Court also rejected the High Court's reliance on the Patna High Court's contrary view, reaffirming its overruling of that precedent. Conclusions: The Court concluded that the statutory provision mandates a minimum fine of Rs. 5000, and courts have no discretion to impose a lesser fine or no fine once the offence is established. Judicial discretion under the proviso is confined strictly to the term of imprisonment. 3. SIGNIFICANT HOLDINGS "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." "The law is well settled that when the 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. Neither of the twin situations is attracted herein." "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." "In such a situation the intention of the Legislature is clear and brooks no interpretation." Final determinations:
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