Mathews Jose v. State of Kerala and Others

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR. JUSTICE A.HARIPRASAD MONDAY, THE 18TH DAY OF AUGUST 2014/27TH SRAVANA, 1936 Crl.MC.No. 1208 of 2012 () --------------------------CRIME NO.375/2012 OF KORATTY POLICESTATION, PENDING ON THE FILE OF JUDICIAL FIRST CLASS MAGISTRATE COURT, CHALAKKUDY PETITIONER(S)/PETITIONER: ------------------------------------------------ MATHEWS JOSE S/O JOSE, AGED 33 YEARS, 190 C, AKG ROD EDAPALLY, COCHIN-24. BY ADV. SRI.V.B.HARI NARAYANAN RESPONDENT(S)/RESPONDENTS: ---------------------------------------------------- ## 1. STATE OF KERALA REPRESENTED BY ITS PUBLIC PROSECUTOR HIGH COURT OF KERALA, ERNAKULAM. ## 2. STATION HOUSE OFFICER, KORATTI POLICE STATION, TRICHUR DISTRICT.680 308. 3. ASSISTANT PROVIDENT FUND COMMISSIONER, EMPLOYEES' PROVIDENT FUND ORGANIZATION SUB REGIONAL OFFICE, KALOOR, COCHIN 17. 4. ENFORCEMENT OFFICER, - EMPLOYEES' PROVIDENT FUND ORGANIZATION SUB REGIONAL OFFICE, KALOOR, COCHIN-17. R3 & R4 BY ADV. DR.S.GOPAKUMARAN NAIR (SENIOR ADVOCATE) R3 & R4 BY ADV. SRI.A.RAJASIMHAN,STADING COUNSEL,EPF ORGANISATION R1 & R2 BY PUBLIC PROSECUTORSHRI N.SURESH THIS CRIMINAL MISC. CASE HAVING BEEN FINALLY HEARD ON 18-08-2014, ALONG WITH CRL.MC NOS.2022/2013, 2039/2013 & WP(C). 5314/2012, THE COURT ON THE SAME DAY PASSED THE FOLLOWING: CRL.MC NO.1208/2012 APPENDIX PETITIONER(S) EXHIBITS A 1: COPY OF THE 7A PROCEEDING DATED 18.5.21011. A 2: A COPY OF THE JUDGMENT DATED 1.8.2011 IN W.P.NO:20856/2011. A 3: A COPY OF THE RECEIPT ISSUED ON 1.3.2012 BY THE RECOVERY OFFICER. A 4: A TRUE COPY OF THE PROCEEDINGS DATED 1.3.2012 ISSUED BY THE 3RD RESPONDENT. A 5: A COPY OF THE INTERIM ORDER DTED 2.3.2012 IN W.P.NO.5314/2012. A 6: A COPY OF THE FIR IN CRIME NO:375/2012 OF KORATTY POLICE STATION. A 7: A TRUE COPY OF PROSECUTION NOTICE DATED 9.4.2012 ISSUED BY 3RD RESPONDENT. RESPONDENTS' EXHIBITS : NIL //TRUE COPY// ## **A.HARIPRASAD, J.** **-------------------------------------Crl.M.C. Nos.1208 of 2012, 2022 of 2013 and 2039 of 2013 & W.P.(C) No.5314 of 2012** **-------------------------------------Dated this the 18[th] day of August, 2014.** ## **COMMON ORDER** Petitioner in W.P.(C) No.5314 of 2012 and Crl.M.C.No.1208 of 2012 is the same. He is the 1[st] petitioner in Crl.M.C.Nos.2022 of 2013 and 2039 of 2013. 2[nd] petitioner in the above said two Crl.M.Cs. is the wife of the 1[st] petitioner. 2. As common questions arise in all these cases, all of them are heard together and disposed by this common order. Crl.M.C.No.2039 of 2013 is taken as the leading case. Documents are referred to as in that petition. 3. Heard the learned counsel for the petitioners and the learned counsel for the contesting respondent, viz., the Enforcement Officer, Employees' Provident Fund Organization. 4. Facts, in brief, relevant for our purpose, are as follows: 1[st] petitioner is the Managing Director of a private limited company and the 2[nd] petitioner is the Director of the said company. The company is covered under the provisions of the Employees' Provident Funds and Miscellaneous Crl.MC Nos.1208/2012, 2022 & 2039/2013 & WP(C) No.5314/2012 2 Provisions Act, 1952 (in short, “the Act”) and the Scheme having allotted Code No.KR/24550. The company started operations in Infopark, Kochi and Thrissur by engaging staff members. Due to certain unforeseen reasons, the company suffered substantial loss. On account of the financial difficulties faced by the company, contribution due to the provident fund account remained unpaid for a certain period. Annexure-A1 is the demand notice issued by the Regional Provident Fund Commissioner under the Act demanding an amount of `12,10,746/- for a period from September, 2009 to to July, 2010. He has invoked his power under Section 7A of the Act, which reads as follows: _“_ _**Determination of moneys due from employers.** - (1) The Central Provident Fund Commissioner, any Additional Central Provident Fund Commissioner, any Deputy Provident Fund Commissioner, any Regional Provident Fund Commissioner, or any Assistant Provident Fund Commissioner may, by order, -_ _(a) in a case where a dispute arises regarding the applicability of this Act to an establishment, decide such dispute; and_ _(b) determine the amount due from any employer under any provision of this Act, the Scheme or the Pension Scheme or the Insurance Scheme, as the case may be,_ Crl.MC Nos.1208/2012, 2022 & 2039/2013 & WP(C) No.5314/2012 3 _and for any of the aforesaid purposes may conduct such inquiry as he may deem necessary._ _(2) The officer conducting the inquiry under subsection (1) shall, for the purposes of such inquiry, have the same powers as are vested in a court under the Code of Civil Procedure, 1908 (5 of 1908), for trying a suit in respect of the following matters, namely:-_ _(a) enforcing the attendance of any person or examining him on oath;_ _(b) requiring the discovery and production of documents;_ _(c) receiving evidence on affidavit;_ _(d) issuing commissions for the_ _examination of witnesses,_ _and any such inquiry shall be deemed to be a judicial proceeding within the meaning of sections 193 and 228, and for the purpose of section 196, of the Indian Penal Code (45 of 1860)._ _(3) No order shall be made under sub-section (1), unless the employer concerned is given a reasonable opportunity of representing his case. (3A) Where the employer, employee or any other person required to attend the inquiry under subsection (1) fails to attend such inquiry without assigning any valid reason or fails to produce any document or to file any report or return when called_ Crl.MC Nos.1208/2012, 2022 & 2039/2013 & WP(C) No.5314/2012 4 _upon to do so, the officer conducting the inquiry may decide the applicability of the Act or determine the amount due from any employer, as the case may be, on the basis of the evidence adduced during such inquiry and other documents available on record._ _(4) Where an order under sub-section (1) is passed against an employer ex parte, he may, within three months from the date of communication of such order, apply to the officer for setting aside such order and if he satisfies the officer that the show-cause notice was not duly served or that he was prevented by any sufficient cause from appearing when the inquiry was held, the officer shall make an order setting aside his earlier order and shall appoint a date for proceeding with the inquiry;_ _Provided that no such order shall be set aside merely on the ground that there has been an irregularity in the service of the show-cause notice if the officer is satisfied that the employer had notice of the date of hearing and had sufficient time to appear before the officer._ _Explanation.- Where an appeal has been preferred under this Act against an order passed ex parte and such appeal has been disposed of otherwise than on the ground that the appellant has_ Crl.MC Nos.1208/2012, 2022 & 2039/2013 & WP(C) No.5314/2012 5 _withdrawn the appeal, no application shall lie under this sub-section for setting aside the ex parte order._ _(5) No order passed under this section shall be set aside on any application under sub-section (4) unless notice thereof has been served on the opposite party.”_ On receiving the notice, the petitioner filed writ petition seeking the following reliefs: _“i) To issue a writ of certiorari or any other appropriate writ, order or direction to quash Ext.P4 since the same is issued by the 1[st] respondent without jurisdiction or authority._ _ii) To declare that the conduct on the part of the 1[st] respondent in retaining the passport belonging to the petitioner is illegal and without authority in so far as the same will amount to curtailing his freedom of movement guaranteed under Article 21 of the Constitution of India._ _iii) To issue a writ of mandamus or any other appropriate writ, order or direction directing the respondents to grant installment facility to clear the outstanding dues._ _iv) To declare that the 1[st] respondent has no authority to issue a warrant of arrest against the employer for recovery of amounts due under the Act._ Crl.MC Nos.1208/2012, 2022 & 2039/2013 & WP(C) No.5314/2012 6 _v) To issue a writ of mandamus or any other appropriate writ, order or direction directing the respondents not to initiate any coercive proceedings including arrest and detention of the petitioner for non-payment of amount covered by Ext.P1._ _vi) To issue a writ of mandamus or any other appropriate writ, order or direction directing the 1[st] respondent to return the passport bearing No:J 5794678 and Cheque No.059957 dated 1-32012 to the petitioner_ ## _And_ _vii) To pass such other orders as are deemed fit and necessary in the facts and circumstances of the case.”_ In that matter, a learned Single Judge of this Court passed an order on 02.03.2012, which reads as follows: _“Admit. Sri.A.Rajasimhan, learned standing counsel takes notice for the respondents._ _Heard the learned counsel appearing on both sides. On going through the pleadings and after hearing the submissions made at the Bar by the learned counsel on either side, I am prima facie satisfied that the first respondent erred in directing the petitioner to surrender his passport, even assuming that the petitioner had voluntarily offered to surrender_ Crl.MC Nos.1208/2012, 2022 & 2039/2013 & WP(C) No.5314/2012 7 _his passport. That apart, a learned single Judge of the Andra Pradesh High Court has in_ _**Venkatesh D.R.**_ _**v. Regional Provident Fund Commissioner, Hyderabad and Another** (2004 (III) LLJ 952) observed that power to arrest the employer may not be available to be exercised until and unless the power to attach and sell the immovable property belonging to the employer is exhausted. In the instant case, Ext.P4 proceedings does not show that the property belonging to the petitioner could not have been attached and sold._ _In such circumstances, there will be an interim order staying the operation and implementation of the warrant of arrest dated 15.2.2012 issued by the first respondent acting either as the Assistant Provident Fund Commissioner or as the Recovery Officer and also all further proceedings pursuant to Ext.P4 proceedings dated 1.3.2012. The first respondent shall forthwith return the petitioner's passport, if he has surrendered the same._ _Hand over to both sides on usual terms.”_ It is the grievance of the petitioners that the Commissioner under the Act without exhausting the remedy of attachment and sale of property belonging to the company, issued a warrant of arrest against the 1[st] petitioner under Section 8B of the Act. Section 8B of the Act reads as Crl.MC Nos.1208/2012, 2022 & 2039/2013 & WP(C) No.5314/2012 8 ## follows: _“_ _**Issue of certificate to the Recovery Officer** .-(1) Where any amount is in arrear under section 8, the authorised officer may issue, to the Recovery Officer, a certificate under his signature specifying the amount of arrears and the Recovery Officer, on receipt of such certificate, shall proceed to recover the amount specified therein from the establishment or, as the case may be, the employer by one or more of the modes mentioned below:_ _(a) attachment and sale of the movable or immovable property of the establishment or, as the case may be, the employer;_ _(b) arrest of the employer and his detention in prison;_ _(c) appointing a receiver for the management of the movable or immovable properties of the establishment or, as the case may be, the employer:_ _Provided that the attachment and sale of any property under this section shall first be effected against the properties of the establishment and where such attachment and sale is insufficient for recovering the whole of the amount of arrears specified in the certificate, the Recovery Officer may take such proceedings against the property of the employer for recovery of the whole or any part of_ Crl.MC Nos.1208/2012, 2022 & 2039/2013 & WP(C) No.5314/2012 9 _such arrears._ _(2) The authorised officer may issue a certificate under sub-section (1), notwithstanding that proceedings for recovery of the arrears by any other mode have been taken.”_ On a careful reading of the provision, it becomes clear that the attachment and sale of the property under the Section shall first be effected against the properties of the establishment before taking recourse to arrest of the employer and his detention in prison. Learned Single Judge while passing the order dated 02.03.2012 referred to the above, took note of a decision in Venkatesh D.R. v. Regional Provident Fund Commissioner, Hyderabad and another (2004 (III) LLJ 952). It is the contention of the petitioners that the Commissioner under the Act has no authority to issue a warrant of arrest against the 1[st] petitioner and to detain his passport. It is also seen that the authorities under the Act preferred a complaint before the Police, which resulted in registration of Crime No.375 of 2012 of Koratty Police Station under Sections 406 and 420 of the Indian Penal Code (in short, “IPC”). Learned Public Prosecutor submitted that after investigation, a final report was filed by the Police stating that the Assistant Provident Fund Commissioner, Kochi is proceeding under the provisions of the Act and, therefore, the prosecution by Police was not required in that case. With Crl.MC Nos.1208/2012, 2022 & 2039/2013 & WP(C) No.5314/2012 10 that observation, a negative final report was filed by the Police. On a perusal of Section 14AC of the Act, it can be seen that the Police has no authority to register a crime for the offence falling under Section 14A of the Act. Sections 14A and 14AC are extracted hereunder for clarity: _“_ _**14A. Offences by companies** .-(1) If the person committing an offence under this Act, the Scheme or the Pension Scheme or the Insurance Scheme is a company, every person, who at the time the offence was committed was in charge of, and was responsible to, the company for the conduct of the business of the company, as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly:_ _Provided that nothing contained in this subsection shall render any such person liable to any punishment, if he proves that the offence was committed without his knowledge or that he exercised all due diligence to prevent the commission of such offence._ _(2) Notwithstanding anything contained in sub-section (1), where an offence under the Act, the Scheme or the Pension Scheme or the Insurance Scheme has been committed by a company and it is proved that the offence has been committed with the consent or connivance of, or is_ Crl.MC Nos.1208/2012, 2022 & 2039/2013 & WP(C) No.5314/2012 11 _attributable to, any neglect on the part of, any director or manager, secretary or other officer of the company, such director, manager, secretary or other officer shall be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordingly._ _Explanation.- For the purposes of this section, -_ _(a) “company' means any body corporate and includes a firm and other association of individuals; and_ _(b) “director”, in relation to a firm, means a partner in the firm._ _xxxxxxxxx_ _**14AC. Cognizance and trial of offences** .- (1) No court shall take cognizance of any offence punishable under this Act, the Scheme or the Pension Scheme or the Insurance Scheme except on a report in writing of the facts constituting such offence made with the previous sanction of the Central Provident Fund Commissioner or such other officer as may be authorised by the Central Government, by notification in the Official Gazette, in this behalf, by an Inspector appointed under section 13._ _(2) No court inferior to that of a Presidency Magistrate or a Magistrate of the first class shall try_ Crl.MC Nos.1208/2012, 2022 & 2039/2013 & WP(C) No.5314/2012 12 _any offence under this Act or Scheme or the Pension Scheme or the Insurance Scheme.”_ 5. Reckoning the above facts, it is evident that registration of the crime alleging offences under Sections 406 and 420 IPC is a misconceived action and legally unsustainable. However, the Police has closed the case and, therefore, no relief need be granted in Crl.M.C.No.1208 of 2012. 6. Regarding Crl.M.C.Nos.2022 and 2039 of 2013, it is submitted by the learned counsel for the petitioners that the prosecution is not legally sustainable since the Police after investigation filed a final report finding that no offence was made out against the 1[st] petitioner. I am unable to agree with the contention for the following reasons: Firstly, since the case was registered by the Police alleging only offences under Sections 406 and 420 IPC as none of the provisions of the Act can be invoked by the Police. Hence, it cannot be stated that the prosecution launched by the Police is a bar to proceed with a complaint for an offence under the Act. The next reason is that what is prohibited under Section 300 of the Code of Criminal Procedure (in short, “Cr.P.C.”) is only a subsequent trial of a person for the same offence, if he had been tried once and the trial ended in conviction or acquittal. Here, the Police case reached only a stage of filing a final report, which is a pre-trial stage. Therefore, neither the benefit of Section 300 Cr.P.C. nor the protection under Article 20(3) of the Constitution of India is Crl.MC Nos.1208/2012, 2022 & 2039/2013 & WP(C) No.5314/2012 13 ## available to the petitioners. 7. Learned counsel for the petitioners submitted that in AnnexureA6 notice only the 1[st] petitioner is shown as the person responsible for the conduct of the business of the establishment. In fact, the notice was issued only to the 1[st] petitioner/2[nd] accused. In the complaint (AnnexureA8), the name of the 2[nd] petitioner is also added without any legal justification. My attention is drawn to paragraph 3 of the complaint, wherein it is stated that the 2[nd] accused (1[st] petitioner) was the person in charge of the said establishment and was responsible to it for the conduct of business. Section 14A of the Act shows that the person, who, at the time the offence was committed, was in charge and was responsible to the company for the conduct of the business of the company as well as the company shall be deemed to be guilty of the offence under the Act. In the absence of any specific averment that the 2[nd] petitioner (3[rd] accused) was also a person in charge of the affairs of the company and responsible to the company, I am of the view that the prosecution against the 2[nd] petitioner in both the cases, are legally unsustainable. 8. Learned counsel for the petitioners submitted that there are altogether eight prosecutions, of which, two only are under challenge herein. It is also submitted that prayer No.(iii) in the writ petition is for Crl.MC Nos.1208/2012, 2022 & 2039/2013 & WP(C) No.5314/2012 14 granting installment facility to clear off the outstanding dues. According to the learned counsel for the petitioners, the dues originally was about `10,00,000/-, out of which `4,00,000/- was paid as per the directions in the order dated 24.04.2012 passed by this Court in Crl.M.C.No.1208 of 2012. Fact remains that still there is arrears of more than `6,00,000/-. Learned counsel for the contesting respondent submitted that in spite of giving an opportunity to the petitioners, they did not pay off the entire liability. Considering the fact that the company is closed down due to unforeseen reasons, learned counsel for the petitioners requests for three months time to clear off the entire arrears. Reckoning the entire facts and circumstances, the following directions are issued: Crl.M.C.No.1208 of 2012 is disposed of finding that as the prosecution in Crime No.375 of 2012 of Koratty Police Station has come to an end by filing a negative report. The complaints against the 2[nd] petitioner in C.C.Nos.7117 and 7118 of 2012 are quashed for want of essential averments to attract any offence against her. 1[st] petitioner shall pay the entire contribution payable under Section 6 of the Act, which is to be determined with reference to Section 17 of the Act, in three equal instalments within a period of three months from today. If the 1[st] petitioner makes default in payment of one installment, the prosecution shall be Crl.MC Nos.1208/2012, 2022 & 2039/2013 & WP(C) No.5314/2012 15 continued against him. In the said facts and circumstances, the prosecution against the 1[st] petitioner in C.C.Nos.7117, 7118, 7119, 7120, 7121, 7122, 7123 and 7124 of 2012 on the file of Judicial First Class Magistrate Court, Chalakkudy shall be kept in abeyance for a period of three months. All pending interlocutory applications will stand dismissed. ## **A. HARIPRASAD, JUDGE.** **cks**