Wilson A.A. and Others v. State of Kerala and Others

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** ## **THE HONOURABLE MR.JUSTICE T.V.ANILKUMAR** **WEDNESDAY,THE 03RD DAY OF APRIL 2019 / 13TH CHAITHRA, 1941** ## **Crl.MC.No. 7776 of 2015** **C.C.NO.6308/2014 of JUDICIAL FIRST CLASS MAGISTRATE COURT, CHALAKUDY** **CRIME NO.2450/2014 OF CHALAKUDY POLICE STATION, THRISSUR** ## **PETITIONER/ACCUSED 1 TO 4:** |**1**|**WILSON A.A.,**| |---|---| ||**AGED 52 YEARS,**| ||**S/O.AUGUSTINE, AKKARA VEEDU, CHALAKUDY P.O.,**| ||**THRISSUR DISTRICT - 680 307.**| |**2**|**GEORGE A.A.,**| ||**AGED 50 YEARS,**| ||**S/O.AUGUSTINE, AKKARA VEEDU, CHALAKUDY P.O.,**| ||**THRISSUR DISTRICT - 680 307.**| |**3**|**ROY A.A.,**| ||**AGED 46 YEARS,**| ||**S/O.AUGUTINE, AKKARA VEEDU, CHALAKUDY P.O.,**| ||**THRISSUR DISTRICT - 680 307.**| |**4**|**SHAJU A.A,**| ||**AGED 42 YEARS,**| ||**S/O.AUGUSTINE, AKKARA VEEDU, CHALAKUDY P.O.,**| ||**THRISSUR DISTRICT - 680 307.**| ||**BY ADVS.**| ||**SMT.M.R.JAYALATHA**| ||**SMT.P.SREESHA**| ## **RESPONDENTS/STATE/COMPLAINANT:** - **1 STATE OF KERALA REPRESENTED BY THE PUBLIC PROSECUTOR, HIGH COURT OF KERALA, ERNAKULAM - 682 031.** - **2 THE SUB INSPECTOR OF POLICE, CHALAKUDY POLICE STATION, CHALAKUDY P.O., THRISSUR DISTRICT - 680 001.** **3 ENFORCEMENT OFFICER, EMPLOYEES PROVIDENT FUND ORGANIZATION,** **Crl.MC.No. 7776 of 2015 : 2 :** **(MINISTRY OF LABOUR, GOVERNMENT OF INDIA), DISTRICT OFFICER, THRISSUR - 680 001.** **4 KRISHNAMOORTHY, S/O.SUNDARARAJAN, SUNDRESWARA NIVAS, CHENATHAUNADU, CHALAKUDY P.O., THRISSUR DISTRICT - 680 307.** **R1 & R2 BY PUBLIC PROSECUTOR SMT.MAYA M.N. R3 BY ADVS. DR.S.GOPAKUMARAN NAIR (SR.) SRI.S.PRASANTH, SC, EMPLOYEES PROVIDENT FUND ORGANIZATION** **THIS CRIMINAL MISC. CASE HAVING BEEN FINALLY HEARD ON 22.3.2019, THE COURT ON 03.04.2019 PASSED THE FOLLOWING:** **Crl.MC.No. 7776 of 2015 : 3 :** ## **T.V.ANILKUMAR, J.** ## **-----------------------------------** ## **Crl.M.C.No.7776 of 2015** **-----------------------------------Dated this the 3[rd] day of April, 2019** ## **O R D E R** Petitioners who seek to quash Annexure A2 final report in C.C.No.6308/2014 on the files of Judicial First Class Magistrate Court, Chalakkudy, are the accused. They are the Managing Partners of M/s.Akkara Theatre, Chalakkudy. The 4[th] respondent herein was one of the employees of the Theatre during the period since November 2012 to April 2014. 2. The petitioners were charge sheeted by the Sub Inspector of Police, Chalakkudy for the offence punishable under Section 406 IPC on the complaint of the 3[rd] respondent **Crl.MC.No. 7776 of 2015 : 4 :** Enforcement Officer, Employees Provident Fund Organization, District Officer, Thrissur that they failed to remit EPF monthly deductions made from the salary of 4[th] respondent from the month of November 2012 to April 2014. The allegation is that, after having deducted EPF contributions from the monthly salary of the employee for the above period, they declined to remit a sum of ` 8,800/- to the Provident Fund constituted under the the Employees' Provident Funds Scheme, 1952. 3. The petitioners seek to quash Annexure A2 final report as well as consequential proceedings in C.C.No.6308/2014 on the following grounds: a) Allegations as per the Final report do not make out an offence under Section 406 IPC b) The Firm was not made a party to the criminal proceeding nor there are allegations to the effect that petitioners were in charge and responsible for the conduct of the affairs of the **Crl.MC.No. 7776 of 2015 : 5 :** Firm and c) Since amount of contribution of ` 8,800/- has already been paid to the Provident Fund Commissioner by Demand Draft dated 14.12.2014 and all monetary claims have been settled under Annexure A5 deed dated 23.7.2015, prosecution of case against the petitioners would only be useless. 4. I find my way very difficult to accept any of these contentions of the petitioners and quash the proceedings in C.C.No.6308/2014 on the files of the Judicial First Class Magistrate Court, Chalakkudy. The allegations appearing from Annexure A2 final report clearly make out an offence punishable under Section 406 IPC. The allegations are so clear enough to indicate that petitioners deducted monthly EPF subscriptions from the salary of 4[th] respondent for the period from November 2012 to April 2014 and failed to remit a sum of ` 8,800/- to the Fund constituted under the Scheme of 1952. 5. The argument advanced by the learned counsel for the **Crl.MC.No. 7776 of 2015 : 6 :** petitioners is that, failure to remit EPF monthly contributions as required by paragraph 32(B) under Employees' Provident Funds Scheme, 1952 will not constitute an offence under Section 406 IPC in as much as such deductions of the amount from the wages of the employee will not amount to an entrustment within the meaning of Section 405 of IPC. 6. I find that such a view was taken by a single Judge of this court in **Gopalkrishna Pillai** v. **State of Kerala** [ **2016 (2) KHC 338]** . But, the learned counsel for the 3[rd] respondent Enforcement Officer, EPF Organization brought to my notice a later single bench decision in Crl.M.C.No.3250/2016, dated 23.11.2016 which held the decision in **Gopalkrishna Pillai** v. **State of Kerala** [ **2016 (2) KHC 338]** to be _per in curium_ as it failed to take notice of binding decision of the Hon'ble Supreme Court in **Harihar Prasad Dubey** v. **Tulsi Das Mundhra And Ors. [AIR** **1981 SC 81]** . The later single bench also took the view that subsequent lump sum payment of contribution is not a ground **Crl.MC.No. 7776 of 2015 : 7 :** for quashing the criminal proceeding. Therefore, in view of the legal position emerging above, I am also of opinion that failure to remit the monthly EPF contributions deducted from the salary of the employees is an offence punishable under Section 406 IPC and further, either subsequent payment of the contributions deducted as well as any kind of settlement arrived at between the employer and employee with respect to the alleged monetary liability as between them will not wipe out criminal liability under Section 406 IPC. A decision of the Hon'ble Supreme Court in **Provident Fund Inspector, Faridabad** v. **M/s. Jaipur Textile, Faridabad and Another [1987 KHC 1214]** cited by the learned counsel for the petitioners did not lay down any different principle of law. 7. The learned counsel for the petitioners advanced an argument that there is no clear allegation that petitioners were in charge of and was responsible for the conduct of M/s.Akkara Theatre and in the absence of such averments, no prosecution **Crl.MC.No. 7776 of 2015 : 8 :** against them lies under law. It is also the contention of the petitioners that without the Firm itself being made a party, no liability can be fastened upon the officers of the Firm. In this respect, a few decisions namely, **Employees' State Insurance Corporation** v. **S.K.Aggarwal and Others [1988 KHC 1089]** , **Sheeja Mol** v. **State of Kerala and Others [2015 (5) KHC 548]** , **Modi Alkalies and Chemicals Ltd. and Others** v. **State of Rajasthan** [ **2008 KHC 5821]** , **Sushil Kumar Bagla** v. **State of W.B. [2004 KHC 2123]** were cited by the learned counsel for the petitioners to contend for the position that company is also a necessary party while seeking to fasten criminal liability on the officers of the company. I find my way difficult to accept the aforesaid contention in this proceeding initiated under Section 482 of the Code of Criminal Procedure. 8. Under Explanation 2 of Section 405 of Indian Penal Code, the person liable for prosecution of offence punishable under Section 406 IPC for his failure to remit EPF contribution ## **Crl.MC.No. 7776 of 2015 : 9 :** after deduction from monthly wages is the employer himself. Though the term 'Employer' is not defined by Indian Penal Code, Section 405 Explanation 1 makes necessary reference, for a precise definition of the said term, to Employees' Provident Funds and Miscellaneous Provisions Act, 1952 (for short 'the Act'). The reference to Section 2 (e) of the Act would give a clear definition as to who is an Employer within the meaning of Explanation 2 of Section 405 of IPC. In the present case, what indisputably applies is Section 2(e)(ii) of the Act. An Employer as per Section 2(e)(ii) is the person who, or the authority which, has ultimate control over the affairs of the establishment, and where the affairs are entrusted to a manager, managing director or managing agent, such manager, managing director or managing agent. 9. In substance, employer is a person who has ultimate control over the affairs of the establishment concerned, which is the Akkara Theatre in the present case. Annexure A2 proceeds **Crl.MC.No. 7776 of 2015 : 10 :** as if all the petitioners have the ultimate control over the affairs of the Theatre in as much as there is nothing to show that among them any one of them has been nominated or authorized as a representative to hold the ultimate control of the affairs of the Institution. As to who is in de facto control of the Theatre is a matter of evidence, for which, the case has to move to the stage of enquiry or trial before the court below as the case may be. Therefore itself, it cannot be said that there exists any legal ground for quashing Annexure A2 at this stage of the proceeding. 10. Either Section 405 or any provisions of the Code of Criminal Procedure provide that there must be a clear averment to effect that the petitioners are in charge of and were responsible for the conduct of the business of the Akkara Theatre. Such a legal requirement could be insisted only when an offence is committed by the Firm itself as provided by Section 14A of the Act. Present is not a case where the petitioners are **Crl.MC.No. 7776 of 2015 : 11 :** sought to be prosecuted for any of the offences under the Act. 11. The sole charge against them is under Section 406 IPC and therefore itself, compliance with legal requirements under Section 14A of the Act cannot be insisted in the present case. The decisions cited by the learned counsel for the petitioners before me are, therefore, clearly distinguishable on facts. Suffice it to say that petitioners are not entitled to an order of quashment of Annexure A2 or consequential proceedings in C.C.No. 6308/2014 on the file of Judicial First Class Magistrate Court, Chalakkudy. In the result, Crl.M.C.No.7776/2015 is dismissed. However, I make it clear that the court below will certainly consider the legal questions as to whether the company is also a necessary party and which of the petitioners is in ultimate control of the affairs of the company etc. at the appropriate stage of the proceeding before it. In any view of the matter, I hope that in view of the subsequent payment of EPF contributions to the Fund created under the Scheme, the court below will take a **Crl.MC.No. 7776 of 2015 : 12 :** lenient view to the petitioners even if there is enough ground to proceed to the stage of trial for offence punishable under Section 406 IPC. **Sd/T.V.ANILKUMAR JUDGE** Bb **Crl.MC.No. 7776 of 2015 : 13 :** ## **APPENDIX** ## **PETITIONERS' ANNEXURES:** **ANNEXURE A1 A TRUE COPY OF THE RELEVANT PAGES OF FIRST INFORMATION REPORT DTD. 2.11.2014.** - **ANNEXURE A2 A TRUE COPY OF THE FINAL REPORT FILED IN FIR/CRIME 2450/2014 ON THE FILES OF CHALAKUDY POLICE STATION.** - **ANNEXURE A3 A TRUE COPY OF THE DEMAND DRAFT DTD. 14.11.2014 DRAWN ON SOUTH MALABAR GRAMIN BANK.** - **ANNEXURE A4 A TRUE COPY OF THE COMMUNICATION ISSUED BY SRI.AKKARA THEATRE TO THE PROVIDENT FUND COMMISSIONER KALOOR COCHIN DTD. 14.12.2014.** - **ANNEXURE A5 A TRUE COPY OF THE RELINQUISHMENT DEED EXECUTED BY KRISHNAMOORTHI DTD. 23/7/2015.** - **ANNEXURE A6 A TRUE COPY OF THE DEMAND DRAFT DRAWN ON SOUTH INDIAN BANK LIMITED DATED 25.1.2016** - **ANNEXURE A7 A TRUE COPY OF THE REPRESENTATION SUBMITTED TO THE 3RD RESPONDENT DATED 25.1.2016** ## **RESPONDENTS' ANNEXURES:** **ANNEXURE R3 TRUE COPY OF THE FORM 5A FURNISHED BY THE EMPLOYER IN TERMS OF PARAGRAPH 36-A OF EPF SCHEME** ## **//True Copy//** **P.A. To Judge** **Bb**