Judgment:
M.F. Saldanha, J.
1. By this petition filed under Article 227 of the Constitution of India and Section 482 of the Code of Criminal Procedure, the prosecutions against petitioners Nos. 1 to 3 instituted by the second respondent, Inspector of the Office of the Regional Provident Funds Commissioner at Bombay, have been challenged.
2. Mr. Bhonsale, learned counsel appearing in support of the petition, has challenged the legality and validity of the institution of the said prosecutions being Criminal Case No. 762 of 1978 to 768 of 1978 on two grounds. In the first instance, Mr. Bhonsale has pointed out that the provisions of Section 7(a) of the Employees' Provident Fund Act; contemplate the holding of an enquiry which requirement, according to Mr. Bhonsale, is mandatory and has not been complied with. Secondly, Mr. Bhonsale submits that in a case where a serious dispute arises with regard to the institution of prosecutions under the Act, and where the party has represented that no such action is warranted through a representation addressed to the Central Government, that the commencement of a prosecution before the representation is decided would be premature.
3. As far as the first submission of Mr. Bhonsale is concerned, where it is the case of Mr. Bhonsale that no such enquiry was at all held, Mr. Mehta, learned counsel appearing on behalf of the second respondent, has drawn my attention to the affidavit in reply that has been filed wherein the department has taken up the contention that such an enquiry was in fact held. Mr. Mehta has also drawn my attention to the fact that there are certain references in the record to the effect that the matter had been enquired into prior to the institution of the prosecution. Unfortunately, a scrutiny of the record does not indicate that theconcerned authority, after considering the matter recorded a finding that the objections raised by the present petitioners viz., that they did not employ more than 20 persons and that the provisions of the Act do not apply to them is not tenable and that, consequently they are liable to be proceeded against. In the absence of such a finding by the authority, which would be a condition precedent in a case of the present type, where the very applicability of the Act has been disputed by the petitioners, the institution of the prosecution cannot be said to have been legal. Section 7(1) is a mandatory requirement but merely because there is some reference in the record to the effect that the Inspector had carried out certain inspections and that certain discussion had taken place at the departmental level, it would not be possible to hold that there has been due, proper and adequate compliance with the provisions of Section 7(a). The consequences being penal in nature, the provisions of the Act will have to be very strictly construed and consequently. Mr. Bhonsale is fully justified in his submission that the prosecutions that were commenced in the present set of cases are liable to be quashed on this ground alone.
4. On behalf of the second respondent Mr. Mehta strenuously argued that there is sufficient material on record from which the Court could come to the conclusion that the provisions of the Act applied to the petitioners. Unfortunately, under the scheme of the Act, the Legislature has entrusted this responsibility to the designated authority of the department and not to the Court and if the procedure has not been followed by the department it cannot be argued that remedial measures are possible in the course of the prosecution.
5. The second submission canvassed by Mr. Bhonsale is to the effect that under the provisions of Section 19(a) of the Act, the petitioners had addressed a representation dated 25th April 1978 to the Secretary, Ministry of Labour, New Delhi, which, admittedly, has reached the concerned authority because, we have on record, the subsequent decision of the authority, who came to reject that representation on 7.1.1980, long after the present prosecutions were commenced. What is material is that the petitioners had forwarded a copy of the representation to the prosecuting authority i.e. the Regional Provident Fund Commissioner at Bombay and had requested him not to initiate any proceedings till the matter is decided by the competent authority, i.e. the Government or India. This application appears to have been ignored and the prosecution was commenced. The objection canvassed by Mr. Bhonsale is not academic but it is a real one for the reason that the decision as to whether the provisions of the Act applied to the petitioners or not was referred to the competent authority or the authority designated under the Act i.e. to the Secretary to the, concerned Ministry. Had that authority upheld the petitioner's contentions, the prosecution itself would have become redundant. It could, therefore, never be argued that the Provident Fund Commissioner was justified in proceeding regardless of the decision that was to be taken by that authority and I am, therefore, inclined to uphold the submission of Mr. Bhonsale to the effect that the prosecutions were premature.
6. Mr. Mehta, in reply to this submission, has drawn my attention to the order passed by the Secretary of the Ministry on 7.1.1980 wherein the representation in question has been rejected. It is Mr. Mehta's contention that this submission of Mr. Bhonsale is of no consequence. Unfortunately, I am unable to agree with this submission because, it may be that on the facts of the present case the representation came to be rejected but this Court will have to address itself also to those cases where the representation could have been, upheld, in which case, the prosecutions would have beenwholly unjustified.
7. My attention has been drawn to a decision of the Madras High Court in the case of Raghuram Textiles v. Regional Provident Fund Commissioner, Madras reported in 1979 FJR (54) 342, wherein the Madras High Court has also endorsed the view that where proceedings under Sections 7(a) and 19(a) are pending, the prosecution must be deferred.
8. In this view of the matter, the petition deserves to be allowed. The prosecutions viz. - Criminal Case No. 762 of 1978 to 768 of 1978 on the file of the learned Metropolitan Magistrate, 23rd Court, Esplanade, Bombay are quashed. Interim stay stands vacated.
9. Mr. Mehta, learned counsel appearing on behalf of the department, has however, pointed out that admittedly, the proceedings under Section 19(a) have long since been concluded and that it is certainly open to the department to recommence the proceedings under Section 7(a) by way or a fresh enquiry even though this matter relates to a period that is almost 25 years old. As against this, Mr. Bhonsale points out that the concerned employees have left the services of the petitioners and that they do not even know the addresses of the employees who have left and that the press itself is closed down. In this view of the matter, he points out that the entire exercise, though involving heavy Labour on the part of the department would be an exercise in futility and would be virtually academic. In the process, he submits that even if a technical view is taken, that for the very period covered by these complaints the amounts mentioned therein are payable, that exercise would unnecessarily involve both the department and the petitioners in a lot of unnecessary labour and harassment not to mention avoidable litigation.
10. The aggregate amount involved in this case is relatively small. The entire challenge in this petition essentially centres around the timing of the prosecutions, which,admittedly was premature. It is because of the non-recovery of the amount that the prosecutions became necessary and it would still, therefore, be open to the department, as pointed out by Mr. Mehta, to hold an enquiry under Section 7(a) of the Act and thereafter to prosecute the petitioners if so warranted. Even if an institution does not employ more than 20 persons, and the provisions of the Act cannot compulsorily be made applicable, nothing prevents an employer from voluntarily becoming a member of the scheme and depositing the amounts in question with the authorities because the payment of these amounts is essentially a contributory towards the welfare of the employees. For this small sum of money, it does not appear necessary that a lengthy exercise should be indulged in, because it appears fair and reasonable that the petitioners, without prejudice to their rights andcontentions, should deposit with the Provident Fund Commissioner the amounts specified in the complaints that have been quashed upon which there will be no necessity for any further proceedings. The saving of public time of the authority and of judicial time is a matter of serious concern. Mr. Bhonsale has sent for his clients who is present in the Court room and who has agreed to deposit the amount without prejudice to the contentions raised in the petition. Accordingly, the petitioners shall deposit the amount in question to the authorities to disburse these amounts to the concerned employees if the same is received.
11. Rule is accordingly made absolute. Interim stay to stand vacated.
Rule made absolute.