Shivram M. Vs. Enforcement Officer - Court Judgment

Excerpt:
labour and industrial - liability - section 482 of criminal procedure code, 1973 and sections 2, 14a and 14 (1-a) of employees' provident funds and miscellaneous provisions act, 1952 - petitioner-director of company filed application for setting aside charges against him under section 482 - petitioner contended that for offences under section 14a and 14(1-a) only general manager of company liable and he cannot be prosecuted vicariously for default to contribute to provident fund scheme - petitioner being director of company liable for affairs of company - director comes well within definition of 'employer' under section 2 (e) - proceedings against petitioner for default under section 14a and 14 (1-a) not liable to be quashed - petition dismissed. - mines and minerals (regulation and development) act (67 of 1957) section 4-a & forest conversation act (69 of 1980), section 2 & karnataka forest act (5 of 1964), section 24: [p.d. dinakaran, c.j & v.g. sabhahit, j] suspension of mining lease in forest area for alleged violation of agreement conditions -leased out areas of petitioner itself is yet to be identified and demarcated civil litigations pending in this regard between petitioner and neighbouring mining operators - enforceability of condition of agreement had become difficult held, it would not be proper to suspend mining operation without ample material to substantiate violation of condition. that would be an arbitrary and unreasonable exercise of power and will also amount to violation of principle of natural justice. - 9. on a careful perusal of the complaints filed in all these three cases by the respondent before the trial court, it is found that there are allegations to the effect that the petitioner who is a-3, along with a-2 and a-4 are the directors to a-1/cornpany and that they are in charge of the conduct and business of the establishment and were responsible to it for the conduct of its business during the relevant period and they failed to pay the family pension fund contribution in respect of the employees for the periods from january, 1995, to march 1995, april to june, 1995, and july to september, 1995. 10. the contention of learned counsel for the petitioner that only the name of the assistant general manager has been disclosed as manager of the factory and that he alone falls under the definition of 'employer',as defined under section 2(e) of the act, is disputed by learned counsel for the respondent and he submitted that the name of the petitioner is also disclosed as owner ask.r. prasada rao, j.1. all these petitions are filed under section 482 of the code of criminal procedure, by the third accused in c.c. nos. 3865 of 1996, 3866 of 1996 and 3867 of 1997 pending on the file of the court of jmfc ii court, shimoga, for the offences under sections 14-a and 14(1-a) of the employees' provident funds and miscellaneous provisions act, 1952 (for short 'the act'), read with para 76(d) of the employees' provident funds scheme, 1952.2. learned counsel for the petitioner submitted that the averments found in all these complaints against the petitioner concerned is that, he is a director of a-1/company and he was responsible for the conduct of business and that himself, a-2 and a-4 are required to comply with all the provisions of the act. he submitted that the said averments in the complaint are not sufficient to make the present petitioner who is a-3, vicariously liable for the abovesaid offences committed by a-1/company represented by the assistant general manager. elaborating his arguments, he has drawn my attention to the definition of 'employer' given under section 2(e) of the act, which defines as follows:'(i) in relation to an establishment which is a factory, the owner or occupier of the factory, including the agent of such owner or occupier, the legal representative of a deceased owner or occupier and, where a person has been named as a manager of the factory under clause (1) of sub-section (1) of section 7 of the factories act, 1948, the person so named ; and (ii) in relation to any other establishment, the person who, or the authority which, has the ultimate control over the affairs of the establishment, and where the said affairs are entrusted to a manager, managing director or managing agent, such manager, managing director or managing agent.'3. according to him, since the respondent (sic) is a factory and the assistant general manager of the said factory is named as the manager of the said factory, he alone can be prosecuted for the offences alleged under sections 14-a and 14(1-a) of the act. in support of his contention, he relied upon a decision of the supreme court in employees state insurance corporation v. s. k. aggarwal, : 1998crilj4027 wherein it was held as under (headnote of air):'section 2(17) of the employees' state insurance act defines the principal employer as either owner or occupier taking care of all eventualities. when the owner of the factory is the principal employer, there is no need to examine who is occupier. the owner will be the principal employer under section 40. therefore, even if the definition of 'principal employer' under the employees' state insurance act, 1948, is read in explanation 2 to section 405 of the indian penal code, the directors of the company, would not be covered by the definition of 'principal employer' when the company itself owns the factory and is also the employer of its employees at the head office. in any event, in the absence of any express provision in the indian penal code incorporating the definition of 'principal employer' in explanation 2 to section 405, this definition cannot be held to apply to the term 'employer' in explanation 2. the term 'employer' in explanation 2 must be understood as in ordinary parlance. in ordinary parlance, it is the company which is the employer and not its directors either singly or collectively.'4. placing reliance on the above decision, he contended that the assistant general manager, who is named as the manager of a-1/factory alone falls under the definition of 'employer' as defined under section 2(e) of the act and, therefore, the present petitioner who is one of the directors is not vicariously liable for the above referred offences. it is pointed out by him that all the above three complaints are filed by the respondent alleging, that the employees contribution amount of provident fund in respect of all the employees have not been paid for the quarters january, 1995, to march, 1995, april, 1995, to june, 1995, and july, 1995, to september, 1995. he also relied upon another decision of the supreme court rendered in the case of state of haryana v. brij lal mittal, : 1998crilj3287 wherein it was held that :'when there are no allegations in the complaint to indicate, even prima facie, that they were in charge of the company and also responsible to the company for the conduct of its business, prosecution against them for the offence under section 34(1) of the drugs and cosmetics act (23 of 1940) is liable to be quashed (municipal corporation of delhi v. ram kishan rohtagi, : 1983crilj159 (followed)'.5. he also relied upon an earlier decision of the supreme court in municipal corporation of delhi v. ram kishan rohtagi, (supra), wherein it was held that 'in a complaint filed against the company under the provisions of section 17 of the food and adulteration act, complaint against the company, its directors and manager, no clear allegations are there against manager and directors that they were responsible for the conduct of business of the disputed sample, therefore, the proceedings could be quashed against directors, but not against manager'.6. it is further, held in the same decision that 'so far as the directors are concerned, there is not even a whisper nor a shred of evidence nor anything to show, apart from the presumption drawn by the complainant, that there is any act committed by the directors from which a reasonable inference can be drawn that they could also be vicariously liable. in these circumstances, it can be said that no case against the directors has been made out ex facie on the allegations made in the complaint and the proceedings against them were rightly quashed by the high court'.7. placing reliance on the above decisionsit is contended by learned counsel for thepetitioner that in the complaint filed, exceptalleging that the petitioner being one of thedirectors along with a-2 and a-4 wereresponsible for the business of the company andwas in charge of the company, no otherallegations are made in the complaint, fromwhich a reasonable inference can be drawn thatthe petitioner could also be vicariously liablefor the offences under sections 14-a and14(1-a) of the act.8. in reply to these submissions, learned counsel for the respondent submitted that in criminal petition no. 658 of 1999 they have produced form no. 5-a submitted by a-1 wherein, in column relating to the particulars of owner, the name of the present petitioner is shown and his status is shown as chairman in the establishment of tungabhadra sugar works ltd., shimoga. it is also pointed out by him that in column 11 relating to the particulars of the persons who are in charge of and responsible for the conduct of the business of the establishment, the name of the present petitioner is also shown with his residential address and father's name. it is, therefore, pointed out by him that there are also clear allegations in the complaint to the effect that the petitioner at the relevant point of time was the director and in charge for the conduct and business of the company. he submitted that the above prima facie material is sufficient to proceed against the petitioner for the abovesaid offences under sections 14-a and 14(1-a) of the act and the above proceedings are not liable to be quashed against him. it is further contended by him that taking into consideration the above facts, criminal revision petitions nos. 184 to 198 of 1998 and 202 of 1998 filed by the petitioner before the court of additional sessions judge, shimoga, have been dismissed by the said court by an order dated december 14, 1998, refusing to interfere with the order passed by the trial court.9. on a careful perusal of the complaints filed in all these three cases by the respondent before the trial court, it is found that there are allegations to the effect that the petitioner who is a-3, along with a-2 and a-4 are the directors to a-1/cornpany and that they are in charge of the conduct and business of the establishment and were responsible to it for the conduct of its business during the relevant period and they failed to pay the family pension fund contribution in respect of the employees for the periods from january, 1995, to march 1995, april to june, 1995, and july to september, 1995.10. the contention of learned counsel for the petitioner that only the name of the assistant general manager has been disclosed as manager of the factory and that he alone falls under the definition of 'employer', as defined under section 2(e) of the act, is disputed by learned counsel for the respondent and he submitted that the name of the petitioner is also disclosed as owner as well as the person in charge and responsible for the conduct and business of the establishment in form no. 5-a submitted by a-1 at the time of the registration of the company and he produced a copy of the said form no. 5-a in criminal petition no. 658 of 1999. learned counsel for the petitioner no doubt objected for production of these documents before this court in these proceedings and contended that the same cannot be looked into. but, the respondent is entitled to produce this evidence at the time of trial. learned counsel for the petitioner has pointed out at this stage that the petitioner has resigned from the directorship on december 28, 1994, and this fact is evidenced by copy of form no. 32 produced by him in these petitions. but, learned counsel for the respondent submits that this question is to be examined by the trial court. since this document has not been produced in the trial court, the petitioner is entitled to produce before the said court and raise his contention that he ceased to be the director of a-1/company, he cannot be proceeded with for the abovesaid offences in all these cases. learned-counsel for the respondent has brought to my notice the decision of the supreme court in srikanta datta narasimharaja wodiyar v. enforcement officer, mysore, : 1993crilj2086 wherein it was held that (headnote of air):'a director of a private company, who is neither an occupier nor a manager can be prosecuted under section 14-a of the employees' provident funds and miscellaneous provisions act, 1952, for violation of the provident funds scheme when in form 5-a, columns 8 and 11, the director has declared himself as one of the persons in charge of and responsible for conduct of the business of the establishment or the factory.'11. in view of the above ruling of the supreme court, the trial court has to examine the question as to whether in form 5-a submitted by a-1/company, the petitioner declared himself as one of the persons incharge of the said establishment and were responsible to it for the conduct of business of a-1/company. having regard to these facts, i find that the proceedings are not liable to be quashed. however, i find it necessary to make it clear that the petitioner is entitled to produce form no. 32 before the trial court and to raise the contention that since he ceased to be the director of the company by the end of december 1994 itself, he is not liable to be prosecuted for the abovesaid offences and the trial court has to examine the said question at the initial stage itself before proceeding to frame charges in the above cases.12. with the above observations, these petitions are dismissed.