Bombay High Court
Girdharlal Bajaj And Anr. vs Unknown on 1 January, 1800
Equivalent citations: [1962]32COMPCAS1114(BOM)
JUDGMENT
1. The judgments of the court was delivred by KOTWAL J.--This is an appeal byte state and is directed against the judgments of the additional chief Presidenryc Magistrate, II court, Esplanadem, Bombay, acquitting the first two respondents, Girdharlal Bajaj and Tulsiprasad Khaitan of offenses under section 420 of the companies act 1956, The original complainant,. Nariman Point Fakirji Bharucha, is the third respondet in this appeal
2. the complainant was employed sometime in 1941 as a manager in the New Pralhad Mills. The company commenced a provident fund scheme and appointed trustees of the provident fund onthe 1st of April, 1949. thereafter,the new Pralhad Mills was sold to a company known as the Amrit Banaspati and C. Ltd o
3. The services of the complainant were for a time continued by the Amrit Banaspati and Co. Ltd. On 29th May 1957, however the complainant was informed that he was dismissed from service of the New Pralhad Mills as from 31st May, 1957.
4. There is some dispute between the parties as to whether the complainant was, in fact, dismissed from service or whether his services where merely terminzted. But that dispute is not merely germane to the point for decision in this appeal and week shall without prejudging the issue refer to it as a dismissal.
5. Consequent upon his dismissal, the complainant, on 28th of March, 1959, addredded a later through his attorneys to the trustees of the Amrit Banaspati and Co. Ltd., who aware holding the employees' provident fund of the New Pralhad Mills. That letter is exhibit "B" . The complainant requested in that letter Ltd he should be furnished with a statement of account of his provident fund account, as the last statement, which had been submitted to him was for the financial year 1956-57. The complainant's attorneys also asked the trustees: "Please also give us an appointment for an inspection of the secrets in which the trust funds are invested by you as trustees. Please noted that if the aforesaid requisitions are not complied with as stated aforesaid, we have instructions to take immediate proceedings in the matter." This letter was signed by the complainant's attorneys.
6. On behalf of the accused and the trustees of the Amrit Banaspati Co. Ltd., a reply was sent on the 18th of April, 1959, to the complainant's letter, wherein the company and the trustees declined to give inspection as required and, on the other hand, they took the stand that "since your client was dismissed from the service of thescompany on account of misconduct, he is entitled to his contribution to precedent fund only. Under the rails he is not at all entitled for the company's contribution." It is clear that no specific reply was given so the complainant's demand for inspection of the secretes in which the trust funds were invested.
7. The complainant filled the present complaint on 22nd of April, 1959. He alleged breaches on the apart of the two accused, who were trustees of the provident fund, under section 420 of the Companies Act, 1956. He also charged the accused under section 406 of the Indian Penal Code.
8. The view which the Additional Chief Presidency Magistrate has taken is that the complaint was not dismissed fromthe services were merely terminated with effect from the 31st of May, 1957; but in any case he had become a past employee of the company and having regard to the provisions of sections 417 to 420 and particularly of section 420 of the Companies Act, 1956, he as a past employ was not entitled tot he inspection which he had claimed. The Additional Chief Presidency Magistrate held that the lord "employee" in section 419 can have reference only to a person who was employed under a contract of service and that upon the termination of the contract lhe had ceased to be an employee within the meaning of section 419 of the Companies Act, 1956.
9. The right which section 419 of the Companies Act, 1956, confers upon the employee to see to bank's receipt for moneys or secretes pertaining to his provident fund account is conferred upon him b the statute inthe following words:
"An employee shall be entitled, on request made in this behalf to the company, or so the trustees referred too in sub-section (4) of section 418, as the case may be, to seed the bank's receipt for any money or security such as is refereed lot in sections 417 and 418."
10. Section 420 merely prescribes the penalty against any officer of a company or any trustee of a provident fund who knowingly contravenes or authorize or permits the contravention of the provisions of sections 417, 418 and 419.
11. Looking to the language used in section 419, it would appear that the words of the section would ordinarily admit of no doubt or difficulty and that when the section uses the word "employee", it means an employee. But Mr. P.P. Khambatta, on behalf of the complainant, has press for our consideration the purpose and object of the enactment as indicated not merely by the terms of sectarian 419 but also by the other sections 417 and 418. He has contended that the sorest given under section 419 is a right in aid of another and a larger sight sconferred upon an employee, namely to see that the provident fund amounts are safely invested by the company; to have his own provident fund secured to him during his term of office and to be paid the same on the termination of his service and it is with that end in view that the legislature gave the employee the right under section 419 of inspection of the securities and the bank's receipts pertaining to the provident fund amount. He also pointed too the prosvisins of section 417, sub-sections(1) and (2) by which corresponding duties are laid upon the company. By sub-section (1) all movies or securities deposited with the company by its employees in pursuance of their contracts of sessrvice with the company must be kept or deposited by the company in a special account to be opened by the company for the purpose in a scheduled bank. Sub- section (2) of section 417 enjoins that no portion of such moneys or secrets shall be utilized by the company except for the purposes agreed to inthe contracts of service. It is these rights Mr. Khambatta contends which are intended to besecured by the grant of she ancillary right of inspection conferred upon the employs by section 419. He, therefore, urged that them word "employee" used in section 419 must be countered with specific refeersnce to the object of the legislation and the aims to be achieved, namely, to permit the employee to inspect the receipts for ssmonies and securities with a view to seeing that his provident fund is safe. If that bythe object of the enactment, it is contended, it would amount to defeating the right of an employee not to permit him an inspection after he ceases lobe an employee or, in other words, after the contract of service is terminated. Therefore, the word "employee" must be construed to include an "ex-employee" or a "past employee".
12. The argument was further reinforced by the submission that where, as in the instant case, the contract of service was not of any particular duration , it was open to an employer to terminate at will the services of his employee with the result that the right conferred on the employ would be largely issusory. If one were to limit the use of the awosd "employee" only to an employee who is in service, then it would always be open tothe employer to defeat the right of inspection by forthwith terminating the contract of service as soon as the employee asked for the inspection. It was surely not the intention of the legislature, it was contended, to bestow upon the employees so ephemeral a right. In support of the interpretation for which he contends Mr. Khambatta also relied upon the authority of a decision of the Supreme Court in Workmen of DimakuchiTea Estate v. Management of Diimakuchi Tea Estates.
13. The decisionto whichwe have ljust referred undoubted lie laid down that the words of a state, when there is doubt can't their meaning are to understood in the sense in which they nest harmonize with the subject of the enactnment and the object whichbthe legislature has in view. Their making is tone found not so much in a strictly grammatical or etymological propriety of language, nor even in its popular use, as the subject or the occasion on which they are used or the object to be attained. Their Lordships quoted with approval the passage from Maxwell on Interpretation of Statutes, 9th edition, page 55, tot he effect that:
"Them words of statute, when Theere is a doubt about their meaning rate to be understood inthe sense in which they best harmonize with the subject of the enactment and the object which the legislature has in view."
14. The passage which we have ljust reproduced states the exception and not the general rule. The passage itself indicates that the first and the cardinal rule of construction of a statute is to give effect to the words of the statute; but thought-out is only in exceptional cases wheere theere is any doubt or difficulty lap to the interpretation ofthe statute or any award thereof that the curt can legitimately look tot he object of the enactment or the purpose fro whichit was made.
15. We have already observed that upon a plain reading of section 419 of Company Act, 1956, it would appear that there is no such doubt or difficulty. But Mr. Khambatta was concerned to point out that such an interpretation of the word "employee" as including an employee who has cased to be an employee or whose contract of service has been terminated, has been given in a decision of t he English courts in Wilkinson v. Barking Corporation, and upon the authority of that decisionhe has contended that a doubt has arisen and we should look to the scope ad object of the enactment and interpret the word "employee" used insection 419 of the Companies Act, 1956, also as including an ex-employee or a past employee. In Wilkinson's case2, the English court of Appeal was concerned with the provisions of section 35 of the Local Government Act, 1937, which provided that:
"Any question concerning the rights and liabilities of an employee of a local authority...shall be decided inthe first instance bythe authorities concerned and if the employee is dissatisfied with any such decision...shall be determined by the Minister, and the Minister's determination shall be final."
16. The plaintiff, WILKINSON., was an employee of the Barking Corporation which was a local authority and he had brought an actionfr declaration that he was entitled to a certain superannuation allowances under section 8, sub-section (1A) of the Local Government Superannuation Act. His claim away met by the plea raised on behalf of the corporation that he is not entitled topursue that remedy because of the provisions of section 35 of the Local Government Act, 1937, which says that the question "shall be determined by the Minister and the Minister's determination shall be final" In answer to that preliminary objection to the plaintiff's action the contention advanced on behalf of the plaintiff inthat case was that section 35 merely referred to an "employee" and not an "employee whose services had been terminated", as inthat case of Wilkison and that , therefore that section would no bar to the plaintiff's suit. The contention was repelled and it was held the having regard to the provisions of that statute even a person like WILKINSON whose services have been terminate would fall within the definition of the award "employee" as used in section 35.
17. Lord Justice Asquith pointed out that there were two definitions inthat enctment, namely the definition of the words "contributory employee" andthat of the word "employee" . He held that a "contributory employee " was merely a species of lthegenus "employee". He pointed out that a contributory employee was expressly so defined in section 3 of that Act as to include in it an ex-employee or a past employee. From that premise the learned Lord Justice reasoned that the other Word "employee" used in the same statute could not but have a similar connotation. He stated the reasoning at pages 726-727 of the report as follows:
"I think , in the first place, that there is nothing inthe separate definitions of employee' and 'contributory employee' to repel the natural assumption that the firsts class is a genus comprising the second as a spaces or that if a 'contributory employee' can continue to retain his character as such after actual employment has terminated, an employee cannot do the same . To hold sthe contrary would be to limit the operation of the machinery of session 35 quite s arbitrarily to questions concerning the rights of persons under Part 1 other than those claiming superannuation allowances, which last claimants are perhaps the most important body of persons asserting rights under that part of the Act."
18. It will be clear from the passage which we have quoted above, that the decision in Wilkinson's case1 turned upon the particular provisions of the statute which fell to be construed inthat case, namely, the Local Government Act, 1937, and it was because that court found in the statute itself an indication that the words "contributory employee" could include an ex-employee or past employee that they interpreted the awosd "employs" as having the same connotation. That is not thee position here so far as the provisions of the Companies Act, 1956, here concerned. Neither do the words "contributory employee" occur in the Companies Act, 1956, nor is the word "employee" anywhere deafened. Moreover, there is no other indication in the Act that when the legislature used the word "employee" they might have intended to refer to an ex-employee of past employee. Therefor, it can be given only its normal connotation.
19. The word "employee" has been defined in Webster's Dictionary as "one employed by another; one who works for wages or salary in the service of a n employer...... " It seems to us that the word "employee"' as used inspection 419 of the Companies ACt, 1956, has been used in contradiction to the award "employer" and that inthe use of the sword "employee" the legislature contemplated the existence of a relationship of master and servant or what is the same thing between the simpler and the employee Obviously, an employee would be a person under the control of the employer and would be bound toby the orders of t he employer not only as to t he work whichwe shall execute, but also as to the details of the wosrjk and the manner of its execution. The attributes of an employee have been stated withe clarity in Diamond's Law of master and Servant (second edition at pages 1 and 2) . The word "employee" used in section 419 cannot, in our opinion, in the absence of any things contained inthe section itself or inthe statute, carry any higher or other meaning. It seems to us then that there's no doubt or difficulty here as to the interpretation of the word "employee" used insection 419 and so it is not necessary to the scope anew object of the legislation.
20. Mr. Khambatta also placed before us a number of anomalies which would arise if this interpretation were to be accepted. He pointed out that if the interpretation be correct, the moment the master chooses to give a notice tothe employee teerminzting his contract of service, the right of inspection would be at an net,yet his right to receive his provident fund amount would subsist. There would, therefore, be no meaning in saying thast the right of insspectionis a right given only in aid of the larger right to the provident fund itself. The argument is no doubt well taken but cannot affect the question of interpretation . MOreover, it seems tour that when sections 417, 418, 419 and 420 of the Companies Act, 1956, were enacted the present day notions of social justice between the employer land the employee where not the same and it is conceivable that the legislature may have thought that upon termination of the contact of lsesrvice the employ should be relegated to his normal remedies of a suit and the normal remediseese which the employee has, tosaafe guard the payment of the provident fund amount pending his suit, such as are sgiveen to him bythe Score of Civil Procedure. It seems to us that the legislature contemplalted that it would be a serious inroad upon the rights of the employer to permit the employee, who has cased to bean employee, to inspect the securities and bank receipts for moneys of hiss former employer. It is not as if the employee whose contract of service has been terminated would lobe entirely without a remedy. Upon the termination of his services, this right would be an immediate right to the receipt of the provident sound amount, wares, during the continence of his contract of service, he has no right torecover the provident fund amount fromthe employer or the trustees. Hence the difference in the remedies made available tothe employee and the consequent difference inthe right to inspect.
21. On behalf of the accused Mr. Amin raised a number of other contentions, particularly that the right of inspection confuted upon the complainant, if any was a right personal tohim and that inthis case no demand was made for inspection by the complaint himself, but that on the other hand his attorney's letter showed that they had asked for inspection for themselves, a right which section 419 does not confer on them. The other contention which away raised was that the employers have nots inthe instant case "knowingly" contravened lot authorized or permitted the contravention of the provisions of section 419 and Mr. Amin set forth a number of circumstances fromwhich absence of knowledge could be inferred . We need not decide these contentions because of the view which we have taken of the provisions of section 419 itself, that the word "employee" means an employee as such and not an E.C-employee orpast employee or a person whose contract of service has been put an end to.
22. In the course of the arguments act the bar, it was alleged but controverted, that the employers inthis case have not set apart the cements of the contribution of their employees, nor kept or deposited them in a special account, but that , on the other hand, the trustees have permitted the moneys and securities to be utilized ny the company for its own proposes. In view of these allegations, when the matter came up before us at the last hearing on February 10,1961, we had ordered the respondents Nos.1 and 2 , who were admittedly the trustees of the provident fund, to file an affidavit stating whether the amount of the provident fund of its employees has been set apart in a separate account or not and whether it was separately invested or not and, if invested, in what securities. We had also asked them to furnish a statement showing the date fromwhich the provident fund amount had been kept apart land /or invested. while no doubt, Mr. Amin had contended at the hearing that he was not in a positions to state whether san affidavit would be filed for not, Mr. Shelllim Samuel has state before us today that inspite of an intimation to respondents Nos. 1 and 2, they do not intend to file such an affidavit. The refusal one the part of the respondents Nos. 1 and 2 to place the facts before the court undoubtedly indicates that in all probability they have not complied with the provisions of section 417(1) and (2) and that that is the reason why a clear affidavit could not be file by them. Unfortunately, the complainant did not bases his complaint inthe instant case upon a breach of the provisions of section 417, sub-section (1) or (2); but he limited himself to breach of section 419 read with section 420 of the Companies Act, 1956. Nothing that has been stated in this order will therefore bar the complainant fromany further remedy that he may choose to seek. Subject towhat we have stated above, the appeal fails and is dismissed.
23. Mr. Khambatta at this stage points out to us that a civil suit has already been filed lb. his client against the company for wrongful dismissal and, in fairness ltoboth the parties to this appeal, we would like to make it clear that nothing that has been stated inthe course of the judgment inthis appeal shall affect the disposal of the suit.
24. Appeal dismissed.