Bangalore District Court
Sundresh B M vs The Enforcement Officer, Epfo on 7 February, 2026
1 Crl.Apl.No.1731/2024 JUDGMENT
KABC010272892024
IN THE COURT OF LXIX ADDITIONAL CITY CIVIL
AND SESSIONS JUDGE (CCH 70)
Present:
Smt. Shirin Javeed Ansari, B.A.,LL.B (Hon`s) LL.M.,
LXIX Additional City Civil and Sessions Judge,
Bengaluru. (CCH70)
Dated this the 7th day of February, 2026
Crl.A.No.1731/2024
Appellant: Sri Sundresh B.M.
Aged about 41 years
#246, Bileshivale,
Doddaguddi Post
Off Hennur Baralur Main Road
Bengaluru-562 149
(Sri Satish G.A., Advocate for
appellant)
Vs.
Respondents: 1. The Enforcement Officer
Employees Provident Fund Organisation,
Regional Office,
Koramangala
Bhavishyanidhi Bhavan,
Annapurneshwari Complex,
Survey No. 37/1,
6th Main, Singasandra,
Bengaluru- 560068.
2 Crl.Apl.No.1731/2024 JUDGMENT
(Sri Harsha.V., Advocate for respondent
No.1)
2. M/s. Design Apparels Pvt. Ltd,
#180/4, 1st Floor,
Govindappa Complex,
Whitefield Road,
B Narayanapura,
Bengaluru- 560 016.
(Accused No.1)
3. Sri. Prabhakara V Shetty
S/o Vittal Shetty,
Director,
R/at. #156, Ramamurthy Nagar,
Ambedkar Nagar,
1st Main Road, 5th Cross,
Bengaluru East,
Bengaluru -560016.
(AccusedNo.2)
4. Sri Anand Kotreshwar Sithale
s/o Kotreshwar Sithale
DirectorsPlot No.25, K.H.Sithale
Biddapur Colony
Afzalpur Road
Gulbarga-585 102
(Accused No.3)
5. Smt. Rekha Prabhakar Shetty
Wife of Prabhakar Shetty,
Additional Director,
#156, Ramamurthy Nagar,
Ambedkar Nagar,
1st Main Road,
5th Cross, Bengaluru East,
Bengaluru -560016
(Accused No.5)
3 Crl.Apl.No.1731/2024 JUDGMENT
JUDGMENT
This criminal appeal is directed against the judgment of conviction and sentence dated 26.09.2024 passed by the Special Court for Economic Offences, Bengaluru, in C.C. No.101/2024, wherein the accused No.4, along with other accused persons, was convicted for the offences punishable under Sections 14(1A) read with Section 14A of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 (hereinafter referred to as "The EPF & MP Act").
2. Being aggrieved by the impugned judgment and conviction, the accused No.4 has preferred the present appeal under Section 374(3) of the Code of Criminal Procedure seeking to set aside the same.
3. The accused No.4 in CC No.101/2024 before the trial court has preferred the instant appeal against the complainant- respondent No.1, by arraigning the accused No.1 to 3 and 5 as respondents No.2 to 4. The appellant and respondents are hereby assigned with their original ranks before the trial court i.e., the appellant as accused No.4 and respondent No.1 as complainant and respondent 4 Crl.Apl.No.1731/2024 JUDGMENT No.2 to 4 as accused No.1 to 3 and 5 in CC No.101/2024 in the instant discussion for the purpose of brevity and convenience to avoid the confusion and perplexity.
4. The prosecution case, in brief, is that M/s. Design Apparels Pvt. Ltd. ("the establishment" or "Accused No.1") was a covered establishment under the EPF Act, engaged in business, and liable to contribute statutory provident fund dues, inclusive of employees' and employers' share of contribution and administrative charges for every month within 15 days of the close of such month as mandated by the EPF Scheme.
5. It was alleged that the establishment defaulted in remitting such statutory contributions for the months of March 2014, April 2014, and May 2014, aggregating to Rs.6,76,549/-. The Inquiry Authority, after due inspection and opportunity, passed an order under Section 7A of the EPF Act confirming the default (Ex.P-4), and thereafter sanction was obtained (Ex.P-2) to prosecute the responsible persons.
6. The appellant, along with Accused Nos.2, 3, and 5 Crl.Apl.No.1731/2024 JUDGMENT 5, were arrayed as Directors and Additional Director of the establishment, and were proceeded against on the basis that they were persons in charge of and responsible for the conduct of the business, as per Form No.5A filed by the establishment (Ex.P-3). The Special Court, after recording prosecution evidence comprising oral testimony of PW-1 and 9 exhibited documents (Ex.P-1 to Ex.P-9), and after hearing the accused persons, convicted the appellant and others under Sections 14(1A) r/w 14A of the EPF Act for the alleged defaults, and directed payment of statutory dues under Section 14C(1).
7. Being aggrieved by the findings of guilt, the conviction and the sentence, Accused No.4 has preferred the instant appeal against the respondent No.1 who was the complainant and respondent No.2 to 4 who are the accused No.1 to 3 and 5 before the trial court on the following:
GROUNDS OF APPLEAL
a) It is submitted that, the impugned Judgment passed by the trial court is 6 Crl.Apl.No.1731/2024 JUDGMENT untenable in law being oppressive and as the same is without authority of law, facts, materials and evidence on record. Hence, the same is liable to be set aside in so far as Accused No.4 is concerned as not maintainable under law.
b) It is submitted that the Complaint was filed under Section 14(1A) read with Section 14-
A of the EPF Act. Section 14-A of EPF Act deals with offences by companies
c) It is an admitted fact on record that the Company had filed the Return of Ownership in Form SA. Column No.8 of Return of Ownership refers to Particulars of Owners, wherein the list of Directors is mentioned. Column No. 11 refers to particulars of persons mentioned, who are in charge of and responsible for the conduct of the business of establishment. In Column No.11, it is specifically stated that, Mr. Prabhakar V Shetty is In-charge and responsible for conduct of business establishment and accordingly there is no reference to any other directors. This document has been produced by the Complainant himself.
7 Crl.Apl.No.1731/2024 JUDGMENT
d) It is submitted that, in spite of clearly stipulating in Form 5A, i.e., Mr.Prabhakar V Shetty was responsible and in-charge for the conduct of the business of establishment and in spite of clear statutory provisions under Section 14A of the EPF Act, it is only the Accused-2 who can be proceeded against for any violation of the Act and the Rules. However, in the instant case, the Trial Court has erroneously proceeded against the Appellant, who is Accused-4 in the complaint and also imposed punishment without any authority of law. Hence for the above said reason, the impugned order is liable to be set aside in so far as Accused No.4 is concerned, as not maintainable under law.
e) It is submitted that, though the Respondent along with the Complaint had produced Form 5A, Return of Ownership which clearly discloses that only Sri.Prabhakar V Shetty is incharge and responsible, the Trial Court has failed to appreciate the admitted fact and has erroneously taken cognizance of offence against the Appellant 8 Crl.Apl.No.1731/2024 JUDGMENT and has proceeded without any sanction of law in so for as Appellant is concerned. Hence for the above said reason the impugned order is liable to be set aside.
f) It is submitted that, the Complaint was filed in pursuant to order dated 31.10.2017 passed under Section 7-A of the EPF Act, in respect of arrears of contribution for the period 9/2012 to 8/2014. In the sald order, it is specifically stated that, "Any failure to comply with the above directions will render the employer liable for prosecution under section 14/14A of the Employees' Provident Fund and Miscellaneous Provisions 1952, in violation of EPF Act. It is respectfully submitted that as on 31.10.2017, the Appellant was no more a Director in the Accused No.1 Company and he had resigned from the post of Director of the Company vide resignation letter dated 14.08.2013 and the same has been Intimated to the Registrar of Companies Affairs in the prescribed Form-32. Therefore, since the Appellant was no more Director or owner of the Company as on 31.10.2017, there is 9 Crl.Apl.No.1731/2024 JUDGMENT no question of any failure to comply with the directions issued in the order dated 31.10.2017 and accordingly the prosecution initiated against the Appellant is not tenable in law. Hence for the above said reason the Impugned order is liable to be set aside in so far as Accused No.4 is concerned as not maintainable under law.
g) It is submitted that, show cause notice dated 18.01.2024 is alleged to have been issued to the Appellant as to why legal action should not be Initiated. However, the Appellant had not received any show cause notice as alleged in the tracking report submitted by the Respondent and the said tracking report itself clearly shows that show cause notice has not been served to the Appellant. Hence the impugned order is liable to be set aside in so far as Accused No.4 is concerned as not maintainable under law.
h) Without prejudice to the above submissions, it is submitted that, in show cause notice issued, it is stated that it is issued to the establishment as well as to the employers. However, as per Section 10 Crl.Apl.No.1731/2024 JUDGMENT 14A for any offence under EPF Act, in respect of Company every person who at the time the offence was committed was in charge of and responsible for the conduct of the business of the Company is liable to be prosecuted. Therefore, the show cause notice dated 18.01.2024 alleged to have been issued to the Appellant is not maintainable in law and therefore no opportunity has been given to the Appellant before passing the Sanction Order dated 14.02.2024. Hence, the impugned order is liable to be set aside in so far as Accused No.4 is concerned as not maintainable under law.
i) It is submitted that, on perusal of the sanction order dated 14.02.2024, sanction has been accorded to all the Directors of the Company as per Form 5A. However, for any offence under EPF Act In respect of a Company, as per Section 14-A, prosecution could be sanctioned only against the Director who is in charge of and responsible for the conduct of the business of the Company. Therefore, sanction order against the Appellant is in 11 Crl.Apl.No.1731/2024 JUDGMENT violation of Section 14-A of the EPF Act.
j) It is submitted that, the Trial Court has erroneously applied the ratio of the judgment of the Hon'ble Apex Court, in the case of Srikantadatta Narasimharaja Wodiyar vs Endorcement Officer, Mysuru, reported in 1993 (3) SCC 217 and the facts clearly reveal as follows:-
"8. Form 5-A envisages to give particulars in Columns 1 to 7 thereof, 1.e. particulars of owner, etc., The Appellant's establishment stated the name of the establishment as Ideal Jawa (India) Ltd., Code No. of the establishment, its address, nature of business, period of its commencement and manufacturing status, have been given. In Column 8 the establishment is to furnish the names of the owner-company, Directors. It was mentioned therein as Mr. Ν.Κ. Irani as Managing Director; the appellant as one of the Directors and others. In Column 10 the names of occupier and Manager as registered under the Factories Act were given. In Column 11 which specifies particulars thus: 'Particulars of the 12 Crl.Apl.No.1731/2024 JUDGMENT persons mentioned above, who are in charge of and responsible for the conduct of the business of the establishment'. Therein it was stated that "as per the details mentioned in Item 8". As stated earlier in Column 8 the names of the Managing Director, the Joint Managing Director and two Directors including the appellant have been mentioned."
k) It is submitted that, in the instant case, Form 5A clearly states in Column 11 that Mr. Prabhakar V Shetty, the Accused No.2 herein is in charge and responsible for conduct of the business of the establishment. Therefore, the judgment of Hon'ble Apex Court, in the case of Srikantadatta Narasimharaja Wodiyar referred to in the impugned order is not applicable to the facts of this case. Hence, the impugned order is liable to be set aside in so far as Accused No.4 is concerned as not maintainable under law.
l) It is submitted that, it is admitted by the Complainant himself in the evidence that, except the list of Directors appended to Annexure P3, no documents have been 13 Crl.Apl.No.1731/2024 JUDGMENT submitted in the Trial Court to show that Accused No.4 is responsible for the day to day affairs and conduct of establishment.
Without considering the same the impugned order dated 26.09.2024 is
passed by the Trial Court. Hence, on this count also the impugned order is liable to be set aside in so far as Accused No.4 is concerned as not maintainable under law.
m) It is submitted that, in furtherance to passing of order under Section 7-A of the EPF Act, the liability of the Company is crystallized and any failure to comply with the order passed under Section 7-A would only attract the penalty provisions of Section 14-B damages and prosecution. Hence the finding of the Trial Court alleging offence as continuance offence set out under Section 468 of CrPC is not tenable in law. Hence, for the above said reason the impugned order is liable to be set aside in so far as Accused No.4 is concerned as not maintainable under law.
n) It is submitted that, the finding of the Trial Court that the contention of Appellant that the complaint is barred by limitation as 14 Crl.Apl.No.1731/2024 JUDGMENT contemplated under Section 468 of CrPC will not survive pursuant to the show cause notice dated 18.01.2024 issued to Appellant is erroneous since no show cause notice has been served on the Appellant.
o) It is further submitted that, the finding of the Trial Court that the establishment being the juristic person managed by the Accused Nos.2 to 4, designated as Directors of the establishment and Accused No.5 who is designated as Additional Director are responsible for the day to day affairs of Accused No.1 establishment and having failed to comply the provisions of EPF Act are guilty of having committed offences punishable under Section 14(1A) read with Section 14A of the EPF Act is erroneous and not maintainable.
p) It is submitted that, the Trial Court erred in holding that the Complainant has discharged the burden of demonstrating the guilt of the Accused Nos. 1 to 5 beyond all reasonable doubts, in spite of the fact that the Appellant is not at all in charge of 15 Crl.Apl.No.1731/2024 JUDGMENT and responsible for the conduct of business of the establishment at the relevant period.
q) It is submitted that, no prosecution could have been lodged against the Appellant and the impugned judgment is not maintainable against the Appellant and the sanction order dated 14.02.2024 ordered against the Appellant is also liable to be quashed.
r) It is submitted that, several criminal complaints have been filed for different periods of time and in every case the Appellant is found guilty. It is further submitted that, the criminal complaint arose out of non-compliance of the order passed under Section 7-A of the EPF Act and order under Section 7A refers to the period 09/2012 to 08/2014. In other words, there is only one order passed under Section 7-A for the period between 9/2012 to 08/2014 and only one show cause notice has been issued for the entire period and one sanction is being Ordered. Therefore, the different complaints filed for different periods and consequent orders 16 Crl.Apl.No.1731/2024 JUDGMENT being passed thereon are not maintainable in law.
s) It is submitted that, it was brought to the notice of the below court that, the Show Cause Notice dated 18.01.2024 was issued by Regional Provident Fund Commissioner-II and the Sanction Order dated 14.02.2024 was granted by Regional Provident Fund Commissioner-I, the same reveals that it is by two different authorities and further reveals that the Sanctioning authority has not issued any notice and also has not followed the procedure as required under section 14(AC) of the EPFO Act, before granting Sanction Order dated 14.02.2024 for prosecution. Without considering the above contention of the Accused No.4, the Court has passed the Judgment dated 26.09.2024.
t) It is submitted that, the Judgment is otherwise bad in law and hence the same is liable to be set aside. Hence for the above said reason the impugned order dated 26.09.2024 passed by the Special Court for Economic Offences at Bengaluru, 17 Crl.Apl.No.1731/2024 JUDGMENT is liable to be set aside in so far as Accused No.4 is concerned as not maintainable under law and thereby acquit the accused/ Appellant.
Hence, under the said facts and circumstances, the appellant/accused No.4 pray before this court to call for records from the trial court, set aside the impugned judgment conviction and sentence passed by Trial Court in CC No.101/2024 dated 26.09.2024 and dismiss the complaint filed by the complainant/ respondent No.1, in so far as Accused No.4 is concerned in the interest of justice.
8. This Court has heard the learned counsel appearing for the appellants and the learned counsel appearing for the respondent. The entire original records of the Trial Court have been summoned and examined.
9. On the basis of the rival submissions and the record, the following points arise for consideration of this appellate Court:
(1) Whether the appellant/Accused No.4 has made out grounds to allow the present appeal?18 Crl.Apl.No.1731/2024 JUDGMENT
(2) What Order?
10. My findings to the above points are as under:
Point No.1 : In the Negative Point No.2 : As per final order for the following:
REASONS
11. Point No.1:-- The principal grounds urged in the appeal by the appellant are: (i) He was not responsible for day-to-day affairs of the establishment and therefore cannot be held liable; (ii) Form No.5A itself identifies only Accused No.2 as the person in charge; (iii) The Assessment/Inquiry Order Ex.P-4 was ex-parte and therefore cannot support conviction; (iv) The complaint is barred by limitation; (v) The show-cause notice was not served on him; (vi) Sanction was erroneously granted against him; and (vii) The Special Court failed to appreciate material contradictions and applicable law.
12. The EPF Act defines "employer" in Section 2(e) to include every person responsible for the conduct and management of the establishment. The definition is statutory and expansive, ensuring that the object of the 19 Crl.Apl.No.1731/2024 JUDGMENT statute--social security for employees--is not defeated by technical defences.
13. Section 14A of the EPF Act further clarifies that where an offence is committed by a company, every person who, at the time the offence was committed, was in charge of, and responsible for the conduct of the business, shall be deemed guilty and liable to be proceeded against and punished. This statutory provision imposes strict vicarious liability on persons in management.
14. In the present case, Form No.5A (Ex.P-3) filed by the establishment before the Regional Provident Fund Commissioner unequivocally lists the appellant as one of the owners/directors and, combined with company records, establishes his status as a person responsible for conduct of the establishment's affairs.
15. Reliance is placed on the authoritative pronouncement of the Hon'ble Supreme Court in Srikantadatta Narasimharaja Wodiyar vs Enforcement Officer, Mysuru, (1993) 3 SCC 217, where the Court held that:
20 Crl.Apl.No.1731/2024 JUDGMENT
"When it comes to establishment other than factory, the term 'employer' is not confined to owner or occupier but to all those who have control or are responsible for the affairs of the Company. It includes even Director. Therefore, every such person who has the ultimate control over the affairs of Company becomes employer."
16. The attempt of appellant to distance himself by claiming non-involvement in day-to-day management is contrary to settled principle. Mere non-participation in routine operations does not absolve liability when the person is statutorily designated as responsible for the conduct of the establishment.
17. Further, it is well established that statutory liability under the EPF Act is not confined to management duties but extends to persons with ultimate control. In Regional Provident Fund Commissioner v. Digjam Ltd. (Delhi High Court) and subsequent High Court authorities, it has been reinforced that Directors and functional managers can be held liable for defaults.
18. Consequently, the appellant, being a Director 21 Crl.Apl.No.1731/2024 JUDGMENT and having been shown in statutory returns as responsible, cannot absolve himself of statutory duties and liabilities merely on subjective assertions.
19. The prosecution examined Enforcement Officer (PW-1), who produced documents Ex.P-1 to Ex.P-9. The Inquiry Order (Ex.P-4) confirmed that statutory contributions for the relevant months were not remitted by the establishment. The Sanction Order (Ex.P-2) was obtained after procedure as required under law, and PW- 1's evidence establishes service of statutory notices (Ex.P-6 & Ex.P-7).
20. Non-challenging of Inquiry Order before competent authority operates against the appellant under Section 114 of the Indian Evidence Act, warranting an adverse inference. An inquiry proceeding under Section 7A is quasi-judicial, and failure to contest it in proper forum makes its findings binding for the purposes of prosecution.
21. It is also pertinent that the default in contribution is a matter of record and common course evidence that can be proved by certified copies and 22 Crl.Apl.No.1731/2024 JUDGMENT statutory returns, as sustained in Office of the Regional Provident Fund Commissioner v. M/s. XYZ.
22. The appellant did not lead any evidence to rebut the presumption of liability or to demonstrate compliance. Accordingly, the prosecution has proved, beyond reasonable doubt, that the establishment defaulted in making contributions and that the appellant was liable as a person responsible.
23. The appellant's contention that Ex.P-4 was ex-parte and therefore cannot be relied upon is rejected. An ex-parte inquiry order is not inherently invalid if the concerned person had an opportunity to participate and respond. The record shows that statutory notices were issued and address records indicate communication (Ex.P- 5, Ex.P-6 & Ex.P-7).
24. Non-service of notice on a director cannot be a panacea when notices were issued to the establishment and statutory forms list him as responsible. Notices issued via statutory portals (like Shram Suvidha) are also legally valid modes of communication recognized in statutory 23 Crl.Apl.No.1731/2024 JUDGMENT enforcement scenarios.
25. Even if service issues existed, the appellant's inaction in taking corrective steps and approach to appropriate forum amounts to waiver of any procedural infirmities. In State of U.P. v. Babulal (Supreme Court), it was held that where statutory opportunity exists and no steps are taken, objections on service become inconsequential if defaults are proved.
26. The appellant contended that the complaint is barred by limitation under Sections 468 and 472 Cr.P.C. However, the law on continuing offences in socio-economic statutes holds that when default continues, the cause of action continues. In State of Gujarat v. Shree Rajeshwari Mills, it was affirmed that failure to comply with statutory contribution obligations constitutes a continuing breach.
27. The show-cause notice in January 2024 falls well within limitation when reckoned from the date of inquiry order (2017) and continued defaults. Thus, the objection of limitation is untenable. 24 Crl.Apl.No.1731/2024 JUDGMENT
28. Sanction under Section 14(AC) of the EPF Act must be granted against persons shown to be responsible. In the instant case, the sanction order (Ex.P-2) lists all directors including the appellant, in view of statutory returns (Ex.P-3) which show the appellant's connection with management.
29. The appellant's argument that sanction was illegal because only one director was shown responsible ignores the settled principle that statutory returns must be believed unless rebutted with cogent evidence. High Courts have held that mere clerical entries in Form 5A, if not challenged, bind the signatory.
30. The sentence of six months' imprisonment and fine is within the statutory parameters, considering the socio-economic nature of default affecting employees' provident fund rights. In RPFC vs. XYZ, imprisonment for non-remittance, even in directors, has been upheld when defaults are deliberate and statutory duty is neglected.
31. In the light of the evidence on record, statutory mandates, and settled legal principles, this Court finds 25 Crl.Apl.No.1731/2024 JUDGMENT that: (a) The appellant was rightly considered a person in charge of and responsible for the conduct of the establishment; (b) Statutory defaults have been proved beyond reasonable doubt; (c) Objections regarding ex-parte inquiry, limitation, service, and sanction fail on legal and factual analysis; (d) The impugned judgment is legally sound, and no interference is warranted. Accordingly, Point No.1 is answered in the Negative.
32. Point No.2: In view of the reasons mentioned above and the findings arrived at on Point No.1, I proceed to pass the following:
ORDER The Criminal Appeal filed by the appellant/aaccused No.4 under Section 374(3) Cr.P.C. is hereby dismissed.
The judgment of conviction and order on sentence dated 26.09.2024 passed by the Presiding Officer, Special Court for Economic Offences, Bengaluru, in C.C. No.101/2024, is hereby confirmed in toto.26 Crl.Apl.No.1731/2024 JUDGMENT
The appellant/ accused No.4 shall comply with the sentence imposed by the trial court forthwith.
Office is hereby directed to send back the records to the trial court along with a copy of this judgment.
(Dictated to Stenographer Grade-I directly on computer, typed by him, revised and corrected by me and then pronounced in open court on this the 7th day of February, 2026) Digitally signed by SHIRIN JAVEED SHIRIN JAVEED ANSARI ANSARI Date: 2026.02.07 17:40:45 +0530 (Shirin Javeed Ansari) LXIX Addl.C.C. & Sessions Judge, Bengaluru.