Bangalore District Court
CRL.R.P./358/2015 on 26 August, 2015
IN THE COURT OF THE L ADDL.CITY CIVIL & SESSIONS
JUDGE, BANGALORE.
DATED THIS THE 26TH DAY OF AUGUST, 2015
-: PRESENT :-
SMT.SHUBHA GOWDAR, B.A.,LL.B,
L Additional City Civil & Sessions Judge,
Bangalore.
CRIMINAL REVISION PETITION NO.358/2015
Petitioner :
1. Sri.Shashikant G.Mandanna
Director,
M/s.Indus Fila Limited
(Apparel Division),
D 21/2, 2nd phase,
Peenya Industrial Area,
Bengaluru-58.
[Rep.by Sri.B.N.Prakash, Advocate ]
/ Vs /
Respondent :
1. State by Karnataka
By Station House Officer,
Peenya Police Station,
Bengaluru-560 022.
[Represented by learned Public
Prosecutor]
2 Crl.R.P.No. 358/2015
2. Enforcement Officer,
Employees' Provident Fund Organization,
Regional Office, S(1)F,
1st cross, 1st stage,
Peenya,
Bengaluru-58.
[Rep.by Sri.B.Pramod, Advocate ]
***
JUDGMENT
This revision petition has been filed under Section 397 of Cr.P.C by the petitioner who is accused before the trial Court by challenging the order dated 02/07/2014 in C.C.No.17282/2014 passed by the learned IV A.C.M.M, Bangalore.
3. The case of the petitioners, in brief, is as under :
Petitioner is the Director of the company running under the name and style of M/s.Indus Fila Ltd. The respondent No.2 had lodged a complaint before the respondent No.1, Peenya Police Station by making an allegation that petitioner made default in depositing the deduction made by them from the monthly salary of the employees of petitioner 3 Crl.R.P.No. 358/2015 towards the provident fund of which constitutes offence under Section 406 and 409 of I.P.C.
4. On petitioner's side challenged order of taking cognizance by learned Magistrate, IV ACMM, Bengaluru on 02/07/2014. Being aggrieved by this order dated 02/07/2014, the petitioner has filed this revision petition by urging the grounds that the complaint lodged by respondent No.2 before the respondent No.1 is illegal and without jurisdiction. There are no specific allegations against the petitioner in the complaint. Therefore, petitioner cannot be held liable for any act of commission or omissions of the company. Petitioner has already remitted the entire contribution for the month of July,2013 and August, 2013. The complaint by respondent No.2 on 19/09/2013 to respondent No.1 without giving prior notice and information to the petitioner the proceedings initiated is liable to be quashed. The aforesaid impugned order dated 02/07/2014 has come to the knowledge of petitioner on 16/03/2015 when the authorized representative of the petitioner has 4 Crl.R.P.No. 358/2015 received the summons. Hence, the petition is in time. Therefore, seeks for setting aside the order dated 02/07/2014 passed by the trial Court in C.C.No.17282/2014. Hence, this revision petition.
5. Inspite of service of notice on respondent No.1 and 2, respondent No.1 made his appearance through learned Public Prosecutor and respondent No.2 through his learned counsel.
6. The learned Public Prosecutor for respondent No.1 has argued that criminal proceedings have been initiated for offence punishable under Section 406 and 409 of I.P.C, not under provisions of Employees' Provident Funds and Miscellaneous Provisions Act, 1952. Therefore, the complaint lodged by the respondent No.2 before the respondent No.1 is legal. Even there are allegations made in the complaint about the non-payment of deductions made by the employer. Remittance of amount subsequently i.e., beyond the schedule time amounts to misappropriation of 5 Crl.R.P.No. 358/2015 which also constitutes the offence under Sections 406 of I.P.C. Hence, the order of taking cognizance by the trial Court is legal and correct.
7. The learned counsel for the respondent No.2 has argued that trial Court has rightly passed the order taking cognizance of the offence under Section 406 of I.P.C. Mere depositing of amount subsequently by the employer does not absolve him from the offence committed by him.
8. Heard the arguments on both sides. Perused. Posted for judgment.
9. The points that arise for my consideration are as :
1) Whether the impugned order dated 02/07/2014 in C.C.No. 17282/2014 passed by the learned IV ACMM, Bangalore is illegal and without jurisdiction?
2) What order?
10. My findings on the above points are as under:- 6 Crl.R.P.No. 358/2015
Point No.1 : In the Negative. Point No.2 : As per final orders for the following :
REASONS
11. Point No.1 :- This is the revision petition filed by the petitioner challenging the order of taking cognizance of the offence under Section 406 of I.P.C, on 02/07/2014 passed by lower Court in C.C.No. 17282/2014.
12. The learned counsel for the petitioner has vehemently argued that the trial Court has not touched the legal points while giving findings, complaint lodged by respondent No.2 before the respondent No.1 is illegal and without jurisdiction, he ought to have filed complaint before the jurisdictional Magistrate as in case of complaint under Section 138 of NI Act, the same procedure also follows in this special statute of Employees' Provident Fund and Miscellaneous Provisions Act, 1952. It is also further argued by him that there are no specific allegations made in the complaint against accused No.1 and 2 for any act of 7 Crl.R.P.No. 358/2015 commission or omissions, on this ground also the criminal proceedings is liable to be quashed. Thirdly the complaint lodged by the respondent No.2 without previous sanction is liable to be quashed. The prior sanction is mandatory to initiate the criminal proceedings against accused as contemplated under Section 14AC. Lastly, he has also sought for setting aside the trial Court order on the ground that petitioner has already remitted the entire contribution for the month of July and August, 2013.
13. In the revision petition, the accused/revisional petitioner has urged the first, second and 4th ground to set aside the trial Court order. The third ground mentioned in supra has been raised by the learned counsel for accused at the time of arguments.
14. He submitted the aforesaid arguments placing reliance on several citations. On the point of previous sanction he has referred me to following rulings : 8 Crl.R.P.No. 358/2015
1. (2000) 8 S.C.C 500 (Abdul Wahab Ansari V/s State of Bihar and Another).
2. (2001) 9 S.C.C 303 (Shivendra Kumar V/s State of Maharastra).
15. On the point of absence of specific allegations in the complaint, he has placed his reliance on following rulings :
1. 1981 LAB. I.C. 538 Karnataka High Court (M/s.Anantharamaiah Wollen Factory, Bengaluru and tohers V/s The State of Karnataka).
2. (2009) 10 S.C.C 48 (K.K.Ahuja V/s V.K.Vora and Another).
3. 2012(4) J.L.J.R 360 in Crl.R.P.No.244/2003 decided on 07/08/2012 between Nirmal Kumar Bagaria @ Nirmal Bagaria V/s The State of Jharkhand & Another.
4. (2002) 7 S.C.C 655 ( Katta Sujatha (SMT) V/s Fertilizers & Chemicals Travancore Ltd., and Another. 9 Crl.R.P.No. 358/2015
16. The learned Public Prosecutor for respondent No.1 has argued that criminal proceedings have been initiated for offence punishable under Section 406 and 409 of I.P.C, not under provisions of Employees' Provident Funds and Miscellaneous Provisions Act, 1952. Therefore, the complaint lodged by the respondent No.2 before the respondent No.1 is legal. Even there are allegations made in the complaint about the non-payment of deductions made by the employer. Depositing of amount subsequently i.e., beyond the schedule time amounts to misappropriation of which also falls under Section 406 of I.P.C. Hence, the order of taking cognizance and issue of summons by the trial Court for the said offence is legal and correct. He has placed his reliance on the ruling reported in 2004 Cri.L.J 171 Calcutta High Court (Sushil Kumar Bagla V/s State of W.B) on the point that previous sanction for prosecution of offence under I.P.C is not required though sanction is required for prosecution under Section 14B of Employees' Provident Fund and Miscellaneous Provisions Act and on the 10 Crl.R.P.No. 358/2015 point of F.I.R cannot be quashed on the ground that Director was wrongly shown as an offender in F.I.R- Company acts through its directors and being incapable of having mens rea for offence under Section 406 and 409 of I.P.C.
17. He has also cited another ruling 2004 Cri.L.J 1304 (M/s.Rita Agencies V/s Enforcement Officer, Employees' Provident Fund Organisation and another) on the point that Explanation 1 and Explanation 2 to Section 405 was self-explanatory for an element of entrustment, therefore, plea that element of entrustment is absent is not tenable.
18. The learned counsel for respondent No.2 has argued that Section 14AC of Employees' Provident Funds and Miscellaneous Provident Fund Act (hereinafter referred to as EPF and MP Act) has clearly laid down that when the complaint is lodged by Enforcement Officer the previous sanction is not required, the complaint has been lodged by 11 Crl.R.P.No. 358/2015 the Inspector appointed under Section 13 of the aforesaid Act, hence there is no force in the arguments addressed by the learned counsel for the revisional petitioner.
19. As per the revision petition, there are 3 grounds urged challenging the order of trial Court. At the time of arguments, the another ground is raised by the learned counsel for the revision petitioner. As per the complaint lodged by respondent No.2, the Enforcement Officer appointed under Section 13 of EPF and MP Act made allegation that revisional petitioner, the Director of Company employed number of employees, the deduction was made from the salary of these employees towards deposit of provident fund as laid down under Section 6 of EPF and MP Act and as contemplated under Section 38 of Employees' Provident Funds Scheme, 1952. There is no dispute that the aforesaid Act and scheme apply to the revisional petitioner and his Company. It is also not disputed that employees were employed and prescribed amount was deducted from their salary. As per the allegations, the amount deducted 12 Crl.R.P.No. 358/2015 towards public provident fund was not deposited by the revisional petitioner to the concerned bank by way of Bank drafts or cheques. As per the allegations, the deduction made for the month of July and August, 2013 in all Rs.25,22,085/- was misappropriated by the revisional petitioner.
20. The first ground urged by the revisional petitioner is the complaint lodged by respondent No.2, Enforcement Officer before respondent No.1 Peenya police is illegal and without jurisdiction as he ought to have lodged complaint before the jurisdictional Magistrate as in case of 138 of NI Act. As per the arguments by the learned counsel for the revisional petitioner same has been contemplated under Section 14AC of the Act.
21. Section 14AC of the Act provides :
"Cognizance and trial of offences-
(1) No Court shall take cognizance of any offence punishable under this Act, the Scheme or [the pension) Scheme or 13 Crl.R.P.No. 358/2015 the insurance Scheme], except on a report in writing of the facts constituting such offence made with the previous sanction of the Central Provident Fund Commissioner or such other officer as may be authorized by the Central Government, by notification in the Official Gazette in this behalf, by an Inspector appointed under Section 13."
The aforesaid provision mainly consists of 3 parts, firstly, no Court shall take cognizance of any offence punishable under this Act, the scheme (that means as per Section 6 of the Act and Sec.38 of Employees' Provident Fund Scheme 1952), secondly except on a report in writing by the facts constituting such offence, by an Inspector appointed under Section 13 and thirdly that previous sanction of Central Provident Fund Commissioner or such other officer as may be authorized by the Central Government, by notification in the official gazette in this behalf.
14 Crl.R.P.No. 358/2015
22. The first part of Section 14AC has clearly laid down that this is related to the offence punishable under EPF and MP Act, 1952. It is rightly argued by the learned Public Prosecutor that the present complaint lodged by respondent No.2 is for the offence under Section 406 and 409 of I.P.C, not for the offence under the present Act. The Explanation (1) to Section 405 of I.P.C which is inserted by the Act 40 of 1973 (w.e.f. 01/11/1973) provides a person, being an employer (of an establishment whether exempted under Section 17 of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 or not) who deducts the employees' contribution from the wages payable to the employee for credit to a Provident Fund or Family Pension Fund established by any law for the time being in force, shall be deemed to have been entrusted with the amount of the contribution so deducted by him and if he makes default in payment of such contribution to the said Fund in violation of the said law shall be 15 Crl.R.P.No. 358/2015 deemed to have dishonestly used the amount of the said contribution in violation of a direction of law as aforesaid."
23. In the present case the provident fund is involved. In view of aforesaid Explanation-1 when there is violation of EPF and MP Act i.e., if the employer makes default in payment of contribution, it shall be deemed to have been entrusted with the amount of the contribution so deducted by him. In view of Section 405, when a person being in any manner entrusted with the property, or with any dominion over property, or dishonestly misappropriates or converts to his own use that property, or dishonestly uses or disposes of that property is said to commit criminal breach of trust.
24. As per the allegations in the present case, he made default in contributing the amount deducted by him from the salary of the employees. Therefore, in view of the aforesaid Explanation-1, it amounts to offence under Section 16 Crl.R.P.No. 358/2015 406 of I.P.C (Section 405 is the definition clause). As per complaint, another offence is under Section 409 of I.P.C of which provides criminal breach of trust by public servant or by banker, merchant or agent. The revisional petitioner is a Director of the company to which the aforesaid Act applies. The charge sheet is for 406 of I.P.C only. In view of his Section 38 of Employees' Provident Act, 1952, the employer is shouldered with responsibility of deducting the prescribed amount from the salary of the employees and along with contribution, he shall within 15 days of the close of every month pay, to the fund by separate bank drops or cheques. The employer shall maintain on his record duplicate copies of aforesaid monthly abstract and consolidated annual contribution statement for production at the time of inspection by the Inspector. As per Section 50 of Employees' Provident Fund Scheme, the aggregate amount received as employers' and employees' contribution to the provident fund shall be credited to an account to be called the 17 Crl.R.P.No. 358/2015 provident fund account. As per Section 52 of the aforesaid scheme all moneys belonging to the fund shall be deposited in the Reserve Bank or Bank of India or in such other schedule Bank as may be approved by the Central Government from time to time. It is not the case of the petitioner that he has remitted the amount, though if remitted as per his petition, as contemplated under Employees' Provident Fund Scheme, 1952. As per the Xerox copy of the receipt produced on petitioner's side they are dated 23/10/2013 and 26/10/2013. In the present case the criminal case for the offence under Section 406 and 409 have been initiated not under the present Act, but under provisions of I.P.C, the chargesheet for the offence under Section 406 of I.P.C has been filed. Under the circumstances, I do not find any force in the contention by revisional petitioner and no substance in the arguments by learned counsel for the revisional petitioner that complaint lodged by respondent No.2 before the respondent No.1 is illegal and without jurisdiction and no 18 Crl.R.P.No. 358/2015 Court shall take cognizance of any offence punishable under this Act and issue of summons. Therefore, the ruling cited by the learned counsel for the revisional petitioner in (2009) 10 S.C.C 48 has no application to the present case.
25. The another ground urged by the revisional petitioner is there are no specific allegations against the petitioner in the complaint. As per the complaint, revisional petitioner is the responsible person and he is required to pay employees provident fund contribution of the establishment under such Act in the respective employees' share which was deducted from their wages. The revisional petitioner is the Director of establishment covered under the aforesaid Act. In view of 2004 Cri.L.J 1304 cited by the learned Public Prosecutor when it is the complaint alleging breach of trust mentioning the default in payment of employees' provident fund by employers as laid down under Explanation-1 to Section 405 itself is self-explanatory to the element of entrustment, plea that element of entrustment was absent in complaint is not tenable. In the present case also as 19 Crl.R.P.No. 358/2015 mentioned in supra, the complaint consists of element of entrustment of the deduction made from the wages of the employees' and there is default in payment of the same by the employer.
26. In view of 2004 Cri.L.J 171, the complaint was lodged against the Director of the Company for the offence under Sections 406 and 409 of I.P.C. F.I.R cannot be quashed on ground that Director was wrongly shown as an offender in F.I.R, the company acts through its directors and being incapable of having mens rea for offences under Section 406 and 409 of I.P.C., F.I.R lodged against director is proper. In the present case, the revisional petitioner is the Director of Company. There is specifically mentioned in the complaint that he is the responsible person of the Company. Therefore, in view of aforesaid two rulings cited by learned Public Prosecutor, I do not find any substance in the second contention taken by the revisional petitioner. The facts and circumstances of (2009) 10 S.C.C 48 is altogether different from the present case. In that case there is no specific 20 Crl.R.P.No. 358/2015 averment in the complaint as to role of each is required. But in the case of hand mentioned that revisional petitioner is the Director of establishment and for the conduct of business of said establishment and he is required to pay the employees' provident fund contribution of the establishment under the said Act and he is required to deposit said deduction and there is also mentioned he is the person in charge of the establishment. Therefore, these rulings cited on revisional petitioner's side have no application.
27. The last ground urged by the revisional petitioner has already remitted the contribution for the month of July and August, 2013. As already mentioned in supra, it is not their case that they have remitted the amount as per the provisions laid down under the Employees' Provident Fund Scheme, 1952. But that is not so here. Hence, on this ground also the order passed by the trial Court cannot be set aside.
21 Crl.R.P.No. 358/2015
28. The additional ground raised by the learned counsel for the revisional petitioner is the complaint was lodged without previous sanction by the Central Provident Fund commissioner or such other officer as may be authorized by Central Government by notification in official gazette in this behalf, hence the entire proceedings are to be quashed. It is pertinent to note if the proceedings were to be initiated under the present Act, the matter would have been different. But the criminal law has been set into motion against the revisional petitioner under the provisions of I.P.C. In view of 2004 Cri.L.J 171 cited by the learned Public Prosecutor as mentioned in supra, sanction required for the prosecution not obtained by the complainant as contemplated under Section 14B of EPF and MP Act is not inserted for the prosecution of I.P.C and theory of double jeopardy or punishment or maxim specialibus non derogant not applicable for prosecution under Section 406 and 409 of I.P.C. In view of the aforesaid ruling, the sanction is not required for 22 Crl.R.P.No. 358/2015 the prosecution of offence under I.P.C. As per principles laid down therein to initiate the proceedings under I.P.C the previous sanction is not required.
29. The learned counsel for the revisional petitioner has placed his reliance on (2000) 8 S.C.C 500 has no application to the present case. That is entirely different from the case on hand. In view of principle laid down therein the previous sanction under Section 197 of Cr.P.C is necessary for the prosecution of a public servant who is alleged to have been committed the offence in discharge of his duty, but the revisional petitioner is not a public servant. Therefore, the said ruling does not help the petitioner in any way.
30. Even the another ruling (2001) 9 S.C.C 303 relied on revisional petitioner's side also does not apply to the present case due to the reasons assigned in supra. Hence, the order of taking cognizance and issue of summons passed by the lower Court is legal and correct. It is 23 Crl.R.P.No. 358/2015 unwarranted to be interfered with the said order. It is in accordance with law.
31. In the petition, the petitioner has taken the contention that the order dated 02/07/2014 by the lower Court has come to his knowledge only on 16/03/2015, hence the petition filed on 14/05/2015 is in time. This is not challenged by otherside. It is taken as in time.
32. The order of taking cognizance and issue of summons challenged by the petitioner is revisable in view of 2012 AIR SCW 1821 (Om Kr.Dhankar V/s State of Harayana and Anr.), and it is revisable as the objection by petitioner if upheld would have the effect of terminating the entire prosecution proceedings against him, hence Magistrate's order cannot be treated as interlocutory and would not be hit by Section 397(2) of Cr.P.C. On this point I have relied upon (2000) 6 S.C.C. 195 (K.K.Patil and Anr. V/s State of Gujarat and Anr. I hold point No.1 in the Negative.
24 Crl.R.P.No. 358/2015
33. Point No.2 :- In view of my foregoing reasons, I proceed to pass the following order :
ORDER The Criminal Revision Petition filed by the petitioner under Section of 397 of Cr.P.C. is hereby dismissed.
(Dictated to the Judgment Writer, transcript corrected, signed and then pronounced by me in open court on this the 26th day of August, 2015.) (SHUBHA GOWDAR) L ADDL.CITY CIVIL & SESSIONS JUDGE, BANGALORE.
*** 25 Crl.R.P.No. 358/2015 IN THE COURT OF THE L ADDL.CITY CIVIL & SESSIONS JUDGE, BANGALORE.
DATED THIS THE 24TH DAY OF AUGUST, 2015
-: PRESENT :-
SMT.SHUBHA GOWDAR, B.A.,LL.B, L Additional City Civil & Sessions Judge, Bangalore.
CRIMINAL REVISION PETITION NO.358/2014 Petitioner :
2. Sri.Shashikant G.Mandanna Director, M/s.Indus Fila Limited (Apparel Division), D 21/2, 2nd phase, Peenya Industrial Area, Bengaluru-58.
[Rep.by Sri.B.N.Prakash, Advocate ] / Vs / Respondent :
2. State by Karnataka 26 Crl.R.P.No. 358/2015 By Station House Officer, Peenya Police Station, Bengaluru-560 022 [Represented by learned Public Prosecutor]
2. Enforcement Officer, Employees' Provident Fund Organization, Regional Office, S(1)F, 1st cross, 1st stage, Peenya, Bengaluru-58.
[Rep.by Sri.B.Pramod, Advocate ] *** JUDGMENT This revision petition has been filed under Section 397 of Cr.P.C by the petitioner who is accused before the trial Court by challenging the order dated 02/07/2014 in C.C.No.17282/2014 passed by the learned IV A.C.M.M, Bangalore.
2. The respondent was the complainant and the petitioners were the accused before the Trial Court. The 27 Crl.R.P.No. 358/2015 ranks of the parties are hereinafter referred to by their original status before the Trial Court.
3. The case of the petitioners, in brief, is as under :
Petitioner is the Director of under the name and style of M/s.Indus Fila Ltd. The respondent No.2 had lodged a complaint before the respondent No.1, Peenya Police Station by making an allegation that petitioner made default in depositing the deduction made by them from the monthly salary of the employees of petitioner towards the provident fund of which constitutes offence under Section 406 and 409 of I.P.C.
4. On petitioner's side challenged order of taking cognizance by learned Magistrate, IV ACMM, Bengaluru on 02/07/2014. Being aggrieved by this order dated 02/07/2014, the petitioner has filed this revision petition by urging the grounds that the complaint lodged by respondent No.2 before the respondent No.1 is illegal and without jurisdiction. There are no specific allegations against the 28 Crl.R.P.No. 358/2015 petitioner in the complaint. Therefore, petitioner cannot be held liable for any act of commission or omissions of the company. Petitioner has already remitted the entire contribution for the month of July, 2013 and August, 2013. The complaint by respondent No.2 on 19/09/2013 to respondent No.1 without giving prior notice and information to the petitioner the proceedings initiated is liable to be quashed. The aforesaid impugned order dated 02/07/2014 has come to the knowledge of petitioner on 16/03/2015 when the authorized representative of the petitioner has received the summons. Hence, the petition is in time. Therefore, seeking for setting aside the order dated 02/07/2014 passed by the trial Court in C.C.No.17282/2014. Hence, this revision petition.
5. Inspite of service of notice of respondent No.1 and 2, respondent No.1 made his appearance through Public Prosecutor and respondent No.2 through his counsel. 29 Crl.R.P.No. 358/2015
6. The learned Public Prosecutor for respondent No.1 has argued that criminal proceedings have been initiated for offence punishable under Section 406 and 409 of I.P.C, not under provisions of Employees' Provident Funds and Miscellaneous Provisions Act, 1952. Therefore, the complaint lodged by the respondent No.2 before the respondent No.1 is legal. Even there are allegations made in the complaint about the non-payment of deduction made by the employer. Remittance of amount subsequently i.e., beyond the schedule time amounts to misappropriation of which also constitutes the offence under Sections 406 of I.P.C. Hence, the order of taking cognizance by the trial Court is legal and correct.
7. The learned counsel for the respondent No.2 has argued that trial Court has rightly passed the order taking cognizance of the offence under Section 406 of I.P.C. Mere depositing of amount subsequently by the employer does not absolve him from the offence committed by him. 30 Crl.R.P.No. 358/2015
8. Heard the arguments on both sides. Perused. Posted for judgment.
9. The points that arise for my consideration are as :
3) Whether the impugned order dated 02/07/2014 in C.C.No.17282/2014 passed by the learned IV ACMM, Bangalore is illegal and without jurisdiction?
4) What order?
10. My findings on the above points are as under:-
Point No.1 : In the Negative. Point No.2 : As per final orders for the following :
REASONS
11. Point No.1 :- This is the revision petition filed by the petitioner challenging the order of taking cognizance of the offence under Section 406 of I.P.C, on 02/07/2014 passed by the trial Court in C.C.No.17282/2014. 31 Crl.R.P.No. 358/2015
12. The learned counsel for the petitioner has vehemently argued that the trial Court has not touched the legal points while giving findings, complaint lodged by respondent No.2 before the respondent No.1 is illegal and without jurisdiction, he ought to have filed complaint before the jurisdictional Magistrate as in case of complaint under Section 138 of NI Act, the same procedure also follows in this special statute of Employees' Provident Fund and Miscellaneous Provisions Act, 1952. It is also further argued by him that there are no specific allegations made in the complaint against accused No.1 and 2 for any act of commission or omissions, on this ground also the criminal proceedings is liable to be quashed. Thirdly the complaint lodged by the respondent No.2 without previous sanction is liable to be quashed. The prior sanction is mandatory to initiate the criminal proceedings against accused as contemplated under Section 14AC. Lastly he has also sought for setting aside the trial Court order on the ground that 32 Crl.R.P.No. 358/2015 petitioner has already remitted the entire contribution for the month of July, 2013 and August, 2013.
13. In the revision petition, the accused/revisional petitioner has urged the first, second and 4th ground to set aside the trial Court order. The third ground mentioned in supra has been raised by the learned counsel for accused at the time of arguments.
14. He submitted the aforesaid line of arguments based on several citations. On the point of previous sanction he has placed his reliance on the following rulings :
1. (2000) 8 S.C.C 500 (Abdul Wahab Ansari V/s State of Bihar and Another).
2. (2001) 9 S.C.C 303 (Shivendra Kumar V/s State of Maharastra).
15. On the point of absence of specific allegations in the complaint, he has placed his reliance on following rulings :
33 Crl.R.P.No. 358/2015
1. 1981 LAB. I.C. 538 Karnataka High Court (M/s.Anantharamaiah Wollen Factory, Bengaluru and tohers V/s The State of Karnataka).
2. (2009) 10 S.C.C 48 (K.K.Ahuja V/s V.K.Vora and Another).
3. 2012(4) J.L.J.R 360 in Crl.R.P.No.244/2003 decided on 07/08/2012 between Nirmal Kumar Bagaria @ Nirmal Bagaria V/s The State of Jharkhand & Another.
4. (2002) 7 S.C.C 655 ( Katta Sujatha (SMT) V/s Fertilizers & Chemicals Travancore Ltd., and Another.
16. The learned Public Prosecutor for respondent No.1 has argued that criminal proceedings have been initiated for offence punishable under Section 406 and 409 of I.P.C, not under provisions of Employees' Provident Funds and Miscellaneous Provisions Act, 1952. Therefore, the complaint lodged by the respondent No.2 before the respondent No.1 is legal. Even there are allegations made in the complaint about the non-payment of deduction made by 34 Crl.R.P.No. 358/2015 the employer. Depositing of amount subsequently i.e., beyond the schedule time amounts to misappropriation of which also constitutes the offence under Section 406 of I.P.C. Hence, the order of taking cognizance by the trial Court for the said offence is legal and correct. He has placed his reliance on the ruling reported in 2004 Cri.L.J 171 Calcutta High Court (Sushil Kumar Bagla V/s State of W.B) on the point that previous sanction for prosecution of offence under I.P.C is not required though sanction is required for prosecution under Section 14B of Employees' Provident Fund and Miscellaneous Provisions Act and on the point of F.I.R cannot be quashed on the ground that Director was wrongly shown as an offender in F.I.R-Company acts through its directors and being incapable of having mens rea for offence under Section 406 and 409 of I.P.C.
He has also cited another ruling 2004 Cri.L.J 1304 (M/s.Rita Agencies V/s Enforcement Officer, Employees' Provident Fund Organisation and another) on the point that Explanation 1 and Explanation 2 35 Crl.R.P.No. 358/2015 to Section 405 was self-explanatory for an element of entrustment, therefore, plea that element of entrustment is absent is not tenable.
17. The learned counsel for respondent No.2 has argued that Section 14AC of Employees' Provident Funds and Miscellaneous Provident Fund Act (hereinafter referred to as EPF and MP Act) has clearly laid down that when the complaint is lodged by Enforcement Officer the previous sanction is not required, the complaint has been lodged by the Inspector appointed under Section 13, hence there is no force in the arguments addressed by the learned counsel for the revisional petitioner.
18. As per the revision petition, merely there are 3 grounds urged challenging the order of trial Court. At the time of arguments, the another ground is raised by the learned counsel for the revision petitioner. As per the complaint lodged by respondent No.2, the Enforcement Officer appointed under Section 13 of EPF and MP Act made allegation that revisional petitioner, the Director of Company 36 Crl.R.P.No. 358/2015 employed number of employees, the deduction was made from the salary of these employees towards deposit of provident fund as laid down under Section 6 of EPF and MP Act and as contemplated under Section 38 of Employees' Provident Funds Scheme, 1952. There is no dispute that the aforesaid Acts apply to the revisional petitioner and his Company. It is also not disputed that employees were employed and prescribed amount was deducted from their salary. As per the allegations, the amount deducted towards public provident fund was not deposited by the revisional petitioner to the concerned bank by way of Bank drafts or cheques. As per the allegations, the deduction made for the month of July, 2013 and August, 2013 in all Rs.25,22,085/- was misappropriated by the revisional petitioner.
The first ground urged by the revisional petitioner is the complaint lodged by respondent No.2, Enforcement Officer before respondent No.1 Peenya police is illegal and without jurisdiction as he ought to have lodged complaint before the jurisdictional Magistrate. As per the arguments 37 Crl.R.P.No. 358/2015 by the learned counsel for the revisional petitioner same has been contemplated under Section 14AC of the Act.
19. Section 14AC of the Act provides :
"Cognizance and trial of offences-
(1) No Court shall take cognizance of any offence punishable under this Act, the Scheme or [the pension) Scheme or the insurance Scheme], except on a report in writing of the facts constituting such offence made with the previous sanction of the Central Provident Fund Commissioner or such other officer as may be authorized by the Central Government, by notification in the Official Gazette in this behalf, by an Inspector appointed under Section 13."
The aforesaid provision mainly consists of 3 parts, first is no Court shall take cognizance of any offence 38 Crl.R.P.No. 358/2015 punishable under this Act, the scheme (that means as per Section 6 of the Act), secondly except on a report in writing by the facts constituting such offence, by an Inspector appointed under Section 13 and thirdly that previous sanction of Central Provident Fund Commissioner or such other officer as may be authorized by the Central Government, by notification in the official gazette in this behalf.
20. The first part of Section 14AC has clearly laid down that this is related to the offence punishable under EPF and MP Act, 1952. It is rightly argued by the learned Public Prosecutor that the present complaint lodged by respondent No.2 is for the offence under Section 406 and 409 of I.P.C, not for the offence under the present Act. The Explanation (1) to Section 405 of I.P.C which is inserted by the Act 40 of 1973 (w.e.f. 01/11/1973) provides a person, being an employer (of an establishment whether exempted under Section 17 of the Employees' Provident Funds and Miscellaneous Provisions Act, 39 Crl.R.P.No. 358/2015 1952 or not) who deducts the employees' contribution from the wages payable to the employee for credit to a Provident Fund or Family Pension Fund established by any law for the time being in force, shall be deemed to have been entrusted with the amount of the contribution so deducted by him and if he makes default in payment of such contribution to the said Fund in violation of the said law shall be deemed to have dishonestly used the amount of the said contribution in violation of a direction of law as aforesaid."
In the present case the provident fund is involved. In view of aforesaid Explanation-1 when there is violation of EPF and MP Act i.e., if the employer makes default in payment of contribution, it shall be deemed to have been entrusted with the amount of the contribution so deducted by him. In view of Section 405, when a person being in any manner entrusted with the property, or with any dominion over property, or dishonestly 40 Crl.R.P.No. 358/2015 misappropriates or converts to his own use that property, or dishonestly uses or disposes of that property is said to commit criminal breach of trust.
As per the allegations in the present case, he made default in contributing the amount deducted by him from the salary of the employees. Therefore, in view of the aforesaid Explanation-1, it amounts to offence under Section 406 of I.P.C (Section 405 is the definition clause). As per complaint, another offence is under Section 409 of I.P.C of which provides criminal breach of trust by public servant or by banker, merchant or agent. The revisional petitioner is a Director of the company to which the aforesaid Act applies. The chargesheet is for 406 of I.P.C only. In view of Section 38 of Employees' Provident Act, 1952, the employer is shouldered with responsibility of deducting the prescribed amount from the salary of the employees and alongwith his contribution, he shall within 15 days of the close of every month pay, to the fund by separate bank drops or cheques. The employer shall maintain on his record duplicate copies of 41 Crl.R.P.No. 358/2015 aforesaid monthly abstract and consolidated annual contribution statement for production at the time of inspection by the Inspector. As per Section 50 of Employees' Provident Fund Scheme, the aggregate amount received as employers' and employees' contribution to the provident fund shall be credited to an account to be called the provident fund account, as per Section 52 of the aforesaid scheme all moneys belonging to the fund shall be deposited in the Reserve Bank or Bank of India or in such other schedule Bank as may be approved by the Central Government from time to time. It is not the case of the petitioner that he has remitted the amount though if remitted as per his petition, as contemplated under Employees' Provident Fund Scheme, 1952. As per the Xerox copy of the receipt produced on petitioner's side they are dated 02/08/2013. In the present case the criminal case for the offence under Section 406 and 409 have been initiated not under the present Act, but under provisions of I.P.C, the chargesheet for the offence under Section 406 of 42 Crl.R.P.No. 358/2015 I.P.C has been filed. Under the circumstances I do not find any force in the contention by revisional petitioner and no substance in the arguments by learned counsel for the revisional petitioners that complaint lodged by respondent No.2 before the respondent No.1 is illegal and without jurisdiction and no Court shall take cognizance of any offence punishable under this Act and issue of summons. Therefore, the ruling cited by the learned counsel for the revisional petitioners in (2009) 10 S.C.C 48 has no application to the present case.
21. The another ground urged by the revisional petitioner is there are no specific allegations against the petitioner in the complaint. As per the complaint, revisional petitioner is the responsible person and he is required to pay employees provident fund contribution of the establishment under such Act in the respective employees' share which was deducted from their wages. The revisional petitioner is the Director of establishment covered under the aforesaid Act. In view of 2004 Cri.L.J 1304 cited by the learned Public 43 Crl.R.P.No. 358/2015 Prosecutor when it is the complaint alleging breach of trust mentioning the default in payment of employees' provident fund by employers as laid down under Explanation-1 to Section 405 itself is self-explanatory to the element of entrustment, plea that element of entrustment was absent in complaint is not tenable. In the present case also as mentioned in supra, the complaint consists of element of entrustment of the deduction made from the wages of the employees' and there is default in payment of the same by the employer.
22. In view of 2004 Cri.L.J 171, the complaint was lodged against the Director of the Company for the offence under Section 406 and 409 of I.P.C. F.I.R cannot be quashed on ground that Director was wrongly shown as an offender in F.I.R, the company acts through its directors and being incapable of having mens rea for offences under Section 406 and 409 of I.P.C., F.I.R lodged against director is proper. In the present case, the revisional petitioner is the Director of Company. There is specifically mentioned in the 44 Crl.R.P.No. 358/2015 complaint that he is the responsible person of the Company. Therefore, in view of aforesaid two rulings cited by learned Public Prosecutor, I do not find any substance in the second contention taken by the revisional petitioner. The facts and circumstances of (2009) 10 S.C.C 48 is altogether different from the present case. In that case there is no specific averment in the complaint as to role of each is required. But in the case of hand mentioned that revisional petitioner is the Director of establishment and for the conduct of business of said establishment and he is required to pay the employees' provident fund contribution of the establishment under the said Act and he is required to deposit said deduction and there is also mentioned he is the person in charge of the establishment. Therefore, these rulings cited on revisional petitioner's side have no application to them.
23. The third ground urged by the revisional petitioner has already remitted the contribution for the month of June, 2013 and July, 2013. As already mentioned in supra, it is not their case that they have remitted the amount as per the 45 Crl.R.P.No. 358/2015 provisions laid down under the Employees' Provident Fund Scheme, 1952. But that is not so here. Hence, on this ground also the order passed by the trial Court cannot be set aside.
24. Lastly the additional ground raised by the learned counsel for the revisional petitioner is the complaint was lodged without previous sanction by the Central Provident Fund commissioner or such other officer as may be authorized by Central Government by notification in official gazette in this behalf, hence the entire proceedings are to be quashed. It is pertinent to note if the proceedings were to be initiated under the present Act, the matter would have been different. But the criminal law has been set into motion against the revisional petitioner under the provisions of I.P.C. In view of 2004 Cri.L.J 171 cited by the learned Public Prosecutor as mentioned in supra, sanction required for the prosecution not obtained by the complainant as contemplated under Section 14B of EPF and MP Act is not inserted for the prosecution 46 Crl.R.P.No. 358/2015 of I.P.C and theory of double jeopardy or punishment or maxim specialibus non derogant not applicable for prosecution under Section 406 and 409 of I.P.C. In view of the aforesaid ruling, the sanction is not required for the prosecution of offence under I.P.C. As per principles laid down therein to initiate the proceedings under I.P.C the previous sanction is not required.
25. The learned counsel for the revisional petitioner has placed his reliance on (2000) 8 S.C.C 500 has no application to the present case. That is entirely different from the case on hand. In view of principle laid down therein the previous sanction under Section 197 of Cr.P.C is necessary for the prosecution of a public servant who is alleged to have been committed the offence in discharge of his duty, but the revisional petitioner is not a public servant. Therefore, the said ruling does not help the petitioner in any way.
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26. Even the another ruling (2001) 9 S.C.C 303 relied on revisional petitioner's side also does not apply to the present case due to the reasons assigned in supra. Hence, the order passed by the lower Court is legal and correct. Ofcourse the trial Court has not discussed on these points, however, the order of rejecting the discharge application of revisional petitioner for the aforesaid offence is in accordance with law.
In the petition, the petitioner has taken the contention that the order dated 02/07/2014 by the lower Court has come to his knowledge only on 16/03/2015, hence the petition filed on 14/05/2015 is in time. This is not challenged by otherside. It is taken as in time.
The order of taking cognizance and issue of summons challenged by the petitioner is revisable in view of 2012 AIR SCW 1821 (Om Kr.Dhankar V/s State of Harayana and Anr.), and it is revisable as the objection by petitioner if upheld would have the effect of terminating the 48 Crl.R.P.No. 358/2015 entire prosecution proceedings against him, hence Magistrate's order cannot be treated as interlocutory and would not be hit by Section 397(2) of Cr.P.C. On this point I have relied upon (2000) 6 S.C.C. 195 (K.K.Patil and Anr. V/s State of Gujarat and Anr. I hold point No.1 in the Negative.
27. Point No.2 :- In view of my foregoing reasons, I proceed to pass the following order :
ORDER The Criminal Revision Petition filed by the petitioners under Section of 397 of Cr.P.C. is hereby dismissed.
(Dictated to the Judgment Writer, transcript corrected, signed and then pronounced by me in open court on this the 20th day of August, 2015.) (SHUBHA GOWDAR) L ADDL.CITY CIVIL & SESSIONS JUDGE, BANGALORE.
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