Calcutta High Court (Appellete Side)
Rajiv Jajodia & Anr vs The State Of West Bengal & ... on 17 November, 2017
Author: Debi Prosad Dey
Bench: Debi Prosad Dey
IN THE HIGH COURT AT CALCUTTA Criminal Revisional Jurisdiction Appellate Side Present:
The Hon'ble Justice Debi Prosad Dey CRR No.806 of 2014 Rajiv Jajodia & Anr...................................Petitioner Versus The State of West Bengal & Anr..........Opposite Party For the : Mr. Debsish Roy Petitioner : Mr. Somopriyo Chowdhuri : Mr. Saptarshi Mukherjee For the opposite party : Mr. S. C. Prasad Heard on : 10.07.2017, 24.08.2017, 14.09.2017 Judgment on : 17.11.2017 Debi Prosad Dey, J. :-
This application under Section 482 of the Code of Criminal Procedure has been filed for quashing of proceedings in GR case no. 295 of 2013 corresponding to Coke Oven police station case no. 22 of 2013 dated 23rd February, 2013 under Section 406/409 of the Indian Penal Code pending in the Court of learned Additional Chief Judicial Magistrate, Durgapur, Burdwan on the ground that the petitioners have been falsely implicated in the instant case and that M/s. Jai Balaji Industries Limited (herein after referred to as the said company only) should have been implicated as the principal accused for not depositing the provident fund of the employees of such company after deducting the same from the salary of the employees. The specific case of the prosecution is that the company has deducted an amount of Rs.1,48,96234/- from the share of employees statutory deduction in respect of the provident fund but the said amount although was deducted by the said company, it has failed to account for the same and deposit the same with the employees provident fund organization within due time and as such the company and persons responsible for such conduct of it's business, are responsible under the provisions of Section 406/409 of the Indian Penal Code. The criminal law was set in motion and after completion of investigation charge sheet has been submitted against one Rajiv Jajodia said to be the director of M/s. Jai Balaji Industries Limited and one Sri Niranjan Gouri Saria said to be the senior general manager of M/s. Jai Balaji Industries Limited under Section 406/409 of the Indian Penal Code. The specific averment made in the report in final form is that the aforesaid persons are the owners of M/s. Jai Balaji Industries Limited and they have violated the mandatory provision of depositing the amount of employees provident fund share which was deducted from the share of the employees.
Learned senior Advocate Mr. Debashis Roy appearing on behalf of the petitioners contended that the charge sheet under reference is not maintainable for the sole reason that the present petitioners are neither the owners nor come within the purview of definition employer in respect of M/s. Jai Balaji Industries Limited, the company. Mr. Roy further contended that the entire prosecution is bad in law since the defacto complainant and the investigating agency have failed to implicate M/s. Jai Balaji Industries Limited who, is the actual employer in terms of Section 405 of the Indian Penal Code. In such circumstances the charge sheet being no. 94 of 2013 dated 30th June, 2013 ought to be quashed. Mr. Roy has further submitted that the company has in the meantime if not, immediate after filing of the first information report has deposited the entire share of the employees, which was deducted by the company vide annexure P2.
Learned Advocate Mr. S. C. Prasad appearing on behalf of opposite party no. 2 vehemently contended that mere payment of the amount towards the share of employees provident fund, which was deducted from their salary, will not absolve the present petitioner from the liability of prosecution under Section 406/409 of the Indian Penal Code. In support of his contention Mr. Prasad has relied on a decision of one of the learned single Judges of this Court in CRR no. 885 of 2015 (Tapan Biswas Vs. The State of West Bengal and Anr.). learned single Judge has been pleased to hold that if after initiation of a proceeding for non-deposit of provident fund amount before the appropriate authority, if the employer deposit the same in that event also the employer would not be absolved of the liability of such criminal offence.
On the contrary, learned senior Advocate appearing on behalf of the petitioners contended that the core issue in the case under reference is that whether the prosecution can be proceeded with against the present petitioners without impleading the company that is M/s. Jai Balaji Industries Limited and which is the employer in true sense of the term. Mr. Roy has referred the following decisions in support of his contentions. I) (2008) 3 CALLT 484 (Satish Kumar Jhunjhunwala Vs. The State of West Bengal).
II) (2012) 5 SCC 661 (Aneeta Hada Vs. Godfather Travels and Tours Private Limited).
III) (1998) 6 SCC 288 (Employees' State Insurance Corporation Vs. S. K. Aggarwal & Ors.) IV) (2015) 3 CHN 755 (Ashoke Sadhya and Anr. Vs. State of West Bengal) V) (2012) 3 CHN 233 (Prabhash Kumar Basu Vs. State of West Bengal) VI) (2009) 4 CHN 364 (Sunil Kr. Panti & Ors Vs. State of West Bengal & Ors.).
Admittedly, the company has not been impleaded as an accused in the case under reference. The decision of the Hon'ble Supreme Court in Employees State Insurance Corporation Vs. S. K. Agarwal (Supra) has made it clear once for all that the word "employer" does not include the director for the purpose of prosecution.
Their Lordships of the Supreme Court took into consideration the definition of the word "employer" as it occurs in Section 2(17) of the ESI Act, 1948. According to the definition, principal employer in a factory means "owner and/or occupier" of the factory and in rules the managing agent of such owner or occupier or legal representative of declared owner or occupier and where the person as has been named as manager of the factory so named. Their Lordships held that for the purpose of prosecution of employer under Section 405 of the Indian Penal Code, the definition of the word "employer" as it occurs in the ESI Act, 1948 cannot be borrowed simply because of the fact that such definition has got no manner of application to either of the explanation to Section 405 of the Indian Penal Code. Therefore it was held that in absence of any such provision in the Indian Penal Code incorporating the definition of principal employer in explanation 2 to Section 405 of Indian Penal Code, the definition in ESI Act cannot be held to apply to term "Employer".
It is apparent from the aforesaid decisions of our High Court as well as of the Hon'ble Supreme Court that the Courts have consistently held that the director or senior manager or any employee of any company cannot be held personally liable for non-deposit of the share of provident fund amount of the employees but it is the company which should be made liable for such offence. It has also been observed in the aforesaid decisions that without impleading the company, such prosecution under Section 406/409 of the Indian Penal Code cannot be proceeded with. Hon'ble Supreme Court in the decision of Aneeta Hada (Supra) reported in (2012) 5 SCC 661 has decided that company is a juristic person and that prosecution has to be launched in the name of the company. It has further been decided that no prosecution can be proceeded with without impleading the company. Paragraph 58 and 59 of the said decision may be reproduced below for appreciation of the principle of law enunciated by the Hon'ble Supreme Court.
"Para 58: Applying the doctrine of strict construction, we are of the considered opinion that commission of offence by the company is an express condition precedent to attract the vicarious liability of others. Thus, the words "as well as the company" appearing in the section make it absolutely unmistakably clear that when the company can be prosecuted, then only the persons mentioned in the other categories could be vicariously liable for the offence subject to the averments in the petition and proof thereof. One cannot be oblivious of the fact that the company is a juristic person and it has its own respectability. If a finding is recorded against it, it would create a concavity in its reputation. There can be situations when the corporate reputation is affected when a Director is indicted.
Para 59: In view of our aforesaid analysis, we arrive at the irresistible conclusion that for maintaining the prosecution under Section 141 of the Act, arraigning of a company as an accused is imperative. The other categories of offenders can only be brought in the drag net on the touchstone of vicarious liability as the same has been stipulated in the provision itself. We say so on the basis of the ratio laid down in C. V. Parekh which is a three-Judge Bench decision. Thus, the view expressed in Sheoratan Agarwal does not correctly lay down the law and, accordingly, is hereby overruled. The decision in Anil Hada is overruled with the qualifier as stated in para 51. The decision in Modi Distillery has to be treated to be restricted to its own facts as has been explained by us hereinabove."
The decision in the State of Haryana Vs. Bhajan Lal reported in 1992 (Supp.) 1 SCC 335 and RB Kapoor Vs. State of Punjab reported in AIR 1960 SC 866 are the guidelines in the matter of quashing of criminal prosecution. The only question that has been cropped up in the discussions made hereinabove, is that whether the prosecution under Section 406/409 of the Indian Penal Code can be proceeded with against the present petitioners in absence of M/s. Jai Balaji Industries Limited, the company. It is needless to say that the answer has been provided by the decisions referred to herein above and I have no hesitation to hold that in absence of the company, the prosecution cannot be proceeded with against the present petitioners in their individual capacity.
In the context of the given facts and circumstances of the case under reference and having regard to the principle of law enunciated by our High Court as well as by the Hon'ble Supreme Court I am of considered view that the instant prosecution cannot be permitted to continue for the reasons assigned in the forgoing paragraphs. Accordingly, it is ordered that the charge sheet no. 94 of 2013 dated 30th June, 2013 arising out of FIR no. 22 of 2013 dated 23rd February, 2013 is quashed.
Let a copy of this order be forwarded to the Court of learned Additional Chief Judicial Magistrate, Durgapur for his information and necessary action.
The criminal revision is allowed and accordingly disposed of. Urgent photostat certified copy of this order, if applied for, be given to the parties as expeditiously as possible (Debi Prosad Dey, J.)