Bangalore District Court
Anand Kotreshwar Sithale vs Enforcement Officer Epfo on 22 November, 2025
1 Crl.Apl.No.1807/2024 JUDGMENT
KABC010282412024
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 22nd day of November, 2025
Crl.A.No.1807/2024
Appellant: Sri Anand Kotreshwar Sithale
s/o Kotreshwar Sithale
Aged about 45 years
Director
No.007, SLV Rajdriva Apt
19th Main, 5th Block
38th Cross, Prakruthi Layout
HBR Layout
Bangalore North
Kalyananaar
Bangalore-560 043
(Smt.Deepa.J, Advocate for appellant)
-V/s-
Respondent: The Enforcement Officer
Employees Provident Fund Organisation,
Regional Office,
Koramangala
Bhavishyanidhi Bhavan,
Annapurneshwari Complex,
6th Main, Singasandra,
2 Crl.Apl.No.1807/2024 JUDGMENT
Bengaluru- 560068.
represented by:
Sri Kumar Prabash Chandra
Enforcement Officer
(Sri Harsha.V., Advocate for
respondent)
JUDGMENT
This appeal arises from the judgment of conviction and order of sentence dated 15.10.2024 passed by the Presiding Officer, Special Court for Economic Offences, Bengaluru, in C.C. No.118/2024, whereby the present appellant, who was arrayed as Accused No.3, was held guilty of the offence punishable under Section 14(1B) read with Section 14(A) of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952.
2. Being aggrieved by the impugned judgment and conviction, the appellant/accused No.3 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.3 in CC No.118/2024 before the trial court has preferred the instant appeal against the complainant. The appellant and respondent are hereby 3 Crl.Apl.No.1807/2024 JUDGMENT assigned with their original ranks before the trial court i.e., the appellant as accused No.3 and respondent as complainant in CC No.118/2024 in the instant discussion for the purpose of brevity and convenience to avoid the confusion and perplexity.
4. The factual matrix, in brief, as borne out from the complaint, oral and documentary evidence adduced before the Trial Court, and the impugned judgment, is thus: M/s. Design Apparels Pvt. Ltd., arraigned as Accused No.1, is an establishment duly covered under the EPF & MP Act, 1952, the Employees' Provident Fund Scheme, 1952, the Employees' Pension Scheme, 1995, and the Employees' Deposit Linked Insurance Scheme, 1976. The said establishment was allotted Code No. PY/BOM/34197.
5. It is the specific case of the complainant that Accused Nos.2 to 4 were Directors and Accused No.5 was the Additional Director of Accused No.1 establishment, and that they were persons in charge of and responsible for the day-to-day affairs and conduct of Accused No.1 establishment, within the meaning and purport of the EPF 4 Crl.Apl.No.1807/2024 JUDGMENT & MP Act, and as reflected in Form 5A submitted to the Provident Fund Authorities.
6. It is the further allegation of the complainant that, as per the statutory mandate, the employer is required to remit the employer's share of contribution towards the Employees' Deposit Linked Insurance Fund, along with the applicable Administrative Charges, within fifteen (15) days of the close of each month, as contemplated by Paragraph 8 of the Employees' Deposit Linked Insurance Scheme, 1976. In the instant case, for the contribution months June 2014, July 2014 and August 2014, a default was committed in remitting the employer's contribution and the administrative charges, in the following manner:
Month & Year Insurance Fund Admin. Due Date Contribution Charges June 2014 Rs.5,921/- Rs.119/- 15.06.2014 July 2014 Rs.5,899/- Rs.118/- 15.07.2014 August 2014 Rs.6,073/- Rs.122/- 15.08.2014 Total Default: Rs.17,893/- Rs.359/-5 Crl.Apl.No.1807/2024 JUDGMENT
7. The total quantified default as per the complaint stands at Rs.17,893/- towards Insurance Fund contribution and Rs.359/- towards Administrative Charges, aggregating to Rs.18,252/- for the said period between June 2014 and August 2014.
8. It is the complainant's case that, despite repeated opportunities issued by the competent authority, and despite proceedings initiated under Section 7A of the EPF & MP Act culminating in an Assessment Order dated 31.10.2017 (Ex.P-4), the accused persons failed to comply with their statutory obligation of remitting the aforesaid contribution together with administrative charges. It is further the complainant's case that sanction for prosecution under Section 14(1B) read with Section 14A of the EPF & MP Act was accorded by the competent authority, viz., the Regional PF Commissioner-I, as evidenced by Ex.P-2, and thereafter the complaint Ex.P-1 was instituted before the learned Trial Court.
9. The Trial Court, having taken cognizance of the offence, secured the appearance of the accused, recorded 6 Crl.Apl.No.1807/2024 JUDGMENT plea, and upon denial, proceeded to trial. The complainant examined its Enforcement Officer as PW-1 and produced Ex.P-1 to Ex.P-9. The accused were examined under Section 313 Cr.P.C. Accused No.3 examined himself as DW-1 and produced Ex.D-1 and Ex.D-2. Accused Nos.2, 4 and 5 did not adduce independent defence evidence. Upon appreciation of the material on record, the learned Trial Court answered Point No.1 in the affirmative, held the accused persons guilty of the offence punishable under Section 14(1B) read with Section 14A of the EPF & MP Act, and imposed sentence. The direction under Section 14C(1) of the Act, to pay Rs.18,252/- within three months to the Provident Fund Authority, was also issued. The appellant, being Accused No.3, challenges the conviction and sentence only insofar as it concerns him.
10. Being aggrieved by the findings of guilt, the conviction and the sentence, Accused No.3 has preferred the instant appeal against the respondent who was the complainant before the trial court on the following: 7 Crl.Apl.No.1807/2024 JUDGMENT
GROUNDS OF APPLEAL
a) The judgment and order of sentence passed by the Special Court is opposed to law and evidence on record, hence, the order of conviction and sentence is liable to be set aside by this Court.
b) The trial court erred in taking cognizance of the offenses under Section 14(1A) & 14(A) of the Employees Provident Funds and Miscellaneous Provisions Act, 1952, without proper evidence or material to sustain the allegations made in the complaint and the very taking of cognizance and consequential proceedings against the appellant is opposed to law and the evidence on record, consequently the order of conviction and sentence is liable to be set aside by this Court.
c) The appellant submits that there has been failure to appreciate by the trial court that, the appellant was merely a director and was not responsible for the day-to-day affairs of the accused No.1 company during his tenure. Furthermore, the appellant had resigned from the company 8 Crl.Apl.No.1807/2024 JUDGMENT on 22.03.2012 and is not connected to the company's operations or financial matters in any manner. Such being the case The Special Court Holding in it's Judgment that the Appellant/Accused No.3 has not appeared during the enquiry initiated by the complainant authority U/s 7A of the EPF and MP act despite notice being not served and the appellant is not residing in the address mentioned in the cause title of the complaint filed by the respondent under section 200 of Cr.P.C (Ex.P1). It is submitted that while drawing the inference the trial Court has erroneously considered that the appellant has not challenged the enquiry order dated 31.10.2017 U/s 7A, when it is very much relevant that the Accused NO.3/Appellant was no longer a director of the company and as such the accused was unaware of any such proceedings. Hence, the impugned order deserves to be set aside by this Court.
d) The Trial Court has erred and passed a cyclostyle order holding the appellant responsible for the actions of the company even after the appellant had resigned from 9 Crl.Apl.No.1807/2024 JUDGMENT the company and was no longer concerned with the happenings of the company whatsoever. The Appellant/ Accused No.3 had resigned from the directorship of Accused No.1 Company on 22.03.2012 much prior to the alleged period of due date of remittance of Employees Deposit Linked Insurance Fund amount for the alleged months as per Ex.pl. This resignation was duly communicated to the company, accepted by the company, and updated in the Registrar of Companies (ROC) records. Furthermore, the appellant had also informed the respondent authority of this resignation much prior to filing of the complaint. Despite these facts being on record, the Trial Court failed to properly appreciate the evidence has erroneously convicted the appellant.
Consequently, the allegations against the appellant unsustainable in law, and the conviction order is liable to be set aside.
e) The trial Court has erred in considering and marking Exhibit P-2 to P-8 has been addressed to the accused No.3 when the same was addressed to the accused no.1 10 Crl.Apl.No.1807/2024 JUDGMENT company. The Appellant was not a director of the company as he resigned from the company on 22.03.2012, and no Notices were served to the appellant, moreover the respondent authority has failed to produce any postal receipt as a proof of such notice being addressed to the Appellant/Accused No.3. Without there being any material of service to the appellant the trial Court has permitted the exhibits of track consignment to be marked despite objections and has erroneously considered Exhibit P-2 to 8, as such the impugned judgment is bad at law and needs to be interfered by this Court. Thus even as per Section 27 of the General clauses Act, the address of the appellant is different as per Ex.P1 and hence the court cannot draw the presumption of deemed service of notices to appellant.
f) The trial court failed to appreciate the various contentions raised by the appellant and lack of sufficient material produced by the Respondent authority to sustain the allegations made in the complaint and the charges levelled against the appellant. 11 Crl.Apl.No.1807/2024 JUDGMENT Hence, the same deserves to be set aside by this Court.
g) The order of conviction is bad at law as far as the appellant is concerned. Further, the trial court has failed to appreciate the evidence of the prosecution, more particularly the cross examination of PW1, which clearly reveals that the complainant/Respondent authority has failed to produce any material to sustain the charges levelled against the appellant/ Accused No.3. In the absence of material to sustain the charges levelled against the accused/appellant, the order of conviction is bad at law and facts. Hence, the same deserves to be set aside by this Court.
h) The order of conviction is bad at law for non-production of the vital material by the prosecution to show production of books of accounts, and non-examination of account statements of accused No.1 establishment, list of employees with respect of the contribution of the employers and its details. The non-production of statement of accounts of the employee, passbook, and non-examination of any employees, non 12 Crl.Apl.No.1807/2024 JUDGMENT examination of the person who has dealt with these files relating to the Employees and employers' contribution to EPF fund by the respondent authority. Due to the non production and non-examination of these vital documents and witnesses, the trial ought to have drawn adverse inference against the prosecution. Hence, the order of conviction is bad at law and evidence.
i) There has been failure to appreciate that, the prosecution has failed to produce the best evidence, and they have also failed to prove the alleged charges against the appellant beyond reasonable doubt by producing cogent and unimpeachable evidence to prove the alleged charges. In the absence of any cogent and unimpeachable evidence, either oral or documentary evidence, the order of conviction against the appellant is bad at law and is liable to be set aside.
j) The trial court has wrongly drawn inference from section 305 (6) of Cr.P.C and concluded that the Appellant/ Accused No.3 is a person responsible for the Accused No. 1 along with other Directors. 13 Crl.Apl.No.1807/2024 JUDGMENT It is a settled position of law that, No one is compelled to represent company and to defend in the court of law, and such being the case the reason mentioned by the trial court in the judgment, which runs contrary to the judgments of the Hon'ble High Court of Karnataka and Hon'ble Apex Court. Hence, the order of conviction passed in by the trial court is totally opposed to the law and is liable to be set aside.
k) The trial court as failed to notice, in the absence of any material to prove the alleged charges and has proceeded to pass order of conviction against the appellant holding erroneously that, the complainant has discharged the burden of proof beyond all reasonable doubts, and proceeded to hold accused No.2 as guilty U/s.14(1A) R/ W Section 14A of EPFMP Act in so far as 33.3% of the defaulted contribution amount when the very basis, Muster Roll of Employees of Accused No.1 and EPF Account statements were not furnished to substantiate the allegations made in the complaint. Even otherwise the Respondent 14 Crl.Apl.No.1807/2024 JUDGMENT authority has failed to establish any connection between the accused No.1 company and the appellant as the appellant is no longer the director, and even during the relevant point of time the appellant was not the one responsible for the day-to-day activities of the company. The trial Court has failed to appreciate the specific contents in the exhibits, where it is categorically specified that the details of the directors in and the particulars of the person in charge and responsible for conduct of business of the establishment. In that, regard the impugned judgment is bad at law and needs to be interfered by this Court.
l) The Appellant has engaged his Advocate in the trial court only for himself and the appellant is not a representative of the company. The Accused No. 1 Company has not engaged any advocate. However, the Trial Court instead of placing the Accused No.1 establishment a juristic person and an independent entity as an ex-Parte, on erroneous consideration has held the Accused No.1 establishment is being 15 Crl.Apl.No.1807/2024 JUDGMENT managed by accused No.2 to 5 and passed the impugned order making the Appellant responsible for the conduct of the Accused No. 1 Company which is arbitrary and illegal. Hence the same needs to be set aside by this Hon'ble Court.
m) The Trial Court has not properly appreciated the relevant judgments relied upon by the appellant, the Trial court has erroneously made the appellant vicariously liable for the activities of the company, even though the appellant is no longer the Director or was responsible for its day to day activities such as paying the employee contribution amount, hence the same is bad at law and needs to be interfered by this Court.
n) The Trial Court has failed to notice the very proceedings against the accused persons and more particularly, against the appellant is bad at law as the Accused No.1 which is an establishment which is required to make EPF contribution, and the said company is a juristic person and has been strike off even prior to filing of a complaint by the respondent before the 16 Crl.Apl.No.1807/2024 JUDGMENT trial Court. Such being the case, when the company is being strike off before filing of a complaint and very taking cognizance against strike off company and its erstwhile directors is bad at law and same is liable to be set aside.
Hence, under the said facts and circumstances, the appellant/accused 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.118/2024 dated 15.10.2024 and acquit the accused in the interest of justice.
11. Heard. The entire original records of the Trial Court have been summoned and examined.
12. 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.3 has made out any ground warranting interference with the judgment of conviction and order of sentence dated 17 Crl.Apl.No.1807/2024 JUDGMENT 15.10.2024 passed in C.C.No.118/2024 by the trial court, either on facts or on law?
(2) What order?
13. 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
14. Point No.1:-- The Point for Consideration falls for determination in the background of certain foundational legal features, which must be articulated at the outset. The offence in question is not a conventional offence against an individual person but is one conceived by the statute as protective, social welfare oriented, and remedial in character. The statutory scheme of the EPF & MP Act, 1952, the EPF Scheme, 1952, and the Employees' Deposit Linked Insurance Scheme, 1976, is a beneficial legislation designed to ensure that employees are not deprived of their provident fund dues, insurance cover, pensionary security, and other foundational social security 18 Crl.Apl.No.1807/2024 JUDGMENT entitlements. The Hon'ble Supreme Court of India has repeatedly characterised defaults in remittance of statutory provident fund and allied contributions as socio-economic offences, which strike at the very heart of social welfare and economic security of wage earners. This is of crucial significance, because it means that once the complainant demonstrates (i) coverage of the establishment, (ii) statutory liability to remit, (iii) quantified default, (iv) opportunity given, and (v) sanction to prosecute, the evidentiary and moral burden on those in management of the establishment becomes particularly weighty.
15. In the present case, as borne out from Ex.P-3, being the certified true copy of Form No.5A - "Return of Ownership" - submitted to the Regional Provident Fund Commissioner, Accused Nos.2 to 4 are shown as owners/promoters/Directors of Accused No.1 establishment, and Accused No.2 is specifically shown, in column No.11, as the "person in-charge of and responsible for the conduct of the business of the establishment." The very tenor of Ex.P-3 reveals and declares to the statutory 19 Crl.Apl.No.1807/2024 JUDGMENT authority that the affairs of Accused No.1 establishment, including compliance and remittance of statutory dues, are vested in and carried on under the control and responsibility of its Directors and Additional Director. This is not a stray private correspondence but a statutory filing. The Trial Court, while referring to Ex.P-3, has rightly treated the same as a document that attracts the presumption under Section 114 of the Indian Evidence Act, 1872. The said presumption, in the considered view of this Court, could safely be drawn against the appellant, who does not dispute that he was reflected as Director in the records furnished to the statutory authority and that the said filing was never rectified in accordance with law before the authority.
16. The Appellant has vehemently contended before this Court that he resigned from the Directorship of Accused No.1 company with effect from 22.03.2012, and therefore cannot be fastened with liability for the default period June 2014 - August 2014. In support, he relies upon Ex.D-1 (stated to be certified copy of Form No.32) and 20 Crl.Apl.No.1807/2024 JUDGMENT Ex.D-2 (rental agreement said to show his residence in Bengaluru as opposed to the Gulbarga address reflected in the complaint). He asserts that he was no longer connected with Accused No.1 establishment and had no responsibility whatsoever for remittance of statutory dues.
17. However, the record of cross-examination of DW-1 (the appellant himself), as meticulously extracted and appreciated by the Trial Court, is fatal to this defence. The appellant, as DW-1, candidly admits that he did not, at any point of time, communicate his alleged resignation and cessation of responsibility to the Provident Fund Authority in the manner contemplated by Para 36A of the Employees' Provident Fund Scheme, 1952. Para 36A casts an affirmative statutory obligation upon "the person or persons who have the ultimate control over the affairs of the establishment" to intimate, within 15 days, to the Regional Commissioner, by registered post and in such manner as may be prescribed, any change in the ownership, management, or other particulars affecting the responsibility for compliance. The Appellant has admitted 21 Crl.Apl.No.1807/2024 JUDGMENT that, save and except producing a copy of Form 32 during the course of trial, he did not place the said alleged resignation or change of control on record before the PF Authority contemporaneously. Furthermore, he admits that his family members continued to reside at the address at Gulbarga that appears in the show cause notice/Ex.P-6, and that he was kept informed of communications received for him at that address. He also admits that he undertook no effective follow-up to ensure that the statutory Authority was apprised of his alleged cessation of responsibility.
18. The consequence of this admission is legally decisive. The liability under Section 14(1B) read with Section 14A of the EPF & MP Act fastens not merely upon a nominal post, but upon the person(s) "in charge of and responsible to the Company for the conduct of the business of the Company," and upon "every person who, at the time the offence was committed, was in charge of, and responsible to, the Company" for the conduct of its business. The Hon'ble Supreme Court in Srikantadatta Narasimharaja Wodiyar v. Enforcement Officer, Mysore, 22 Crl.Apl.No.1807/2024 JUDGMENT (1993) 3 SCC 217, has pronounced that in establishments other than factories, the word "employer" is of expanded amplitude, and includes "every such person who has the ultimate control over the affairs of the establishment," and that the statutory declaration in Form 5A naming such person(s) is not a mere formality but carries legal consequences. The Apex Court has further emphasised that an attempt by such persons to evade responsibility by merely asserting internal resignation, without due intimation to the Provident Fund Authority and without ensuring alteration of statutory records, cannot absolve them of liability for default in statutory remittances. The Trial Court has faithfully applied this ratio.
19. Thus, when the appellant contends that he had ceased to be a Director by 22.03.2012, two things become immediately apparent: first, that such alleged cessation was never made effective, in the eye of the Provident Fund Authority, as per Para 36A of the Scheme; and secondly, that there is no contemporaneous or pre-complaint material placed before the Authority, or placed before this 23 Crl.Apl.No.1807/2024 JUDGMENT Court, to demonstrate that, as on the default period June 2014 to August 2014, the appellant was neither in charge of, nor responsible for, the affairs of Accused No.1 establishment. The belated production of Form No.32 as Ex.D-1, in the course of trial, without proof of its statutory communication to the Provident Fund Authority at the relevant time, in no manner erases the responsibility which continued to subsist as per Ex.P-3 and as per the statutory records of the Authority. The admissions of DW-1 that he did not bring this so-called cessation to the knowledge of the Authority, and that he had the opportunity but chose not to do so, completely undermine his plea of non-liability. In such a situation, this Court finds, in full agreement with the Trial Court, that the appellant cannot now turn around and claim immunity from prosecution for statutory default merely by waving an internal Form 32.
20. The appellant has further urged before this Court that he was never served with the show cause notice as per Ex.P-6, and that therefore the entire prosecution is vitiated. This contention too is devoid of merit. The 24 Crl.Apl.No.1807/2024 JUDGMENT complainant has produced Ex.P-6 - certified true copy of the show cause notice dated 18.01.2024, addressed to Accused Nos.1 to 5 - and Ex.P-7, being certified true copies of track reports demonstrating dispatch to accused, including to the address which the appellant admits is his parents' address where his family members continued to reside and where communications addressed to him were received and brought to his knowledge. PW-1, during cross-examination, deposed that notices were sent through the official Shram Suvidha portal and by e-mail and physical mode, and the Authority has also produced Ex.P-5 and Ex.P-8, being certified true copies of e-mails dated 04.01.2024 and 18.01.2024, addressed to the management. There is no material - and more importantly, no credible denial - from the appellant that he had no knowledge whatsoever of these proceedings. On the contrary, the appellant's own answers in cross- examination show that he was aware of communications sent to the Gulbarga address and was in a position to respond, but chose inaction. In these circumstances, the 25 Crl.Apl.No.1807/2024 JUDGMENT Trial Court was perfectly justified in drawing the statutory presumption under Section 114 of the Indian Evidence Act and even the common-law presumption that arises from dispatch of notices, so also in holding that the appellant cannot claim the benefit of his own omission to notify change of address or cessation of control.
21. The appellant has sought to fault the complainant on the ground that muster rolls, wage registers, employee-wise contribution particulars, attendance sheets, or books of account, etc., were not produced before the Trial Court, and that therefore the "best evidence" has been withheld. This Court finds no merit in this argument. The gravamen of the prosecution is not that the appellant misappropriated particular individual workman's deduction for a particular month, which would require a person-wise matching of ledgers, but that the establishment, being statutorily covered, failed to remit the employer's share of contributions and administrative charges for specific contribution periods, quantified to the rupee, and that such default stands 26 Crl.Apl.No.1807/2024 JUDGMENT crystallised under Section 7A proceedings vide Ex.P-4. The Assessment Order under Section 7A of the EPF & MP Act, dated 31.10.2017, is not an idle piece of paper; it is a quasi-judicial determination rendered by the competent Authority after due opportunity, which determination was never challenged, set aside, stayed, quashed or vacated. The Trial Court has rightly observed that no material was placed to show that Ex.P-4 was ever appealed against, modified, or nullified. In such a situation, the quantified liability, coupled with the statutory Form 5A declaration and the continued non-remittance, is sufficient to establish the offence under Section 14(1B) read with Section 14A of the EPF & MP Act.
22. In other words, once there is a subsisting and unchallenged order under Section 7A fixing liability for specific periods and amounts, and once it is shown that payment has not been made, the essence of the offence stands established. The plea now raised by the appellant that the complainant should have examined each employee or produced every internal ledger of the establishment is, 27 Crl.Apl.No.1807/2024 JUDGMENT with respect, a smokescreen. It disregards the fact that the appellant, claiming to be a responsible officer with knowledge of the affairs of Accused No.1 establishment (or claiming to have ceased to be such officer), could himself have produced the alleged books of account, PF remittance challans, deposit proofs, bank statements showing payments, or any other material disproving default, if such material truly existed. He did not. The law does not permit an accused, who is in the best position to produce exculpatory material, to withhold such material and then accuse the complainant of not having produced what lies within the accused's own peculiar knowledge and dominion.
23. The appellant has also contended that the complaint is barred by limitation. The learned Trial Court has rejected this contention on two foundations, both of which commend themselves to this Court. Firstly, the show cause notice Ex.P-6 is dated 18.01.2024 and prosecution sanction Ex.P-2 is dated 14.02.2024, and the complaint was promptly lodged thereafter. Secondly, and far more 28 Crl.Apl.No.1807/2024 JUDGMENT fundamentally, the nature of the offence alleged is a continuing default in remitting a statutory social security contribution which the employer is obliged to deposit within a stipulated date every month. The failure to so deposit does not become an event confined to that date alone; it continues to operate as a live default until cured by remittance. Section 472 of Cr.P.C. explicitly recognises that, "in the case of a continuing offence, a fresh period of limitation shall begin to run at every moment of the time during which the offence continues." Thus, in respect of non-remittance of statutory contributions which, by design, deprives employees of their statutory social security cover on a continuing basis till remittance is made, the bar of limitation under Section 468 Cr.P.C. cannot be invoked in the simplistic manner suggested by the appellant. This Court finds no perversity whatsoever in the Trial Court's conclusion that limitation does not enure to the benefit of the accused persons in the factual and statutory setting of the present prosecution.
24. Another limb of argument by the appellant is 29 Crl.Apl.No.1807/2024 JUDGMENT that Accused No.1 company is shown as "strike off" in the records of the Ministry of Corporate Affairs, and therefore, according to the appellant, there can be no prosecution of an erstwhile Director of a non-existent company. This contention too cannot be sustained. Firstly, the appellant has not produced any conclusive, certified, and contemporaneous material to establish that as on the date of default (June 2014 to August 2014), or even as on the date of the Section 7A order (31.10.2017), or as on the date of sanction (14.02.2024), the company stood finally dissolved in a manner extinguishing statutory liabilities, nor that any lawful process under the Companies Act had the effect of obliterating liabilities under the EPF & MP Act. The vague invocation of "strike off" in oral argument cannot, in criminal appellate jurisdiction, defeat a conviction premised on statutory defaults, in the absence of proof that such striking off was notified to and accepted by the Provident Fund Authority and that liabilities under the beneficial legislation stood lawfully extinguished thereby. Secondly, and more decisively, the EPF & MP Act 30 Crl.Apl.No.1807/2024 JUDGMENT casts personal liability not only upon the juristic establishment, but expressly upon "every person who, at the time the offence was committed, was in charge of, and responsible to, the Company for the conduct of its business," and treats each of them as guilty of the offence. The beneficial and protective nature of the Act prevents Directors and persons in control from taking shelter behind technical statuses of the corporate vehicle, particularly where they have failed in their own statutory duty to ensure remittance of social security contributions of vulnerable employees. This Court therefore finds, in concurrence with the Trial Court, that the plea of "strike off" is neither substantiated nor, in any event, capable of effacing statutory liability.
25. The appellant has also suggested that the learned Trial Court passed a "cyclostyle" order, in mechanical fashion, without appreciating his distinct defence. A careful and dispassionate reading of the impugned judgment dispels this allegation. The Trial Court has in fact separately extracted the evidence of PW-1, has 31 Crl.Apl.No.1807/2024 JUDGMENT recorded the tenor of cross-examination conducted on behalf of each accused, including Accused No.3, has noticed the specific defence of resignation prior to 2014, has noted Ex.D-1 and Ex.D-2, has analysed the admissions of DW-1 during cross-examination regarding non-intimation of resignation under Para 36A of the Scheme, has referred to the addresses used for service and to the presumption available under the Indian Evidence Act, has addressed the contention of limitation with reference to Section 472 Cr.P.C., has considered the plea that the Section 7A order was ex-parte and has, with justification, observed that the said order was never challenged. The learned Trial Court has then, after referring to the ratio of the Hon'ble Supreme Court in Srikantadatta Narasimharaja Wodiyar v. Enforcement Officer, Mysore, (1993) 3 SCC 217, come to the conclusion that Accused Nos.2 to 5, including the present Appellant, being Directors/Additional Director and persons reflected in Form 5A as responsible for conduct of day-to- day affairs, are squarely liable for the continuing default. 32 Crl.Apl.No.1807/2024 JUDGMENT Far from being cyclostyled, the reasoning is elaborate, issue-wise, evidence-based, and firmly anchored in binding precedent of the Hon'ble Supreme Court of India. This Court is unable to accept the criticism advanced on behalf of the appellant.
26. The appellant has further contended that the Trial Court erred in holding him guilty without any proof that he personally handled remittances or finances. This contention, too, mischaracterises the statutory regime. The EPF & MP Act, being a piece of social welfare legislation, deliberately travels beyond the narrow confines of traditional corporate criminal liability. The purpose is to ensure that those who exercise ultimate control over the affairs of the establishment - and who therefore have the capacity to ensure compliance - cannot divest themselves of liability by internal arrangements, abdications, or silent resignations not notified to the Authority. The very prfovision in Section 14A, read with Section 14(1B), is to render personally accountable every such person in control of the establishment at the relevant point, unless and until 33 Crl.Apl.No.1807/2024 JUDGMENT such person demonstrates, contemporaneously and convincingly, that (a) he was not, in fact, in charge of and responsible for the conduct of business at the relevant time; and (b) he had neither knowledge of nor consented to the default; and (c) he exercised all due diligence to prevent the default. The appellant has not, at any stage, discharged this burden. On the contrary, his own evidence discloses a conscious omission to notify the Authority of his alleged cessation and a passive indifference to statutory proceedings initiated by the Authority. This Court finds, therefore, that the Trial Court was correct in holding that the appellant's liability flows directly from the statutory scheme.
27. The appellant has also taken exception to the Trial Court's reliance upon Ex.P-2 (Sanction Order) and Ex.P-4 (Section 7A Assessment Order), and argued that there was no application of mind by the Sanctioning Authority and that the Section 7A order being "ex parte"
ought not to have been relied upon. This Court is unable to agree. Ex.P-2 discloses that the competent Regional PF 34 Crl.Apl.No.1807/2024 JUDGMENT Commissioner-I, on the basis of the Enforcement Officer's report, accorded sanction after noting that accused persons, being employers within the meaning of Section 2(e) of the EPF & MP Act, had defaulted in remittance of statutory dues despite opportunity. The law is well settled that a sanction order need not read like a judgment; it is sufficient if it reflects that the Sanctioning Authority was aware of the material facts constituting the offence and, upon consideration thereof, authorized prosecution. The Trial Court has rightly observed that the appellant never challenged this sanction before the competent forum and has raised this plea only at the appellate stage to assail conviction. Insofar as Ex.P-4, the Section 7A order, the mere circumstance that it was passed ex-parte does not render it a nullity, particularly when no steps were taken thereafter to have it set aside or appealed. The Section 7A order has reached finality. This Court cannot, in criminal appellate jurisdiction over a conviction under Section 14(1B) read with 14A, sit in collateral appeal over the unchallenged Assessment Order under Section 7A. The 35 Crl.Apl.No.1807/2024 JUDGMENT existence, finality, and non-compliance of Ex.P-4 is sufficient to hold that there was a continuing default, and that the persons responsible for the management of the establishment failed to comply with statutory obligations.
28. The record further reveals that the learned Trial Court, having convicted the accused persons, has imposed a sentence that is, in truth, moderate and proportionate, keeping in view both the punitive and the restitutive aspects of the offence. The Trial Court has sentenced Accused No.1 (juristic person) to pay fine of Rs.4,000/-; and Accused Nos.2 to 5, including the present Appellant, to pay fine of Rs.4,000/- each, in default to undergo simple imprisonment for one month. The Trial Court has further directed that Accused Nos.2 to 5 shall jointly pay the sum of Rs.4,000/- on behalf of Accused No.1, failing which they shall undergo an additional ten days of simple imprisonment. Importantly, invoking Section 14C(1) of the EPF & MP Act, the Trial Court has directed Accused Nos.2 to 5 to pay Rs.18,252/- (being the quantified default for June 2014 to August 2014) within three months to the 36 Crl.Apl.No.1807/2024 JUDGMENT Provident Fund Authority. The learned Trial Court has also, quite correctly, directed payment of compensation of Rs.1,000/- to the Department under Section 357 Cr.P.C. This sentencing structure is not only legally sustainable, but also reflective of the settled position that, in socio-economic offences involving default in social welfare contributions, compensatory and restitutive directions are essential to vindicate the legislative object. The sentence cannot, by any measure, be characterised as excessive, vindictive, or perverse. On the contrary, it balances deterrence, restitution, and proportionality.
29. In the totality of the circumstances, this Court finds no infirmity, either factual or legal, in the judgment of conviction or in the order of sentence. The complainant has, by examining PW-1 and producing Ex.P-1 to Ex.P-9, satisfactorily established: (i) coverage of the establishment under the EPF & MP Act; (ii) the obligation to remit the employer's contribution to the Employees' Deposit Linked Insurance Fund along with administrative charges within the prescribed time; (iii) quantified default to the extent of 37 Crl.Apl.No.1807/2024 JUDGMENT Rs.18,252/- for the contribution period June 2014 to August 2014; (iv) culmination of proceedings under Section 7A of the EPF & MP Act in Ex.P-4, which has attained finality; (v) the role and responsibility of Accused Nos.2 to 5 as persons in charge of and responsible for the conduct of business of Accused No.1 establishment, as recorded in Form 5A (Ex.P-3); and (vi) sanction for prosecution under Ex.P-2.
30. The appellant, for his part, has not demonstrated before this Court any effective, contemporaneous divestiture of responsibility communicated to the Provident Fund Authority as mandated by Para 36A, has not rebutted the statutory presumption that arises from the Form 5A declaration, and has not produced any material to show either that he exercised due diligence to prevent default, or that he neither knew of nor consented to the default. Instead, his defence rests substantially on a belated assertion of resignation and on a technical plea of non-service, both of which, upon scrutiny of his own admissions, stand 38 Crl.Apl.No.1807/2024 JUDGMENT dispelled.
31. Consequently, this Court is constrained to hold that the conviction recorded by the learned Trial Court is based on cogent evidence, supported by statutory presumptions properly invoked, consistent with the binding pronouncement of the Hon'ble Supreme Court in Srikantadatta Narasimharaja Wodiyar v. Enforcement Officer, Mysore, (1993) 3 SCC 217, and in full consonance with the object and spirit of a beneficial social welfare legislation.
32. The conclusions of the Trial Court are neither perverse nor contrary to record; on the contrary, they are founded on sound principles of statutory interpretation, on due evaluation of evidence, and on well-established legal position that Directors and persons in control of an establishment cannot shirk liability for provident fund and insurance defaults on mere technical or internal pleas.
33. The Point for Consideration is therefore answered in the Negative, in that the Appellant has made 39 Crl.Apl.No.1807/2024 JUDGMENT out no ground whatsoever for interference with the impugned conviction and sentence. This Court is of the considered view that the impugned judgment does not call for appellate interference. Accordingly, the Point for consideration is answered in the Negative.
34. 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/accused No.3 under Section 374(3) Cr.P.C. is hereby dismissed.
The judgment of conviction and order on sentence dated 15.10.2024 passed by the Presiding Officer, Special Court for Economic Offences, Bengaluru, in C.C. No.118/2024, are hereby confirmed in its entirety.
The appellant shall comply with the sentence imposed by the Trial Court.
Office is hereby directed to send 40 Crl.Apl.No.1807/2024 JUDGMENT 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 22nd day of November, 2025) Digitally signed by SHIRIN SHIRIN JAVEED JAVEED ANSARI ANSARI Date: 2025.11.26 15:25:49 +0530 (Shirin Javeed Ansari) LXIX Addl.C.C. & Sessions Judge, Bengaluru.