Jharkhand High Court
Ram Prasad Sao And Anr. vs State Of Bihar And Anr. on 17 May, 2007
Equivalent citations: [2008(1)JCR131(JHR)], (2008)ILLJ162JHAR, 2008 CRI. L. J. (NOC) 61 (JHAR.) = 2007 (3) AIR JHAR R 494, 2007 (3) AIR JHAR R 494, (2008) 116 FACLR 887, (2007) 3 LAB LN 756, (2007) 3 JLJR 283
Author: D.G.R. Patnaik
Bench: D.G.R. Patnaik
JUDGMENT D.G.R. Patnaik, J.
1. Petitioners have prayed] for quashing the order dated 26.11.19871 passed by the learned Judicial Magistrate, Dhanbad in G.R. No. 3584 of 1985 arising out of Chirkunda P.S. Case No. 245 of 1985, whereby the learned Court below has taken cognizance for the offence under Section 406, IPC against the petitioners and also for quashing the entire criminal proceeding pending against them vide aforesaid order.
The primary ground taken in support of the prayer is that the order of cognizance as passed by the learned Court below is bad both on points of law as well as on facts due to the reason that the learned Court below has failed to appreciate that even if taking the entire allegations in the complaint against the petitioners to be true, no offence under Section 406, IPC could be attracted. Another ground on which equal emphasis has been placed is that since the allegation refers to the alleged violation of the Employees Provident Fund Act and since the Act being a special Act contains penal provision in respect of the violation of the provisions of the Act, the offences under the Indian Penal Code can not be attracted, nor can the petitioners be tried for any offence under Indian Penal Code much less for the offence under Section 406, IPC. Besides the aforesaid two grounds, it has also been contended that the case was instituted against the petitioners by suppressing material facts, which if revealed, would have firmly established that no offence under Section 406, IPC or even under Section 14 of the Employees Provident Fund Act could be made out against the petitioners.
2. Heard learned Counsel for the petitioners and learned Counsel for the State as also learned Counsel for the opposite party No. 2.
3. For better appreciation of the grounds advanced, reference in brief may be made to the facts of the case. The case against the petitioners was registered at the police station on the basis of the FIR lodged by the Provident Fund Inspector/opposite party No. 2 alleging therein that the present petitioners being partners of a firm namely M/s Jaiswal Rolling Mills had deducted specific amounts from the wages of the individual employees of the firm towards provident fund contribution from December, 1983 to March, 1985, but the amount collected, together with the contribution to be made by the employee, was not promptly deposited in the provident fund account of the employees. This fact was detected by the informant in course of his inspection of the factory of the petitioners on 1.10.1985. It is alleged that under the Provident Fund Family Scheme meant for the benefit of the employees of the firm, the amount towards the provident fund contribution deducted from the wages of the employees, was to be compulsorily deposited every month and statement of such deductions an deposits was to be forwarded to the Provident Fund Commissioner, Non-performance of the aforesaid duties amounted not only to the violation of the Act and rules under the Provident Fund Family Scheme, but also amounts to criminal misappropriation of the money belonging to the employees. A written report to the informant though prepared on 8.10.1985, the case was registered at the police station after drawing up a formal first information report on 20.12.1985. At the conclusion of the investigation, police submitted charge-sheet recommending trial of the petitioners for the aforesaid offence and on the basis of the charge-sheet, vide impugned order dated 6.11.1987, the learned Court below took cognizance of the offence and issued summons against the petitioners directing them to appear and face trial.
4. Elaborating the grounds advanced, learned Counsel for the petitioners submits that though written report of the informant was drawn up on 1.10.1985, but before the case was finally registered at the police station, the entire arrears of the Provident Fund dues was deposited by the firm with the Provident Fund Commissioner and intimation to this effect was conveyed to the informant by letter No. 1253 dated 25.12.1985 with a copy thereof forwarded to the officer-in-charge of the concerned police station. Subsequently, the informant made a second round of inspection of the factory of the petitioners and being satisfied that the amount of arrears towards provident fund dues was deposited by the petitioners, he in his turn, sent intimation to this effect to the officer-in-charge of the concerned police station Yet, by suppressing this material fact, the Investigating Officer had submitted the charge-sheet recommending trial of the petitioners for the offence under Section 406, IPC and the learned Court below proceeded to take cognizance of the offence also against the petitioners. Learned Counsel explains that no case for the offence under Section 406, IPC can be made out against the petitioners in view of the fact that they have not misappropriated the money to their wrongful gain, nor did they cause any wrongful loss to the employees whose money towards the provident fund contribution was deducted from their respective wages and the mere fact that the money was retained for a period of two years, in itself does not constitute any offence attracting criminal liability in absence of any such dishonest intention on the part of the petitioners. Retention of the money for the alleged period may at best attract civil liability. Learned Counsel in this context refers to the judgment of the Supreme Court reported in 2000 (7) SCC 621, wherein the Apex Court, on considering the facts and circumstances of the case before. it, had observed that for any shortage of cash relating to the period which did not correspond to the period for which charge was framed against the petitioners, no criminal liability can be attached against the accused and even if the accused is made liable to make good the shortage detected in the subsequent period, there could be a civil liability and he cannot be convicted on the ground that he had misappropriated the amount pertaining to a totally different period, not incorporating charge framed against him.
5. Learned Counsel next emphasizes on the ground that even if the alleged act of the petitioners suggest that it was a case of violation of the provisions of the Provident Fund Scheme and consequent violation of the provisions of the Provident Fund Act, the petitioners cannot be prosecuted for offence under the Indian Penal Code since the Employees Provident Fund Scheme is a self contained statute and the penal provisions under Section 14 of the Act, which is a Special Act, prescribes punishment in respect of the violation of the provisions under the Act, or any scheme of pension or insurance under the Act. It also provides for recovery of any damage from the employer who defaults in payment of his contribution to the fund.
6. As against this, Shri P.P.N. Roy, learned Counsel for the opposite party No. 2 claims that the Act alleged against the petitioners do squarely constitute offence under Section 406, IPC as because, the amount of money deducted from the wages of the employees towards Provident Fund Contribution, is deemed to be money entrusted by the employees with the employer for the purpose of promptly depositing the same in the Provident Fund Account and retention of the money without making prompt deposit of the same in the provident fund account, ipso facto constitutes an offence of criminal misappropriation of the money which, in the instant case, is the allegation against the petitioners. To buttress his argument, learned Counsel refers to the judgment of the Supreme Court reported in AIR 1981 SC 81. Learned Counsel argues further that even if the amount was subsequently deposited, yet the very fact that the petitioners had illegally retained the money with them for a period of two years, cannot absolve them from the liability of the offence. Learned Counsel argues further that even though Section 14 of the Employees Provident Fund Act provides for punishment for contravention of certain provision of the Act and for contravention of any scheme under the Act, yet the petitioners cannot escape the liability which amounts to offence of criminal misappropriation of the money belonging to the employees.
7. On the basis of the rival submission of the parties, the question which are called upon to be addressed are,
1. whether on the basis of the allegations in the FIR, a prima facie case for the offence under Section 406, IPC is attracted against the petitioners?
2. whether in view of the penal provisions contained in the Section 14 of the Employees Provident Fund Act which provides for punishment for violation of any of the provisions of the Act or for violation of any of the provision under the scheme, offences under the Indian Penal Code can be attracted?
8. As regards the first question, the facts of the case, plain and simple.are that the petitioners had deducted specific amounts of money every month from the wages of the employees towards provident fund contribution and yet, for a period of two years, had failed to deposit the amount, together with the employer's own contribution, in the Employees Provident Fund Account promptly, thereby violating the provisions of Clause 76 of the Employees Provident Fund Scheme, 1952.
9. The Employees Provident Fund Scheme, 1952 was framed by the Central Government in exercise of its powers under Section 5 of the Employees Provident Fund Act, 1952 and it applies to establishment such as that of the petitioner also. The scheme lays down certain mandatory rules for compliance by the employer, which essentially stipulates that deductions made by the employer from the wages of the workers as contribution towards provident fund, should be promptly deposited in the separate Provident Fund Account along with the employer's own contribution and a monthly statement showing such deductions and deposits must be submitted to the Provident Fund Commissioner. It implies that the rule is mandatory and noncompliance thereof attracts penal consequences. It is therefore not within the discretion of the employer to retain the money so deducted from its workers for any period beyond what is permitted under the rule.
10. Explanation I to Section 405. IPC which defines and explains the term "criminal breach of trust" reads as follows:
405. Criminal breach of trust.--Whoever, being in any manner entrusted with property, or with any dominion over property, dishonestly misappropriates or converts to his own use that property, or dishonestly uses or disposes of that property in violation of any direction of law prescribing the mode in which such trust is to be discharged, or of any legal contract, express or implied, which he has made touching the discharge of such trust, or willfully suffers any other person so to do, commits "criminal breach of trust.
Explanation (1).--A person, being an employer (of an establishment whether exempted under Section 17 of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 (19 of 1952), or not] who deducts the employee's 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 the 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.
It is apparent from the above that the petitioners who had admittedly deducted the amount from the wages of the workers as contribution towards the provident fund, are deemed to have been entrusted with the money and if the employer makes default in payment of such contribution to the Employees Provident Fund, in violation of the mandatory rules, such employer shall be deemed to have dishonestly used the amount of such contribution in violation of the provisions of the law. Specific case of the complainant against the petitioner is that the petitioners, in violation of the rules under the scheme and in violation of the law under the Employee's Provident Fund Act, had intentionally retained the money deducted from the wages of the employees for a period of two years and have further failed to submit returns and statements of such deductions and deposits to the Employees Provident Fund Commissioner. The aforesaid allegations do squarely make out a prima facie case for the offence under Section 406, IPC against the petitioners. The fact that the petitioners had eventually deposited the entire arrears of their dues towards the provident fund contribution, would not absolve them from the liability for the offence if they have already incurred during the period prior to the date of such deposit. This may at best be considered as mitigating circumstance in respect of the gravity of the offence.
11. As regards as the other question as to whether the petitioners cannot be made liable for the offence under the provisions of Indian Penal Code, since the Employee's Provident Fund Act by virtue of Section 14 of the Act, provides for punishment of the offender who violates the provisions of the Act and rules of the scheme framed under the Act, the argument of the petitioners does not appear to be persuasive. It is true that the employee's provident fund is a special stature and self contained in as much as it contains penal provisions in respect of the offenders who violate the provisions of the Act. Yet, since the same act of the petitioners also constitutes an offence under Section 406, IPC which being a distinct offence, the petitioners can very well be tried for the said offence. It is to be noted here that the petitioners are being sought to be prosecuted for the offence under Section 406, IPC only and not for offence which is punishable under Section 14 of the Employee's Provident Fund Act and it is only in respect of the offence under Section 406, IPC that cognizance was taken against the petitioners by the Court below.
12. In the light of the above discussions. I do not find any merit in this application which is accordingly dismissed. The order dated 30.6.1999 staying further proceedings in the case before the Court below, is hereby vacated.
Let the lower Court records be transmitted to the Court below forthwith.