Rolta India Ltd. And Anr vs The State Of Maharashtra And Anr
2024 Latest Caselaw 22051 Bom

Bombay High Court

Rolta India Ltd. And Anr vs The State Of Maharashtra And Anr on 1 August, 2024

Author: Bharati Dangre

Bench: Bharati Dangre

2024:BHC-AS:33126-DB

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                           IN THE HIGH COURT OF JUDICATURE AT BOMBAY
                                 CRIMINAL APPELLATE JURISDICTION

                                     WRIT PETITION NO.3078 OF 2018

               1. Rolta India Ltd.
               Rolta Tower A, Rolta Technology
               Park, MIDC, Marol Andheri (E),
               Mumbai - 400093
               2. Ram Krishna Prabhu                          Petitioners
               Director of Rolta India Ltd.
               Rolta Tower A, Rolta Technology
               Park, MIDC, Marol Andheri (E),
               Mumbai- 400093

                                    Versus
               1. State of Maharashtra
               Through Police Inspector,
               MIDC Police Station, Andheri (E)

               2. Mrs. Hema Hate,                             Respondents
               Enforcement Offcer,
               Provident Fund Offce,
               Sector 3, Charkope Market,
               Kandivali (W)

                                                        ...
               Mr. Anuj Jhaveri a/w Mr. Mihir Modi, for Petitioner No. 1.

               Mr. Niranjan Mundargi a/w Mr. Jayesh Bhosale and Keral
               Mehta, for the Petitioner No. 2.
               Mr. S. V. Gavand, APP, for the State.
               PSI, Mr. Sachin Tambe, MIDC Police Station, is present.
                                                        ...

                                          CORAM: BHARATI DANGRE &
                                                  MANJUSHA DESHPANDE, JJ.

DATED : 1st AUGUST, 2024

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Order : (Per Manjusha Deshpande, J.):

1. The petitioners herein are challenging the registration of FIR No. 175 of 2018 dated 12.04.2018, registered with MIDC Police Station, Andheri (East), Mumbai. The petitioners have approached this Court with a prayer to quash and set aside the FIR No. 175 of 2018, which is registered for the offences under Sections 406 and 409 of the Indian Penal Code alongwith Section 14 of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 (For short "The Act of 1952"). Though initially the petitioners had challenged the impugned FIR, however subsequently after fling of charge-

sheet in the present crime the petitioners have amended the prayer clause by adding the prayer clause (a-i), which reads thus:

"(a-i) That this Hon'ble Court be pleased to quash and set aside the charge sheet No.1461/PW/2024 dated 19/04/2024 fled in impugned FIR dated 12/04/2018 for the offences punishable under Section 406, 409 IPC and Section 14 of the Provident Fund Act lodged at MIDC Police Station [Exh. "A" hereto]"

2. The factual matrix leading to the registration of the FIR are that, respondent No. 2- the complainant Mrs. Hema Hate is an authorised offcer in the offce of the Provident Fund Commissioner, who has fled a complaint on 12.04.2018 alleging that, since the petitioner No. 1 company which is situated in MIDC, Andheri (East), Mumbai is governed by the Act of 1952, from the date of its registration under the Companies Act from 01.10.1985. All the provisions of the Act of 1952 are applicable to the establishment of the petitioner

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No. 1 company. The petitioner No. 2 is the Director of the said company. It is alleged by the complainant that, the petitioners have failed to deposit the amount of provident fund deducted from the salary of the Employees working in the petitioner No. 1 company in the account maintained for depositing the said amount in the State Bank of India (SBI), as per the provisions of the Act of 1952.

3. It is also alleged that, apart from the contribution deducted from the Employees' salary, the contribution of the Employer is also required to be deposited in the account maintained in the SBI, which has not been deposited by the petitioners. It is further stated in the said complaint that, as per Rule 38 of the Act of 1952, the amounts which are deducted from the salary of the Employees, for each month is required to be deposited in the account maintained for that purpose, in the SBI, within a period of 15 days of such deductions. During visit of the complainant it was noticed that, the petitioner company had not deposited the amounts so deducted alongwith the Employer's contribution within the specifed period in the account of SBI. The complainant informed the concerned offcer of the petitioner company to deposit the defaulted amount, during her visit.

Immediately thereafter, the complainant has registered an offence on 12.04.2018, alleging offences under Sections 406, 409 of the IPC, with Section 14 of the Act of 1952. It is alleged that, the Employees' contribution from the month July, 2017 to February 2018 amounting to Rs.1,70,06,347/- has not been deposited by the Director of the company. The petitioner

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No. 2, who is the Director of the petitioner No.1, has allegedly misappropriated the said amount and has used the said amount for his own beneft, hence the complainant has prayed for taking legal action against the petitioner No. 2 who is responsible for the said offence.

4. According to the learned counsel for the petitioners, the petitioner No. 1 vide communication dated 13.04.2018 had informed the Provident Fund Commissioner that, the Employee's contribution from July 2017 to February 2018 of Rs.1,70,79,701/- has been deposited on 23.03.2018. The day after, the FIR was registered on 12.04.2018, one more communication was addressed to the Assistant Commissioner of PF (Compliance) on 13.04.2018, informing him that, the petitioner No. 1 has already deposited the Employer's contribution for the period July 2017 to February 2018 to the tune of Rs.1,66,81,329/-. Thereafter, vide communication dated 16.04.2018 addressed to the Senior Inspector of Police, MIDC Police Station, Andheri (East) it was informed that, the amount of Rs.1,70,79,701/- was deposited by the petitioner No. 1 on 23.03.2018. A similar communication was also addressed to the Assistant PF Commissioner (Compliance).

5. The learned counsel for the petitioners contends that, the Assistant Commissioner of Police has addressed a communication dated 30.04.2018 to the Assistant PF Commissioner, seeking his confrmation, whether petitioner No. 1 has deposited the PF dues for the period July 2017 to March 2018. In response to the said communication it was

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informed that, petitioner No. 1 has deposited the Employees' contribution on the dates mentioned therein.

It is further contended that, during the visit of respondent No. 2 complainant on 27.03.2018, petitioner No. 1 had expressly brought to the notice of respondent No. 2 that, the part of the defaulted amount has already been deposited on 23.03.2018. In spite of that, respondent No. 2 had gone ahead and fled the complaint on 12.04.2018 with the MIDC Police Station, Andheri (East).

6. According to the learned counsel, there are no specifc or material allegations, on the basis of which respondent No. 2 has fled the FIR. The allegations of misappropriation and use of the said amount for personal beneft are baseless and without evidence. According to the petitioners, the reason for delay in depositing the said amount was due to the HR and Finance servers of the petitioner company were infected by virus during the month of July 2017. Their IT Security team was continuously working for resolving the said issue and retrieving the data. The ERP servers were severely impacted and retrieving the Employee data was diffcult. The petitioners were unable to access the ERP data and salary related data for payouts such as reimbursements, tax, ESIC and EPF deductions. As a result, there was delay in making the deductions and payment under those heads. So also the petitioners were facing severe fnancial crunch on account of delay in receivables from the customers from its projects.

According to the petitioners, since part of the amount was already deposited prior to fling of the complaint, the

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bonafdes of the petitioners were writ large. Similarly, the rest of the amount was also deposited and the dues were cleared by the petitioners by 19.04.2018.

The learned counsel for the petitioners has placed reliance on the judgment of the Hon'ble Supreme Court in case of The Employees State Insurance Corporation V/s S. K. Aggarwal and Ors.1 in support of their contention that, when owner of a factory is a company, it is the 'company' who is liable as a 'Principal Employer' and not its 'Directors'. Therefore, the company is liable for contribution and not the Directors.

7. The learned counsel for the petitioners has also placed reliance on the Judgment of the Hon'ble Supreme Court in case of Adoni Cotton Mills Ltd. and Ors. V/s. Regional Provident Fund Commissioner and Ors.2, wherein in similar circumstances, offence registered under Section 14 of the Act of 1952, has been quashed and set aside.

The learned counsel for the petitioners has placed reliance on the Judgment of the High Court of Gujarat in case of Vineet Jain Surendrakumar and Ors. V/s. State of Gujarat and Ors.3, wherein view is taken by the Gujarat High Court that the 'Director' of the company cannot be held liable as an 'Employer', since the defnition of Criminal Breach of Trust under Section 405 of the IPC, makes the Employer of an establishment responsible for deduction and deposit of

1 1998 (4) ALL MR 389 2 1995 Supp (4) SCC 580 3 R/Cri.Misc. Appl No.15559 of 2017

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Employees contribution from his wages and his failure to do so amounts to Criminal Breach of Trust. The Gujarat High Court, while taking the aforementioned view has relied on the Judgment of the Hon'ble Supreme Court, in case of Employees' State Insurance Corporation V/s. S. K. Aggarwal and Ors.4 whrein a view has been taken that, 'Directors' cannot be held liable as 'Employer'. As a result, Section 406 and 409 of the IPC will not be attracted in the present case as against petitioner No.2, since he is a Director of the company.

8. The learned APP opposes the prayer of the petitioners contending that, the complaint itself discloses that there has been default on the part of the petitioners in depositing the PF amount, which was already deducted from the salary of the Employees. The said amount which was deducted from the salary of the Employees has not been deposited alongwith contribution of the Employer by the said company. Withholding such amount which is deducted from the salary of the Employees, amounts to Criminal Breach of Trust. Though, subsequently the amount has been deposited in the PF amount, however default has been committed by the employer, hence it would attract Section 14 of the Act of 1952 with Section 406 and 409 of the IPC. According to the learned APP, since charge-sheet is already fled, the Writ Petition deserves to be dismissed.

9. We have perused the Affdavit-in-reply fled by respondent No. 2 through Shri Vijay Jarpe, Assistant

4 (1998) 6 SCC 288

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Provident Fund Commissioner (Legal), working in the offce of EPFO, Regional Provident Fund Offce, Kandivali - East, Mumbai. Respondent No. 2 has stated in the said affdavit that a complaint was received for non-payment of PF contribution from the wages of the employees. The Area Enforcement Offcer (AEO) has fled the FIR No.175 of 2018 on 12.04.2018 for non-payment of PF dues for the period of July 2017 to February 2018 for amount of Rs.1,70,06,347/-.

10. We have gone through the Petition alongwith its annexures.

The documents placed on record undisputably discloses that, the amounts as mentioned in the complaint dated 12.04.2018, which were withheld by the employer have been partly deposited before fling of the FIR on 23.03.2018 itself, and rest of the amount which was due has been deposited in installments within a short span of time by 19.04.2018.

A communication dated 06.03.2020 addressed to the Government Pleader by the Senior Police Inspector, MIDC Police Station discloses that, after fling of the FIR, during the investigation, the Accountant of the petitioner No. 1 company has personally informed the Investigating Offcer that, all the amounts which were due have been cleared. The vouchers in support of the said claim, of the Accountant were made available to the said Senior Police Inspector. He has also made an inquiry with respondent No. 2- the complainant Smt. Hema Hate about the arrears of PF amount as alleged in the complaint made by her. The complainant also has informed that, the dues have been cleared giving the dates on which the

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said amounts have been deposited.

The statement of the Employees of petitioner No. 1 company namely Shri Kamesh G. Chafe and Shri Nandkumar B. Umrani was recorded. Upon inquiry they informed that, deductions were regularly made from their salaries towards the PF and they are in receipt of regular monthly salary from the petitioner company, and they do not have any complaint against the petitioners. On going through the said report which is on record it is explicitly clear that, there are no PF dues which were pending against the petitioners. The pending dues were already cleared by the petitioners immediately before and after the fling of the complaint.

On this background, the petitioners have prayed for quashing of the FIR and charge-sheet fled against them.

11. The complainant has alleged that, an offence under Section 406 and 409 of the IPC, has been committed by the present petitioners. Section 405 of the IPC is the offence of Criminal Breach of Trust, while Section 406 is the punishment for criminal breach of trust. Section 409 is Criminal Breach of Trust by public servant or banker or merchant or agent.

Section 405 of the IPC, reads as under:

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 wilfully suffers any other person so to do, commits

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"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 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 for 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.

Explanation 2.- A person, being an employer, who deducts the employees contribution from the wages payable to the employee for credit to the Employees' State Insurance Fund held and administered by the Employees' State Insurance Corporation established under the Employees' State Insurance Act, 1948 (34 of 1948), 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 Act, shall be deemed to have dishonestly used the amount of the said contribution in violation of a direction of law as aforesaid.

12. In the present case, the petitioner No. 1 is the company and the Petitioner No. 2 is the Director of the company. In view of the Judgment relied upon by the learned counsel for the petitioners, the petitioner No.2 cannot be termed as an 'Employer'. Similarly considering Explanation- 1 to the defnition of criminal breach of trust under Section 405, only Employer can be held responsible for the default in making payment of contribution.

Even otherwise, there is no prima facie case made out as

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against the petitioners in the FIR itself, as the ingredients of offence under Sections 406 and 409 of the IPC have not been made out by the complainant. The complainant has not stated in what manner the petitioners have used the said "property for their own use or dishonestly used or disposed of the said property", as required under Sections 405 of the IPC to constitute criminal breach of trust. It has been merely stated in the complaint that, the said amounts have not been deposited in the PF account. It has nowhere stated, in what manner the said amount has been used by the petitioners dishonestly for their own use. Therefore having failed to make out the ingredients of Sections 406 and 409 of the IPC, allegations made by the complainant are not at all sustainable. Even if the allegations in the FIR are taken at its face value, and accepted to its entirety, it does not constitute the alleged offence.

13. The fact remains that, had it been the intention of the present petitioners to commit criminal breach of trust, they would not have deposited the amount in the PF account. Even prior to fling of the FIR, part of the PF amount has already been deposited in the PF account and rest has been deposited within short time. Therefore, the conduct of the petitioners does not refect dishonesty in any manner. There has to be an 'intention' for committing the said offence. The continuation of criminal proceedings in relation to the FIR and the charge- sheet against the petitioners would be unfair, unjust and against the interest of justice. It would only amount to abuse of process of law and a sheer waste of judicial time. There is

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nothing likely to be achieved by continuation of such proceedings.

14. Considering the facts and record, the prosecution is not likely to succeed if the proceedings are continued. There is no prima facie case warranting for continuation of prosecution. Therefore to secure the ends of justice, the FIR and the consequential proceedings are required to be quashed and set aside, in exercise of powers conferred under Section 482 of the Code of Criminal Procedure.

15. Accordingly, the Writ Petition is allowed. The FIR No. 175 of 2018 dated 12.04.2018, registered with MIDC Police Station, Andheri (East), and the charge-sheet bearing No. 1461/PW/2024, dated 19.04.2024 are hereby quashed and set aside.

No order as to costs.

(MANJUSHA DESHPANDE, J.) (BHARATI DANGRE, J.)

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