Bombay High Court
Rolta Defense Technology Systems ... vs The State Of Maharashtra And Anr on 1 August, 2024
Author: Bharati Dangre
Bench: Bharati Dangre
2024:BHC-AS:33129-DB
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CRIMINAL APPELLATE JURISDICTION
WRIT PETITION NO.3080 OF 2018
1. Rolta Defense Technology
Systems Pvt. Ltd.,
Rolta Tower A, Rolta Technology
Park, MIDC, Marol Andheri (E),
Mumbai - 400093
2. Ashok Kumar Gakhar Petitioners
Director of Rolta Defense
Technology Systems Pvt. 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)
...
Ms Nimisha Rathod, for the Petitioner.
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.174 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. 174 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").
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 01.12.2015. All the provisions of the Act
of 1952 are applicable to the establishment of the petitioner
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.
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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 the 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.79,61,491/- has not
been deposited by the Director of the company. The petitioner
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 letter dated 13.04.2018 had informed the
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Assistant PF Commissioner (Compliance) that, the Employee's
contribution from July 2017 to February 2018 of
Rs.80,04,656/- 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.79,26,413/-. 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.80,04,656/- 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
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
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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 wad 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
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
1 1998 (4) ALL MR 389
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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
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
2 1995 Supp (4) SCC 580
3 R/Cri.Misc. Appl No.15559 of 2017
4 (1998) 6 SCC 288
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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. In view thereof, the Writ Petition deserves
to be dismissed.
9. 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 impugned 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.
On this background, the petitioners have prayed for
quashing of the FIR registered against them.
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10. 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
"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
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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.
11. In the present case, petitioner No. 1 is the company and
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
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.
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12. Therefore 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 such offences. The
continuation of criminal proceedings in relation to the FIR
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 nothing likely to
be achieved by continuation of such proceedings.
13. 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.
14. Accordingly, the Writ Petition is allowed. The FIR No. 174
of 2018 dated 12.04.2018, registered with MIDC Police Station,
Andheri (East), Mumbai is hereby quashed and set aside.
No order as to costs.
(MANJUSHA DESHPANDE, J.) (BHARATI DANGRE, J.)
R.V.Patil
