The central legal point established in the judgment is the mandatory nature of the inquiry under Section 7A of the EPF Act and the importance of following prescribed procedures before invoking penal provisions.

JUDGMENT :

(Shyam C. Chandak, J.) :

1. Present Petition is preferred under Articles 226 and 227 of the Constitution of India read with Section 482 of the Criminal Procedure Code, seeking to quash F.I.R. dated 28th June, 2018 bearing C.R. No.333 of 2018, registered with Powai Police Station, Mumbai for the offences punishable under Sections 406, 409 read with 34 of the Indian Penal Code, 1860 and Section 14 of the Employees’ Provident Funds & Miscellaneous Provisions Act, 1952 (‘the Act’, for short).

2. Heard Ms. Deepa Chavan, learned Counsel for the Petitioners and Ms. Mahalakshmi Ganpathy, learned APP for the Respondent-State. Perused the record.

3. Record reveals that, by an Order dated 2nd November, 2018, this Court directed that, till next date the Petitioners as well as the Respondent No.3 should not be arrested in the crime. By an Order dated 16th January 2019, the respondent police was directed not to file the charge sheet. Then the Respondent No.1 filed his Affidavit in Reply. The Rule was issued on 19th October, 2022 and the interim relief was continued till the Petition is finally disposed of.

4. The facts giving rise to this Petition are as under:

4.1 Petitioner No.1 is a Private Limited Company. The Petitioner Nos.2 and 3 are respectively the Founder & Director and Co-Founder & Director of the Petitioner No.1. The Respondent No.3 is a Nominee Director of the Petitioner No.1.

4.2 The Petitioner No.1 company has been registered under the Employees’ Provident Fund and Miscellaneous Provisions Act, 1952 (‘ the Act’ for short). Therefore, the Petitioners are responsible to deposit the EPF dues of its employees and the EPF dues of the Petitioner No.1 in the relevant EPF account. On 6th March, 2018, the Respondent No.1 visited the office of Petitioner No.1 and inspected its relevant record. It revealed that, from September, 2017 to February, 2018, the Petitioner No.1 deducted total Rs.37,23,451/- as the EPF subscription from the salaries of its employees. The said subscription amount, however, was not deposited in the relevant EPF account maintained with the State Bank of India. Therefore, the Respondent No.1 gave a letter to deposit the said amount at the earliest. Thereafter, on 28th June, 2018, the Respondent No.1 lodged a report with Powai police station alleging that, the Petitioners converted for their own use the said amount and thus, misappropriation the same. In turn, Powai police station registered the impugned F.I.R.

5. Learned counsel for the Petitioners submitted that, during the period of September, 2017 to April, 2018, the executive role of finance team of Petitioner No.1 was shifted from its base in Mumbai to Bangalore. Therefore, all executive and operational decisions regarding the finances of the Petitioner No.1 were to be taken from the Bangalore Office of Petitioner No.1. From the period of March, 2017 to April, 2018, key finance team members of the designations of “Head–Accounts and Payments”, “Manager- Accounts and Payments” and “Senior Executive-Accounts” exited the services of Petitioner No.1, leaving no responsible or competent finance team member(s) to oversee the dues payable by the Petitioner No.1 and also due to the change in management structure, the aforesaid dues were inadvertently left unpaid due to oversight. However, immediately after the inspection by Respondent No.1, the Petitioners realized that said amount has not been deposited in the concerned EPF account. Therefore, on 12th March, 2018 and 20th March, 2018, the Petitioners deposited the said EPF dues totalling to Rs.73,50,586/- in the concerned EPF account ( vide bank Challans at Exhibit B-1 to B-6). On 11th September, 2018, the Petitioner No.1 paid an amount of Rs. 3,37,998/- towards the interest and penalty for the unpaid dues. There is no much delay in payment of said dues.

5.1 Learned counsel for the Petitioners submitted that, the Petitioner No.1 company was registered in the year 2012. Vide D.O. Letter No.Z-13025/39/2015-LR C