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MADRAS HIGH COURT
Mrs. Padmini Jesudurai J,
S. Ganapathy - Petitioner
Versus
The Mallalakshmi Textile Mills Ltd. and other. - Respondents
Criminal Misc. Petition Nos. 5042 to 5059/85
Decided on 12-4-1988
IMPORTANT POINT
Notification blued u/s 3 of Tamil Nadu Relief Undertakings (Special Provisions Act, 1969 cannot hare the effect of staying prosecution for offences relating to nonpayment of provident fund contributions and the administrative charges under Employees Provident Fund Act and the schemes framed thereunder, either by the company or by these in charge of or responsible to the affairs of the company.
Headnote:Criminal Misc. Petition Nos. 5042 to 5059/85 Decided on 12-4-1988 Tamil Nadu Relief Undertakings (Special Provisions) Act. 1969 - Section 3 - Notification under-Criminal prosecution relating to non payment of Provident Fund contribution, the dishonest retention of provident fond contribution already collected and the non payment of the administrative charges against the company and its officers-Whether the moratorium placed under the Act extends to such criminal prosecutions order Employees Provident Foods and Miscellaneous Provisional Act and the scheme framed thereunder?-(No)
Held, the obligations and liabilities which do not accrue or arise under contracts, assurances of property, agreements settlements, awards, standing orders or other instruments are not suspended by the Notification. The liability to contribute to the Provident Fund of the, employees, to deposit amount collected from / the employees and the liability to pay administrative charges do not arise under any contract or agreement or settlement between the employer and the employee or under any award or standing orders or other instruments. These liabilities are created by a statute, which requires the employer to contribute his share to the Provident Fund of the employees under him. The Employer, under the statute, is also required - to collect the employees in charge of the Provident Fund, by deducting the same from the wages of the employees.
Held, Further Sec. 405 of the Indian Penal Code, has been amended and Explanation 1 has been added, which provides that the money deducted by the employer from the wages of the employees, as contribution to the employees share of the Provident Fund for being credited to the". Provident Fund or Family Pension Fund, shall be deemed to have been entrusted with the employer, and default in the payment of such contributions, amounts to criminal breach of trust, attracting provisions of Sec. 405, I.PC. It is, therefore, clear that the liability to contribute the employer's share of the Provident Fund, the liability to deposit the amount already collected from the employ", and the liability to pay administrative charge a created by statutes, cannot be brought within sub-clause (b) of the Notification. (Para 13)
Held, When an industrial concern runs into financial difficulties and suffers loss, and threat of winding up appears to be imminent, notification is issued under the Act, to provide the undertaking with same breathing time by keeping pre-existing obligations and liabilities arising out or contract, assurance of property, agreement out, to which the relief undertaking is, a party, alive, and entering moratorium and staying such proceedings against the relief undertaking. The undertaking, tries to restabilise its finance, unhindered by litigants seeking to enforce liabilities against them. This is the limited object behind the Act. It follows, that the notification cannot have the effect of staying prosecution for offences, committed either by the company or by these in charge of or responsible to the again of the company. (Para 14)
Result: Petitions Allowed.
JUDGMENT
Mrs. Padmini Jesudurai, J. These petitions coming on for hearing upon perusing the petitions and upon hearing the arguments of Mr. V. Vibhishanan, Advocate for the petitioner in all the petitions and of Mr. A. Chidambaram, Advocate for the Respondents 1 to 7 and 9, in all the petitions, M/s. Aiyer & Dolia, Advocate for the 8th respondent in all the petitions, the Court made the following order:
The Provident Fund Inspector, Madurai IV Division, who had filed 18 complaints, before the Judicial First Class Magistrate, Madurai as C. C. Nos. 159 to 164 of 1964, 467 to 472 of 1984 and 775 to 780 of 1984 for offences under Sections 14 (1A), 14-A and 14AAA of the Employee's Provident Funds and Miscellaneous Provisions Act, 1952 (Act 19 of 1952) and the Employees' Provident Funds Scheme, 1952, and in which, the learned Magistrate ordered postponement of the trial on the around that, the first respondent Textile Mill has been declared by a Notification to be a Relief Undertaking, under See. 3 of the Tamil Nadu Relief Undertakings (Special Provisions) Act, 196' (Tamil Nadl1 Act 21 of 1969) (hereinafter referred to as the Act) and that during the currency of that Notification, the above criminal prosecutions are to be kept in abeyance, invoke the inherent powers of this Court under Sec. 482, Cr. P.C., for a direction to the learned Magistrate, to proceed with the trial according to law.
2. Facts briefly are: The petitioner has filed the above complaints on the averments that, respondents 1 to 8 are the Directors and the ninth respondent, is the Manager of the first respondent Textile Mills and that between August 1982 and January 1.984, the respondents, as employers, had collected Provident Fund contributions from their workers and had failed to deposit the same as required under the Act and had also failed to contribute their share of the Employees' Provident Fund and had also failed to pay the administrative charges and in addition, had previously been convicted for similar offences in S.T.C. Nos. 638 to 650 of 1978.
3. During trial, P. W. 1 and D. W. 1 were examined, Written arguments had also been submitted on behalf of the respondents, it had been contended that the Notification dated 21.2.1983 issued under Sec. 3 of the Act, declaring the first respondent as a relief undertaking, placed a morotorium on criminal prosecutions for failure to discharge financial obligation and the present prosecutions, being for non-payment and non-remittance of provident fund dues, could neither be instituted or continued, during the period, when the undertaking had the benefit of the Act. Accepting the above contention of the respondents, the learned Magistrate, passed the impugned order, stopping the trial and directing postponement of all further proceedings. Challenging the correctness of the decision, the petitioner has filed the present applications seeking a direction to the Trial Court, to proceed further with the trial.
4. Thiru V. Vibushunam, learned Counsel for the petitioner contended that though the first respondent bas been declared to be a Relief Undertaking under the Act by Notification No. 1 dated 28.11.1984, which bas been periodically extended, Notification No. 11 issued under Section 4 of the Act, does not have the effect of suspending criminal prosecutions for offence Committed by the Company or by its officers. The Notification neither precludes lunching of such prosecutions nor stays them.
5. Per contra, Thiru A. Chidambaram, learned Counsel for respondents 1 to 7 and - contended that, the since Act is primarily intended to live temporary relies to sick industries and enforcement of fiscal liabilities during the relief period is suspended, these prosecution, which have the indirect effect of compelling the undertaking, to make the defaulted payments, should also be deemed to be kept in abeyance, during the period when the undertaking is given the protection of the Act.
6. M/S. Aiyar and Dolia, learned Counsel for
