The main legal point established in the judgment is that employers have a statutory obligation under the EPF Act, and non-compliance leading to misappropriation of provident fund contributions can constitute criminal breach of trust under the Indian Penal Code.

JUDGMENT :

1. Heard Mr. Umesh Prasad Singh, learned senior counsel for the petitioners, Sri Rajeev Kumar Verma, learned senior counsel for the Employees Provident Fund Organization and learned counsel for the State.

2. The petitioners in both the applications have filed their applications praying for quashing of the first information report of Gandhi Maidan P.S. Case no. 340 of 2021 registered on 17.7.2021 under sections 406 and 409 of the Indian Penal Code.

3. The FIR was registered on the basis of written statement dated 16.7.2021 of the Enforcement Officer, Regional Office, Employees Provident Fund Organization, Patna, Bihar addressed to the Officer In-charge, Police Station Gandhi Maidan, Patna. It was stated therein that M/s Sahabad Investment and Traders Ltd. (SINTRA) is an establishment covered under the provisions of the Employees Provident Fund and Miscellaneous Provisions Act, 1952 (hereinafter referred to as ‘the EPF Act’) with effect from 31.7.1972 bearing code no. BR/PAT/2006. By letter dated 4.5.1976 SINTRA was granted relaxation under para 79 of the EPF Scheme, 1952, however as the establishment violated the conditions as mentioned in the letter dated 16.7.2021 of the EPF Scheme, 1952, by letter dated 28.2.2017 the competent authority withdrew the relaxation granted. Further the establishment was directed to transfer the past accumulation within 10 days of receipt of the order dated 8.2.2017 and to submit a statement of the same in accordance with the provisions of paragraph no. 28 of the EPF Scheme, 1952. The Secretary of the trust submitted the past accumulation statement as on 28.2.2017 with their letter dated 3.7.2018 according to which Rs. 5,14,24,723/-was payable to the EPFO, Patna. Out of the aforesaid amount Rs. 1,61,50,120/-relates to employer’s share while Rs. 3,52,74,603/-relates to the employees share. It was further stated that till date only Rs. 2,50,34,204/-has been recovered from the establishment and an amount of Rs. 2,63,90,519/-in respect of 224 employees as on 28.2.2017 i.e. the date the relaxation was withdrawn, is still due. It was stated that the office is regularly receiving complaints from the employees of the establishment of payment of EPF benefits. Consequent to withdrawal of the relaxation, the management of SINTRA Ltd was liable to transfer the total EPF accumulation of the employees as on 28.2.2017 as per past accumulation statement against whom the provident fund contribution was deducted. It was stated that since the establishment failed to deposit/transfer the dues amount of Rs. 2,63,96,519/-in accordance with the provisions of the EPF Scheme, 1952, it appeared that the management of SINTRA Ltd and its provident fund trust has misappropriated the provident fund contribution of their employees and thereby they have committed the offence of criminal breach of trust as provided in Explanation-1 of section 405 of the Indian Penal Code and punishable under sections 406 and 409 of the Indian Penal Code. The Enforcement Officer, Regional Office, EPFO by his letter dated 16.7.2021 requested that an FIR be lodged against the petitioners for misappropriation of the provident fund contribution of their employees. Accordingly the FIR as stated above was registered against the petitioners.

4. It is submitted by learned senior counsel appearing for the petitioners that from perusal of the allegations as leveled in the FIR it would transpire that no specific allegation has been made against the petitioners. The so-called establishment or the Company of which the petitioners were merely employees have not been made accused. None of the petitioners were holding the office at any time as In-charge or controlling Director and or as Executive Director or Managing Director of the company. The company had become non-functional since 2016. The petitioner no. 1 of Cr.W.J.C no. 868 of 2021 was appointed as Additional Director of the company on 23.11.2017 and he retired as Director on 31.12.2020. The petitio