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2007 Supreme(Cal) 165
High Court Of Calcutta
Before Mr. Justice Sailendra Prasad Talukdar J.
KAMALA TEA COMPANY LIMITED - Appellant
Versus
STATE OF WEST BENGAL - Respondent
C. R. R. 1446 Of 2005
Decided On : 03/09/2007
ASHIM KUMAR ROY, HIMANGSU DE, Joy Sengupta, JOYMALYA BAGCHI, KAUSHIK CHATTERJI, KAZI SAFIULLA, MIHIR KUNDU, P.D.MUKHERJI, P.F.AUTHORITY, R.P.BHATTACHARJI, R.S.CHATTERJEE, S.C.Prasad, S.K.MALLICK, S.P.TIWARY, SEKHAR BASU, SUMAN DE
Subsequent payment of employees' share of Provident Fund (PF) contributions, though welcome, does not absolve the accused of criminal liability under Section 405 of the Indian Penal Code for criminal breach of trust.
Headnote:
CRIMINAL BREACH OF TRUST - PROVIDENT FUND DEDUCTIONS - SUBSEQUENT DEPOSIT - EFFECT - EMPLOYEES' PROVIDENT FUND AND MISCELLANEOUS PROVISIONS ACT, 1952 - SECTIONS 405, 406, 409 - INDIAN PENAL CODE, 1860 - SECTION 405 - INTERPRETATION - LIABILITY OF DIRECTORS.
Fact of the Case:
In five separate cases, the petitioners, directors of various companies, were accused of criminal breach of trust under Section 405 of the Indian Penal Code for failing to deposit employees' share of contributions towards Provident Fund (PF) with the statutory fund, despite deducting the same from the employees' wages. The petitioners claimed that due to various financial difficulties, they were unable to deposit the PF dues on time but subsequently deposited the entire amounts. They sought to quash the criminal proceedings against them on the grounds that the subsequent deposit absolved them of any criminal liability.
Finding of the Court:
The court held that subsequent payment of the PF dues does not, by itself, condone the lapse but is a factor to be considered at the subsequent stage, particularly during the imposition of punishment. The court declined to quash the criminal proceedings at this stage, observing that the liability of individual directors could be best decided during the trial.
Issues: 1. Whether subsequent payment of employees' share of PF contributions absolves the accused of criminal liability under Section 405 of the Indian Penal Code? 2. Whether the liability of directors for criminal breach of trust can be determined at the initial stage of the proceedings?
Ratio Decidendi: 1. Subsequent payment of PF dues does not, by itself, absolve the accused of criminal liability under Section 405 of the Indian Penal Code. 2. The liability of individual directors for criminal breach of trust can be best decided during the trial, taking into account the specific circumstances and allegations against each accused.
Final Decision: The court dismissed all five applications seeking to quash the criminal proceedings against the petitioners. The petitioners were granted liberty to approach the respective Magistrates' Courts with their claims of subsequent deposit of the PF dues. The Magistrates' Courts were directed to consider these claims and pass appropriate orders in accordance with the law.
( 2 ) GRIEVANCES of the petitioners as ventilated in the various applications, may briefly be stated as follows:
( 3 ) THOUGH employees' share of contributions towards Provident Fund were deducted by the respective employers from the wages of the employees, they failed to pay or deposit such contributions to the statutory find. By not paying such amount to the statutory fund though recovered from the wages of the members of the employees, there had been a failure on the part of the employers which amounted to an offence of criminal breach of trust under Section 405 of the Indian Penal Code.
( 4 ) CONCERNED Provident Fund authorities lodged complaints against the petitioners in the various cases, as referred to. On the basis of the same cases under Sections 406/409 of Indian Penal Code were started against the petitioners. By filing such applications under Sections 401/ 482 of the Code of Criminal Procedure, the petitioners in the various cases sought for quashing of the said cases on the grounds which may be capsulated in a few sentences as follows:- in C. R. R. No. 97 of 2006, it was claimed on behalf of the petitioners that due to various reasons like labour problem, loss of capital, shortage of power, general recession in the tea market, there had been active financial crisis for a considerable period. Such unforeseen circumstances stood in the way of the Company's depositing the Provident Fund dues in time for the period from october, 2003 to January, 2004. The petitioners in the said case claimed that subsequently the entire amount of Rs. 8,82. 701/- was duly deposited. The said case was investigated and Police after completion of investigation submitted charge-sheet under Sections 406/409 of Indian Penal Code. In C. R. R. No. 37 of 2006, the default in making such deposit was to the tune of Rs. 10,80,883/-for the period from February, 2005 to April, 2005, in C. R. R. No. 3300 of 2005, the alleged default in deposit of the employees share of the Provident Fund for the period from April, 2005 to August, 2005 was to the tune of Rs. 7,75,895/ -. In C. R. R. No. 670 of 2006 the amount involved was rs. 9,33,477/- for the period from January, 2003 to December, 2004. In C. R. R. No. 1446 of 2005, the amount was Rs. 28,19. 703/- and it was for the period from March, 2004 to December, 2004.
( 5 ) PETITIONERS in different cases were represented by the respective learned Counsel. Both the O. P. /state and the O. P. /p. F. authority were also represented by different learned Counsel.
( 6 ) THE main thrust of argument on behalf of the petitioners was that the Directors of a Company cannot be termed as owners of the same and they cannot be fastened with criminal liability inasmuch as it is the company which is the owner and is responsible for payment of Provident fund dues with the authorities. Prosecution of the Directors by invoking the principle of vicarious liability is not tenable-more so when the deposits had already been made with the concerned Provident Fund authorities.
( 7 ) LEARNED Counsel, Mr. Sekhar Basu, appearing on behalf of the petitioners submitted that this Court in the best interest of justice is required to take into consideration the fact that subsequently the entire amounts were, deposited. According to him, in absence of any guilty mind or mens rea, there could not be any offence either under Section 406 or Section 409 of Indian Penal Code.
( 8 ) MR. Basu referring to the decision in the case of Jasoda Glass and silicate and Ors. v. Regional Provident Fund Commissioner and Ors. , reported in 2002 (2) CHN 407, submitted that the learned Division Bench of this court in a similar situation disposed of a writ appeal with a direction upon the petitioners to approach concerned learned Courts of Magistrates a
