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HIGH COURT OF CALCUTTA
Dipak Kumar Sen, J.
Hooghly Docking and Engineering Co. Ltd & Ors.
vs.
The Inspector, Employees Provident Fund, West Bengal & Ors.
C.R.No. 1971 (W) to 1980 (W) of 1974
Decided on : July 30. 1979
CRIMINAL PROCEEDINGS - EMPLOYEES PROVIDENT FUND AND FAMILY PENSION ACT, 1952 - SECTION 14(2A) - PAYMENT OF ARREARS OF PROVIDENT FUND CONTRIBUTIONS - CRIMINAL PROSECUTION - WHETHER MAINTAINABLE AFTER PAYMENT OF ARREARS.
Fact of the Case:
The petitioner company, Hooghly Docking and Engineering Co. Ltd., had been sustaining losses in its business since 1963 and was unable to pay its contributions to the provident fund of its employees from July 1970. The company informed the Regional Provident Fund Commissioner about its financial difficulties and assured him that it would pay all arrears of contributions as soon as it received assistance from the Industries Re-construction Corporation of India Ltd. The Corporation sanctioned grant for assisting the company on condition that the management and control of the company would be made over to the Corporation during the period such assistance would continue. The company accepted the conditions and started making payment of the instalments immediately thereafter. The company alleged that in spite of the aforesaid, the Provident Fund Authorities are continuing the proceedings instituted against them, the petitioner, in the Court of the 10th Presidency Magistrate.
Finding of the Court:
The court held that in view of the payment of the entire provident fund dues, the petitioners should not suffer the said criminal proceeding. The court observed that the Provident Fund Authorities had accepted the instalments offered after the stipulated period and must be held to have extended the time for payment of such instalments by implication and by their conduct. The court further held that the petitioners have acted on the basis that the time for payment of instalment under the said scheme had been extended and by paying the said instalments they have altered their position. It is not open to the Provident Fund Authorities Now to fall back upon the past defaults and continue the Criminal prosecution.
Issues: Whether the criminal prosecution against the petitioners for non-payment of provident fund contributions is maintainable after the payment of the entire arrears.
Ratio Decidendi: The court held that the criminal prosecution against the petitioners is not maintainable after the payment of the entire arrears of provident fund contributions. The court observed that the Provident Fund Authorities had accepted the instalments offered after the stipulated period and must be held to have extended the time for payment of such instalments by implication and by their conduct. The court further held that the petitioners have acted on the basis that the time for payment of instalment under the said scheme had been extended and by paying the said instalments they have altered their position. It is not open to the Provident Fund Authorities Now to fall back upon the past defaults and continue the Criminal prosecution.
Final Decision: A Writ in the nature of Prohibition will issue commanding the respondents Nos. 2 and 3 to refrain from proceedings further with the said criminal cases pending before the 10th Metropolitan Magistrate, Calcutta. A Writ in the nature of Mandamus will also issue directing the respondents to take steps for withdrawing the said criminal cases against the petitioners in accordance with law and if necessary, to take steps to compound the same.
1. The Hooghly Docking and Engineering Co. Ltd. the petitioner No. 1 herein is an existing company within the meaning of the Companies Act 1956. It has its registered office at No. 12. Mission Raw. Calcutta and its factory is situated at No.6. Howrah Road, Salkia, West Bengal, The petitioner No. 1 carries on business in ship building and ship repairing. Birendra Nath Mukherjee, the petitioner No. 2 is a shareholder of the petitioner No. 1 and lie the material time had been a director and the Chairman of the Board of Directors of the petitioner No. 1. The petitioners Nos. 3 to 6 were at the material time also the directors of the petitioner No 1.
2. The petitioner. No. 1 had been sustaining losses in its business since 1963, and its position became ever more acute since 1966 on account of general economic recession in India. As a result the available working fund of the petitioner No. 1 was completely depleted and all its reserves were completely wiped cut. Funds were not available for payment of both the net wages of the employees as also the other liabilities including statutory liabilities and after payment of the net wages the petitioner No.1 had to defer payment of its other liabilities till its financial position improved. The contributions of the petitioner No.1 to the provident fund of its employees therefore remained unpaid from July 1970, in spite of exercise of all possible diligence and bona fide attempts on its part.
3. The petitioner No.1 by its letter dated the 21st March, 1973 informed the Regional Provident Fund Commissioner that it was unable to pay its contributions to the provident fund of its employees by reason of the aforesaid facts. The Commissioner was further informed that the petitioner No. 1 was about to secure two large orders which could keep it going for some more time and that the Industries Re-construction Corporation of India Ltd., (hereinafter referred to as the Corporation) a subsidiary of the reserve Bank of India, bad assured the petitioner No. 1 that assistance would be given to it to enable it to tide over its temporary financial difficulty and had agreed to advance funds to the petitioner No.1 sufficient to mod its liabilities. The Regional Provident Fund Commissioner was assured that as soon as such fund would be received from the Corporation a scheme for refund of all arrears of contribution. to the provident fund would be submitted.
4. By a subsequent letter dated the 24th May. 1973 the petitioner No. 1 further informed the Regional Provident Fund Commissioner that the Corporation had sanctioned grant for assisting the petitioner No. 1 on condition that the management and control of the -petitioner No. 1 would be made over to the Corporation during the period such assistance would continue.
5. By the said letter petitioner No.1 also submitted a scheme for repayment of al1 arrears of provident fund contributions and requested the Regional Provident Fund Commissioner to drop all criminal prosecution instituted in the meantime for non-payment of the said provident fund contribution.
6. The Corporation assumed management and control of the petitioner No.1 in April, 1973 and the Board of Directors of the petitioner No.1 was reconstituted. Since the 27th February 1973 petitioner No. 2 ceased to be the Chairman of the petitioner No. 1 and the petitioner Nos. 3,4.5 and 6 also ceased to be the director and had nothing further to do with the control or management of the affairs of the petitioner No. 1.
7. Between the 9th January, 1973 and the 12th February, 1974 the Inspector, Employees Provident Fund, West Bengal had instituted several proceedings against the petitioner in the Court of the Chief Presidency Magistrate, Calcutta and altogether 17 petitions of complaints had been lodged
8. By his letter dated the 30th November. 1973, the Regional Provident fund Commissioner, west Bengal, informed the petitioner No. 1 that the Government of India in its Ministry of labour had agreed to accept its
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