Non-payment of gratuity by an employer to an employee on retirement or resignation does not constitute a criminal breach of trust under sections 405 and 406 of the Indian Penal Code. The Payment of Gratuity Act, 1972, is a complete Code for dealing with non-payment of gratuity and excludes the application of the Indian Penal Code.

S. K. Jam, J.

1. R. N. KHANNA petitioner, herein, is the Director of M/s. Sri Krishna Woolen Mills (P) Ltd. , Bombay, Amrik Singh, respondent was employed with the said company with effect from 1.10.1958 to 30.11.1988. He tendered his resignation which was accepted and he was relieved on 31.10.1988. Since the company failed to pay the amount of his gratuity, Amrik Singh Nayyar instituted complaint Annexure P-2 under sec. 406/420 of the Indian Penal Code, on 1.24.12.1991 in the Court of Chief Judicator Magistrate, Ludhiana. Vide his order dated 31.10.1992 the said Magistrate summoned the petitioner. Through this petition under sec. 482 of the Code of Criminal Procedure Shri R. N. Khanna Petitioner has sought quashing of the complaint Annexure P-2 and summoning order Annexure P-i.

2. On being served, respondent has filed the reply.

3. I have heard learned counsel for the parties.

4. The learned counsel for the petitioner has argued that a bare reading of the complaint will show that no offence whatsoever has been made out even prima facie.

5. In reply, it has been argued on behalf of the respondent that pension and gratuity are no longer any bounty to be distributed by the employer to his employees on their retirement but are valuable rights and property in their hands and any culpable delay in settlement and disbursement thereof must be visited with penalty.

6. I have given a thoughtful consideration to the entire matter and the question now is as to whether non payment of gratuity by an employer to its employee on his retirement or acceptance of resignation from service could supply a cause of action to the employee to bring a complaint before a criminal Court under sections 406/420 of the Indian Penal Code.

7. In order to succeed in this petition like the one, the petitioner was required to fulfil the essential ingredients of the provisions of sections 405 and 406 I. P. C. Secondly, he is also required to indicate that the respondent company failed to comply with the relevant provisions of the Payment of Gratuity Act, 1972. It appears that on both counts, the petitioner failed badly.

8. Section 405 is the relevant provision which defines the criminal breach of trust. Sec.406 prescribes the punishment for criminal breach of trust. The essential ingredients of the section are:

1. The accused must have been entrusted with property or with dominion over property; 2. (a) The accused must have misappropriated or converted to its own use that property; or (b) Used or disposed of that property in violation of any direction of law prescribing the mode in which such Trust is to be discharged; or (c) Used or disposed of the property in violation of any legal contract (express or implied) which he has made touching the discharge of such trust; or (d) Wilfully suffered any other person so to do.3. Such misappropriation or user or disposal must be dishonest or such sufference must be wilful.

9. In the absence of proof of entrustment of property or dominion over the property of another, this section will not apply. Similarly, in the absence of proof of the dishonest intention, the rigour of this section will not be attracted.

10. In this view of the matter one has rust to find out if the petitioner has entrusted any amount to the company which they in turn have put to their own user. There cannot be any entrustment in the case of the payment of gratuity amount. It is not disputed that at no point of time any amount is contributed by the employee or deducted from his salary towards the gratuity fund. Sec.4 of the Payment of Gratuity Act, 1973, lays down an obligation on the employer to pay gratuity to the employee on the termination of his employment after he has rendered service for not less than 5 years, on his superannuation or on his retirement or on his death or his disablement due to accident or disease. For every completed year of service or part thereof in excess of six months, the employer has to pay gratuity at the rate of