The prosecution must prove both entrustment and dishonest misappropriation for conviction under Section 406 IPC; mere non-deposit without establishing these elements does not suffice.

JUDGMENT :

MANJARI NEHRU KAUL, J.

1. The instant appeal by the State of Punjab is directed against the judgment dated 10.06.2004 passed by learned Judicial Magistrate 1^st Class, Ludhiana, whereby respondent-accused Vijay Kumar was acquitted of the charge under Section 406 of the IPC . The State of Punjab seeks setting aside of the acquittal primarily on the ground that the learned trial Court misappreciated the evidence and failed to hold the respondent guilty of criminal breach of trust in respect of the provident fund contributions deducted from the salaries of employees of M/s Ashoka Uniwool Industry, Ludhiana (hereinafter referred to as ‘the Ashoka Industry’).

2. Having heard learned counsel for the parties and upon careful examination of the evidence and record, we are of the considered view that the judgment of acquittal rendered by the learned trial Court does not suffer from perversity or misappreciation of evidence, and the appeal is devoid of merit.

3. According to the prosecution, the Ashoka Industry, was an establishment governed by the provisions of The Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 (hereinafter referred to as the ‘EPF Act’), and thereby under a statutory obligation to deduct the provident fund contributions from the wages of its employees and deposit the same with the Provident Fund Commissioner.

4. On 29.10.1999, Mahesh Kumar, Inspector, Office of the Provident Fund Commissioner, submitted an application bearing No.11365/18 to the SSP, Ludhiana. It was alleged therein that during inspection, it was discovered that for the period April 1998 to June 1999, the management of Ashoka Industry deducted provident fund contributions of its employees but failed to deposit the same in the statutory fund. The amounts so deducted, being trust money, were alleged to have been dishonestly misappropriated by the management.

5. On this complaint, FIR No.289 dated 10.11.1999 (Exhibit PC) was registered at Police Station Division No.6, Ludhiana, under Sections 406 /409 of the IPC against Vijay Kumar, stated to be a partner of the firm.

6. Investigation was conducted by PW-1 ASI Hakam Singh, who collected records of provident fund deductions containing signatures of employees and details of contributions. On completion of investigation, a report under Section 173 of the Cr.P.C. was filed, and the accused was sent to trial under Section 406 of the IPC .

7. During trial, the prosecution examined six witnesses including PW-1 ASI Hakam Singh, PW-2 Mahesh Kumar (complainant Inspector), and some employees of the establishment, besides producing documentary evidence to demonstrate deduction of provident fund contributions and their alleged non-deposit within time.

8. When examined under Section 313 of the Cr.P.C., the accused denied the allegations, asserted his false implication, and stated that he was not personally responsible for accounts or for depositing provident fund contributions.

9. In defence, DW-1 Sundar Lal was examined, who categorically deposed that Vijay Kumar was neither the proprietor nor the person in charge of Ashoka Industry at the relevant time.

10. The learned trial Court, on appraisal of evidence, acquitted the accused by extending benefit of doubt. The material findings were:

 The prosecution failed to prove entrustment or legal liability of the respondent to deposit provident fund contributions.

 PW-2 Mahesh Kumar admitted that no written authorization or communication existed from the establishment fixing responsibility upon the respondent.

 PW-2 Mahesh Kumar further admitted that any delay in deposit could be regularized by payment of penalty and that at the time of trial, no dues were outstanding.

 No employ