Partnership liability under the Employees Provident Funds Act is limited to managing partners; non-managing partners cannot be prosecuted post-dissolution.

Dated this the 11^th day of September, 2024

ORDER

These criminal miscellaneous cases are filed to quash the proceedings in C.C.Nos.1162/2004, 992/2004, 942/2001, 218/2002, 374/2002, 939/2001, 945/2001, 231/2001 and 156/2002 on the file of the Judicial First Class Magistrate Court, Alathur. The petitioner in these cases is the 4^th accused in the above cases. All these cases are charge sheeted against the petitioner and others alleging offence punishable under Section 406 read with Section 34 of the Indian Penal Code.

2. The prosecution case in brief is that accused Nos.1 to 10, who are the partners of M/s. A.S.Mohammed Kutty Company, Apple Photo Beedies, Alathur, committed criminal breach of trust by misappropriating the contribution collected from the charge witness and other employees of the Company which is due to the defacto complainant and hence it is alleged that the accused committed the offence. According to the 11 petitioner, who is the 4^th accused in these cases, no o made out against the petitioner even if the entire allegations are accepted.

3. Heard the learned counsel for the petitioner and the learned Public Prosecutor.

4. The counsel for the petitioner submitted that the petitioner who is the 4^th accused in all these cases was the partner of “M/s. A.S.Mohammed Kutty Company, Apple Photo Beedies, Alathur”, a partnership firm, which is established within the meaning of the Employees Provident Funds and Miscellaneous Provisions Act, 1952 (for short, Act 1952). It is submitted that the afore mentioned partnership firm got established on 02.07.1980 with one of the condition that death or insolvency of any of the partners shall dissolve the firm. The partnership deed is produced in all these cases as Annexure-A. It is submitted that the 4^th partner in Annexure-A instrument of partnership died on 28.04.1989. Hence it is submitted that the partnership firm dissolved on 28.04.1989, as per the aforementioned condition. Therefore it is submitted that the partnership firm in the name and style “M/s.A.S.Mohammed 12 Kutty Company” was not reconstituted after the death of the 4^th partner named Abdul Rehman. It is also submitted that as per Clauses 3 and 4 of the partnership deed, the business of the firm is managed by 3 persons and the petitioner is not in charge and responsible for the activities of the firm. The counsel for the petitioner also takes me through the definiton of ‘Employer’ in the Act 1952 and submitted that even if the entire allegations are accepted, no offence is made out as against the petitioner. The Public Prosecutor submitted that the contention raised by the petitioner are all matters of evidence and the petitioner has to prove the same before the trial court at the appropriate stage.

5. After hearing both sides, I think there is force in the argument of the petitioner. Section 2 (e) of the Act 1952 defines ‘employer’. It will be better to extract (e):

"2(e) "employer" means -

(i) in relation to an establishment which is a factory, the owner or occupier of the factory, including the agent of such owner or occupier, the legal representative of a deceased owner or occupier and, where a 13 person has been named as a manager of the factory under clause (f) of sub-section (1) of section 7 of the Factories Act, 1948, the person so named; and (ii) in relation to any other establishment, the person who, or the authority which, has the ultimate control over the affairs of the establishment, and where the said affairs are entrusted to a manager, managing director or managing agent, such manager, managing direct