Default by an employer in depositing deducted employees' contributions under labour laws constitutes criminal breach of trust under Section 406 IPC by virtue of the Explanations to Section 405 IPC. Such criminal prosecution is distinct from and independent of penalty proceedings under labour statutes, thus avoiding double jeopardy.

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YASHVIR SINGH RATHOR, J. (Oral)

1. Prayer in this petition filed under Section 528 of Bharatiya Nagarik Suraksha Sanhita, 2023 is for quashing of F.I.R. No.835 dated 20.12.2011, registered under Sections 406 and 420 of IPC at Police Station Model Town Panipat, District Panipat and all subsequent proceedings arising therefrom.

2. The present FIR has been registered on the basis of a complaint given to the police by the Executive Engineer, Sub Division, Haryana Vidyut Prasaran Nigam Limited (for short ‘HVPNL’), Panipat, with the allegation that M/s Sandhu Security Services, SCO No. 45-46, First Floor, Office No. 105 Sector-11, Panchkula, was an approved contractor for providing skilled manpower under this Division on outsourcing basis w.e.f. 01.06.2009 to 31.05.2010, and accordingly, work orders were placed on a monthly basis for the supply of requisite manpower at various substations. The payment is regulated by multiplying the number of manpower provided by the contractor with approved DC rates, applicable Employee Provident Fund (for short ‘EPF’) plus Employee State Insurance (for short ‘ESI’) plus service tax plus zero percent premium thereon. All the payments including EPF/ESI have been made to the contractor through account payee cheques but contractor has neither deposited the entire amount of EPF (both employer and employee share) and ESI (both employer and employee share) with the concerned authorities nor he has provided the contract labour with the mandatory EPF and ESI cards which was obligatory on the part of contract. The contractor has, thus, dishonestly misappropriated the EPF and ESI amounts paid to him and has also committed breach of trust. The contractor’s employees working under the proprietor have not been paid the EPF amounts even after the lapse of 18 months of termination of contract of this contractor. The embezzlement of EPF amount of Rs.14,65,041/- and ESI amount of Rs.3,71,856/- was made by the contractor which shows that contractor has not deposited the exact amount with the EPF/ESI authorities and has embezzled the same. Accordingly, a prayer was made to investigate the matter after lodging the FIR against Ajay Sandhu son of Kulbir Singh resident of village and post office Kaoth Kalan, District & Tehsil Narnaud, District Hisar under appropriate Sections of IPC and initiate proceedings against him. After registration of FIR, matter was investigated and after completion of investigation, final report has been presented in the Court for trial.

3. By way of present petition, petitioner is seeking the quashing of the FIR. It has been alleged that the FIR has been falsely registered against the petitioner with an ulterior motive to blackmail him. A bare perusal of the FIR shows that it is a case of violation of provisions of Section 39(5a) of the Employees’ State Insurance Act, 1948 (for short ‘ESI Act’) according to which if the contribution payable under this Act is not paid by the principal employer on the date on which such contribution was due, he shall be liable to pay simple interest at the rate of 12% per annum or at such higher rates as may be specified in the regulations till the date of actual payment as has been provided in Section 39 of the said Act which is reproduced as below:-

“39. Contributions- (1) The contribution payable under this Act in respect of an employee shall comprise contribution payable by the employer (hereinafter referred to as the employer's co