STATE OF GUJARAT v. INDEQUIP ENGINEERING LIMITED — 1978 DIGILAW 143 (GUJ)

M. P. THAKKAR, J. ( 1 ) CAN the Court eschew the charge of being soft and unduly lenient in the cases of affluent offenders who commit serious offences whilst on the other hand being unduly harsh in dealing with the petty offenders who indulge in minor property offences if the sentencing policy reflected in the impugned judgment and order rendered by the Metropolitan Magistrate ( 2 ) COURT Ahmedabad is approved or confirmed ? 2 The respondent No. 2 who is said to be the managing director of respondent No. 1 public limited Company and respondent Nos. 3 and 4 who are slid to be the Secretary and Manager respectively of the said Company were charged with the offences under secs. 14 (1a) 14 (A-1) and 14-A (2) of the Employees Provident Funds Act 1952 (hereinafter referred to as the `act) inasmuch as they had failed to pay a sum of Rs. 66 894 for October 1976 in respect of the deductions made from the wages of workers and in respect of the contributions payable by the employer under paragraphs 30 and 38 of the Employees Provident Funds Scheme 1952 (hereinafter referred to as the Scheme ). The respondents pleaded guilty. The learned trial Magistrate accepted the plea of guilty and imposed an insignificant fine of Rs. 100. 00 against each of the respondents-accused. Thereupon the State of Gujarat has preferred the present appeal praying for enhancement of the sentence imposed by the learned trial Magistrate. Sec. 14 (1-A) provides that an employer who contrivances or makes default in complying with the provisions of sec. 6 or clause (a) of sub-sec. (3) of sec. 17 or paragraph 38 of the Scheme is so far as it relates to the payment of administrative charges shall be punishable with imprisonment for a term which may extend to six months. It has been further provided by clause (a) that the term of imprisonment shall not be less than three months in case of default in payment of the employees contribution which has been deducted by the employer from the employees wages. It has also been further provided by clause (b) that it shall not be less than one month in any other case i. e. a case which does not fall within the purview of clause (a ). It has also been further provided by clause (b) that it shall not be less than one month in any other case i. e. a case which does not fall within the purview of clause (a ). A proviso has been added to the main section whereby a discretion has been vested unto the Court to impose a sentence of imprisonment for a lesser term or of fine in lieu of imprisonment for any adequate and special reasons to be recorded in the judgment. In the present case the charge was inter alia that the employer had committed default in payment of employers contribution as also in payment of deductions made by the employer from the wages of the employees. Upon a plea of guilty the learned trial Magistrate was bound to impose a minimum term of imprisonment of three months having regard to the Legislative mandate embodied in clause (a) of sec. 14 (1-A) of the Act. With regard to the default in respect of the payments other than the deductions made from the wages of the employees it was incumbent upon the learned trial Magistrate to impose a minimum sentence of one months imprisonment. Of course the Court had discretion to impose a lesser term of imprisonment or a sentence of fine only in view of the proviso but then the condition precedent to the exercise of the power under the proviso to impose a lesser sentence or sentence of fine only was that special and adequate reasons existed in his opinion and reasons were recorded in his judgment. Notwithstanding the Legislative mandate the learned Metropolitan Magistrate has imposed a sentence of fine of Rs. 100. 00 only without giving any reasons for dispensing with the sentence of imprisonment which has been made obligatory by the Legislature. Even if the learned Magistrate was of the opinion that there were adequate and special reasons he was hound to record his reasons in the judgment. He has not recorded any reasons whatsoever. The learned trial Magistrate has dis-regarded the provisions made in sec. 14 (1-A) of the Act altogether. Not only he has dis-regarded the Legislative mandate but he has also dis-regarded the following observation made by this Court in C. K. Shah Provident Fund Inspector v. Natson Manufacturing Co. Pvt. Ltd. and Anr. He has not recorded any reasons whatsoever. The learned trial Magistrate has dis-regarded the provisions made in sec. 14 (1-A) of the Act altogether. Not only he has dis-regarded the Legislative mandate but he has also dis-regarded the following observation made by this Court in C. K. Shah Provident Fund Inspector v. Natson Manufacturing Co. Pvt. Ltd. and Anr. 127 G. L. R. 419 which also arose from a decision rendered by the Metropolitan Magistrate Ahmedabad. "in matters relating to contravention of the provisions of such an Act imposing of a sentence of imprisonment must be the rule and imposing of a sentence of mere fine an exception. A rich man who commits an economic offence out of avarice or in order to enlarge his economic empire and to maintain his privileged position arising out of his affluence cannot be treated on par with a poor man who commits a property offence for his bread or sustenance. One who robs to purchase an airconditioner or a T. V. set cannot claim the same liniency as one who does likewise to stave off starvation. Otherwise an impression will be created that there is one law for the rich (which favours him) and another for the poor (Which frowns at him) in a society professing egalitarian ethics but indulging in elite practices. And the situation is confounded when the rich rob the poor for whose poverty they are in some measure responsible. The Provident hand provides a measure of safety and security for the workers who have invested their entire life-time in the service of the Company. A person who robs a poor man of even the rags on his person deserves a very deterrent punishment and if a lenient view of such offences is taken by the Courts the administration of justice would lose the respect which it enjoys at the hands of the society at large. Under the circumstances the sentence imposed by the learned trial Magistrate which is extremely inadequate must be enhanced". ( 3 ) IT is therefore abundantly clear that sentence imposed by the learned trial Magistrate is ridiculously low and unduly lenient apart from the fact that it has been imposed without regard to the provision contained in sec. Under the circumstances the sentence imposed by the learned trial Magistrate which is extremely inadequate must be enhanced". ( 3 ) IT is therefore abundantly clear that sentence imposed by the learned trial Magistrate is ridiculously low and unduly lenient apart from the fact that it has been imposed without regard to the provision contained in sec. 14 (1-A) clause (a); and apart from the fact that the sentence of imprisonment has altogether been dispensed with in the absence of the existence of any reason much the less an adequate and special reason. Under the circumstances the sentence imposed by the learned trial Magistrate requires to be enhanced. The learned Counsel for respondent No. 2 his filed a lengthy affidavit running into about 11 pages wherein respondent No. 2 has traced the history of the financial difficulties faced by the company concerned at the material time. He has also adverted to the circumstance that some 12 prosecutions were instituted against these very respondents for different charges and that 5 of these cases were withdrawn by the competent authority and in 7 cases applications for withdrawn were made but the learned Magistrate refused to accord sanction to such withdrawal. In the present case no application for withdrawal was made at all. In the affidavit it has been stated that to the best of the information available to respondent No. 2 the Central Government was considering withdrawal of the case. It must be stated that there is no question of withdrawing the case as the case has already resulted into conviction and sentence and there is no provision for withdrawing an appeal preferred by the State. There is no material on the record to show that the Central Government is considering the request made by the respondents sympathetically. Besides the present appeal has been preferred by the State and not the Central Government. Be that as it may be these circumstances can hardly have a bearing on the question of appropriate sentence which requires to be imposed. ( 4 ) COUNSEL for respondent No. 2. has urged the following submissions in support of his plea that there are special and adequate reasons for dispensing with a sentence of imprisonment: (1) The financial circumstances of the Company were not good at the material times. (2) The amount in question had been paid up subsequent to the institution of the complaint. has urged the following submissions in support of his plea that there are special and adequate reasons for dispensing with a sentence of imprisonment: (1) The financial circumstances of the Company were not good at the material times. (2) The amount in question had been paid up subsequent to the institution of the complaint. ( 5 ) ASSUMING for the sake of argument that the Company was facing financial difficulties it does not mean that the employer responsible for the payment of the amount deducted from the wages of the workers could help himself with the amount so deducted in order to overcome the financial difficulties. So also it was not open to the employer to convert the amount which ought to have been paid by way of employers contribution to some other use. It would amount to borrowing the amounts which were in the hands of the employer as a trustee in as much as the deductions had been made from the wages of the workers for the specific purpose of making deposits as per the provisions of the Act and the Scheme. It would be difficult to escape the charge that the law is not administrated even handedly if the members of the affluent section of the society are allowed to help themselves with the deductions made from the wages of the workers which are in their hands in the capacity of trustees for making deposit under the relevant provisions of the Act and the Scheme. The Court would in that event expose itself to the charge that the law is administered with positive discrimination in favour of rich and the affluent by treating them as blue eyed boys. This would shake the faith of a majority of the citizens and of all fair minded people in the administration of justice. Under the circumstances the argument that a lenient view should be taken merely because the Company was facing financial difficulties at the relevant time has only to be mentioned to be rejected. It would have been a different matter if respondent No. 2 was obliged to live in a room in a chawl or live in a slum on account of sudden misfortune and if he was pleading for mercy in connection with an offence committed by him in circumstances of financial distress. It would have been a different matter if respondent No. 2 was obliged to live in a room in a chawl or live in a slum on account of sudden misfortune and if he was pleading for mercy in connection with an offence committed by him in circumstances of financial distress. If notwithstanding the poverty of a citizen when he commits an offence the Courts are not reluctant to impose a sentence of imprisonment (to-days Press-report shows that for a mis-appropriation of Rs. 50. 00 3 years R. I. was imposed on a talati) There is no reason why the Court should shirk from its duty merely because a rich man has become less rich. Counsel for respondent No. 2 is not in a position to contend that respondent No. 2 is in such circumstance that he has to live in a slum. He had to concede that respondent No. 2 is still living in his own bungalow. The argument as regards adverse financial circumstances of the Company is therefore altogether irrelevant and out of place. ( 6 ) IT was argued by the learned Counsel for respondent No. 2 that Probation of Offenders Act may be made recourse to and an opportunity may be given to respondent No. 2 to rehabilitate himself. It is not an offence committed on account of falling in bad company or falling into bad habits where reformative approach may be meaningfully made. There is no question of reforming one when one appropriates to different use large funds wilfully and deliberately by setting up an alibi of shortage of funds. I therefore do not see any merit in this submission. ( 7 ) THE learned Counsel for respondent No. 2 then contended that a lenient view should be taken by reason of the fact that the amount in question had already been deposited after the prosecution was launched but before the order of conviction and sentence was recorded. Payment of dues in respect of which default was committed cannot wipe off the offence in view of the seriousness of it. It will not be possible to characterise that circumstance as providing a special or adequate reason. The offender has done what he was bound to do in any case. That cannot be considered as an adequate or special reason. It will not be possible to characterise that circumstance as providing a special or adequate reason. The offender has done what he was bound to do in any case. That cannot be considered as an adequate or special reason. Under the circumstances it is not possible to accede to the request of the learned Counsel for respondent No. 2 for a sympathetic approach or for dispending with the sentence of imprisonment which is made obligatory by the legislature. In fact the failure to impose a deterrent sentence notwithstanding the of such offence on the part of others and to reversing the Legislative policy. Ends of justice therefore demand that a substantive sentence should be imposed in respect of the offence committed by respondent No. 2. The circumstance that respondent No. 2 belongs to what is called respectable section of the society or happens to be a rich or affluent person cannot prevent the Court from doing its duty. I am therefore unable to accede to the request of the learned Counsel for respondent No. 2 in this behalf. ( 8 ) THE learned Counsel for respondent No. 2 has argued that the plea recorded by the learned trial Magistrate is not in accordance with the law. The plea has been recorded in the following manners: it is no doubt true that the aforesaid record does not show that the plea of each accused was recorded separately. It is however clear that the respondent No. 2 appeared for himself as also on behalf of the respondent No. 1 Company and pleaded guilty. It must also be realized that it is one thing to say that the learned Magistrate has recorded the plea in an omnibus manner whereas altogether another thing to say that every accused was not separately asked to make his plea. What is of great significance is the circumstance that though the respondent No. 2 has filed a lengthy affidavit he has not stated that he had not pleaded guilty or that he had not been separately interrogated. What is more he has accepted the order of conviction and sentence and has even paid up the fine. The only defect that the learned Counsel could point out was that the record did not show that in terms the plea of each individual respondent was separately recorded. That if at all is an irregularity which cannot vitiate the proceedings. What is more he has accepted the order of conviction and sentence and has even paid up the fine. The only defect that the learned Counsel could point out was that the record did not show that in terms the plea of each individual respondent was separately recorded. That if at all is an irregularity which cannot vitiate the proceedings. ( 9 ) COUNSEL for respondent No. 2 has in desperation contended that the sanction accorded by the competent authority as required by sec. 14-AC of the Act is defective in the present case. It is not his case that there is no sanction. The order of sanction is on record. It is however argued that the sanction does not in terms provide for prosecution of respondent No. 2. It is difficult to comprehend how such an argument can be advanced in view of the following passage extracted from the order of sanction: and WHEREAS I am satisfied that it is proper and expedient in public interest to prosecute the said employer for the offences abovementioned. Now therefore in exercise of the powers conferred by sub-sec. (1) of sec. 14-AC of the Employees Provident Funds and Misc. Provisions Fund Act 1952 read with the Goat. of India Department of Labour and Employment Notification No. S. O. 549 (R) dated 16th October 1973 I the Regional Provident Fund Commissioner Gujarat State Ahmedabad hereby accord sanction for the prosecution of the said 1 M/s. Indequip Engineering Ltd. Ahmedabad. 2 Shri Gopaldas P. Parikh Managing Director. 3 Shri M. R Thakkar Secretary 4 Shri J. C. Shastri. Manager. The order of sanction in terms provides for prosecution of respondent No. 2 Gopaldas P. Parikh alongwith the other respondents. I therefore see no substance in the contention. 10 In the result therefore the sentence imposed on respondent No. 2 must be enhanced and a substantive sentence of imprisonment must be imposed. Having regard to the fact that respondent No. 2 is said to be 75 years of age a sentence in excess of minimum need not to be imposed. Therefore so far as respondent No. 2 Gopaldas P. Parikh is concerned I enhance the sentence imposed on him from one of fine of Rs. 100. 00 only to one of substantive imprisonment for three months. The sentence of fine is maintained. Therefore so far as respondent No. 2 Gopaldas P. Parikh is concerned I enhance the sentence imposed on him from one of fine of Rs. 100. 00 only to one of substantive imprisonment for three months. The sentence of fine is maintained. Respondent No. 2 shall surrender on or before December 4 1978 Upon failure of respondent No. 2 to surrender on December 4 1978 a warrant for his arrest shall be issued if no order of stay or bail is obtained from the Supreme Court of India. ( 10 ) SO far as respondent No. 1 Company is concerned the only sentence that can be imposed is that of file and there is no reason why maximum fine should not be imposed. Therefore the sentence of fine is enhanced from one of Rs. 100. 00 to one of Rs. 2000. 00. The remaining amount of fine is to be paid on or before December 4 1978 ( 11 ) TURNING now to the case of respondent Nos. 3 and 4 it is no doubt true that they are the paid employees of respondent No. 1 Company. Respondent No. 3 is the paid Secretary of the Company and respondent No. 4 is the paid Manager of the Company. A Company Secretary is expected to know the law and to discharge his duties showing awareness of the obligations imposed by the relevant provisions of law. In fact it is for the Secretary to guide the employer in such matters. Even so having regard to the fact that respondent No. 2 in his affidavit says that the default was committed in view of the financial difficulties of the Company a lenient view can be taken for if the Company has no funds what can a Secretary do even if he is aware of his responsibilities. ? If it was found that on account of any lapse on the part of the Secretary or the Manager the default was committed a sentence of imprisonment would have been called for. Under the circumstances of the case there are special and adequate reasons for not imposing a sentence of imprisonment on respondent Nos. 3 and 4. However there is no reason why maximum sentence of fine should not be imposed on them as in a way they have abetted the offence. Under the circumstances of the case there are special and adequate reasons for not imposing a sentence of imprisonment on respondent Nos. 3 and 4. However there is no reason why maximum sentence of fine should not be imposed on them as in a way they have abetted the offence. I therefore enhance the sentence of fine imposed on respondent No. 3 M. R. Thakkar Secretary and respondent No. 4 J. C. Shastri Manager from one of Rs. 100. 00 to one of Rs. 2000. 00 each. The difference between the enhanced fine and the fine already paid shall be paid on or before December 4 1978 In case of default in payment of fine each of them will suffer S. T. for a term of 10 days. ( 12 ) ). ppeal is allowed and the sentence is enhanced as indicated hereinabove. .