KAILASHKUMAR RADHAKRISHAN KANORIA v. STATE — 1991 DIGILAW 160 (GUJ)

S. D. DAVE, J. ( 1 ) THIS common judgment shall govern the disposal of these two cri. Revision Applications arising out of the orders pronounced by the learned Metropolian Magistrate, Court No. 2, Ahmedabad in Cri. Case No. 178 of 1986 below the application at Ex. 6 dated 16-1-1991 ordering the impleadment of the petitioners as the accused in the case and raise a brief but an interesting question as to whether all the Directors of the accused-Company would be liable for the offence punishable under Sec. 406 of the I. P. C. on the accusation that they had not deposited the amount under the Provident Fund Scheme. ( 2 ) THE present petitioners happen to be the Directors of a Limited Company known as New Gujarat Synthetics Ltd. No. II. The Provident Fund Inspector had filed the complaint before the police on 30-1-1986 saying that the Directors of the above said Limited Company had failed to deposit the P. F. amount according to the rules and regulations and thereby they have committed the offence punishable under Sec. 406 of the I. P. C. On the basis of the above said complaint the offence was registered. Any how at the initial juncture the chargesheet was filed against only two persons, namely Deviprasad M. Tibrewala and Sagarmal r. Sharma. But later on the application at Ex. 6 was submitted by the State saying that the present petitioners who also happen to be the Directors of the above said Limited Company should be impleaded in the capacity of the accused persons. The above said application at Ex. 6 came to be allowed by the learned trial Magistrate by the orders dated 16-1-1991. The petitioners challenged the above said orders of the learned trial Magistrate by filing the present two Criminal revision Applications. ( 3 ) MR. A. D. Shah the learned Advocate appears on behalf of the petitioners, while the State have been represented by learned A. P. P. Mr. S. D. Patel. ( 4 ) THE contention raised by Mr. Shah for the petitioners before this Court is that the Mills Company had submitted the necessary form which is known as Form No. 5a under the Employees Provident Funds and Misc. Provisions act, 1952 and that the names of only two persons, namely Deviprasad Mr. S. D. Patel. ( 4 ) THE contention raised by Mr. Shah for the petitioners before this Court is that the Mills Company had submitted the necessary form which is known as Form No. 5a under the Employees Provident Funds and Misc. Provisions act, 1952 and that the names of only two persons, namely Deviprasad Mr. Tribrewala and Sagarmal R. Sharma were shown as the persons who were incharge and responsible for the conduct of the business of the establishment. M. Shah therefore has contended that looking to the provisions of the Act of 1952 the above said two persons only, could be prosecuted and not the present petitioners who are only the Directors of the above said Limited Company. But the contention raised by Mr. Patel for the opponent-State is that the Form No. 5a shows the names of all the Directors, including the present petitioners and therefore the learned trial Magistrate was perfectly justified in his orders below application Ex. 6. ( 5 ) MR. Shah the learned Advocate who appears on behalf of the petitioners has invited the attention of this Court to the specific provisions contained under sec. 14a of the Act of 1952 alongwith the provisions contained under Sec. 405 of the I. P. C. Firstly making a reference to the provisions contained under sec. 14a of the Act of 1952 it is clear that in case of the offence by the company every persons who at the time when the offence was committed was in-charge of and was responsible for the Company,for the conduct of the business of the Company, as well as the Company shall be deemed to be guilty of the offence under the Act. The above said position becomes clear from a bare perusal of the proviso contained under Sec. 14a of the Act of 1952, which may conveniently be reproduced as under :"14a. The above said position becomes clear from a bare perusal of the proviso contained under Sec. 14a of the Act of 1952, which may conveniently be reproduced as under :"14a. Offences by Companies :- (1) If the person committing an offence under this Act, the Scheme or (the Family Pension Scheme or the Insurance Scheme) is a company, every person, who at the time the offence was committed was in-charge of, and was responsible to, the Company for the conduct of the business of the company, as well as the Company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly : provided that nothing contained in this sub-section shall render any such persons liable to any punishment, if he proves that the offence was committed without his knowledge or that he exercised all due diligence to prevent the commission of such offence. " ( 6 ) THE above said proviso would go to show that when the offences are alleged to have been committed by the Company, those persons only who were responsible for the conduct of the business of the Company would be liable. The proviso would go to show further that even in case of such persons, if it is shown that the offence was committed without their knowledge or that they had exercised due diligence to prevent the commission of such offence then they would not be liable. Sub-section (2) of Sec. 14a of the Act of 1952 further makes it clear that the other Directors of the Company may also be held liable for the offence if it is shown that the offence has been committed with the consent or connivance or neglect on the part of any other such Director, Manager, secretary or officer-bearer of the Company. ( 7 ) THE reference also requires to be made to Form 5a prescribed under the Act of 1952. Column No. 8 is in respect of the particulars of the owners and the names of owners of the establishment or of the Directors of the Limited company shall have to be shown in Col. No. 8 of the Form. But Col. No. 11 of the Form also requires to be taken into consideration. This Col. Column No. 8 is in respect of the particulars of the owners and the names of owners of the establishment or of the Directors of the Limited company shall have to be shown in Col. No. 8 of the Form. But Col. No. 11 of the Form also requires to be taken into consideration. This Col. No. 11 is in respect of those persons who are in-charge of and responsible for the conduct of the business of the establishment. It appears on a perusal of the zerox copy of Form No. 5a supplied to this Court by the learned Advocate Mr. A. D. Shah, that under Col. No. 8 the names of all the Directors etc. of the Company including the present petitioners have been shown. But under Col. No. 11 of the Form the names of only 2 persons, namely, Deviprasad M. Tibrewala and sagarmal R. Sharma have been shown. It therefore becomes clear that though the present petitioners were working as the Directors of the Limited Company the abovesaid two persons only were in-charge of and responsible for the conduct of the business of the Mills Company. ( 8 ) MR. Patel the learned A. P. P. who appears on behalf of the opponent-State has tried to urge that both the columns, namely, Col. No. 8 and Col. No. 11 have to be seen but even doing so it appears very clearly that by filing the Form 5a the establishment which would be the Limited Company in the instant case was required to notify the names of those persons who were in-charge of and responsible for the business of the establishment, namely, the Mills Company, if all the persons who were the Directors etc. of the establishment, namely, the Limited company were to be made liable for the offence punishable under Sec. 14a of the Act of 1952, then there was no necessity of the insertion of Col. 11 in the above said Form. The very fact that a special column, namely, Column No. 11 has been inserted in the above said Form 5a,,would go to show that only those persons would be liable who were in-charge of and responsible for the conduct of the business of the establishment. 11 in the above said Form. The very fact that a special column, namely, Column No. 11 has been inserted in the above said Form 5a,,would go to show that only those persons would be liable who were in-charge of and responsible for the conduct of the business of the establishment. ( 9 ) WHEN the reference is made to Sec. 405 of I. P. C. alongwith Sec. 406 of the same Code it becomes clear that the later section a penal provision providing the punishment for the offence of criminal breach of trust. Section 405 I. P. C. defines the offence known as criminal breach of trust but before invoking the provisions contained under the above said two Sections of the i. P. C. it requires to be appreciated that only that person who deducts employees contribution from the wages payable to the employee for credit to provident fund or family pension fund would be liable for the offence punishable under Sec. 405 of the I. P. C. This position becomes clear from the explanations annexed to Sec. 405 of the Code. Therefore, also it becomes clear that, only those persons would be liable who actually deducts the employees contribution for the credit to the fund and not the other persons. ( 10 ) THE position emerging from Sec. 14a of the Act, 1952 from the form 5a under the said Act and Sec. 405 are so eloquently clear that the contention raised by Mr. A. D. Shah could have been accepted without the support of any case law on this point. Any how Mr. Shah was able to press in service the Supreme Court decision in Sham Sunder and Ors. v. State of Haryana, AIR 1989 SC 1982 . In the above said decision the Supreme court was concerned with the provisions contained under Sec. 10 of the essential Commodities Act, 1955. The said provisions have been reproduced at para 5 on page 1983 and the reference to the same would go to show that the provisions contained under Sec. 10 of the Essentail Commodities Act, 1955 and under Sec. 14a of the Act of 1952 are in pari materia. The said provisions have been reproduced at para 5 on page 1983 and the reference to the same would go to show that the provisions contained under Sec. 10 of the Essentail Commodities Act, 1955 and under Sec. 14a of the Act of 1952 are in pari materia. While considering the above said provisions under the Essential Commodities Act, 1955 the Supreme Court has taken a view that the requisite condition would be that the partner was responsible for carrying the business and was during the relevant time in-charge of thebusiness. The Supreme Court has also pointed out that in the absence of any such proof no partner could be convicted. It is also emphatically stated by Supreme Court that it would be a travesty of justice to prosecute all persons and especially when the proof under the proviso to sub-sec. (1) of Sec. 10 of the Act of 1955 shows that the offence was committed without their knowledge. ( 11 ) PLACING reliance upon the above said Supreme Court decision in the instant case also it can be said that only two persons were in-charge of the business of the Limited Company and their names were duly notified under the statutory form by the Mills Company. If other Directors who were not in-charge of and responsible for the conduct of the business of the establishment are to be impleaded as the accused persons it would be nothing but "a travesty of justice" as pointed out by the Supreme Court of India. ( 12 ) IT therefore becomes categorically clear that only those persons whose names were shown in Col. No. 11 could have prosecuted for the alleged commission of the offence punishable under Sec. 406 of the I. P. C. It is therefore further clear that the learned trial Magistrate was at an error in coming to the conclusion that the present petitioner accused required to be prosecuted alongwith the above said two persons whose names were notified in Column No. 11 of the above said Form. In view of this position the present two Criminal Revision applications require to be allowed and the orders under challenge are required to be set aside. These two Criminal Revision Applications therefore are hereby accordingly allowed and the orders under challenge are hereby set aside. In view of this position the present two Criminal Revision applications require to be allowed and the orders under challenge are required to be set aside. These two Criminal Revision Applications therefore are hereby accordingly allowed and the orders under challenge are hereby set aside. Now the trial shall proceed further according to law and on merits only against those two persons, namely Deviprasad M. Tibrewala and Sagarmal R. Sharma, whose names have been notified under Column No. 11 of the Form 5a. The rule is made absolute accordingly. .