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2025 DIGILAW 557 (GUJ)

Nityaranjan Pyarelal Sarkar v. State Of Gujarat

2025-06-25

J.C.DOSHI

body2025
ORDER : J. C. DOSHI, J. 1. By way of this application under Section 482 of the Code of Criminal Procedure, 1973 (hereinafter referred to as ”the Code”), the petitioners have prayed for quashing and setting aside FIR being C.R.No.I – 60 of 2018 registered with Navrangpura Police Station, for the offences punishable under Sections 406 , 409 and 114 of the IPC as well as all other consequential proceedings arising out of the aforesaid FIR qua the petitioners herein. 2. Brief facts of the case are as under:- 2.1 The allegations in short as narrated in FIR are to the effect that the applicants are alleged to have misappropriated a sum of Rs.47,06,332/-, being provident fund contribution of its employees, by not depositing the same with the office of Provident Fund Commissioner. As per the allegation, the said amount was used by the applicants for their personal use and thereby, they have committed the aforestated offences. Hence, present petition. 3. Learned advocate, Mr. KJ Panchal appearing for the petitioners referring to the judgments in cases of (1) Savindersing Bhatti Vs. State of Gujarat , Criminal Misc. Application No.8949 of 2010 (2) BR Daga, Managing Director, Air Control and Chemical Engineering Company Ltd. Vs. State of Gujarat and another , Criminal Misc. Application No.6879 of 2009 (3) Sangramsinh Gaikwad Vs. State of Gujarat and another , Special Criminal Application No.1909 of 2009 as well as judgment of the Hon’ble Apex Court in case of KL Chachra @ Krishan Lal Chachra Vs. State of Jharkhand , AIR online 2019 SC 2038, would mainly argue that though the petitioners were facing financial crunch and could not deposit share of provident fund of their employee with the department within stipulated time period, subsequently, they have deposited entire fund of the share of their employee. He would further submit that various proceedings were started under the provisions of the Provident Fund Act/Scheme against the petitioners and various demands were raised pursuant to such proceedings, however, the petitioners have already deposited funds of their share. He would further submit that now the prosecution may not be continued against the petitioners as it is a futile exercise. He would further submit that the petitioners have also informed to the Regional Commissioner, PPFO, ESIC that their business activity has been closed with effect from 1st December 2017. He would further submit that now the prosecution may not be continued against the petitioners as it is a futile exercise. He would further submit that the petitioners have also informed to the Regional Commissioner, PPFO, ESIC that their business activity has been closed with effect from 1st December 2017. Therefore, he would submit that in these peculiar facts and circumstances, the prosecution against the petitioners may not be continued. Upon such submission, learned advocate Mr. Panchal requests to allow the petition. 4. On the other hand, learned advocate, Ms. E. Shailaja appearing for the private respondent would submit that section 29 of the Employee Provident Fund Scheme, 1952 defined “contribution”. She would further refer to section 32 of the Scheme and submit that any sum deducted by an employer from the wages of an employee under the Scheme shall be deemed to have been entrusted to him for the purpose of paying the contribution in respect of which it was deducted. She further referred to section 38 of the Scheme and submit that the employer is duty bound to deposit his share of contribution within 15 days of the close of every month, failing, which offence under section 405 of the IPC is made out. She also referred to Explanation 1 of section 405 of the IPC and submit that since the petitioners being an employer has not deposited the amount of provident fund after deducting it from the salary of the employee for more than four years, he has admittedly committed the offence under section 405 of the IPC having punishment in section 406 of the IPC. She would further submit that since the offence is admittedly made out, it cannot be wiped on paying the amount of contribution subsequent to filing of the FIR. She would further submit that the offence would relate back to the date on which the employee was required to pay contribution. She would further submit that no sooner 15 days of the month has been completed and if the employee has not deposited amount of contribution after deducting it from the salary of the employee, he has committed offence. Thus she would submit that under these circumstances, the FIR cannot be quashed. 5. Adopting the argument of learned advocate for the private respondent, learned APP requests to pass necessary orders. 6. Thus she would submit that under these circumstances, the FIR cannot be quashed. 5. Adopting the argument of learned advocate for the private respondent, learned APP requests to pass necessary orders. 6. Having heard learned advocates for both the sides, at the outset, it is clear that the petitioners has deposited his contribution of his share, however, subsequent to registration of the FIR. He was in default of paying the contribution since 2015 until the FIR was filed. Para 10 and 11 of the affidavit filed by the respondent No.2 reads as under:- “10. So far as averments made by the petitioner in the Para 4.4 are concerned, it is to state and submit that admittedly the amounts mentioned in this para are paid only after filing of the impugned FIR. However, the said amounts includes employees contribution which was deducted from the salaries of the employees as back as in the year 2015, but not remitted to the statutory fund administered by the office of the deponent within the stipulated time and thus illegally retained and siphoned off for personal use by the applicants. In this regard it is pertinent to refer to the definition of employer under Sec 2(e) which reads as under: 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 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 (63 of 1948), the person so named; and (ii) in relation to any other establishment, the person who, or the authority which, has the ultimate control said affairs are entrusted to a manager, managing LOFINO Hirector or managing agent, such manager, managing director or managing agent; In the above circumstances, the applicants were responsible for the non deposit of the employees' contribution with the E.P.F.O. though deducted from the salary/wages of their employees, within due time as prescribed under Para 38 of the E.P.F. Scheme, 1952 and thus misappropriated the fund for business purposes. The applicants have thus committed criminal breach of trust which is an offence under Section 405 of INDIAN PENAL CODE , 1860 and is liable to be punished under Section 406 & 409 of INDIAN PENAL CODE , 1860. Vide an amendment as Explanation 1 to Section 405 of INDIAN PENAL CODE a presumption is raised that if an employer who deducts the employees contribution from the wages payable to the employee for credit to a Provident Fund or Family Pension Fund established by any law for the time being in force, shall be deemed to have been entrusted with the amount of the contribution so deducted by him and if he makes default in payment of such contribution to the said Fund in violation of the said law, shall be deemed to have dishenestly used the amount of the said contribution in Sof any criminal motive or intention to breach the trust is of no relevance or consequence. The aforesaid view has been held in the case of Provident Fund Inspector, Panipat v. Ram Kumar & Ors [1983 LAB.I.C.717] wherein a Division Bench of Punjab and Haryana High Court vide para 11 held as under: "...that considering the entire Scheme and the object of the Act and the different provisions made therein the conclusion is clear that in all cases not covered by sub section 1 of section 14 the criminal intention is not essential element of the offence under the Act or the Scheme...." It is to further state and submit that the amounts stated in this para are the total of all the PF and allied dues and exclusively not of the employees contribution, further the office of the deponent has also initiated inquiry under section 7A of the EPF and MP, Act 1952 against the responsible person of the establishment for determination of total dues payable by the employer as stated above. In inquiry under section 7A, during hearing the establishment has not produced documentary evidence that it has remitted all the due till today and still inquiry under section 7A of the EPF and MP, Act 1952 is under process. 11. So far as averments made by the applicants in para 45 and 4.6 is concerned, it is to state and submit that the EPF & MP Act, 1952 provides for dues interest and damages under separate provisions having totally different connotation and effect. 11. So far as averments made by the applicants in para 45 and 4.6 is concerned, it is to state and submit that the EPF & MP Act, 1952 provides for dues interest and damages under separate provisions having totally different connotation and effect. Hence the demand as stated in the para under reference were validly raised by the office of the deponent. In this regard it is pertinent to note that since the establishment (of which the applicants are at the helm of affairs) defaulted in payment of contribution of PF, FPF and EDLI, a notice u/s 14/B and 7Q was generated on 11/12/2017 vide Ref.No. GJ/AHD/0055987/000Enf 511/ DAMAGES/1763. Total Amount of dues u/s 14B was Rs.829489/= and u/s. 7Q Rs.416828/= The establishment had paid the 7Q amount on 03/03/2018. An outstanding speaking order was passed on 09/05/2018 quantifying Rs.829489/= towards 14B dues. In between the establishment paid Rs 2,65,545/- in Account X for damages on 05/04/2018. Subsequently as per EPF and MP act a notice u/s 8F were issued on 15/06/2018. Thereafter the establishment had made all the payment toward 14B and 7Q amounts, therefore the 8F issued was withdrawn vide letter No.GJ/AHD/DAM/C-14/55987/2687 dt. 25/07/2018.” 7. Notably, for non-payment of contribution of provident fund, the office of the Provident Fund has initiated another proceeding against the petitioners by issuing notice and subsequent to making of all payments by the petitioners, notice under section 8F of the Employees’ Provident Fund and Misc. Provisions Act, 1952 was withdrawn by the department of the Provident Fund. 8. In case of Provident Fund Inspector, Faridabad Versus Jaipur Textile, Faridabad , AIR 1987 SC 1738 , the Hon’ble Apex Court held his under:- 1. We have heard learned counsel for the parties. We set aside the Judgement passed by the High Court in each of these cases. In view of the statement made by M/s. T.V.S.N. Chari and P.H. Parekh, learned counsel for the respondents on behalf of some of the respondents that they have paid all the arrears of Provident Fund in respect of which the prosecution was instituted we direct that the prosecution against them shall not be proceeded with. In view of the statement made by M/s. T.V.S.N. Chari and P.H. Parekh, learned counsel for the respondents on behalf of some of the respondents that they have paid all the arrears of Provident Fund in respect of which the prosecution was instituted we direct that the prosecution against them shall not be proceeded with. If any of the respondents has not paid all the arrears in respect of which the prosecution has been instituted they may deposit whatever arrears are due from them on or before 31.12.1986 and if they do so the prosecution against them shall come to all end. If they do not pay the arrears accordingly the prosecution shall be proceeded with. The order will not serve as a precedent as it is passed in the peculiar facts and circumstances of these cases. 2. The Criminal Appeals and Special Leave Petition are disposed of accordingly.” 9. In the multiple judgments relied upon by learned advocate Mr. KJ Panchal, it indicate that when the amount is paid by the petitioners, this court has exercised discretion to quash the FIR or subsequent proceedings. 10. In case of Madhavrao Jiwajirao Scindia & Ors. v. Sambhajirao Chandrojirao Angre & Ors., reported in (1988) 1 SCC 692 , the Hon’ble Apex Court held as under:- "The legal position is well-settled that when a prosecution at the initial stage is asked to be quashed, the test to be applied by the court is as to whether the uncontroverted allegations as made prima facie establish the offence. It is also for the court to take into consideration any special features which appear in a particular case to consider whether it is expedient and in the interest of justice to permit a prosecution to continue. This is so on the basis that the court cannot be utilised for any oblique purpose and where in the opinion of the court chances of an ultimate conviction is bleak and, therefore, no useful purpose is likely to be served by allowing a criminal prosecution to continue, the court may while taking into consideration the special facts of a case also quash the proceeding even though it may be at a preliminary stage." 11. Thus, from the facts of the present case, it appears that chances of ultimate conviction are bleak and therefore no fruitful purpose would be served or likely to be served by allowing criminal prosecution to continue against the petitioners. The petitioners has already closed his business as per his communication to the Regional Director, PPFO, ESIC. 12. In view of that since the amount of contribution is already paid and disbursed to the employee, there is no fruitful purpose serve to continue the criminal prosecution against the petitioners. 13. In the result, present petition is allowed and impugned FIR being C.R.No.I – 60 of 2018 registered with Navrangpura Police Station, for the offences punishable under Sections 406 , 409 and 114 of the IPC as well as all other consequential proceedings arising out of the aforesaid FIR qua the petitioners herein are hereby quashed and set aside. Direct service is permitted.