IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 27TH DAY OF MARCH, 2019 BEFORE THE HON'BLE MR. JUSTICE K. NATARAJAN CRIMINAL REVISION PETITION NO.1068 OF 2018 BETWEEN:
1. C. VALLIAPPA S/O. LATE M.S. CHOCKALINGAM, AGED ABOUT 71 YEARS, RESIDING AT 434, III CROSS, 13TH MAIN, III BLOCK, KORAMANGALA, BENGALURU.
2. V. CHOCKALINGAM S/O. C. VALLIAPPA, AGED ABOUT 49 YEARS, RESIDING AT 434, III CROSS, 13TH MAIN, III BLOCK, KORAMANGALA, BENGALURU.
3. PROF. R. KUMAR S/O. MUNSHI RAM, AGED ABOUT 82 YEARS, RESIDING AT NO.47/1, 5TH CROSS, MALLESWARAM, BENGALURU.
(BY SRI M.T. NANAIAH, SR. ADV., FOR SRI M.R.C. RAVI, ADV.) ... PETITIONERS AND:
1. THE STATE OF KARNATAKA THROUGH THE P.S.I, HAROHALLI POLICE STATION, HAROHALLI.
2. ENFORCEMENT OFFICER EMPLOYEES PROVIDENT FUND ORGANISATION, REGIONAL OFFICE, KARNATAKA BHAVISHYANIDHI BHAVAN, NO.13, RAJA RAM MOHAN ROY ROAD, BENGALURU.
... RESPONDENTS (BY SRI K.P. YOGANNA, H.C.G.P., FOR R-1, AND SMT. NANDITA HALDIPUR, ADV., FOR R-2) * * * THIS CRIMINAL REVISION PETITION IS FILED UNDER SECTION 397 READ WITH SECTION 401 OF THE CR.P.C. PRAYING TO SET ASIDE THE IMPUGNED ORDER DATED 21-8-2018 PASSED BY THE PRINCIPAL CIVIL JUDGE AND J.M.F.C., KANAKAPURA, IN C.C. NO.267 OF 2004.
THIS CRIMINAL REVISION PETITION HAVING BEEN HEARD AND RESERVED FOR ORDERS ON 7-3-2019 AND COMING ON FOR PRONOUNCEMENT, THIS DAY THE COURT PRONOUNCED THE FOLLOWING:
O R D E R The petitioners have filed this revision petition being aggrieved by the order of dismissal passed by the Principal Civil Judge and J.M.F.C., Kanakapura, in Criminal Case No.267 of 2004 dated 21-8-2018 on the application filed by the petitioners under Section 239 of the Code of Criminal Procedure (for short, ‘the Cr.P.C.’) for discharging them from the charges under Sections 406 and 409 of the Indian Penal Code (for short, ‘the I.P.C.’).
2. Heard the learned counsel for the petitioners, learned High Court Government Pleader for respondent No.1-State as well as the learned special counsel for respondent No.2.
3. Before adverting to the arguments addressed by the learned counsel, it is required to mention the facts of the case of the respondents before the trial Court.
4. Respondent No.2, who is the Enforcement Officer of Employees Provident Fund Organisation, Regional Office, Bengaluru, has filed a complaint before Harohalli Police Station against petitioners Nos.1 to 3 for the offences punishable under Sections 406 and 409 read with Section 34 of the I.P.C alleging that the petitioners being the Managing Director and Directors of M/s. Sona Synthetics Company registered under the Companies Act, they have deducted contribution from the employees’ towards the Provident Fund but not remitted to the Employees Provident Fund account with the Bank for a period from December 2000 to July 2002. After registering the case, the Police have filed the charge-sheet against the accused persons. They have been summoned to the Court and released on bail. The petitioners being accused Nos.1 to 3 filed an application under Section 239 of the Cr.P.C. for discharge, which came to be dismissed by the trial Court. Aggrieved by the same, the petitioners have preferred this revision petition.
5. Learned counsel for the petitioners addressed the arguments mainly on two grounds that, the complaint came to be filed against Managing Director, Ex-Director and Director of the Company without making the Company as an accused, which is bad in law. Therefore, on the said ground only the petitioners should be discharged from the charges and another ground, it is contended the Company suffered huge loss in the business and unable to remit the amount though it was shown as deducted from the salaries of the employees’ and subsequently, a notice has been issued by respondent No.2 and in response to the notice, the Company has deposited the contribution as well as the penalty together with interest as demanded by respondent No.2. Respondent No.2 has also initiated recovery proceedings and registered a case before the Special Court for Economic Offences for the offences punishable under Sections 14(1A) and 14A of the Employees’ Provident Fund Act (for short, ‘the Act’). Subsequently, the petitioners have made payments. Previously, these petitioners filed criminal petition for quashing the charges against them on the ground of double jeopardy, which came to be dismissed with an observation to move an application for discharge. Respondent No.2 has passed an order demanding Rs.14,06,516/- towards interest and Rs.41,15,145/- towards the damages. The same was challenged before the Employees’ Provident Fund Appellate Tribunal, New Delhi. The Tribunal held that there is no deliberate violation of the provisions of the Act by the petitioners and Rs.10,00,000/- was levied as damages and the same was deposited by the petitioners, as such, the petitioners have already suffered the punishment. Therefore, continuing the procedures for the same offences punishable under Sections 406 and 409 of the I.P.C. cannot be sustainable. Therefore, he prayed for allowing the revision petition and to dismiss the complaint.
6. On the other hand, though the learned counsel for respondent No.2 supported the order passed by the trial Court in respect of non-remittance of the contribution to the Authority, but fairly admits the complaint cannot be sustainable, without making the Company as accused.
7. Having heard the arguments of the learned counsel on both side, it is an admitted fact that accused Nos.1 to 3 were the Managing Director and Directors of M/s. Sona Synthetics incorporated under the Companies Act, which was involved in the manufacturing of textile yarn. It is also admitted fact that the Company deducted the contribution from its employees’, but not remitted to the account of respondent No.2 through Lakshmi Vilas Bank for a period from December 2000 to July 2002, thereby, the Company is said to have violated the provisions of Sections 14(1A) and 14(A) of the Act. It is also admitted fact that the Officer of respondent No.2 filed the complaint before Harohalli Police Station for the offences punishable under Sections 406 and 409 of the I.P.C. for having committed criminal breach of trust and charge-sheet also came to be filed against them. It is also not in dispute that simultaneously, respondent No.2 filed the complaint to the Special Court for Economic Offences for contravention of the provisions of Employees’ Provident Fund Act and also issued a notice to the accused demanding the dues from the accused for Rs.14,06,516/- towards interest for a period from March 2000 to February 2004, which includes the contribution said to have not remitted. On 17-6-2011, order came to be passed by the Commissioner of Regional Provident Fund directing the Company to pay as follows:
8. Being aggrieved by the same, the petitioners have approached the Employees Provident Fund Appellate Tribunal by filing an appeal in A.T.A No.736(6) of 2011. The Tribunal holding that the appellants (the petitioners herein) had not deliberately violated the provisions of the Act and they have already remitted the interest for delayed remittance and Rs.10,00,000/- deposited towards damages. In view of the payment already deposited by the petitioners along with the interest and damages, they have exonerated of the offences committed under the Act. The order passed by the Tribunal as well as the Commissioner are placed on record and are not disputed by the learned counsel for the respondent.
9. On this admitted background, now coming to the contention taken by the learned counsel for the petitioners taking cognizance without making the Company as accused is bad in law. In this respect, the learned counsel for the petitioners relied upon the order of this Court passed in Criminal Petition No.5320 of 2009 dated 22-7-2013 in the case of I.R. Rao and Others v. The State of Karnataka and Others. This Court in the said criminal petition, after relying upon the judgment of the Hon’ble Apex Court held that, the Company has not been arraigned as accused and in the absence of the Company being prosecuted for the offences alleged, the prosecution only against the Directors as mentioned in Section 14A of the Act is not tenable. This Court has also quashed the charges in an identical case in respect of the complaint filed by the original Provident Fund Commissioner to Shivamogga, where the allegation against the petitioner in the said case is for Rs.1,73,258/-, which has been paid by the said petitioner along with interest. Similarly, in this case, the petitioners have deposited the contributions including the interest and damages as per the order passed by the Employees Provident Fund Appellate Tribunal in ATA No.736(6) of 2011. This Court, in another unreported judgment in Criminal Petition No.948 of 2013, in the case of Shanthi Kiran Bulla v. State of Karnataka and Enforcement Officer, Employees Provident Fund Organisation, quashed the charges against the Company. In this case, the prosecution cannot be sustained mainly on the ground the respondent has not made the Company as a party and only made the Directors as party. Therefore, on this sole ground alone, the petitioners are required to be discharged. Apart from that, even on the facts, the petitioners have already deposited the contribution including the interest and damages for more than Rs.10,00,000/- as demanded by the Commissioner of Employees Provident Fund, from 2000-2004 and there is no material to show that the accused have misappropriated the contribution. Apart from that, the offence is committed by the Company, which is a legal entity and without making the Company as the accused, the prosecution against individual Directors is not sustainable and hence, the petitioners deserve to be discharged. Accordingly, I pass the following O R D E R i. The Criminal Revision Petition is allowed;
ii. The order dated 21-8-2018 passed by the Principal Civil Judge and J.M.F.C., Kanakapura, in Criminal Case No.267 of 2004 is hereby set aside and the petitioners are discharged from the charges for the offences under Sections 406 and 409 of the I.P.C; and iii. The bail bond, if any, stands cancelled.
Send a copy of this order to the trial Court.
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