IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 29TH DAY OF JULY 2019 BEFORE THE HON’BLE MR. JUSTICE JOHN MICHAEL CUNHA CRIMINAL PETITION NO.2161 OF 2016 A/W.CRIMINAL PETITION NO.2162 OF 2016 IN CRL.P.2161/2016 BETWEEN:
1. MR. PUNEET AGGARWAL, EMPLOYEE M/S MOTOROLA SOLUTIONS INDIA PVT. LTD EPF TRUST NO.415/2 MEHRAULI GURGAON ROAD SECTOR 14, GURGAON, HARYANA 2. Ms MONA CHADHA, EMPLOYEE M/S MOTOROLA SOLUTION INDIA PVT. LTD EPF TRUST NO.415/2 MEHRAULI GURGAON ROAD SECTOR 14, GURGAON, HARYANA 3. Ms RITA SINGH EX-EMPLOYEE M/S MOTOROLA SOLUTIONS INDIA PVT. LTD EPF TRUST NO.1507 LEVEL 15, CONCORDE TOWERS UB CITY, VITTAL MALLYA ROAD BANGALORE-560 001 4. MR RAMADORAI MEYOOR DIRECTOR M/S MOTOROLA SOLUTIONS INDIA PVT. LTD NO.3, GOVINDU STREET T NAGAR, CHENNAI-600017 ... PETITIONERS (BY SRI: JAYAKUMAR S.PATIL, SENIOR ADVOCATE A/W SRI: RAJENDRA PRASAD B, ADVOCATE) IN CRL.P.2162/2016 BETWEEN:
M/S.MOTOROLA SOLUTIONS INDIA PVT. LTD. NO.1507, LEVEL 15, CONCORDE TOWERS UB CITY, VITTAL MALYA ROAD, BANGALORE NOW AT : 415/2, MEHRAULI GURGAON ROAD SECTION 14, GURGAON, HARYANA 122 001 … PETITIONER (BY SRI: JAYAKUMAR S.PATIL, SENIOR ADVOCATE A/W SRI: RAJENDRA PRASAD B, ADVOCATE) AND THE ENFORCEMENT OFFICER EMPLOYEES PROVIDENT FUND ORGANIZATION SUB REGIONAL OFFICE, BOMMASANDRA BHAVISHYANIDHI BHAWAN ANNAPOORNESHWARI COMPLEX SURVEY NO.37/1 6TH MAIN SINGASANDRA BANGALORE-560 068 ... RESPONDENT (common) (BY SMT : NANDITA HALDIPUR, ADVOCATE) THESE CRIMINAL PETITIONS ARE FILED U/S.482 CR.P.C PRAYING TO QUASH AND SET ASIDE THE COMPLAINT DATED 14.05.2015 AND THE COMPLAINT CASE NO.175/2015 EMANATING THEREFROM TITLED "ENFORCEMENT OFFICER, EPFO VS. MOTOROLA SOLUTIONS INDIA PVT. LTD. AND OTHERS." PENDING BEFORE THE LD. SPECIAL COURT (ECONOMIC OFFENCES), BANGALORE AND QUASH AND SET ASIDE THE SUMMONING ORDER DATED 16.05.2015 PASSED IN THE COMPLAINT CASE AND THE PROCESS ISSUED THEREUNDER;
THESE CRL.P COMING ON FOR ADMISSION THIS DAY, THE COURT MADE THE FOLLOWING:-
O R D E R Heard learned counsel for petitioners, learned Standing Counsel appearing for respondent. Perused the records.
2. The petitioners in Crl.P.2161/2016 are A2 to A5 and the petitioner in Crl.P.2162/2016 is A1. The Enforcement Officer sought prosecution of the petitioners under Section 14(2A) of the Employees Provident Funds and Miscellaneous Provisions Act, 1952 (EPF Act) r/w.Para 76(b) of the Employees Provident Funds Scheme 1952 (EPF Scheme) on the allegations that the petitioners herein failed or refused to submit any returns for the period from 1.4.2014 to 31.3.2015.
3. Learned Senior Counsel appearing for the petitioners submitted that the requisite returns were filed in manual form in Appendix A as per condition No.16 of Para 27AA of the EPF Scheme. However, by virtue of the proviso incorporated to condition 16 of Appendix A of the EPF Scheme, the employer was also required to submit the returns in electronic format. But merely for want of submission of returns in electronic form, the petitioners do not render themselves liable for prosecution under Section 14(2A) of the EPF Act and hence, the prosecution of the petitioners for the alleged offences is illegal and opposed to the provisions of the EPF Act and the EPF Scheme .
4. Learned Senior Counsel further contended that insofar as accused Nos.2 to 5 are concerned, as there are no averments in the complaint that they were in-charge or responsible for the day-to-day affairs of A1-Company, prosecution of petitioners 2 to 5 (A2 to A5) is also illegal and cannot be sustained in law and the facts of this case.
5. In support of his submission learned counsel has placed reliance on the decision of the Hon’ble Supreme Court in ADONI COTTON MILLS LTD. AND OTHERS V. REGIONAL PROVIDENT FUND COMMISSIONER AND OTHERS reported in 1995 Supp (4) Supreme Court Cases 580 and with reference to paragraph 3 of the said decision highlighted that there being substantial compliance of the provisions of the Act, the prosecution of the petitioners is liable to be quashed at the hands of this Court.
6. Repelling the submissions, learned Standing Counsel appearing for the respondent referred to the detailed statement of objections filed by the respondent and emphasized that there being clear violations of para 27AA of Appendix A of the Scheme, the petitioners are liable for prosecution for non-submission of the returns in E-form. Further, the learned counsel referring to paragraph 3 of the complaint submitted that necessary averments are made therein to the effect that petitioners 2 to 5 (A2 to A5) were responsible for the day-to-day conduct of the business and that the judgment relied on by the learned Senior Counsel is not applicable to the facts of this case. In the said case, there was a default for a brief period of four months and moreover, prosecution was initiated in respect of the said offence after 15 years and in the said circumstance, the Hon’ble Supreme court intervened in the matter; but in the instant case, the factual matrix is entirely different and thus sought to dismiss the petitions.
7. Considered the submissions and perused the material on record.
8. Contention taken up by the petitioners that the requisite returns were submitted from time to time in manual forms as per condition 16 of Appendix A of the EPF Scheme is not specifically denied in the written statement and as such, we have to proceed on the basis that the requisite returns have been submitted before the Authority in manual forms.
9. The question that arises for consideration is, ‘Whether for failure of A1 to submit the returns in E-form, the accused are liable for prosecution for the alleged offence under Section 14(2A) of the EPF Act?’ 10. In order to answer this question, it may be relevant to refer to Section 14(2A) of the EPF Act which reads as under :-
“14(2A) Whoever,contravenes or makes default in complying with any provision of this Act or of any condition subject to which exemption was granted under section 17 shall, if no other penalty is elsewhere provided by or under this Act for such contravention or non-compliance, be punishable with imprisonment which may extend to six months, but which shall not be less than one month, and shall be liable to fine which may extend to five thousand rupees”.
11. In the instant case, there is no dispute as to the fact that A1-establishment is exempted under Section 17 of the Act. As such, A1-establishment is required to comply with all the conditions prescribed under the Act.
12. In so far as the requirement of submitting the returns, condition 16 of Appendix A of the Scheme requires that, “The Board of Trustees and the employer shall file such returns monthly/annually as may be prescribed by the Employees’ Provident Fund Organization within the specified time-limit, failing which it will be deemed as a default and the Board of Trustees and employer will jointly and separately be liable for suitable penal action by the Employees’ Provident Fund Organization.”
13. By virtue of amendment dated 4.5.2012, with effect from 4.5.2012 proviso is incorporated to condition 16 which reads as under :-
“Provided that above mentioned returns shall be filed by the employer in electronic format also, in such form and manner as may be specified by the Commissioner”
14. There is no dispute as to the fact that the petitioners herein have submitted the returns in manual forms which is in substantial compliance with condition 16 of the Scheme. Failure to submit returns as provided in condition 16 is visited with penalty as provided in Section 14(2A) of the Act. But no such penalty has been prescribed in the proviso for non-submission of the returns in the electronic format. Had the legislature intended that non-submission of the returns in electronic formats should also be visited with penal consequence, a stipulation to that effect would have been incorporated in condition No.16. In the absence of any such penal provision, petitioners cannot be proceeded with for the alleged violations or default. In this context, it is important to note that Section 17(1A)(d)(ii) of the Act requires the Board of Trustees constituted under clause(b) to submit such returns to the Regional Provident Fund Commissioner or any other officer as the Central Government may direct from time to time. Sub-section 17(1B) provides that where the Board of Trustees established under clause (b) of sub- section (1A) contravenes, or makes default in complying with, any provisions of clause (d) of that sub-section, the Trustees of the said Board shall be deemed to have committed an offence under sub-section (2A) of section 14 and shall be punishable with the penalties provided in that sub-section.
15. If this provision is read in conjunction with condition No.16 of the Appendix A of the Scheme, it leaves no manner of doubt that failure to submit the returns would render the company and its trustees liable for prosecution but not the failure to submit the returns in electronic formats. As long as the returns are submitted in any one of the form, there cannot be any default under condition 16 of Appendix A of the Scheme. In that view of the matter prosecution initiated against the petitioners in my view being contrary to clause (6) and Section 17 of the Act cannot be sustained.
16. In view of the above conclusion, other contentions urged by the learned counsel for the petitioners are not required to be gone into at this stage.
As a result, the petitions are allowed. Prosecution initiated against the petitioners in C.C.No.175/2015 pending before the Special Court (Economic Offences), Bangalore, are hereby quashed.
Sd/- JUDGE rs