Prayers:- These Criminal Original Petition are filed to call for the records in CC.Nos.80 to 84 and 86 to 92/2000 on the file of Judicial Magistrate No.III, Coimbatore and quash the same.
For petitioners: Mr. T. Muniratna Naidu For respondent : Mr. V. Vibhishnan COMMON ORDER Since the Petitioners, Respondent and the issue involved in all these Criminal Original Petitions are one and the same, these Criminal Original Petitions are disposed of by this common order.
2. The Petitioners in all these Criminal Original Petitions are facing trial for the alleged offences under Sections 6C read with 14(1B) and 14-A of Employees Provident Fund and Miscellaneous Provisions Act 1952 and also under Sections 14(1A) and 14-A of the said Act in CC.Nos.80 to 84 and 86 to 92/2000 on the file of the learned Judicial Magistrate III, Coimbatore.
3. The petitioners submit that the respondent has launched prosecution for an offence under Sections 6C read with 14(1B) and 14-A of Employees Provident Fund and Miscellaneous Provisions Act 1952 and also under Sections 14(1A) and 14-A of the said Act. The accusation against the petitioners is that they have not paid the contribution charges and administration charges for the period from March 98 to October 98. After receipt of summons, the petitioners have appeared before the learned Judicial Magistrate No.III, Coimbatore. It is submitted by the petitioners that first petitioner/Company has become sick and a reference was made to the BIFR and the BIFR has also declared the first petitioner/Company sick. However, in the meanwhile the petitioners have paid the entire dues to the respondent.
4. Mr.T.Muniratna Naidu, the learned counsel for the petitioner would contend that launching of prosecution against the petitioners by the authority of the Provident Fund Commissioner is illegal, unsustainable and contrary to the provisions of Sick Industries Companies (Special Provisions) Act 1985 and the same is liable to be quashed.
5. The contention of the learned counsel for the petitioners cannot be countenanced, in view of the position of law laid down directly by the Full Bench of this Court rendered in the case of Gowri Spinning Mills (P) Ltd by its Managing Director, Dharmapuri Vs. Assistant Provident Fund Commissioner, Salem and another [2007-II-LLJ-140], wherein it has held thus:-
"In the light of the provisions of the EPF Act, and the Scheme framed thereunder, this court is of the view that the rights of the employees under the Scheme are protected and the proceedings under the EPF Act do not come within the purview of the provisions of
Section 22(1) of the SICA. An amendment to the EPF Act was made by Act 33 of 1988 in terms whereof proviso to
Section 14B has been introduced. Under
Section 14B where an employer makes default in payment of any contribution to the Fund, the Central Provident Fund Commissioner has been authorised to recover the damages by way of penalty not exceeding the amount of arrears. However, under the proviso appended thereto, the Central Board has been empowered to reduce the quantum of damages that may be required to be paid by a company in relation to an undertaking which is a sick industrial undertaking and in respect of which the scheme for rehabilitation has been sanctioned by the BIFR, subject to such terms and conditions as may be specified under the Scheme. Parliament thus as a matter of legislative policy has enacted that the employer be granted a waiver of damages payable under
Section 14B where the undertaking of the employer is a sick industrial undertaking and the scheme for its rehabilitation has been sanctioned. There again, it must be noticed that the eligibility to grant waiver under
Section 14B is subject to those conditions which have been prescribed therein. Parliament having thus amended the EPF Act had taken within its purview the position of a sick industrial undertaking the extent of the immunity which have been conferred upon such undertaking with reference to provident fund dues under the Act, must be confined to what has been legitimised by Parliament. The extent of the immunity or exemption cannot be extended beyond what was allowed in terms of the amendment to the EPF Act."
From the above position of law, it is made clear that provident fund due under the EPF Act is not covered by
Section 22(1) of SICA.
6. A careful reading of
Section 22 clearly shows that in cases of Industrial Companies, where an enquiry under
Section 16 is pending or any scheme referred to under
Section 17 is under consideration and preparation, the Companies are entitled to certain benefits.
7. It is crystal clear from the language of
Section 22 that only specified matters which are specifically mentioned in the different sub Sections are matters for which the protection is extended. There is no suspension of prosecutions launched against the Company. In the case on hand, the liability to pay provident fund contributions is the personal obligation of the petitioners and dues are not paid within the stipulated period. Admittedly, default in payment of such dues has been committed by the petitioner and only in respect of such personal obligation of the petitioner, prosecution of the petitioner had been launched in various Calendar Cases.
8. In the case of Orr Cee Electronics Limited, Mysore and others Vs. Judicial Magistrate, First Class, II Court, Mysore [2000-1-LLJ-843], the Karnataka High Court has held as follows:
"....... The question then is whether the prosecution proceedings launched against a Company for offences committed by it can also be said to be forbidden within the meaning of Section 22(supra). A closer reading of the provision however would show that it is not all kinds of proceedings initiated against the Company, in respect of which an enquiry is pending or a scheme is under preparation, consideration or implementation, but only proceedings of the kind described in the provision. These proceedings must in order to fall within the mischief of
Section 22 be the proceedings in the nature of winding up of the Industrial Company or for execution, distress or the like against any of the properties of the Industrial Company or for the appointment of a receiver in respect thereof. Prosecution proceedings do not answer the description set out in
Section 22 of proceedings which are forbidden. They are not in the nature of winding up of the proceedings nor can such proceedings be said to be proceedings for execution or distress of the properties of the Industrial Company or for appointment of a receiver in respect thereof. Such proceedings are also not meant for recovery for any money or for enforcement of any security against the Industrial Company or for any guarantee in respect of any loans or advances granted to it. In the absence of a specific bar contained in
Section 22 forbidding prosecution for offences already committed by the Company or its offices, it is difficult to extend the prohibition contained in
Section 22 to prosecutions validly launched against it. I have therefore no difficulty in repelling the first limb of the argument advanced on behalf of the petitioners."
9. Yet another contention was raised by the learned counsel for the petitioners that the petitioners had paid the entire amount due, after the launching of prosecution and drew the attention of this Court to the admission made by PW1 R. Devadoss, the Enforcement Officer, Office of the Provident Fund Commissioner, Coimbatore before the Court of learned Judicial Magistrate No.III, as below:
VERNACULAR (TAMIL) PORTION DELETED
10. The learned counsel for the petitioners submitted that in view of payment made by the petitioners, the prosecution launched is nothing but an abuse of the process of the Court and relied on the unreported judgement of this Court dated 12.09.2003 made in Crl.RC.Nos.1311 to 1337 of 2003, wherein his Lordship V.Kanagaraj, J. as he then was, after referring to the decisions of the Andhra Pradesh High Court made in Crl.Petition No.4625 of 1998 and the decision of the Karnataka High Court in the case of Aravinda Parimala and others Vs. Employees State Insurance Corporation, held that belated payments would not attract the penal provision of the Act.
11. Whereas, His Lordship P. Sadhavisam, J. as he then was, in Crl.RC.No.469/2003, in relation to the same point has held that subsequent payment would not absolve the criminal prosecution. However, His Lordship observed that it may be a ground for praying leniency while imposing punishment.
12. In a similar situation and on similar facts, the Honourable Supreme Court in the case of Adoni Cotton Mills Ltd. & others -vs- Regional Provident Fund Commissioner & others, [1996-II-LLJ-135] held that "taking into account the circumstances of the case and the payment made by the petitioner, the proceedings by way of prosecution need not be pursued, provided that the amount deposited into the Court and served by the bank guarantee are paid over to the Regional Provident Fund Commissioner for credit to the appropriate account.
13. In view of the aforesaid decision of the Honourable Supreme Court, leave is granted to the petitioners to file separate affidavits before the learned Magistrate in respect of each separate complaint giving details of the payment of the amounts in default in each complaint and if the learned Magistrate is satisfied that such payments have been duly made, he shall take steps to drop the proceedings in respect of which such payments have been made.
14. With the above directions, these Criminal Original Petitions are disposed of. Consequently, the connected Mps are closed.
Srcm To:
1. The Judicial Magistrate III, Coimbatore
2. The Public Prosecutor, High Court, Madras