N K JAIN Vs. C K SHAH

JUDGEMENT

(1.) The question of general importance that arises in these three appeals is whether criminal proceedings can be instituted under Sec. 14 of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 ('Act' for short) against an establishment exempted under Sec. 17 of the Act for the contravention of the provisions of Sec. 6 of the Act

(2.) The appellants, who are common in each of these three appeals, were connected with the management of M/s. Shri Subhlaxmi Mills Ltd. by the Act. By a Notification dated October 17, 1957 the Central Government in exercise of the powers under Sec. 17 of the Act granted exemption to the said Company subject to the conditions specified in Schedule 2 annexed to the said notification. As a result of the said exemption the provisions of the Employees' Provident Funds Scheme, 1952 framed under Sec. 5 of the Act did not apply to the said Company which created a trust and the management made contributions of provident fund to the said trust and admittedly the exemption continued to be in operation at all material times. In or about September/October 1975 the Inspector of Provident Fund filed criminal complaints in the Court of the Judicial Magistrate, Cambay against the appellants on the allegation that they being in-charge of the management failed to pay the contributions to the provident fund trust and thereby committed offences punishable under Secs. 14(1-A), 14(2), 14(2-A), 14-A(1), 14-A(2) and paragraph 76 of the Employees' Provident Funds Scheme, 1952. The appellants also received notice dated September 15, 1975 from the Inspector threatening to cancel the exemption granted under Sec. 17 of the Act. However, some time in September 1975 the said Company's Mill had to be closed down and liquidation proceedings were initiated. The criminal complaints pursuant to an order of the High Court were transferred to the Court of the Second Metropolitan Magistrate, Ahmedabad. Respondent No. 1, the complainant was examined who in his evidence admitted that the Government of India had exempted the said Company under Sec. 17 of the Act and the same had not been subsequently cancelled and was in existence at all material times. The appellants filed an application praying that the proceedings against them should be dropped and they should be acquitted on the ground that Sec. 6 of the Act was not applicable to the establishment exempted under Sec. 17 of the Act and therefore no proceedings under Sec. 14 can be initiated against them. The learned Metropolitan Magistrate by his order dated November 28, 1978 rejected the aforesaid application. Being aggrieved, they filed three criminal revision applications in the Court of the Additional Sessions Judge, Ahmedabad who by a common order dismissed the same taking the view that Sec. 6 of the Act covers and attracts all the establishments including the exempted establishment. Against that order in those three revision applications, the present appeals have been filed.

(3.) Shri P. Chidambaram, learned Counsel for the appellants, submitted that none of the sections of the Act mentioned in the complaints can be applied as against the appellants since the establishment in question is exempted under Sec. 17 of the Act and consequently is not governed by the 1952 Scheme nor by Sec. 6 of the Act. According to the learned Counsel, the Act does not provide for prosecution in respect of any of the offences enumerated under Sec. 14 in case of breach by an exempted establishment in not paying the provident fund contributions to the trust and therefore no prosecution can be launched and that if at all the management of the establishment had not deposited the provident fund contributions with the trust, the Government was empowered only to cancel the exemption which also amounts to a penalty.