N P S SHINH Vs. STATE

JUDGEMENT

(1.) This criminal petition is filed under Sec. 482 Cr. P. C. for quashing the FIR No. 189 of 2005 registered by the Sanathnagar Police Station, Cyberabad District for the alleged offence punishable under Sections 406 and 409 Penal Code on the complaint made by the Provident Fund Enforcement Officer.

(2.) Sri Vedula Venkata Ramana, learned counsel for the petitioner contends that petitioner being the Managing Director of M/s. Bakelite Hylam Limited, which is a sick Company and registered as such in Case No. 356 of 2001 with the Board for Industrial and Financial Reconstruction (BIFR) in which rehabilitation package was under consideration by BIFR and it passed an order dated 10-11-2004 ordering that there should be change in the management of the Company or in the alternative the Company should go for winding up. Against the said order, Company preferred an appeal before the Appellate Authority for Industrial and Financial Reconstruction under Sec. 25 of the Sick Industrial Companies (Special Provisions) Act, 1985, which is pending. Since the Company has become sick as early as in 2001, it is unable to pay salaries and provident fund contribution amounts in time and the same is under consideration of the appellate authority in which draft rehabilitation scheme was circulated to all the concerned including the P. F. authorities inviting objections on the complaint lodged by the Enforcement Officer. Therefore, registering the case against the petitioner is nothing but an abuse of process of law. Further it was contended that the Company is the employer but not the Managing Director of the Company. In the absence of any mens rea, the Managing Director cannot be prosecuted for the offence, which is liable to be quashed.

(3.) Per contra, learned Counsel for the 2nd respondent-complaint contends that when once the petitioner failed to contribute the P. F. amounts deducted from the salaries of its employees, numbering 640, under the provisions of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 (for short 'the Act') it amounts to Criminal Breach of Trust within the meaning of Sec. 405 Penal Code and punishable under Sec. 409 Penal Code, thus contended that compliant lodged by the 2nd respondent cannot be quashed. In view of explanations (1) and (2) to Sec. 405 Penal Code and the definition of employer under Sec. 2 (e) (ii) of the Act, it is the Managing Director who will have the control over the affairs of the company deemed to have been entrusted with the amount so deducted by the employer and in default in payment of such contribution to the Fund shall be deemed to have dishonestly used the amount of the said contribution in violation of a direction of law. Therefore, petitioner is liable to be proceeded for the said amount and the same cannot be quashed at the threshold.