minal Appeal No 57 of 1973
Appeal by special leave from the judgment and order dated the 9th February 1973 of the Gujarat High Court at Ahmedabad in Criminal Revision Application No 86 of 1973
Y section Chitaley and section K Dholakia for the appellants
G Das section N Anand and M N Shroff for the respondent
The Judgment of the Court was delivered by CHANDRACHUD J
Appellants 1 2 4 5 and 6 are the directors of Rajnagar Spinning and Weaving Manufacturing Co Ltd Ahmedabad and appellant No 3 is an officer of the said company
On March 19 1969 a complaint was lodged against them by respondent 1 an Inspector appointed under the Employees  Provident Funds Act 1952 that they bad failed to pay a sum of Rs 139419 50 being the contribution to the Provident Fund for the months of June July and August
1968 and that thereby they had contravened the provisions of Paragraph 381 of the Employees  Provident Funds Scheme
1952 an act punishable under Paragraph 76a of the Scheme
An investigation was made into the affairs of the company under section 15 of the Industries Development and Regulation Act 1951 and on being satisfied that the company was managed in a manner highly detrimental to public interest the Government of India issued an order dated January 7 1972 authorising the Gujarat State Textile Corporation to take over the management of the company
On May 69 1972 the Gujarat Government issued a notification declaring the company to be a relief undertaking under section 41aiv of the Bombay Relief Undertakings Special Provisions Act 1958  the Act  and directing that all rights privileges obligations and liabilities accrued or incurred before the undertaking was declared a relief undertaking and any remedy for the enforcement thereof shall be suspended and all the proceedings relative thereto pending before any Court tribunal officer or authority shall be stayed with effect from 6th May 1972 
The appellants filed one application after another asking the court which was seized of the matter to stay the prosecution in view of the notification issued by the Government of Gujarat
Two of such applications were rejected by the learned City Magistrate III Court Ahmeda bad
Appellants acquiesced in one of the orders carried the other in revision to the High Court but withdrew that proceeding
on October 27 1972 they made yet another application for the same relief which also was rejected by the learned Magistrate
He took the view as in the two earlier applications that the operation of section 4 of the Act is restricted to the statutes mentioned in the Schedule to that Act and that clause iv of section 41 did not contemplate stay of criminal proceedings
The High Court of Gujarat rejected summarily the revision application filed by the appellants against the judgment of the learned Magistrate
This appeal by special leave is directed against the judgment of the High Court
52 We are concerned in this appeal with the narrow question whether the prosecution pending against the appellants under Paragraph 76a of the Employees  Provident Funds Scheme 1952 is liable to be stayed by virtue of the notification issued by the Government of Gujarat on May 6 1972
That notification was issued in exercise of the power conferred by section 41aiv of the Act which reads thus  4
1 Notwithstanding any law usage custom contract instrument decree order award submission settlement standing order or other provision whatsoever the State Government may by notification in the official Gazette direct that a in relation to any relief undertaking and in respect of the period for which the relief undertaking continues as such under sub section 2 of section 3 iv any right privilege obligation or liability accrued or incurred before the undertaking was declared a relief undertaking and any remedy for the enforcement thereof shall be suspended and all proceedings relative thereto pending before any court tribunal officer or authority shall be stayed all proceedings relative thereto patently means all proceedings relating to any right privilege obligation or liability accrued or incurred before the undertaking was declared a relief undertaking
The obligation or liability which sub clause iv speaks of is an obligation or liability incurred by the undertaking before it was declared a relief undertaking
In other words sub clause iv concerns itself with the pre existing obligations and liabilities of the undertaking and not of its directors managers or other officers The obligation or liability of these persons is not comprehended within the words of  sub clause iv
Clause a of section 41 shows that the power of the State Government is itself restricted to giving directions referred to in sub clause iv in relation to any relief undertaking
Obligations and liabilities of the directors or other officers of the undertaking are not in a true sense obligations and liabilities in relation to the relief undertaking
In plain and simple language they ark the obligations and liabilities of such persons themselves
Their obligations and liabilities have to be viewed from a different angle than the obligations and liabilities of the company itself which only acts impersonally
The object of section 41aiv is to declare so to say a moratorium on actions against the undertaking during the currency of the
notification declaring it to be a relief undertaking
By sub clause iv any remedy for the enforcement of an obligation or liability against the relief undertaking is suspended and proceedings which are already commenced are to be stayed during the operation of the notification
Under section 4b on the notification ceasing to have force such obligations and liabilities revive and become enforceable and the proceedings which are stayed can be continued
These provisions are 53 aimed at resurrecting and rehabilitating industrial undertakings brought by inefficiency or mismanagement to the brink of dissolution posing thereby the grave threat of unemployment of industrial workers Relief undertaking  means under section 22 an industrial undertaking in respect of which a declaration under section 3 is in force
By section 3 power is conferred on the State Government to declare an industrial undertaking as a relief undertaking as a measure of preventing unemployment or of unemployment relief Relief undertakings so long as they continue as such are given immunity from legal actions so as to render their working smooth and effective
Such undertakings can be run more effectively as a measure of unemployment relief if the conduct of their affairs is unhampered by legal proceedings or the threat of such proceedings
That is the genesis and justification of section 41aiv of the Act
Thus neither the language of the statute nor its object would justify the extension of the immunity so as to cover the individual obligations and liabilities of the director and other officers of the undertaking
If they have incurred such obligations or liabilities as distinct from the obligations or liabilities of the undertaking they are liable to be proceeded against for their personal acts of commission and omission
The remedy in that behalf cannot be suspended nor can a proceeding already commenced against them in their individual capacity be stayed
Indeed it would be strange if any such thing was within the contempla tion of law
Normally the occasion for declaring an industry as a relief undertaking would arise out of causes connected with defaults on the part of its directors and other officers
To declare a moratorium on legal actions against persons whose activities have necessitated the issuance of a notification in the interest of unemployment relief is to give to such persons the benefit of their own wrong
Section 4iaiv therefore advisedly limits the power of the State Government to direct suspension of remedies and stay of proceedings involving the obligations and liabilities in relation to a relief undertaking and which were incurred before the undertaking was declared a relief undertaking
Paragraph 381 of the Employees  Provident Funds Scheme 1952 imposes an obligation on The employer  to pay the Provident Fund contribution to the Fund within 15 days of the close of every month
The Scheme does not define Employer  but Paragraph 2m says that words and expressions which are not defined by the Scheme shall have the meaning assigned to them in the Employees  Provident Funds Act
Section 2eii of that Act defines an Employer  to the extent material as the person who or the authority which has the ultimate control 54 over the affairs of an establishment and where the said affairs are entrusted to a manager managing director Or managing agent such manager managing director or managing agent
Thus the responsibility to pay the contributions to the Fund was of the appellants and if they have defaulted in paying the amount they are liable to be prosecuted under Paragraph 76a of the Scheme which says that if any person fails to pay any contribution which he is liable to pay under the Scheme he shall be punishable with six months  imprisonment or with fine which may extend to one thousand rupees or with both
Such a personal liability does not fall within the scope of section 41aiv of the Act
We therefore dismiss the appeal and direct that the prosecution shall proceed expeditiously
PBR Appeal dismissed


Summary:
The appellants five of whom were directors and one an officer of a company were prosecuted under the Employees Provident Funds Act 1952 on the ground that they had failed to pay the contribution to the Provident Fund and thereby committed an offence punishable under paragraph 76a of the Employees Provident Fund Scheme 1952
Later an investigation was made into the affairs of the company under section 15
of the Industries Development and Regulation Act 1951 and an order was issued authorising the Gujarat State Textile Corporation to take over the management of the company
By a notification the State Government declared the company to be a relief undertaking under section 4 1 a iv of the Bombay Relief Undertakings Special Provisions Act 1958 and directed that all rights privileges obligations and liabilities accrued or incurred before the undertaking was declared a relief undertaking and any remedy for the enforcement thereto shall be suspended and all the proceedings relevant thereto pending before any court tribunal officer or authority shall be stayed with effect from a certain date
An application filed by the appellants for stay of the prosecution in view of the notification issued by the Government was rejected by the lower court on the view that the operation of section 4 of the 1958 Act was restricted to the statutes mentioned in the Schedule to that Act and that clause iv of section 4 1 a did not contemplate stay of criminal proceedings
On appeal the High Court summarily rejected the revision application
The appellants came in appeal to this Court by special leave
On the question whether the prosecution pending against the appellants under paragraph 76 a of the Employees Provident Funds Scheme 1952 is liable to be stayed by virtue of the notification issued by the State Government
Dismissing the appeal HELD  The personal liability of the directors and officers does not fall within the scope of section 4 1 a iv of the Act
The responsibility to pay the contribution to the Fund was of the appellants and if they had defaulted in paying the amount they were liable to be prosecuted under paragraph 76 a of the Scheme
The phrase all proceedings relative thereto patently means all proceedings relating to any right privilege obligation or liability accrued or incurred before the undertaking was declared a relief undertaking
Sub clause iv concerns itself with the pre existing obligations and liabilities of the undertaking and not of its directors
managers or other officers
Neither the language of the statute nor its object would justify the extension of the immunity so as to cover the individual obligations and liabilities of the directors and other officers of the undertaking
If they had incurred such obligation or liabilities as distinct from the obligations or liabilities of the undertaking they were liable to be proceeded against for their personal acts of commission and commission
The remedy in that behalf cannot be suspended nor can a proceeding already commenced against them in their individual capacity be stayed52E 53E The occasion for declaring an industry as a relief undertaking would arise out of causes connected with the defaults on the part of its directors and other officers
To declare a moratorium on legal actions against persons whose activities have necessitated the issuance of a notification in the interest of unemployment relief is to give such persons the benefit of their own wrong
Section 4 1 a iv advisedly limits the power of the State Government to direct suspension of all remedies and stay of proceedings involving the obligations and liabilities in relation to a relief undertaking and which were incurred before the undertaking was declared a relief undertaking
53F 51