IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE M.SASIDHARAN NAMBIAR WEDNESDAY, THE 11TH NOVEMBER 2009 / 20TH KARTHIKA 1931 Crl.MC.No. 3389 of 2009() ---------------------------- (CRIME NO.147/2009 OF THE ARTHINGAL POLICE STATION ON THE FILE OF THE JUDICIAL FIRST CLASS MAGISTRATE COURT-II AT CHERTHALA) ............................................................................................... PETITIONER: -------------- DR.K.S.SUBHASH, AGED 51, S/O.LATE C.V.SUSEELAN, PARTNER, M/S.THE KONCHERRY COIR FACTORIES, MAYITHARA POST, CHERTHALA, ALAPPUZHA DISTRICT, RESIDING AT `SREEVALSOM', MAYITHARA MARKET P.O., CHERTHALA, ALAPPUZHA DISTRICT. BY ADV. MR.K.C.ELDHO RESPONDENT(S): ------------------- 1. STATE OF KERALA, REPRESENTED BY THE PUBLIC PROSECUTOR, HIGH COURT OF KERALA ERNAKULAM. 2. EMPLOYEES PROVIDENT FUND ENFORCEMENT OFFICER, O/O.THE EMPLOYEES PROVIDENT FUND ENFORCEMENT, DISTRICT OFFICE, ALAPPUZHA. 3. THE SUB INSPECTOR OF POLICE, ARTHINGAL POLICE STATION. ADV. MR.GOPAKUMARAN NAIR (SR) FOR R2 MR.M.CHANDRA BOSE FOR R2 STANDING COUNSEL FOR EMPLOYEES PROVIDENT FUND THIS CRIMINAL MISC. CASE HAVING COME UP FOR ADMISSION ON 11/11/2009, THE COURT ON THE SAME DAY PASSED THE FOLLOWING: M.SASIDHARAN NAMBIAR,J. ------------------------------------------ CRL.M.C.NO. 3389 OF 2009 ------------------------------------------ Dated 11th November 2009 O R D E R This petition is filed under Section 482 of Code of Criminal Procedure to quash crime No.147/2009 of Arthingal police station registered under Annexure-A10 FIR for the offence under Section 406 of Indian Penal Code, on the allegation that petitioner is also one of the partners of Koncherry Coir Factory, a registered partnership firm which did not remit the contribution of the provident fund amount collected from the employees, for the period from May 2007 to October 2008. Case of the petitioner is that he is only one of the partners of the partnership firm and the factory is managed by the Managing Partner and he is not an employer as defined under Section 2(e) of the Employees Provident Funds and Miscellaneous Provisions Act (hereinafter referred to as the Act) and he is not responsible or in charge of the factory as provided under Section 14A of the Act and therefore, he cannot be prosecuted. It is also Crmc 3389/09 2 contended that as cognizance of the offence under the Act cannot be taken without previous sanction of the Provident Fund Commissioner or such other officer as may be authorised by the Central Government, even if the case is investigated, as cognizance of the offence cannot be taken, continuation of the crime is only an abuse of process of the court. It is also pointed out that proceedings has been initiated against the factory and the partners by issuing certificate as provided under Section 8B of the Act and for the same set of facts a prosecution under Annexure-A10 cannot be allowed to be continued and on that ground also it is to be quashed. Petitioner further contended that as against the Managing Partner alleging that factory is not properly managed, Arbitration O.P.53/2007 was filed and an Arbitrator was appointed and arbitral proceedings are pending and in such circumstances, continuation of the proceedings as against the petitioner is not in the interest of justice. 2. Learned counsel appearing for the second respondent contended that petitioner is also an employer as defined under Section 2(e) and contribution to the Employees Provident Fund collected from the employees, Crmc 3389/09 3 for the period from 5/2007 to 10/2008 was not paid and though subsequently a portion of the amount was paid by the Managing Partner, still Rs.1,09,924/- is outstanding and employees are entitled to get interest on their contribution from the respective due dates and as the employer did not remit the amount the fund would loss the said interest which the employees are to be paid and in such circumstances, payment of portion of the amount is also not a ground to quash the proceedings. Learned counsel submitted that as provided under explanation to Section 405 of Indian Penal Code, a person being an employer of an establishment who deducts the employee's provident fund from the wages payable to the employee for credit to a Provident Fund if it is not remitted to the Fund, offence is attracted and therefore, investigation of the offence under Section 405 of Indian Penal Code is also cannot be quashed. 3. True, Annexure-A1 agreement of partnership establish that K.S.Sajeev is Managing Partner and petitioner and K.S.Shibu are working partners. As provided under clause 7 therein, managing partner and the working partners have to carry out specified activities like marketing, production, Crmc 3389/09 4 administration, purchases, employees related activities etc. and the managing partner and all other working partners are entitled to remuneration. Therefore, it cannot be said that a working partner is not responsible for the running of the factory. An employer is defined under Section 2(e) of the Act as follows. “2(e) “employer“ means- (i) in relation to an establishment which is a factory, the owner or occupier of the factory, including the agent of such owner or occupier, the legal representative of a deceased owner or occupier and, where a person has been named as a manager of the factory under clause (f) of sub-section (1) of section 7 of the Factories Act, 1948 (63 of 1948), the person so named, and (ii) in relation to any other establishment, the person who, or the authority which, has the ultimate control over the affairs of the establishment, and where the said affairs are entrusted to a manager, managing director or managing agent, such manager, managing director or managing agent;” Under clause (ii) only in respect of other Crmc 3389/09 5 establishments not covered by clause (i) the authority which has ultimate control of or the affairs of the company is the employer. Under clause (i) either the owner or occupier of the factory and when a person has been named as a manager of the factory under clause (f) of sub section (1) of Section 7 are employers. Therefore, when the establishment is a factory as provided under sub clause (i) of clause (e) of Section 2 employer could be either the owner or the occupier of the factory. The case of the second respondent is that ownership certificate was furnished to the Employees Provident Fund office and it shows that petitioner is also one of the owners and therefore, he would be an employer as defined under Section 2(e) of the Act. 4. Though learned counsel appearing for the petitioner relying on Section 14 A argued that in respect of a company which by explanation includes a firm, the person who at the time of committing the offence in charge of and was responsible to the company for the conduct of the business at the relevant time alone is liable and he was not responsible and so he cannot be prosecuted. It is also argued that Annexure- A2 establish that on 5/9/2007 petitioner has initiated Crmc 3389/09 6 arbitration proceedings as against the Managing Partner and therefore, it is clear that petitioner was not responsible for the collection or failure to remit the contribution of the employees to the Employees Provident Fund and so the proceedings against petitioner is not in the interest of justice. But in view of definition of employer under Section 2(e), which includes the owner and petitioner being one of the owners, based on Section 14A or the proviso to Section 14A, proceedings cannot be quashed as sought for. 5. Section 14AC of the Act only provides that a court shall not take cognizance of an offence punishable under the Act, without previous sanction of Provident Fund Commissioner or such other officer as may be authorised by notification in the official gazette on that behalf by an inspector appointed under Section 13. There is bar for taking cognizance of an offence under Indian Penal Code. The case is registered and is being investigated only for the offence under Section 406 of Indian Penal Code and not an offence under the Act. Section 14AC has no application to an offence under Indian Penal Code. Therefore, based on Section 14AC also the FIR registered for the offence Crmc 3389/09 7 under Section 406 of Indian Penal Code cannot be quashed. 6. Learned counsel then submitted that a direction may be issued to expedite the investigation. 7. Learned counsel also submitted that a direction be issued to grant bail to the petitioner. It is for the petitioner to approach the concerned Magistrate for bail. If petitioner surrenders and files an application for bail, Magistrate is expected to pass orders in the application without delay. I find no reason to believe that Magistrate is unaware of the provisions of law or the decisions of this court or the Apex court and Magistrate will not act in accordance with law. Hence no direction is warranted. Petition is disposed directing Sub Inspector of Police, Arthingal to complete investigation of crime 147/2009 expeditiously. M.SASIDHARAN NAMBIAR, JUDGE. uj.