Case: Srikanta Datta Narasimharaja Wodiyarb Vs. Enforcement Officer, Mysore

achieving this objective by enacting provisions requiring the employer to contribute towards Provident Fund, Family Pension and Insurance and keep the Commissioner informed of it by filing regular returns and submitting details in forms prescribed for that purpose. Paragraph 36-A of the Provident Funds Scheme framed by Central Government under Section 5 of the Act requires the employer in relation to a factory or other establishment to furnish Form 5-A mentioning details of its branches and departments, owners, occupiers, Directors, partners, Managers or any other person or persons who have ultimate control over the affairs of the factory or establishment. The purpose of giving details of the owners, occupiers and Directors etc. is not an empty formality but a deliberate intent to widen the net of responsibility on any and every one for any act or omission. It is necessary as well as in absence of such responsibility the entire benevolent scheme may stand frustrated. The anxiety of the legislature to ensure that the employees are not put to any hardship in respect of Provident Fund is manifest from Section 10 and 11 of the Act. The former grants immunity to provident fund from being attached for any debt outstanding against the employee. and the latter provides for priority of provident fund contribution over other debts if the employer is adjudged insolvent or the Company is winded up. Such being the nature or provident fund any violation or breach in this regard has to be construed strictly and against the employer 14. Reverting to the statutory provisions Sections 14 and 14-A provide for penalties. The one applies to whosoever is guilty of avoiding payment of provident fund and to employer if he commits breach of provisions mentioned in its various clauses whereas Section 14-A fastens liability on certain persons if the person committing the offence is a company. The scope of the two sections is same. Latter is wider in its sweep and reach. The former applies to anyone who is an employer or owner or is himself responsible for making payment whereas latter fastens the liability on all those who are responsible or are in charge of the Company for the offence committed by it. Section 14-A reads as under "14-A. Offences by Companies. - (1) If the person committing an offence under this Act, the Scheme or the Family Pension Scheme or the Insurance Scheme is a company, every person, who at the time the offence was committed was in charge of, and was responsible to, the company the conduct of the business of the company, as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly Provided that nothing contained in this sub-section shall render any such person liable to any punishment, if he proves that the offence was committed without his knowledge or that he exercised all due diligence to prevent the commission of such offence (2) Notwithstanding anything contained in sub-section, (1), where an offence under this Act, the Scheme or the Family Pension Scheme or the Insurance Scheme has been committed by a company and it is proved that the offence has been committed with the consent or connivance of, or is attributable to, any neglect on the part of, any director or manager, secretary or other officer of the company, such director, manager, secretary or other officer shall be deemed to be guilty of that offence and shall be liable to be proceeded against and punished accordinglyExplanation. - For the purposes of this section - (i) company means any body corporate and includes a firm and other association of individuals; and (ii) director, in relation to a firm means a partner in the firm" 15. Sub-sections (1) and (2) extend the liability for any offence by any person including a partner by virtue of explanation if he was in charge or was responsible to the Company at the time of committing the offence. The expression, was in charge of and was responsible to the Company for the conduct of the business are very wide in their import. It could not, therefore, be confined to employer only. The employer is defined by Section 2(e) 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, 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;" * Both clauses (i) and (ii) again are wide in their sweep. In clause (i) are included not only owner or occupier but even the agent of Manager. When it comes to establishments other than factory it is not confined to owner or occupier but to all those who have control or are responsible for the affairs of the Company. It includes even Director. Therefore, every such person who has the ultimate control over the affairs of Company becomes employer. To say therefore that since paragraph 36-A requires an employer to do certain acts the responsibility for any violation of the provision should be confined to such employer or owner would be ignoring the purpose and objective of the Act and the extended meaning of employer in relation to establishments other than the factory. The declaration therefore in Form 5-A including appellant as one of the persons in charge and responsible for affairs of the Company was in accordance with law. Therefore his prosecution for violation of the Scheme does not suffer from any error of jurisdiction or lawORDER

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]It is made mandatory to the employer to abide by the same and non-compliance therewith is liable for prosecution under Section 14-A of the Act. Section 14(1-A) relied on by Shri Nesargi relates to only liability for punishment for contravention or making default to comply with Section 6 or Section 17(3-A) insofar as it relates to the payment of inspection charges and para 38 of the Scheme insofar as it relates to payment of administrative charges. That has no application as regards the offence covered under Section 14-A by the companies are concerned. Accordingly we hold that the appellant having been declared himself as one of the persons in charges of and responsible for conduct of the business of the establishment or the factory, the complaint and non-compliance therewith having been enumerated in subsequent paras of the complaint, it was validly made against the appellant along with order accused for the alleged contravention. Necessary allegations bringing out the ingredient of offence have been made out in the complaint. Therefore, the learned Magistrate has rightly taken cognizance of the offence alleged against the appellant11. Employees State Insurance Corpn. v. Gurdial Singh 1991 (S1) SCC 204 : 1991 SCC(L&S) 833) is the case relating to an admission made by the prosecution that the Directors were not in charge nor are responsible for compliance with the provisions of the Employees State Insurance Act, 1948. "Admittedly the company had a factory and it is not in dispute that the occupier of the factory had been duly named. It is also not in dispute that it has a Manager too". In view of this admission the Directors were held not responsible for non-compliance with the provisions of the Employees State Insurance Act, 1948. The ratio therein, therefore, does not assist the appellant. Equally in Municipal Corpn. of Delhi v. Ram Kishan Rohtagi 1983 (1) SCC 1 : 1983 SCC(L&S) 833) for an offence under Prevention of Food Adulteration Act specific provisions of Food Adulteration Rules provide for nomination of occupier of Manager responsible for the production or manufacture of articles of food, etc. by the company and were nominated. Under those circumstances, this Court upheld the quashing of the proceedings against the Directors as the complaint did not contain necessary allegations constituting the offence against the Directors. The appeals are thus dismissed