Full Judgment Text
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PETITIONER:
SRIKANTA DATTA NARASIMHARAJA WODIYAR
Vs.
RESPONDENT:
ENFORCEMENT OFFICER, MYSORE
DATE OF JUDGMENT04/05/1993
BENCH:
RAMASWAMY, K.
BENCH:
RAMASWAMY, K.
SAHAI, R.M. (J)
CITATION:
1993 AIR 1656 1993 SCR (3) 508
1993 SCC (3) 217 JT 1993 (3) 230
1993 SCALE (2)783
ACT:
%
Employees Provident Funds and Miscellaneous Provisions Act
1952:
Sections 2 (e), (k), 14A.
Employees Provident Funds Scheme 1952: Para 76.
Employees Family Pension Scheme 1971.
Employees Deposit Linked Insurance Scheme 1976.
Director of private company-Neither occupier nor manager-
Whether liable for prosecution under Section 14A of 1952 Act
for violation of Provident Fund Scheme.
HEADNOTE:
The appellant was one of the Directors of a Company
registered under the Companies Act This company was also
registered under the Factories Act and its object was to
manufacture Motorcycles and its accessories. It had a
Managing Director, Joint Managing Director and Directors
including the appellant for managing the establishment.
The respondent- an Enforcement Officer, Regional Provident
Fund Commissioner’s Office laid 18 complaints against six
accused including the appellant (A-6) and the Company-
employer, for the failure to deposit the contribution for
the period October to December 1990 to the Provident Fund
Account under the Employees Provident Fund and Miscellaneous
Provisions Act, 1952, Employees Provident Fund Scheme 1952,
Employees Family Pension Scheme, 1971 and Employees Deposit
Linked Insurance Scheme 1976, offences punishable under
Section 14A of the 1952 Act read with para 76 of the 1952
Scheme.
On the Magistrate taking cognizance of the complaint, the
appellant filed Criminal Miscellaneous Petitions in the High
Court for quashing the complaint as they did not contain the
relevant averments constituting offences against the
appellant. It was contended that the appellant was a mere
Director of the Company, that he was neither incharge of the
company nor was
509
responsible to comply with the provisions of the aforesaid
Act and the Schemes thereunder. Reliance was placed on the
definition of ’employer’ in Section 2 (e) of the Act and the
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liability that had been fastened on the Managing Director or
the Manager or occupier of the establishment to abide by the
Act and the Schemes. The High Court dismissed the
applications.
The appellant appealed to this Court and contended that the
reading the definition of ’employer’ in section 2(e) of the
Act with Sections 30,14(1a) and para 31 of the Scheme,
demonstrate that the employer in relation to the
establishment means the owner or occupier of the factory
which includes the Agent or the Manager of the factory under
the Factories Act, that there was an occupier and Manager
recorded for the instant company, and that they were
Incharge of and were solely responsible to comply with the
Act and the Schemes thereunder and that no specific
averments have been made in the complaint making the
appellant responsible for the management of the factory or
the liability to comply with the Act and the Schemes. The
complaint laid against the appellant was therefore illegal
and the cognizance taken by the Magistrate was vitiated by
manifest error of law.
On the question: whether a Director of a Private Company,
who is neither an occupier nor a manager can be prosecuted
under Section 14(A) of the Employees’ Provident Fund and
Miscellaneous Provisions Act, 1952 for violation of the
Provident Fund Scheme.
Dismissing the appeals, this Court,
HELD: (By the Court K. Ramaswamy & R.M. Sahai, JJ.)
1. The Employees’ Provident Fund and Miscellaneous
Provisions Act 1952 by Section 2(e) defines ’employer’. It
is an inclusive definition and consists of two clauses which
are vide in their sweep. In Clause (i) are included not
only owner or occupier but even the agent or manager. When
it comes to establishments other than factory it is not
confined to owner or occupier but to all these who have
central or are responsible for the affairs of the company.
It includes even director. Therefore, every such person who
has the ultimate control of the affairs of the company
becomes employer Section 2(k) defines ‘occupier’ which means
the person who has the ultimate control of the factory, and
where the said affairs are entrusted to a Managing Agent,
such agent shall be deemed to be the occupier of the
factory. Therefore, by its extended definition its sweep is
enlarged bringing within its scope the person who is
incharge of or responsible for,the management or 1
510
ultimate control over the affairs of the factory or
establishment. In the event of entrustment to a Managing
Agent, such Managing Agent shall also be deemed ’to be the
occupier of the factory’. (514-GH,)
2. In the instant case, the appellant having been declared
himself as one of the person Incharge of and was responsible
for conduct of the business of the establishment or the
factory in Form 5A the complaint and non-compliance thereof
having been enumerated in para 3 of the complaint, it was
validly made against the appellant along with other accused
for the alleged Contravention. Necessary allegations
bringing out the ingredient of offence have been made out in
the complaint. Therefore, the Magistrate has rightly taken
cognizance of the offence alleged against the appellant.
(518-A-B)
(Per K. Ramaswamy, J.)
1. The Act and the Schemes are self-contained code for
deduction from the salary of the employees and the
responsibility to contribute in equiproportion of the
employer’s share and deposit thereof in the account within
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the specified time under the Act and the Schemes into the
account It is a welfare legislation to provide benefits to
the employees as per the schemes. They need mandatory
compliance and violation thereof visits with penal action.
(514-E)
2. Section 6 fastens the obligation on the employer. It
postulates that the contribution to the fund shall be made
by the employer. (515-A)
3. Under para 30 of the Employees’ Provident Fund Scheme,
1952 and the other Schemes, the employer shall deposit the
contribution to the Fund. (515-B)
4. The employer shall, in the first instance, pay both the
contributions payable by himself(in the Scheme referred to
as employer’s contribution) and also on behalf of the
members employed by him directly or through a Contractor,
the contribution payable by such member (in the Scheme re-
ferred to as member’s contribution). (515-G)
5. Para 38 provides that the employer shall send to the
Commissioner within 15 days of the close of every month, pay
the same to the Fund by separate Bank Drafts or cheques and
the administrative charges within 25 days of close of the
month, the employer shall submit a monthly consolidated
511
statement as per form 5 with particulars mentioned therein.
(515-H, 516-A)
6. Para 76 also fastens criminal offence for non-
compliance of the provisions of the schemes on the persons
incharge of and responsible for the management or control of
the establishment.
7. Every person, who at the time the offence was
committed, was Incharge of and was responsible to the
establishment for conduct of its business as well as the
company shall be liable to be proceeded against and punished
accordingly. (517-C)
8. Form 5-A read with para 36A give an option to the
employer to furnish particulars of ownership and the
branches of the department, owners, occupiers, directors,
partners, manager or other person or persons who have
ultimate control over the affairs of such factory or
establishment incharge of and responsible for the conduct of
the business of the company and compliance of the statutory
obligation fastened under the Act and the relevant schemes.
It is made mandatory to the employer to abide by the same
and noncompliance thereof is liable for prosecution under
Section 14A of the Act (517-D)
Municipal Corpn. of Delhi v. Ram Kishan Rohtagi & Ors.;
[1983] 1 SCC 1 and Employees’State Insurance Corpn. v.
Gurdial Singh & Ors. [1991] Supp. 1 SCC 204, referred to.
Employees’ State Insurance Corporation v. Gurdial Singh &
Ors. (1991 Supp. 1 SCC 204, and Municipal Corporation of
Delhi v. Ram Kishan Rohtagi & Ors., [1983] 1 SCC 1,-
distinguished.
(Per R.M. Sahai, J.)
1. The Act is a welfare legislation enacted for the
benefit of he employees engaged in the factories and
establishments and is directed towards 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 riling
regular returns and submitting details in forms prescribed
for that purpose. (518-G)
512
2. Paragraph 36A of the Provident Fund Scheme framed by
Central Government under Section 5 of the Act requires the
employer in relation to a factory or other establishment to
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furnish Form 5A 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. (519-A-B)
3. The anxiety of the Legislature to ensure that the
employees are not put to any hardship in respect of
Provident Fund is manifest from sections 10 and 11 of the
Act. The farmer 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 of provident fund any violation or breach in this
regard has to be construed strictly and against the
employer. (519-C)
4. Sections 14 and 14A provides 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 where as Section
14A fastens liability on certain person if the persons
committing the offence is 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. (519-D-E)
5. Sub-sections (1) and (2) of Section 14A extend the
liability for any offence by any person including a partner
by virtue of explanation if he was incharge 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. (520-D)
6. To say therefore that since paragraph 36A 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
513
objective of the Act and the extended meaning of ’employer’
in relation to establishments other than the factory. The
declaration therefore in Form 5A in the instant case
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
law. (521-B-C)
JUDGMENT:
CRIMINAL APPELLATE JURISDICTION: Criminal Appeal Nos. 402 to
419 of 1993.
From the Judgment and Order dated 3.3.1992 of the Karnataka
High Court in Crl. Petitions Nos. 1574 to 1584 of 1991 and
1588 to 1594 of 1991.
M.S. Nesargi, R.C. Mishra and Dr. (Mrs.) Meera Aggarwal (For
Aggarwal & Mishra & Co.,) for the Appellant.
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V.Gauri Shankar, Anil Srivastava and Mrs. Anil Katiyar (NP)
for the Respondent.
The Judgments of the Court were delivered by
K. RAMASWAMY.J. Special Leave granted.
Since common question of law arises in these 18 appeals for
decision, they are disposed of by a common judgment. The
appellant is one of the Directors of M/s Ideal Jawa (India)
Ltd. Yadavagiri, Mysore, a Private Ltd. Company estab-
lished under the Companies Act. It was also registered
under the Factories Act, 1948. Its object is to manufacture
Motor-Cycles and its accessories. It has its Managing
Director, Joint Managing Director and Directors including
the appellant to manage the establishment. The respondent
laid 18 complaints against six accused including the
appellant(A-6) and the Company,employer,for their failure to
deposit the contribution for the periods of October to
December, 1990 to the Provident Fund Account No. NK 2260
under the Employees’Provident Funds and Miscellaneous
Provisions Act, 1952, for short ’the Act’, Employees’
Provident Funds Scheme, 1952,Employees’ Family Pension
Scheme, 1971 and Employees’ Deposit- Linked Insurance
Scheme, 1976, for short ’the Schemes’ punishable under S.
14A of the Act read with para 76 of 1952 scheme. On the
Magistrate’s taking cognizance thereof, the appellant laid
Crl. M.Ps. in the High Court to quash the complaints as
they do not contain the relevant averments constituting the
offences against the appellant. It is his case that he is a
mere Director of the
514
Company. He was neither Incharge of the Company, nor is
responsible to comply with the provisions of the Act and the
Scheme,. In support thereof he placed reliance on the
definition ’employer’ and the liability has been fastened on
the Managing Director or the Manager or occupier of the
establishment to abide by the Act and the Schemes. The High
Court by its order dated March 3,1992, dismissed the
applications. Thus these appeals.
Sri Nesargi, learned Sr. counsel for the appellant contended
that a reading of the definition ’employer’ in s.2(e) read
with ss. 30, 14 (1-A) and paras 30 and 38 of the Schemes
demonstrates that the employer in relation to an
establishment means the owner or occupier of the factory
which includes the Agent or the Manager of the Factory under
the Factories Act. One Sri N.K. Khudamurad was recorded as
occupier and one Sri D.K. Darashawas recorded as the
Manager. They are Incharge of and were responsible to
comply with the Act and the Schemes. No specific averments
were made in the complaint making the appellant responsible
for the management of the factory or the liability to comply
with the Act and the Schemes. The complaint, therefore,
laid against him is illegal and the cognizance taken by the
Magistrate is vitiated by manifest error of law. In support
thereof he placed reliance on the decisions of this court in
Municipal.Corpn. of Delhi v. Ram Kishan Rohtagi & Ors.
[1983] 1 SCC 1 and Employees’State Insurance Corpn.v.Gurdial
Singh & Ors. [1991] Supp. 1 SCC 204.
The Act and the Schemes are self-contained code for
deduction from the salary of the employees and the
responsibility to contribute in equi-proportion the
employer’s share and deposit thereof in the account within
the specific time under Act and the Schemes into the
account. It is a welfare legislation to provide benefits to
the employees as per the schemes. They need mandatory
compliance and violation thereof visits with penal action.
Section 2(e) of the Act defines 1 employer’ which means in
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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 deceased
owner or occupier and, where a person has been named as a
Manager of the factory under clause (f) of sub-s. (1) of s.7
of the Factories Act, 1948, the person so
named................
The definition is an inclusive definition bringing within
its ambit the owner or occupier as well:" its Manager.
Section 2(k) defines ’occupier’ which means the person who
has ultimate control over the affairs of the factory, and,
where the said affairs are entrusted to a Managing Agent
such Agent shall be deemed to be the occupier of the
factory. Therefore, by its extended definition its sweep is
enlarged bringing within its scope the person who is
incharge or responsible for in management or ultimate
control over the affairs of the factory or establishment.
515
In the event of entrustment to a Managing Agent, such
Managing Agent shall also be deemed ’to be the occupier of
the factory’. Section 6 fastens the obligation on the
employer in this behalf. It postulates that the
contribution shall be made by the employer to the Fund and
shall be 8-1/3% of the basic wages, dearness allowances and
retaining allowances, if any, for the payment being payable
to each of the employees, whether employed by him directly
or through a Contractor. The employee’s contribution shall
be equal to the contribution payable by the employer in
respect of him, etc. in its application to any establishment
or class of establishments. Other provisions are not
relevant, hence they are omitted. Under para 30 of the
Employees’ Provident Fund Scheme, 1952 and the other
Schemes, the employer shall deposit the contribution to the
Fund.
Under para 36A of the Scheme the employer is enjoined to
furnish particulars of the ownership of the factory which
provides thus:
"36-A Employer to furnish particulars of ownership:- Every
employer in relation to a factory or other establishment to
which the Act applies on the date of coming into force of
the Employees’ Provident Funds Scheme, 1961, or is applied
after that date, shall furnish in duplicate to the Regional
Commissioner in Form No. 5A annexed hereto particulars of
all the branches and departments, owners, occupiers,
directors, partners, manager or any other person or persons
who have the ultimate control over the affairs of such
factory or establishment and also sent intimation of any
change in such particulars, within fifteen days of such
change, to the Regional Commissioner by registered post and
in such other manner as may be specified by the Regional
Commissioner.
Provided that in the case of any employer of a factory or
other establishment to which the Act and the Family Pension
Scheme, 197 1, shall apply the aforesaid Form may be deemed
to satisfy the requirements of the Employees’ Family Pension
Scheme, 197 1, for the purpose specified above."
The employer shall, in the first instance, pay both the
contributions payable by himself (in the Scheme referred to
as employer’s contribution) and also on behalf of the
members employed by him directly or through a Contractor,
the contribution payable by such member (in the Scheme
referred to as member’s contribution). Para 38 provides
that the employer shall send to the Commissioner within 15
days of the close of every month, pay the same to the Fund
by separate Bank Drafts or cheques and the administrative
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charges. Within 25 days of close
516
of the month, the employer shall submit a monthly
consolidated statement as per form 5 with particulars
mentioned therein.
Form 5-A envisages to give particulars in Columns 1 to 7
thereof, i.e. particulars of owner, etc. The appellant’s
establishment stated the name of the establishment as Ideal
Jawa (India) Ltd., Code No. of the establishment, its
address, nature of business, period of its commencement and
manufacturing status, have been given. In Column 8 the
establishment is to furnish the names of the owner-company,
Directors. It was mentioned therein as Mr. N.K. Irani as
Managing Director; the appellant as one of the Directors and
others. In column 10 the names of occupier and Manager as
registered under the Factories Act were given. In Column 11
which specifies particulars thus: ’particulars of the
persons mentioned above, who are Incharge of, and
responsible for the conduct of the business of the
establishment’. Therein it was stated that "as per the
details mentioned in item 8". As stated earlier in column 8
the names of the Managing Director, the Joint Managing
Director and two Directors including the appellant have been
mentioned.
Section 14A which is penal states thus:
"14A. Offences by Companies:-
(1)If the person committing an Offence under this Act, the
Scheme or the Family Pension Scheme or the Insurance Scheme
in a company, every person who at the time the offence was
committed was Incharge of and was responsible to the company
for the conduct of the business of the company, as well as
the company shall be deemed to be guilty of the offences 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-s. (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
517
director or manager, secretary or other officer shall be
deemed to be guilty of that offence and shall be liable to
be proceeded against and punished accordingly.
Explanation:For the purposes of this Section-
(a) "Company" means any body corporate and includes a firm
and other association of individuals; and
(b) "director" in relation to a firm means a partner in the
firm."
Para 76 also fastens criminal offence for non-compliance of
the provisions of the schemes on the persons incharge of and
responsible for the management or control of the
establishment. It could thus be seen that every person, who
at the time of the offence was committed, was Incharge of
and was responsible to the establishment for conduct of its
business as well as the company shall be liable to be
proceeded against and punished accordingly. It is seen that
Form 5-A read with para 36A give an option to the employer
to furnish particulars of ownership and the branches of the
department, owners, occupiers, directors, partners, manager
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or other person or persons who have ultimate control over
the affairs of such factory or establishment incharge of and
responsible for the conduct of the business of the company
and compliance of the statutory obligation fastened under
the Act and the relevant schemes. Particulars in column 8
as regards owners and column 10 relates to Manager or
occupier and their names, addresses etc. and column 11
refers to the persons Incharge of, and are responsible to
the management of the establishment or factory are
specified. In form 5-A, as seen earlier in columns 8 and 1
1, it was specifically stated that the Managing Director,
Joint Managing Director and Directors including the
appellant as not only owners of the factory, but are
Incharge of and responsible for the management of the
factory and the establishment. In paragraph 3 of the
complaint, It was specifically stated, "that accused 2 to 6
(appellant) are the persons Incharge of the said
establishment and are responsible for conduct of its
business. They are thus required to comply with all the
provisions of the Act and the Schemes in respect of the said
establishment". It is made mandatory to the employer to
abide by the same and non-compliance thereof is liable for
prosecution under s. 14A of the Act. Section 14(1-A) relied
on by Sri Nesargi relates to only liability for punishment
for contravention or making default to comply with s. 6 or
s. 17 (3-A) in so far as it relates to the payment of
inspection charges and para 38 of the Scheme in so far as it
relates to payment of administrative charges. That has no
application as regards the offence covered under s. 14A by
the companies are concerned. Accordingly, we hold that the
518
appellant having been declared himself as one of the person
Incharge of and responsible for conduct of the business of
the establishment or the factory, the complaint and non-
compliance thereof having been enumerated in subsequent
paras of the complaint, it was validly made against the
appellant along with other 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 been taken
cognizance of the offence alleged against the appellant.
Employees’ State Insurance Corporation v. Gurdial Singh &
Ors. [1991] Supp. 1 SCC 204 is the case relating to an
admission made by the prosecution that the Directors were
not Incharge nor are responsible for compliance of 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 Corporation of Delhi v. Ram Kishan Rohtagi & Ors.
[1983] 1 SCC 1 for an offence under Prevention of Food
Adulteration Act specific provision of Food Adulteration
Rules provide to nominate occupier or Manager responsible
for the production or manufacture of articles of food, etc.
by the company and were nominated. Under those circum-
stances, 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.
R.M. SAHAI, J. Can a director of a private company, who is
neither an occupier nor a manager be prosecuted under
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Section 14(A) of the Employees’ Provident Fund and
Miscellaneous Provisions Act, 1952 (in brief ’the Act’) for
violation of the Provident Fund Scheme.
That depends, obviously, on the scheme of the Act the
liability it fastens on the director of the Company and
applicability of the penal provisions to the statutory
violation or breach of the scheme framed under it. But
before doing so it may not be out of place to mention that
the Act is a welfare legislation enacted for the benefit of
the employees engaged in the factories and establishments.
The entire Act is directed towards 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 36A of the
519
Provident Fund 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 5A 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 ail 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
Sections 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 of provident fund any
violation or breach in this regard as to be construed
strictly and against the employer.
Reverting to the statutory provision Sections 14 and 14A
provide for penalities. 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 where as Section 14A 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 14A 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 for 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
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commission of such offence.
520
(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
accordingly.
Explanation- 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."
Sub-sections (1) and (2) extend the liability for any
offence by any person including a partner by virtue of
explanation if he was incharge 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) to
mean,
"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
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included not only owner or occupier but even the agent or
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 5A 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 law.
ORDER
For reasons given by us in our concurring but separate
orders the appeals fail and are dismissed.
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NVK. Appeals dismissed.
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