Person in charge and responsible - designation alone insufficient; criminal liability requires proof of actual control and responsibility.

Whether a managing director is criminally liable under the offence provision turned on proof that he was "in charge of, and responsible to" the company for conduct of its business; the court held that designation alone does not create that legal responsibility and the prosecution must prove both factual elements beyond reasonable doubt. Having reviewed evidentiary material and the accused's statements, the HC found no prima facie connection establishing actual charge and responsibility and therefore upheld acquittal, dismissing the appeals.

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Issues: (i) Whether respondent No. 2 was, at the time of the alleged offences, "in charge of, and responsible to" the company for the conduct of its business within the meaning of section 14A(1) of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952, and thereby criminally liable; (ii) Whether the designation or admission that respondent No. 2 was the managing director creates a legal presumption that he was in charge of and responsible for the conduct of the company's business.

Analysis: The Court examined section 14A(1) which makes liable those who at the time of the offence were in charge of and responsible to the company for conduct of its business; the prosecution must prove both factual ingredients beyond reasonable doubt. The Court considered the evidentiary material (exhibits P-1 to P-8) and the statement under section 313 CrPC in which respondent No. 2 admitted he was managing director but disavowed responsibility for conduct of the business. The Court analysed the definition of "managing director" in section 2(26) of the Companies Act and concluded that criminal liability under section 14A(1) does not follow from designation alone; liability depends on actual charge of and responsibility for the company's business. The Court applied the criminal standard of proof and found the prosecution evidence did not prima facie connect respondent No. 2 to the conduct and responsibility required by section 14A(1).

Conclusion: The Court held that the appellant failed to prove that respondent No. 2 was in charge of and responsible to the company for the conduct of its business as required by section 14A(1); the acquittal of respondent No. 2 is therefore upheld and the appeals are dismissed.

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