Ordinary meaning of employer limits criminal liability for deducted employee contributions; company directors are not treated as principal employers.

The term "employer" in Explanation 2 to Section 405 of the Indian Penal Code must be given its ordinary meaning, and it cannot be expanded by borrowing the definition of "principal employer" from the Employees' State Insurance Act, 1948 unless the Penal Code expressly incorporates that scheme. On that footing, where the company is itself the employer, the company-not its directors-is the person entrusted with employees' deducted contributions. Directors are not treated as employers merely because they manage the company's affairs, so criminal liability for default in remittance of the deducted amount does not attach to them on that basis.

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Issues: Whether the directors of a company can be treated as "employers" or "principal employers" for the purpose of Explanation 2 to Section 405 of the Indian Penal Code, so as to attract liability for criminal breach of trust for default in remittance of employees' contribution deducted from wages.

Analysis: Explanation 2 to Section 405 deems an employer who deducts employees' contribution for credit to the Employees' State Insurance Fund to be entrusted with the amount so deducted and liable if payment is defaulted. The expression "employer" was held to have to be understood in its ordinary sense, and not by importing the definition of "principal employer" from the Employees' State Insurance Act, 1948 in the absence of any express incorporation in the Penal Code. Under the Employees' State Insurance Act, the principal employer in a factory is the owner or occupier, and where the company owns the factory and is the employer, the company itself is the employer. The statutory scheme and prior decisions were relied on to hold that directors, merely by reason of their office, are not the employers responsible for the contribution.

Conclusion: The directors were not liable as "employers" within Explanation 2 to Section 405 of the Indian Penal Code, and the prosecution could not be sustained against them on that footing.

Final Conclusion: The appeal failed because the impugned quashing order was sustained; the company, and not its directors, was the relevant employer for the purpose of the alleged default.

Ratio Decidendi: In the absence of express statutory incorporation, the term "employer" in Explanation 2 to Section 405 of the Indian Penal Code must be given its ordinary meaning and does not extend to company directors merely because they manage the company's affairs.

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