Relief undertaking moratorium does not shield directors from personal criminal liability for provident fund default.

The Bombay Relief Undertakings (Special Provisions) Act, 1958 creates a moratorium only for rights, liabilities and proceedings concerning the relief undertaking itself; it does not extend immunity to the personal obligations of directors, managers or officers. In the context of provident fund defaults, the duty to remit contributions under the Employees' Provident Funds Scheme, 1952 rested on the employer, and persons having ultimate control over the establishment could be proceeded against for default. The statutory stay therefore did not bar criminal prosecution against the directors and an officer, who remained personally answerable for the alleged non-compliance.

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Issues: Whether the criminal prosecution for default in provident fund contributions against directors and an officer of a company could be stayed under the notification declaring the company a relief undertaking.

Analysis: Section 4(1)(a)(iv) of the Bombay Relief Undertakings (Special Provisions) Act, 1958 operates as a moratorium only in relation to rights, liabilities and proceedings concerning the relief undertaking itself. The provision is directed to pre-existing obligations of the undertaking and not to the personal obligations of its directors, managers or officers. The object of the Act is to protect and rehabilitate the industrial undertaking during the period of relief, not to extend immunity to individuals for liabilities incurred by them in their personal capacity. Under Paragraph 38(1) of the Employees' Provident Funds Scheme, 1952, read with Section 2(e)(ii) of the Employees' Provident Funds Act, 1952, the duty to pay the provident fund contribution rested on the employer, and the appellants, being the persons having ultimate control over the establishment, could be prosecuted for default under Paragraph 76(a) of the Scheme.

Conclusion: The prosecution was not liable to be stayed, and the appellants remained personally answerable for the alleged default.

Ratio Decidendi: A statutory stay of proceedings granted in favour of a relief undertaking does not extend to the personal criminal liability of its directors or officers for defaults committed in their individual capacity.

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