2017 (4) TMI 1110 - HC - Indian Laws

Court quashes criminal cases under Payment of Bonus Act, 1965 for non-profit institution

SABARMATI ASHRAM GAUSHALA Versus STATE GOVERNMENT AND 2

The court held that the Payment of Bonus Act, 1965 does not apply to the applicant institution as it is not for profit-making purposes. The complaints ... Complains under the provisions of the Payment of Bonus Act, 1965 - Held that: - Provisions of the Act of 1965 are not applicable to the applicant no.1-Trust as it is not established for the purpose of profit making activity and the object of the Trust is for charitable purposes, therefore the impugned complaints are nothing but abuse of process of the Court and therefore in the interest of justice, the same are required to be quashed and set aside. At this stage, it is also required to be noted that respondent no.2 has issued the show cause notice to the applicants alleging that the applicants have violated the provisions of the Act of 1965 and the Rules framed thereunder and therefore asked the applicants-accused to show cause as to why the proceedings under the Act of 1965 should not be initiated against them. In response to the said show cause notice, the applicants filed reply dated 13.8.1996 wherein it was specifically pointed out that the applicant no.1-Trust is charitable Trust and is not incorporated for profit making activity and by referring to the provisions of Section 32(v)(c) of the Act of 1965, it was submitted that the provisions of the Act of 1965 are not applicable to the said Trust. In spite of such reply, the complainant has filed the impugned complaints by not disclosing the issuance of the show cause notice and the reply submitted thereto by the applicants. Thus, in the opinion of this Court, this is nothing but suppression of material fact and therefore the learned Judicial Magistrate has issued summons against the applicants. Thus, on this ground also, the impugned complaints are required to be quashed and set aside. Issues Involved:1. Applicability of the Payment of Bonus Act, 1965 and Rules framed thereunder to the applicant institution.2. Alleged violation of the provisions of the Payment of Bonus Act, 1965 and Rules by the applicant institution.3. Abuse of process of law and suppression of material facts by the complainant.Detailed Analysis:1. Applicability of the Payment of Bonus Act, 1965:The primary issue was whether the provisions of the Payment of Bonus Act, 1965 (the Act) and the Rules framed thereunder apply to the applicant institution, Sabarmati Ashram Gaushala. The applicant argued that the institution is not established for profit-making activities, thus exempt under Section 32(v)(c) of the Act. The court examined the financial details provided, showing minimal surplus after deducting expenses, and referred to a previous decision by the Division Bench of the High Court, which recognized the institution's objectives as charitable and of general public utility under Section 2(15) of the Income Tax Act. The court concluded that the applicant institution is indeed not established for profit-making purposes, and thus, the provisions of the Act do not apply.2. Alleged Violation of the Act and Rules:The complaints alleged that the applicants violated provisions of the Act and the Rules by not maintaining prescribed registers. The complainant found during a visit that the required registers were not produced. The court noted that the applicants had responded to a show cause notice by stating their charitable status and the inapplicability of the Act. The court found that the complainant did not disclose this response when filing the complaints, which led to the issuance of summons by the Judicial Magistrate.3. Abuse of Process of Law and Suppression of Material Facts:The court referred to the Supreme Court's guidelines in the case of State of Haryana and Others V/s Bhajan Lal and Others, which outline scenarios where the inherent powers under Section 482 of the Code of Criminal Procedure can be exercised to prevent abuse of the process of law. The court found that the complainant's actions constituted an abuse of the process of law, as they suppressed material facts, specifically the response to the show cause notice. The court held that the complaints were filed maliciously and with an ulterior motive, thus warranting quashing.Conclusion:The court concluded that the provisions of the Payment of Bonus Act, 1965 do not apply to the applicant institution as it is not established for profit-making purposes. The complaints filed were deemed an abuse of the process of law due to the suppression of material facts. Consequently, the court quashed and set aside the criminal cases filed against the applicants.