TaxTMI 
TaxTMI 
1997 (1) TMI 425
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....eard Sri Ashok Haranahalli, learned Central Government standing counsel for the appellants in all the appeals, and Sri C. M. Desai, advocate, appearing for respondent/accused No. 2 in all the appeals. Respondent No. 1 is served with notices in all the appeals and it remained absent. The brief facts of the case are that the respondents/accused were charge-sheeted by the Enforcement Officer appointed under the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 (hereinafter referred to as "the P. F. Act"), for the offences punishable under sections 14(1A) and 14A(1) of the P. F. Act read with para 76(d) of the Employees' Provident Funds Scheme, 1952 (hereinafter referred to as the "P. F. Scheme"). That respondent/accused No. 1, Bellary Spinning and Weaving Co. Ltd., was an establishment within the meaning of the P. F. Act and the P. F. Scheme was applicable to respondent/accused No. 1 having been allotted with Code No. KN/3852. Respondent/accused No. 2, B. Manickya Reddy, is none other than the person in charge of the said Spinning and Weaving Co. Ltd. and was responsible to it for the conduct of its business. He and respondent/accused No. 2 were, therefore, required....
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....ober, 1985. It was further contended that respondent/accused No. 2 during the relevant period was in charge of the establishment of respondent/accused No. 1 and was responsible to it for the conduct of its business and having not paid the P. F. contributions (employees' share with employer's share) as and when the same had fallen due, more fully set out in the table aforementioned, the aforesaid offences were committed by respondent/accused No. 1 company due to negligence thereto of respondent/accused No. 2 and, therefore, both the respondents/ accused were liable to be prosecuted for the offences. It was further stated in the complaint that, therefore, the respondents/accused persons were in the normal circumstances punishable with both imprisonment and fine and accordingly a prayer was made by the Enforcement Officer in his complaint that a direction to the respondents/accused be made to pay within one month the above sums of contribution in respect of which the complaints were lodged and also to pass orders for payment of the amounts under section 357 of the Criminal Procedure Code, 1973, and further for punishing the respondents/accused as provided under law. After taking co....
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....ant to establish that respondent/accused No. 2 was responsible for the conduct of the business of respondent/accused No. 1-company and further that none of the documents produced by the complainant-PW-1 marked as exhibits P-1 to P-8 disclosed that respondent/accused No. 2 was in charge of and was responsible for respondent/accused No. 1-company. Sri Ashok Haranahalli, learned Central Government standing counsel, at the outset, fairly conceded that the appellants have got no quarrel as to the acquittal order passed therein as against respondent/accused No. 1-company. But, he submitted that the appellants have got a grievance as against the acquittal of respondent/accused No. 2, for it is his argument that even if respondent/accused No. 1 could be absolved of the charge, in view of the provisions under section 446 of the Companies Act that when a winding up order has been made or the official liquidator has been appointed as the provisional liquidator, no suit or other legal proceedings shall commence or if pending on the date of the winding up order, shall proceed as against the company except with the leave of the company court, respondent/accused No. 2 could not have been absol....
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....a. 78 of the P. F. Scheme. Sri Haranahalli had also cited before me the decision of the Supreme Court in T. J. Stephen v. Parle Bottling Co. P. Ltd., [1988] 64 Comp. Cas. 151; AIR 1988 SC 994, wherein, in a case under section 200 of the Criminal Procedure Code, 1973, for an offence under section 5 of the Imports and Exports (Control) Act, 1947, the Supreme Court held that the managing director could not be discharged on the ground that there were no allegations against him and that the offence was committed by the company as a licensee since the company by itself could not act. The other case Sri Haranahalli cited before me is Municipal Corporation of Delhi v. Ram Kishan Rohtagi, AIR 1983 SC 67, wherein the Supreme Court, in a case under the Prevention of Food Adulteration Act held that the proceedings against an accused can be quashed only if on the face of the complaint or the papers accompanying the same, no offence is constituted, the test being that the allegations and the complaint as they are, are to be taken without adding or subtracting anything. Sri Haranahalli next cited before me the decision of this court in Siddharth Kejriwal v. ESI Corporation [1997] 90 Comp. C....
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....ss of the company. Therefore, the submission of Sri Desai is that even the said statement cannot now be based to argue before this court to say that respondent/accused No. 2 was in charge of and was responsible for the conduct of the business of respondent/accused No. 1-company and, therefore, he was guilty of the offences. With regard to the argument advanced by the Central Government standing counsel that section 2(26) of the Companies Act has to be taken assistance of to hold that by admitting in the statement recorded under section 313 of the Criminal Procedure Code, 1973, that respondent/ accused No. 2 was the managing director, it had to be presumed in law that he was in charge of and was responsible for the conduct of the business of the company, Sri Desai counter-argued that it is nothing but a farfetched argument to presume in law that respondent/accused No. 2 was guilty of the offence within the meaning of section 14A(1) of the P. F. Act. According to Sri Desai such an argument cannot be accepted by this court. For the aforesaid reasons, Sri Desai submitted that there is no good ground to interfere with the well-reasoned judgment passed by the learned AJMFC, Bellary, i....
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....e guilty of the offence along with the company. It is further clear from the above provision that every person who, at the time of the offence, was in charge of and was responsible to the company for the conduct of the company is primarily responsible whereas the company he represents is secondarily responsible. Hence to prove the guilt of respondent/accused No. 2 in the instant case, it is incumbent on the appellant to prove before the AJMFC, Bellary, that it is respondent/accused No. 2, who at the time of the committal of the alleged offence, was in charge of at the first instance and in the second was responsible to the company for the conduct of the business of the company. By producing exhibits P-1 to P-8 by the appellant before the AJMFC, Bellary, the appellant tried to connect respondent/accused No. 2. But unfortunately none of the said documents in any way connected the respondent/accused No. 2 to say in any way that it is he who was in charge of and was responsible to accused No. 1-company for the conduct of its business. It, therefore, appears to me that the learned AJMFC, Bellary, had recorded the acquittal as against respondent-accused No. 2 also. Learned Central Govern....
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....Act, the liability therefor does not go with the designation, but it goes with the charge of and responsibility to the company in the person in the matter of the conduct of business of the company and nothing beyond. It appears to me that sub-section (2) of section 14A lends support for such a view I have taken, for, in the said sub-section, when the offence is 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. Therefore, it is difficult for me to accept the argument of learned Central Government standing counsel that when respondent/accused No. 2 had admitted in his statement under section 313 of the Criminal Procedure Code that he was the managing director, there arose a presumption that it is he who was in charge of and was responsible to the company in the matter of the conduct of its business. Further, when the provision of law in section 14A(1) of the P. F. Act makes it abundantly clear that it is the person who, at the time ....