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Jasoda Glass & Silicate & Ors. v. Regional Provident Fund Commissioner & Ors.
Factual and Procedural Background
This appeal is against the summary rejection of a writ petition filed by the appellants. The writ petition sought, inter alia, quashing of various criminal complaint cases pending before the learned Chief Judicial Magistrate, Barasat, which had been founded on adjudications under section 7A of the Employees' Provident Fund and Miscellaneous Provisions Act, 1952. The appellants alleged that they had not been served notice in the section 7A proceedings, that prosecution sanction was not obtained from the appropriate Regional Provident Fund Commissioner, and that, in any event, the outstanding dues had since been paid. The Single Judge had dismissed the writ petition summarily, and the appellants appealed.
Legal Issues Presented
- Whether the complaints founded on adjudications under section 7A of the Employees' Provident Fund and Miscellaneous Provisions Act, 1952, are incompetent because the appellants were not given notice or opportunity to represent in the section 7A proceedings.
- Whether actual service or proof of service is essential (i.e., whether the theory of communication suffices) for proceedings founded on such adjudications.
- Whether prosecution sanction was obtained from the Regional Provident Fund Commissioner as required, and whether absence of sanction renders the complaints without authority.
- Whether payment (or deposit) of outstanding provident fund dues by the appellants prior to or after institution of complaints bars criminal prosecution for defaults under section 14 (and related provisions) of the 1952 Act.
- Whether a writ petition under Article 226 was maintainable when alternative remedies (such as revisional remedy under section 482 Cr.P.C.) were available, particularly where the authority is alleged to have acted without jurisdiction.
- Whether the learned Magistrate had jurisdiction to take cognizance of the complaints filed on the basis of the adjudications and consequential steps taken by the authorities.
Arguments of the Parties
Appellants' Arguments
- The complaints were incompetent because they were based on section 7A adjudications in respect of which no notice had been served on the appellants, and hence the section 7A proceedings were vitiated.
- Reference to authority: relied on Ramanujam Press (Madras) where section 7A orders were quashed due to lack of opportunity to represent.
- Invoked Union of India v. Dinanath Shantaram Karekar for the proposition that actual service must be proved (in relation to service of a charge-sheet) and that the theory of communication cannot be invoked without proof of actual service.
- Asserted that sanction for prosecution had not been obtained from the appropriate Regional Provident Fund Commissioner and therefore the complaints by the Provident Fund Inspector were without authority.
- Contended that all alleged outstanding dues had been paid pursuant to various orders, and relying on Supreme Court and High Court decisions (including Adoni Cotton Mills and Raj Kumar Nemani), sought quashing of criminal complaints.
- Argued that the High Court's writ jurisdiction under Article 226 remained available even if alternative remedies existed, particularly where the concerned authority acted without jurisdiction (citing Whirlpool Corporation v. Registrar of Trade Marks).
Respondents' Arguments
- The appeal was misconceived and the Single Judge was correct to summarily dismiss the writ petition.
- Payments made by the appellants after the defaults are immaterial because under section 14 of the 1952 Act the offence was committed when the defaults occurred; subsequent payments can only mitigate punishment, not bar prosecution.
- Contended that in the Provident Fund Inspector, Faridabad case, the decision was not to be treated as a precedent (per Mr. Biswas) and thus could not be relied upon by the appellants.
- Argued that the decisions relied upon by the appellants (Raj Kumar Nemani and Kanoria Jute Industries) were rendered on special facts and did not apply here.
- Maintained that, in this case, appellants had been duly notified of the section 7A proceedings and that prosecution sanction had been given by the Regional Provident Fund Commissioner after appellants failed to comply with demand notices.
- Submitted that a writ petition was not the proper remedy once cognizance had been taken by the Magistrate, and that a revisional application under section 482 Cr.P.C. would have been the appropriate route.
- Pointed out factual distinctions from Adoni Cotton Mills (e.g., in that case no criminal prosecution had been started and the period of default was short); here defaults spanned several months.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court (as stated in the opinion) |
|---|---|---|
| Ramanujam Press v. Regional Provident Fund Commissioner, Madras, A.I.R. 1970 Madras 224 | Orders consequent to adjudication under section 7A were quashed where employer was not given opportunity to represent in section 7A proceedings. | Referred to by appellants to support the contention that section 7A proceedings conducted without notice vitiate subsequent complaints. The Court records the reference in the submissions. |
| Union of India v. Dinanath Shantaram Karekar, A.I.R. 1998 S.C. 2722 | In relation to service of a charge-sheet, the delinquent must submit a reply; actual service is essential and must be proved. | Referred to by appellants to argue that without proof of actual service the theory of communication cannot be invoked. The Court records this submission. |
| Adoni Cotton Mills Ltd. v. Regional Provident Fund Commissioner, 1995 Supp. (4) S.C.C. 580 | Where outstanding provident fund dues were liquidated (partly deposited/secured), proceedings for prosecution initiated on notices to show cause were quashed subject to deposit/appropriation conditions. | The Court regarded this Supreme Court decision as material: noting that in Adoni prosecutions were quashed when amounts in default had been partly deposited/secured, the Court disposed of the appeal by permitting appellants to file affidavits before the Magistrate to enable dropping proceedings if payments were proved. |
| Regional Provident Fund Commissioner, West Bengal v. Raj Kumar Nemani, 1995 (1) C.H.N. 115 | Held, relying on Provident Fund Inspector, Faridabad, that since entire arrears were deposited prior to lodging of the criminal complaint, prosecution could not proceed. | Referred to by appellants; respondents contended it was decided on special facts. The Court noted the precedent as part of the submissions considered. |
| Provident Fund Inspector, Faridabad v. Jaipur Textile, Faridabad, A.I.R. 1987 S.C. 1738 | Addressed issues concerning prosecution where arrears/payments are involved (as cited by other cases). | Referenced in argument and in other High Court decisions discussed; respondents noted that the Faridabad decision was indicated not to be treated as a precedent in the reported context. The opinion records its citation and how it was treated in subsequent High Court consideration. |
| Kanoria Jute Industries Ltd. v. The Regional Provident Fund Commissioner, West Bengal, 1994 (1) C.L.J. 442 | In the facts of that case, instalment was granted to clear arrear dues and authorities were restrained from taking coercive measures. | Referred to by appellants; respondents argued it was rendered on special facts and inapplicable here. The Court notes the decision among the authorities considered. |
| Whirlpool Corporation v. Registrar of Trade Marks, Mumbai, A.I.R. 1999 S.C. 22 | High Court's jurisdiction under Article 226 to entertain a writ petition is not affected by the availability of an alternative remedy, particularly where the authority has acted without jurisdiction. | Invoked by appellants to support maintainability of writ despite alternative remedies. The Court records the submission in framing the dispute over appropriate remedy. |
| Heavy Mechanical Lifting Enterprise v. Union of India (unreported, appeal from Matter No. 97 of 1993) | Division Bench held that under section 14(1-A) of the 1952 Act, default in respect of deposits required to be made under section 6 constitutes an offence, and subsequent deposit does not waive prosecution (but may affect sentence). | Referred to by respondents; the Court records that this Division Bench considered Provident Fund Inspector, Faridabad and held subsequent deposits do not bar prosecution. The opinion records this authority as part of the respondent's submissions. |
Court's Reasoning and Analysis
The Court set out the competing contentions: appellants' central contention that section 7A adjudications were vitiated for lack of notice and that dues have been paid; respondents' contention that the offence under section 14 arose when default was committed and subsequent payments do not negate the offence, only mitigate punishment, and that sanction and notice had been properly given.
The Court noted that, pursuant to orders in this appeal, the appellants had deposited the outstanding dues. However, the Court observed the legal position that the commission of default constitutes an offence under section 14 of the 1952 Act (paras 22–23). The Court expressly acknowledged the Adoni Cotton Mills Ltd. decision of the Supreme Court, which quashed proceedings for prosecution initiated on notices to show cause where the amount in default had been partly deposited and partly secured (para 24).
Applying the Adoni principle to the facts before it — namely, that the appellants had deposited all alleged outstanding dues — the Court elected not to quash the complaints outright on the present record but to dispose of the appeal by permitting a practical course of action: the appellants were given leave to file separate affidavits before the learned Chief Judicial Magistrate, Barasat, detailing payments in respect of each complaint; if the Magistrate was satisfied that payments had been duly made, he was directed to take steps to drop the proceedings in respect of those complaints (para 26).
Thus, while the Court accepted the doctrinal position that default constitutes an offence under section 14, it relied on the Supreme Court's Adoni decision as a ground to provide a remedial mechanism that could lead to dropping prosecutions where payments had been made. The Court therefore balanced the statutory offence principle with the remedial precedent in Adoni, resulting in an order that funnels the factual question of payment to the Magistrate for determination.
The Court also recorded other submissions (e.g., on service, sanction, and alternative remedies) and prior High Court and Division Bench decisions, but the operative step taken by the Court was to implement the approach consistent with Adoni by enabling the appellants to seek dropping of proceedings at the Magistrate level upon proof of payment.
Holding and Implications
Holding: The appeal is disposed of with leave to the appellants to file separate affidavits before the learned Chief Judicial Magistrate, Barasat, specifying payments made in respect of each complaint; if the Magistrate is satisfied that such payments have been duly made, he shall take steps to drop the proceedings in respect of those complaints.
Direct implications:
- The appellants are authorized to file detailed affidavits before the Chief Judicial Magistrate to prove payments pertaining to each complaint.
- Upon satisfaction of the Magistrate as to payment, the Magistrate is to take steps to drop the proceedings in respect of those complaints for which payments have been shown.
- There is no order as to costs.
- If an urgent xerox certified copy of the order is sought, it is to be supplied expeditiously subject to compliance with formalities.
Broader implications and precedent:
- The Court relied on the Supreme Court's Adoni decision to justify relieving appellants of prosecutions in appropriate circumstances where dues are paid; the opinion does not purport to lay down a new legal principle beyond applying that precedent to the present facts.
- The Court did not set aside or overrule the principle (advanced by respondents and in other authorities) that an offence under section 14 is committed upon default and that subsequent payment generally does not erase the commission of the offence; instead, the Court provided a procedural route at the Magistrate level in light of Adoni.
- The opinion does not state that it creates a binding new precedent; it addresses the particular factual and procedural posture by directing steps to the Magistrate for factual determination and possible dropping of proceedings.
Altamas Kabir, J.:— This appeal is directed against the summary rejection of the writ petition filed by the appellants, inter alia, praying for quashing of the various complaint cases set out in prayer (a) thereto and pending before the learned Chief Judicial Magistrate, Barasat.
2. On behalf of the appellants it was urged by Mr. Sukumar Bhattacharjee that all the complaints filed on behalf of the Regional Provident Fund Commissioner, West Bengal, were incompetent as the same were based on adjudications said to have been made under section 7A of the Employees' Provident Fund and Miscellaneous Provisions Act, 1952, but in respect whereof no notice had been served on the appellants. It was urged that since the section 7A proceedings had been conducted behind the back of the writ petitioners, the same stood vitiated and all proceedings taken on the basis of such unlawful adjudication also stood vitiated and were liable to be quashed.
3. In this connection, reference was made to a Single Bench decision of the Madras High Court in Ramanujam Press v. Regional Provident Fund Commissioner, Madras, Madras, A.I.R 1970 Madras Page 224, wherein the orders passed consequent to the adjudication under section 7A of the aforesaid Act were quashed as the employer was not given an opportunity to represent his case in the section 7A proceedings.
4. Mr. Bhattacharjee then referred to the decision of the Hon'ble Supreme Court in Union of India v. Dinanath Shantaram Karekar, reported in A.I.R 1998 S.C page 2722, wherein in relation to service of a charge-sheet the Hon'ble Supreme Court held that since the delinquent had to submit his reply, actual service was essential and had to be proved.
5. Mr. Bhattacharjee submitted that in the absence of proof of actual service the theory of communication could not be invoked.
6. It was also submitted that sanction for prosecution had not been obtained from the Regional Provident Fund Commissioner, West Bengal, the Andaman and Nicobar Islands, and the complaints filed by the Provident Fund Inspector were, therefore, without authority, and the cognizance taken thereupon was bad in law and was liable to be quashed.
7. Mr. Bhattacharjee urged that pursuant to the various orders passed from time to time in the appeal, all the dues alleged to have been outstanding, had been fully paid by the appellants and in view of the decisions of the Hon'ble Supreme Court and this Court in that regard, the criminal complaint cases were liable to be quashed.
8. Mr. Bhattacharjee also referred to the decision of the Hon'ble Supreme Court in Adoni Cotton Mills Ltd. v. Regional Provident Fund Commissioner, reported in 1995 Supp. (4) S.C.C page 580, wherein having regard to the liquidation of the outstanding provident fund dues, the Hon'ble Supreme Court directed that the prosecutions for default in payment of such dues be quashed subject to the condition that the sum directed to be deposited be paid to the Regional Provident Fund Commissioner who would be entitled to appropriate the same.
9. In this connection reference was also made to a Bench decision of this Court in the case of The Regional Provident Fund Commissioner, West Bengal v. Raj Kumar Nemani, reported in 1995 (1) C.H.N Page 115, wherein relying on the decision of the Hon'ble Supreme Court in Provident Fund Inspector, Faridabad v. Jaipur Textile, Faridabad, reported in A.I.R 1987 S.C Page 1738, it was held that since the entire arrears of provident fund had been deposited prior to the lodging of the criminal complaint, the prosecution could not be proceeded with.
10. Mr. Bhattacharjee next referred to a Single Bench decision of this Court rendered by one of us (Altamas Kabir, J.) in Kanoria Jute Industries Ltd. v. The Regional Provident Fund Commissioner, West Bengal, reported in 1994 (1) C.L.J page 442, wherein in the facts and circumstances of the case instalment was granted to the Company to clear the arrear dues and the authorities were restrained from taking coercive measures.
11. Mr. Bhattacharjee submitted that following the decisions of the Hon'ble Supreme Court and this Court, the criminal prosecutions commenced against the appellants were liable to be quashed since the entire arrear provident fund dues had been liquidated by the appellants.
12. Mr. Bhattacharjee submitted that the appellants could have moved this Court in its revisional jurisdiction but as observed by the Hon'ble Supreme Court in Whirlpool Corporation v. Registrar of Trade Marks, Mumbai, A.I.R 1999 S.C page 22, the jurisdiction of the High Court to entertain a writ petition under Article 226 of the Constitution inspite of an alternative remedy available to the petitioner, is not affected particularly in a case where the concerned authority had acted without jurisdiction.
13. Appearing for the respondents, Mr. Jayanta Kumar Biswas, learned Senior Advocate, submitted that the appeal was misconceived and the learned Single Judge had not committed any error in summarily dismissing the writ petition. It was submitted by Mr. Biswas that it was immaterial whether the appellants had deposited the arrear dues having regard to the provisions of section 14 of the 1952 Act and since the offence for the periods in question had already been committed and the learned Magistrate had taken cognizance on the basis of materials disclosed in the several complaints, the payments subsequently made could only be a mitigating factor on the quantum of punishment to be awarded.
14. Mr. Biswas submitted that in the case of the Provident Fund Inspector, Faridabad, it was specifically indicated that the same was not to be treated as a precedent and the said decision could not, therefore, be relied upon by the appellants in support of this case.
15. As far as the Bench decision of this Court in Raj Kumar Nemani's case (supra) and the Single Bench decision in Kanoria Jute Industries Ltd. (supra) were concerned, Mr. Biswas urged that the same had been rendered in the special facts of those cases and the same could have no application to this case where such special facts were absent.
16. As to the decision in the Adoni Cotton Mills Ltd. case (supra), Mr. Biswas urged that in the said case no criminal prosecution had been started and what was quashed were the notices issued to the appellant to show cause as to why the company should not be prosecuted under sections 14 and 14-A of the Act and section 15 of the Additional Emoluments (Compulsory Deposit) Act, 1974 read with sections 406 and 409 of the Indian Penal Code. Moreover, in the said case the period of default was only 4 months which seemed to have weighed with the Court in quashing the impugned notices.
17. Mr. Biswas submitted that the defaults in this case were committed over several months and the fact situation was, therefore, quite different from the facts in the Adoni Cotton Mills Ltd. case.
18. It was pointed out that the appellants had been duly notified of the section 7A proceedings and prosecution had been duly sanctioned by the Regional Provident Fund Commissioner, West Bengal, after the failure of the appellants to comply with the demand notices duly served on them pursuant to the adjudication under section 7A of the Employees' Provident Fund and Miscellaneous Provisions Act, 1952.
19. Mr. Biswas submitted that the same question had been considered by a Division Bench of this Court in an unreported judgment in the case of Heavy Mechanical Lifting Enterprise v. Union of India, in an appeal from Matter No. 97 of 1993. Mr. Biswas submitted that the decision of the Hon'ble Supreme Court in the case of Provident Fund Inspector, Faridabad (supra) relied upon by Mr. Bhattacharjee in this case, was also considered by the Division Bench in the said appeal and it was ultimately held that under section 14(1-A) of the 1952 Act any person who commits a default in complying with the provisions of section 6 or clause (a) of sub-section (3) of section 17 or paragraph 38 of the scheme is liable to be punished. It was also held that when default had been committed in respect of the deposits required to be made under section 6, the offence stands committed, and any subsequent deposit could not cause a waiver of the prosecution but could only be a consideration for imposing minimum sentence in accordance with law.
20. Mr. Biswas lastly urged that, in any event, writ remedy was not the proper remedy available to the appellants and the appellants should have moved a revisional application under section 482 of the Code of Criminal Procedure for quashing the criminal complaints since cognizance had already been taken by the learned Chief Judicial Magistrate, Barasat, on the basis thereof.
21. Mr. Biswas submitted that this was not a case of the learned Magistrate not having jurisdiction to take cognizance on the complaints filed so as to bring it within the ambit of the Whirlpool Corporation case relied upon by Mr. Bhattacharjee.
22. Mr. Biswas submitted that this was not a case which called for interference either with the orders passed in the section 7A proceedings or the complaints filed on the basis thereof.
23. We have carefully considered the submissions made on behalf of the respective parties and have also noted the fact that pursuant to the orders of the Court in this appeal the outstanding dues have been deposited by the appellants. However, the fact still remains that as soon as default was committed, it constituted an offence punishable under section 14 of the Employees' Provident Fund and Miscellaneous Provisions Act, 1952, with imprisonment and fine also.
24. Notwithstanding the above position, the Hon'ble Supreme Court in the Adoni Cotton Mills Ltd. case (supra) quashed the proceedings for prosecution initiated on the notices to show cause as to why prosecution for default should not be taken under sections 14 and 14A of the 1952 Act since the amount in default had been partly deposited and partly secured.
25. In the case before us, the appellants have also deposited all the dues which were allegedly outstanding on the strength of orders passed from time to time.
26. In view of the aforesaid decision of the Hon'ble Supreme Court, we dispose of the appeal with leave to the appellants to file separate affidavits before the learned Chief Judicial Magistrate, Barasat, North 24 Parganas, in respect of each separate complaint giving details of the payments of the amounts in default in each such complaint, and if the learned Magistrate is satisfied that such payments have been duly made, he shall take steps to drop the proceedings in respect of which such payments have been made.
27. There will be no order as to costs.
28. If an urgent xerox certified copy of this order is applied for, the same is to be supplied expeditiously, subject to compliance with all the required formalities.
A.K Basu, J.:— I agree.
Direction given.
S.K.P
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