(1) This is an appeal by the State and is directed against the judgment of the Additional Chief Presidency Magistrate, III Court, Esplanade, Bombay, acquitting the first two respondents, Firdharlal Bajaj and Tulsiprasad Khaitan of offences under Section 420 of the India Companies Act 1956. The original complainant, Nariman Fakirji Bharucha, is the third respondent in this appeal.
(2) The complainant, was employed sometime in 1941 as a Manager in New Pralhad Mills. The company commenced a provident Fund Scheme and appointed Trustees of the Provident Fund on the 1st April 1949. Thereafter, the New Pralhad Mills was sold to a company known as the Amrit Banaspati and Co. Ltd., on 1st July 1951, and the latter Company were appointed their managing agents in 1952. The respondents Nos. 1 and 2, who were the accused before the trial Court are the General Manager and the Chairman of the Amrit Banaspati and Co. Ltd. It is also not in dispute that consequent upon the taking over of the New Pralhad Mills by the Amrit Banaspati and Co. Ltd., the accused, who were the principal officers of the company, became trustees of the Provident Fund of the New Pralhad Mills, which was transferred to the Amrit Banaspati and Co. Ltd.
(3) The services of the complainant were for a time continued by the Amrit Banaspati and Co. Ltd. On 29h May 1957, however the complainant was informed that he was dismissed from service of the New Pralhad Mills as from 31st May 1957.
(4) There is some dispute between the parties as to whether the complainant was, in fact, dismissed from service or whether his services were merely terminated. But that dispute is not really germane to the point for decision in this appeal, and we shall without prejudging the issue refer to is as a dismissal.
(5) Consequent upon his dismissal, the complainant, on 28th March 1959, addressed a letter, through his attorneys, to the Trustees of the Amrit Banaspati Co. Ltd., who were holding the Employees' Provident Fund of the New Pralhad Mills. That letter is Ex. B. The complainant requested in that letter that he should be furnished with a statement of account of his Provident Fund Account, as the last statement which had been submitted to him, was for the financial years 1956-57. The complainant's attorneys also asked the Trustees 'please also give us an appointment for inspection of the securities in which the trust funds are invested by you as Trustees. Please note that if the aforesaid requisitions are not complied with as stated aforesaid, we have instructions to take immediate proceedings in the matter.' This letter was signed by the complainant's attorneys.
(6) On behalf of the accused and the Trustees of the Amrit Banaspati Co. Ltd., a reply was sent on the 18th of April, 1959 to the complainant's on the 18th of April, 1959 to the complainant's letter, wherein the company and the Trustees declined to give inspection as required and, on the other hand, they took the stand that 'Since your client was dismissed from the service of the company on account of misconduct, he is entitled to his contribution to Provident Fund only. Under the rules, he is not at all entitled for the company's contribution.' It is clear that no specific reply was given to the complainant's demand for inspection of the securities in which the trust funds were invested.
(7) The complainant filed the present complaint on 22nd of April 1959. He alleged breaches on the part of the two accused, who were Trustees of the Provident Fund, under section 420 of the Indian Companies Act. He also charged the accused under section 406 of the Indian Penal Code.
(8) The view which the Additional Chief Presidency, Magistrate has taken is that the complainant was not dismissed from the service of the New Pralhad Mills, but that his services were merely terminated with effect from the 31st of May 1957; but in any case he had become a past employee of the company and having regard to the provisions of sections 417 to 420, and particularly of section 420, of the Indian Companies Act, he, as a past employee, was not entitled to the inspection which he had claimed. The Additional Chief Presidency Magistrate held that the word 'employee' in section 419 can have reference only to a person who was employed under contract of service and that upon the termination of the contract he had ceased to be an employee within the meaning of section 419 of the Indian Companies Act.
(9) The right which section 419 of the Indian Companies Act, confers upon the employee to see the Bank's receipt for moneys or securities pertaining to his Provident Fund Account, is conferred upon him by the statute in the following words:
'An employee shall be entitled, on request made in this behalf to the company, or to the trustees referred to in sub-section (4) of Section 418, as the case may be, to see the Bank's receipt for any money or security such as is referred to in Ss. 417 and 418'.
Section 420 merely prescribes the penalty against any officer of a company or any trustee of a provident fund who knowingly contravenes or authorises or permits the contravention of the provisions of sections 417, 418 and 419.
(9a) Looking to the language used in Section 419, it would appear that the words of the section would ordinarily admit of no doubt or difficulty and that when the section uses the word 'employee', it means an employee. But Mr. P. P. Khambatta on behalf of the complainant has pressed for our consideration the purpose and object of the enactment as indicated not merely by the terms of section 419, but also by the other sections 417 and 418. He has contended that the right given under section 419 is a right in aid of another and a larger right conferred upon an employee, namely, to ese that the provident fund amounts are savagely invested by the Company; to have his own provident fund secured to him during his term of office and to be paid the same on the termination of his service and it is with that end in view that the legislature gave the employee the right under section 419 of inspection of the securities and bank's receipts pertaining to the provident fund amount. He also pointed to the provisions of Section 417, sub-sections (1) and (2), by which corresponding duties are laid upon the company. By sub-section (1) all moneys or securities deposited with the company by its employees in pursuance of their contracts of service with the company, must be kept or deposited by the company in a special account to be opened by the company for the purpose, in a Scheduled Bank. Sub-section (2) of section 417 enjoins that no portion of such moneys or securities shall be utilised by the company except for the purposes agreed to in the contracts of service. It is these rights, Mr. Khambatta contends, which are intended to be secured by the grant of the ancillary right of inspection conferred upon the employee by section 419. He, therefore, urged that the word 'employee' used in section 419 must be construed with specific reference to the object of the legislation and the aim to be achieved, namely, to permit the employee to inspect the receipts for moneys and securities with a view to seeing that his Provident Fund is sage. If that be the object of the enactment, it is contended, it would amount to defeating the right of an employee not to permit him an inspection after he ceases to be an employee, or, in other words, after the contract of service is terminated. Therefore, the word 'employee' must be construed to include an 'ex-employee' or a 'past-employee'.
(10) The argument was further reinforced by the submission that where, as in the instant case, the contract of service was not of any particular duration, it was open to an employer to terminate at will the services of his employee, with the result that the right conferred on the employee would be largely illusory. If one were to limit the use of the word 'employee' on to an employee who is in service, then it would always be open to the employer to defeat the right of inspection by forthwith terminating the contract of service as soon as the employee asked for inspection. It was surely not the intention of the Legislature, it was contended, to bestow upon the employee so ephemeral a right. In support of the interpretation for which he contends Mr. Khambatta also relied upon the authority of a decision of the Supreme Court of India reported in : (1958)ILLJ500SC , Workmen of Dimakuchi Tea Estate v. Management of Dimakuchi Tea Estate.
(11) The decision to which we have just referred undoubtedly laid down that the words of a statute, when there is doubt about their meaning are to be understood in the sense in which they best harmonise with the subject of the enactment and the object which the Legislature has in view. Their meaning is to be found not so much in a strictly grammatical or etymological propriety of language, nor even in its popular use, as in the subject or the occasion on which they are used, or the object to be attained. Their Lordships quoted with approval the passage from Maxwell's Interpretation of Statutes, 9th Edition page 55, to the effect that
'The words of a statute, when there is a doubt about their meaning are to be understood in the sense in which they best harmonise with the subject of the enactment and the object which the legislature has in view.'
(12) The passage which we have just re-produced states the exception and not the general rule. The passage itself indicates that the first and cardinal rule of construction of a statute is to give effect to the words of the statute; but that it is only in exceptional cases where there is any doubt or difficulty as to the interpretation of the statute or any word thereof, that the Court can legitimately look to the object of the enactment or in the purpose for which it was made.
(12a) We have already observed that upon a plain reading of section 419 of the Indian Companies Act, 1956, it would appear that there is no such doubt or difficulty. But Mr. Khambatta was concerned to point out that such an interpretation of the word 'employee' as including an employee who has ceased to be an employee or whose contract of service has been terminated, has been given in a decision of the English Courts reported in Wilkinson v. Barking Coporation, (1948) KB 721 and upon the authority of that decision he has contended that a doubt has arisen and we should look to the scope and object of the enactment and interpret the word 'employee' used in S. 419 of the Indian Companies Act, also as including an ex-employee or a past employee. In Wilkinson's case the English Court of Appeal was concerned with the provisions of S. 35 of the local Government Act, 1937, which provides that
'any question concerning the rights and liabilities of an employee of a local authority . . . .. . shall be decided in the first instance by the authorities concerned and if the employee is dissatisfied with any such decision . . . . .shall be determined by the Minister, and the Minister's determination shall be final.'
The plaintiff Wilkinson was an employee of the Barking Corporation which was a local authority and he had brought an action for a declaration that he was entitled to a certain superannuation allowance under S. 8, sub-section 1(A) of the Local Government Superannuation Act. His claim was met by the plea raised on behalf of the Corporation that he is not entitled to pursue that remedy because of the provisions of S. 35 of the Local Government Act, 1937, which says that the question 'shall be determined by the Minister and the Minister's determination shall be final'. In answer to that preliminary objection to the plaintiff's action, the contention advanced on behalf of the plaintiff in that case was that S. 35 merely referred to an 'employee' and not an 'employee whose services had been terminated', as in the case of Wilkinson & that therefore that section would be no bar to the plaintiff's suit. The contention was repelled and it was held that having regard to the provisions of that Statute even a person like Wilkinson whose services have been terminated would fall within the definition of the word 'employee' as used in section 35.
(13) Lord Justice Asquith pointed out that there were two definitions in that enactment, namely, the definition of the words 'contributory employee' and that of the word 'employee'. He held that a 'contributory employee' was merely a species of the genus 'employee'. He pointed out that a contributory employee was expressly so defined in section 3 of that Act as to include in it an ex-employee or a past employee. From that premise the learned Lords Justice reasoned that the other word 'employee' used in the same statute could not but have a similar connotation. He stated the reasoning at pages 726-727 of the report as follows:
'I think, in the first place that there is nothing in the separate definitions of 'employee' and 'contributory employee' to repel the natural assumption that the first class is a genus comprising the second as a species, or that if a 'contributory employee' can continue to retain the character as such after actual employment has terminated, an employee cannot do the same. To hold the contrary would be to limit the operation of the machinery of section 35 quite arbitrarily to questions concerning the rights of persons under Part I other than those claiming superannuation allowances, which last claimants are perhaps the most important body of persons asserting rights under that part of the Act.'
It will be clear from the passage which we have quoted above, that the decision in Wilkinson's case (1948) 1 KB 721 turned upon the particular provisions of the statute which fell to be construed in that case, namely, the Local Government Act, 1937, and it was because that Court found in the statute itself an indication that the word 'contributory employee' could include an ex-employee or past-employee that they interpreted the word 'employee' as having the same connotation. That is not the position here so far as the provisions of the Indian Companies Act are concerned. Neither do the words 'Contributory employee' occur in the Indian Companies Act; nor is the word 'employee' anywhere defined. Moreover, their is no other indication in the Act that when the Legislature used the word 'employee,' they might have intended to refer to an ex-employee or past employee. Therefore, it can be given only its normal connotation.
(14) The word 'employee' has been defined in Webster's Dictionary as 'one employed by another; one who works for wages or salary in the service of an employer' . . . . . . . . . It seems to us that the word 'employee' as used in section 419 of the Indian Companies Act, has been used in contra-distinction to the word 'employer' and that in the use of the word 'employee' the legislature contemplated the existence of a relationship of master and servant or what is the same thing between the employer and the employee. Obviously, an employee would be a person under the control of the employer and would be bound to obey the orders of the employer not only as to the work which he shall execute, but also as to the details of the work and the manner of its execution. The attributes of an employee have been stated with clarity in Diamond's Law of Master and Servant, Second Edition, at pages 1 and 2. The word 'employee' used in section 419 cannot in our opinion, in the absence of anything contained in the section itself, or in the statute, carry any higher or other meaning. It seems to us then that there is no doubt or difficulty here as to the interpretation of the word 'employee' used in section 419 and, so it is not necessary to go back to a consideration of the scope and object of the legislation.
(15) Mr. Khambatta also placed before us a number of anomalies which would arise if this interpretation were to be accepted. He pointed out that if the interpretation be correct, the moment the master chooses to give a notice to the employee terminating his contract of service, the right of inspection would be at an end yet his right to inspection would be at an end yet his right to receive his provident fund amount would subsist. There would therefore be no meaning in saying that the right of inspection is a right given only in aid of the larger right to the provident fund itself. The argument, is no doubt well taken but cannot affect the question of interpretation. Moreover, it seems to us that when sections 417,. 418, 419 and 420 of the Indian Companies Act, were enacted, the present-day notions of social justice between employer and employee were not the same and it is conceivable that the legislature may have thought that upon termination of the contract of service the employee should be relegated to his normal remedies of a suit and the normal remedies which the employee has to safeguard the payment of provident fund amount pending his suit, such as are given to him by the Code of Civil Procedure. It seems to us that the legislature contemplated that it would be a serious inroad upon the rights of the employer to permit the employee who has ceased to be an employee, to inspect the securities and Bank receipts for moneys of his former employer. It is not as if the employee whose contract of service has been terminated would be entirely without a remedy. Upon the termination of his services, his right would be an immediate right to the receipt of the provident fund amount, whereas during the continuance of his contract of service he has no right to recover the provident fund amount from the employer or the trustees. Hence, the difference in the remedies made available to the employee and the consequent difference in the right to inspect.
(16) On behalf of the accused Mr. Amin raised a number of other contentions, particularly that the right of inspection conferred upon the complainant, if any, was a right personal to him and that in this case no demand was made for inspection by the complainant himself, but that on the other hand, his attorneys' letter showed that they had asked for inspection for themselves a right which section 419 does not confer on them. The other contention which was raised was that the employer have not in the instant case 'knowingly' contravened or authorised or permitted the contravention of the provisions of section 419, and Mr. Amin set forth a number of circumstances from which absence of knowledge could be interfered. We need not decide these contentions because of the view which we have taken of the provisions of Section 419 itself that the word 'employee' means an employee as such and not an ex-employee or past employee or a person whose contract of service has been put an end to.
(17) In the course of the arguments at the Bar it was alleged, but controverted, that the employers in this case have not set apart the amount of the contribution of their employees, nor kept or deposited them in a special account, but that, on the other hand, the trustees have permitted the moneys and securities to be utilised by the company for its own purposes. In view of these allegations, when the matter came up before us at the last hearing on 10th February 1961, we had ordered the respondents 1 and 2, who were admittedly trustees of the Provident Fund, to file an affidavit stating whether the amount of the provident fund of its employees has been set apart in a separate account or not and whether it was separately invested or not and if invested, in what securities. We had also asked them to furnish a statement showing the date from which the provident fund amount had been kept apart and/or invested. While, no doubt, Mr. Amin had contended at the hearing that he was not in a position to state whether an affidavit would be filed or not, Mr. Shellim Samuel has stated before us today that in spite of an intimation to respondents Nos. 1 and 2, they do not intend to file such an affidavit. The refusal on the part of the respondents Nos. 1 and 2 to place the facts before the Court undoubtedly indicates that in all probability they have not complied with the provisions of section 417 (1) and (2) and that that is the reason why a clear affidavit could not be filed by them. Unfortunately, the complainant did not base his complaint in the instant case upon a breach of the provisions of section 417, sub-section (1) or (2); but he limited himself to a breach of section 419, read with section 420, of the Indian Companies Act. Nothing that has been stated in this order will therefore bar the complainant from any further remedy that he may choose to seek. Subject to what we have stated above the appeal fails and is dismissed.
(18) Mr. Khambatta at this stage points out to us that a civil suit has already been filed by his client against the company for wrongful dismissal and in fairness to both the parties to this appeal, we would like to make it clear that nothing that has been stated in the course of the judgment in this appeal shall affect the disposal of that suit.
(19) Appeal dismissed.