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Mahalderam Tea Estate P. Ltd. and ors. Vs. D.N. Prodhan and anr. - Court Judgment

LegalCrystal Citation
SubjectCompany
CourtKolkata High Court
Decided On
Case NumberCriminal Revisions Nos. 1050-52 of 1974
Judge
Reported in[1979]49CompCas529(Cal),[1979(38)FLR13]
ActsEmployees' Provident Funds Act, 1952 - Section 14A
AppellantMahalderam Tea Estate P. Ltd. and ors.
RespondentD.N. Prodhan and anr.
Appellant AdvocateD.P. Chaudhury and ;Amarnath Roy Chaudhury, Advs.;Manas Ranjan Chakraborty, Adv.
Respondent AdvocateD.N. Das and ;Anjan Mukherjee, Advs.
Cases ReferredGirdhari Lal Gupta v. D. N. Mehta
Excerpt:
- .....according to mr. chaudhury, before process can be issued against a director of a company for an offence committed under the provisions of the act, it has to be established, that the director was in charge of or was responsible to the company for the conduct of the business of the company. a bald statement such as in the petitions of complaint filed in the aforesaid cases that merely because they were directors they were liable for the conduct of the business and management of the company would not bring them within the purview of section 14a of the act and, as such, the cognizance taken against the petitioners nos. 2, 3 and 4 is bad in law and without jurisdiction.4. mr. d. n. das, appearing on behalf of the provident fund inspector, has submitted that the petitions of complaint are.....
Judgment:

P.C. Barooah, J.

1. These three rules are directed against orders dated21-12-71, 19-11-71 and 21-12-71 passed in C. R. Cases Nos. 49/71, 71/71and 73/71, respectively, by Sri S. K. Sinha, Sub-divisional Judicial Magistrate, Kurseong, taking cognizance and issuing summons against the petitioners under Section 14(2) of the Employees' Provident Funds Act, 1952, readwith para. 76 of the scheme framed under the Act.

2. Petitioners Nos. 2, 3 and 4 are the directors of the Mahalderam Tea Estate (P.) Ltd. having its registered office at 14, Chandney Chowk Street, Calcutta-13, and owning tea gardens including Mahalderam Tea Estate in the District of Darjeeling. Sri D. N, Prodhan, Provident Fund Inspector, West Bengal, filed three complaints in the court of the learned Sub-divisional Judicial Magistrate, Kurseong, wherein it was alleged, inter alia, that the petitioners Nos. 2, 3 and 4 who are the directors of Mahalderam Tea Estate (P.) Ltd. and hence responsible for the conduct of the business and management of the company and all its establishments and are as such legally bound to pay to the provident fund the employer's-cum-members' contributions together with the administrative charges within the statutory period, have failed to do so for three different months as mentioned in the complaints.

3. The submission made by Mr. D. P. Chaudhury, appearing for the petitioners, relates to the interpretation of Section 14A of the Employees' Provident Funds Act, 1952 (hereinafter the Act). According to Mr. Chaudhury, before process can be issued against a director of a company for an offence committed under the provisions of the Act, it has to be established, that the director was in charge of or was responsible to the company for the conduct of the business of the company. A bald statement such as in the petitions of complaint filed in the aforesaid cases that merely because they were directors they were liable for the conduct of the business and management of the company would not bring them within the purview of Section 14A of the Act and, as such, the cognizance taken against the petitioners Nos. 2, 3 and 4 is bad in law and without jurisdiction.

4. Mr. D. N. Das, appearing on behalf of the Provident Fund Inspector, has submitted that the petitions of complaint are not happily worded and the necessary averments in conformity with Section 14A of the Act, have not been made.

5. Section 14A of the Act is in the following terms :

' If the person committing an offence under this Act, the Scheme or the Family Pension Scheme is a company, every person, who at the time the offence was committed was in charge of, and was responsible to, the company for the conduct of the business of the company, as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly :

Provided that nothing contained in this sub-section shall render any such person liable to any punishment, if he proves that the offence was committed without his knowledge or that he exercised all due diligence to prevent the commission of such offence. (2) Notwithstanding anything contained in Sub-section (1), where an offence under this Act, the Scheme or the Family Pension Scheme, has been committed by a company and it is proved that the offence has been 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 and punished accordingly.''

6. Under the aforesaid section a company is made primarily liable for an offence committed under the Act. The liability may be extended to other persons vicariously only under the conditions laid down in the section. A director of a company may. be concerned only with the policy to be followed and might not have any hand in the management of its day to day affairs. Such persons must necessarily be immune from such prosecutions. In the three petitions of complaint filed before the learned Magistrate, apart from the statement that the petitioners Nos. 2, 3 and 4 are directors of the aforesaid company and hence responsible for the conduct of its business and management, there is no further material from which the learned Magistrate could satisfy himself that the petitioners Nos. 2, 3 and 4 took some part in the running of the business of the company or its tea gardens. In the absence of such averments in the three petitions of complaint the cognizance taken by the learned Magistrate against the petitioners Nos. 2, 3 and 4 in the three cases, is bad in law and must be quashed. This view will find support in a decision of the Supreme Court in the case of Girdhari Lal Gupta v. D. N. Mehta, : [1971]3SCR748 .

7. In the result, all the cases pending against the petitioners Nos. 2, 3 and 4 in the court of the learned Sub-divisional Judicial Magistrate, Kur-seong, are quashed. The cases will, however, proceed against the first petitioner. The rules are thus disposed of.

8. Proceedings quashed against petitioners Nos. 2, 3 and 4.

S. C. Majmudar, J.

9. I agree.


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