Swapna & Anr. Vs State of Karnataka & Anr. (Karnataka High Court)
In the case Swapna & Anr. Vs State of Karnataka & Anr., the Karnataka High Court deliberated on criminal proceedings initiated under Sections 406 and 409 of the Indian Penal Code (IPC) against the trustees of a charitable trust running educational institutions. The case stemmed from allegations of non-deposit of employee provident fund (EPF) contributions, which were purportedly deducted from employee wages but not transferred to the EPF authority. The petitioners challenged the proceedings on grounds that no deductions were made, and all dues were cleared before the police complaint was lodged.
The petitioners argued that the essential elements of Section 406 IPC—criminal breach of trust—were absent, as no amounts were withheld. They contended that responsibility for deductions and deposits lies with the employer, in this case, the trust. The prosecution maintained that Form 12A reports indicated deductions and non-remittance, warranting criminal liability under IPC provisions. The court noted that the trust was not included in the charge sheet and held that trustees could not be prosecuted in its absence.
The court reviewed the legal requirements under Sections 405 and 406 IPC, emphasizing that the deeming provision under Section 405 applies only if deductions were made. Since the evidence presented did not establish deductions, the deeming fiction of criminal breach of trust could not be invoked. Additionally, the court observed that any pending amounts were cleared prior to the complaint, eliminating grounds for criminal prosecution.
