Enforcement Officer Vs Prathigna.Com HR Solutions Pvt. Ltd. (Special Court for Economic Offences, Bengaluru)
₹9,202 PF Default Paid-But Not Wiped Away: Directors Convicted u/s 14(1B) r.w.s. 14A, Yet Escape Imprisonment
Summary:
In Enforcement Officer, EPFO v. M/s Prathigna.Com HR Solutions Pvt. Ltd. & Others, the Special Court for Economic Offences, Bengaluru, considered prosecution for failure to remit the employer’s contribution towards the Employees’ Deposit Linked Insurance Fund within the prescribed period.
Accused No.1 was a company covered by the Employees’ Provident Funds & Miscellaneous Provisions Act, 1952, Employees’ Provident Fund Scheme, Employees’ Pension Scheme & Employees’ Deposit Linked Insurance Scheme, 1976. Accused No.2 was its Managing Director, while accused Nos.3 to 5 were Directors. Proceedings against accused No.6 were split into a separate case because she could not be secured.
The company defaulted in remitting insurance-fund contributions for May, June & July 2019 amounting to ₹2,911, ₹3,074 & ₹3,217 respectively. The total default was ₹9,202. Contributions were required to be paid within 15 days from the close of each month.
After an inquiry, the competent authority passed an assessment order dated 27.11.2024 u/s 7A. A show-cause notice dated 05.03.2025 followed. Since the default continued, the Enforcement Officer instituted prosecution u/s 14(1B) r.w.s. 14A.
Issues Before the Court
The primary issue was whether the company & persons managing it had failed to remit the statutory insurance-fund contribution within time, thereby attracting section 14(1B).
The Court also examined whether accused Nos.2 to 5 were responsible for the company’s day-to-day affairs & consequently vicariously liable u/s 14A. Further questions concerned whether mens rea was necessary, whether subsequent payment extinguished criminal liability & whether financial hardship constituted a valid defence.
EPFO’s Contentions
EPFO relied upon the complaint, sanction order, Form 5A, assessment order u/s 7A, proof of service, show-cause notice & the company’s email response. The documents showed that accused No.2 was described as owner, Managing Director & person responsible for conducting the establishment’s business. Accused Nos.3 to 5 were disclosed as Directors.
EPFO argued that the assessment order remained unchallenged. The accused had also acknowledged the show-cause notice & promised to pay 50% of the assessed liability by March 2025, with the balance by April or May 2025. That assurance was not honoured within the stated period.
It was contended that payment made during trial could not erase an offence already completed upon failure to remit the contribution by its statutory due date. EPFO also sought damages u/s 14B, emphasising the welfare character of the legislation & prejudice caused to employees.
Accused’s Contentions
The accused argued that accused Nos.2 to 5 were merely Directors & were not individually shown to be responsible for the company’s daily management. Neither the complaint nor sanction order allegedly described their specific roles.
They also disputed proper communication of the assessment order & show-cause notice. According to them, knowledge or intention was necessary because the penal provision used the expression “knowingly,” while section 14A protected persons who lacked knowledge or had exercised due diligence.
Accused No.2 testified that the company faced severe financial hardship, was owed nearly ₹56 lakh by clients & had survived through loans from financial institutions, relatives & friends. Operations had ceased around November or December 2024. Most importantly, the entire arrears were paid through a demand draft dated 22.07.2026, shortly before judgment. On that basis, the accused sought acquittal.
Court’s Findings
The Court held that EPFO had proved the company’s coverage & default through Form 5A, the assessment order u/s 7A & the accused’s admissions. Accused No.2 admitted that the establishment was obliged to remit contributions within 15 days of the succeeding month. He also accepted that the assessment corresponded with the company’s records & had never been challenged before the CGIT.
The defence of non-service was rejected. Accused No.3 had acknowledged the show-cause notice on behalf of the establishment & Directors. The company’s subsequent email expressly referred to that notice & promised payment. These circumstances established knowledge of the determined liability.
On vicarious liability, the Court relied upon the statutory definition of “employer,” Form 5A, accompanying corporate records & the Supreme Court’s ruling in Srikantadatta Narasimharaja Wodiyar v. Enforcement Officer. For an establishment other than a factory, liability could extend to persons having ultimate control or responsibility for its affairs. The Court treated the Managing Director & Directors as responsible for management.
Legal Reasoning
The EPF legislation was characterised as beneficial social-welfare legislation. The Court held that mens rea was not an essential prerequisite for the statutory default involved. Financial difficulty, delayed client receipts or business closure could not override the mandatory obligation to safeguard employees’ statutory benefits.
The offence stood completed when the contribution was not remitted by the due date. Therefore, subsequent payment during trial did not retrospectively erase criminal liability. It was, however, relevant while determining punishment.
The Court declined EPFO’s request for damages u/s 14B because the complaint contained no necessary averments supporting such relief.
Decision & Practical Implications
Accused Nos.1 to 5 were convicted u/s 14(1B) r.w.s. 14A. The company was fined ₹2,500. Accused Nos.2 to 5 were fined ₹2,500 each, with ten days’ simple imprisonment in default. They were also directed to jointly pay the company’s fine, failing which they would undergo five additional days’ simple imprisonment.
Since the full arrears had been cleared during trial, the Court found special reasons to avoid substantive imprisonment. EPFO was awarded ₹1,000 compensation from the fine.
The ruling highlights that delayed compliance may reduce punishment but does not undo prosecution. Payment after prosecution can soften the sentence-not reverse the completed statutory default.
Cases Discussed
- Srikantadatta Narasimharaja Wodiyar Vs. Enforcement Officer, Mysuru, (1993) 3 SCC 217
- Provident Fund Inspector Vs. Chitrala Co-op. Spinning Mills Ltd., 1999 (1) LLJ 255 (AP)
- State of Bihar Vs. S.P. Bhadani, AIR 1959 Patna 9
- Ramjhora Tea Company Ltd. Vs. Provident Fund Inspector, (1990) Crl. LR 267 (Cal)
FULL TEXT OF THE JUDGMENT/ORDER OF SPECIAL COURT FOR ECONOMIC OFFENCES, BENGALURU
The instant complaint has been made by the complainant against the accused persons alleging to have committed the offences punishable U/s.14(1B) r/w Section 14A of the Employees’ Provident Fund and Miscellaneous Provisions Act, 1952 (hereinafter referred as “the Act”).
2. The complainant’s case in nutshell is as under:
The accused No.1 company is an establishment within the meaning of the Employees’ Provident Fund and Miscellaneous Provisions Act, 1952, the Employees’ Provident Fund Scheme 1952, the Employees Pension Scheme, 1995 and Employees Deposit Linked Insurance Scheme, 1976. The said statutes are very much applicable to the accused No.1 establishment, the same has been allotted with Code No.PY/BOM/1429442. It is further complainant’s allegations that, the accused Nos.2 to 6 are the persons, in-charge of day to day affairs and conduct of the accused No.1 establishment as per Form No.5A submitted by the said establishment. Thereby, the said accused No.2, who is the Managing Director and the accused Nos.3 to 6, who are Directors of accused No.1 establishment are equally and statutorily bound to pay the employers share of contributions to the Insurance Funds along with Administrative Charges for every month within 15 days of close of that month in respect of the employees working in the accused No.1 establishment, as per paragraph No.8 of the Employees Deposit Linked Insurance Scheme, 1976. It is further complainant’s case that, the accused persons have defaulted in remittance of aforesaid statutory contributions between May 2019 and July 2019 as below:
| Month & Year | Insurance Fund Contribution | Insurance Fund Administrative Charges | Due Date |
|---|---|---|---|
| May 2019 | Rs.2911 | 0 | 15.06.2019 |
| Jun 2019 | Rs.3074 | 0 | 15.07.2019 |
| July 2019 | Rs.3217 | 0 | 15.08.2019 |
| Total | Rs.9202 | 00 |
3. The accused persons despite several requests by the complainant having failed to comply in remittance of the aforesaid contributions. The Inquiry Authority has also after providing sufficient opportunities to the accused persons has passed order U/s.7A of the Act. The accused persons have failed to comply the said order and pursuant to default committed supra, are alleged to have committed the offences punishable U/s.14(1B) r/w Section 14A of the said Act. Hence, this complaint.
4. Upon receiving the instant complaint, this court acting U/s.223(1)(a) of BNSS, the sworn statement of the complainant was dispensed, pursuant to the complainant being the public servant, took cognizance of the offences punishable U/s.14(1B) r/w Section 14A of the Act and issued process.
5. The accused Nos.2 to 5 on service of summons, appeared through their counsel and made a bail application. The same came to be allowed and were enlarged on bail.
6. The accused No.6 despite coercive steps, could not be secured. Hence, separate case bearing C.C. No.81/2026 was registered against her, on the file of this court.
7. Thereafter, the substance of the accusation was framed and read over and explained to accused Nos.2 to 5, they pleaded not guilty and claimed to be tried.
8. The complainant in order to substantiate the claim and allegations put-forth in the complaint got examined himself as PW-1 and got marked 9 documents as Ex.P-1 to Ex.P-9 and got closed his side of evidence. Thereafter, the statements of accused Nos.2 to 5 as contemplated U/s.351 of BNSS was recorded. The accused Nos.2 to 5 denied incriminating materials and accused No.2 got examined himself as DW-1 on his behalf as well as on behalf of the accused Nos.3 to 5.
9. Heard the arguments canvassed by learned counsel for the complainant and the accused Nos.1 to 5.
10. Having due regard to the complaint, evidence on record and arguments canvassed by the either parties, the following points would arise for the consideration of this court namely:
1. Whether the complainant has proved beyond all reasonable doubts as to the accused No.1 being the establishment failed to pay the employers share of contributions to the Insurance Fund along with Administrative Charges for the period between May 2019 and July 2019 within 15 days of the close of every month to the tune of Rs.9,202/- and thereby accused No.1 establishment being managed by accused Nos.2 to 5 have committed the offences punishable U/s.14(1B) r/w Section 14A of the EPF and MP Act?
2. What order?
11. The answer of this court to the aforesaid points is as under:
Point No.1: In the Affirmative
Point No.2: As per final order for the following:
REASONS
12. Point No.1: The complainant in order to establish the guilt of the accused persons beyond all reasonable doubts has got examined himself as PW-1 and got marked 9 documents as Ex.P-1 to Ex.P-9 and got closed his side of evidence.
13. It is the complainant’s allegations as to the accused No.1 company/establishment duly covered under EPF and MP Act, 1952, the said accused No.1 company duly managed by the Managing Director i.e., accused No.2 and Directors i.e., accused Nos.3 to 5 respectively, defaulted in remittance of the employers share of contributions towards Insurance Fund along with Administrative Charges in the succeeding month within 15th day pertaining to the period between May 2019 and July 2019 to the tune of Rs.9,202/-.
14. The complainant/CW-1 has reiterated the allegations put-forth in the complaint in his oral testimony while being examined as PW-1. It has been deposed regarding the default by the accused Nos.2 to 5 being the Directors are responsible for day to day affairs of accused No.1 establishment, the Inquiry being conducted after the inspection so also regarding the order of sanction being accorded by the competent Authority.
15. In support of the said oral testimony, the complainant has produced and got marked in all 9 documents as Ex.P-1 to Ex.P-9. Ex.P-1 is the complaint lodged in the case on hand by the complainant on the basis of the sanction accorded by Regional PF Commissioner-1, Bengaluru. Ex.P-2 is the sanction order dated 04.08.2025, wherein on the basis of the report submitted by the Enforcement Officer, the Regional PF Commissioner-1, R.O., Bengaluru (Koramangala), Bengaluru has accorded sanction to prosecute the accused persons for having committed the offence alleged in the complaint. Ex.P-3 is the certified true copy of Return of Ownership in Form No.5A along with enclosures submitted to the Regional Commissioner of complainant Department by the accused No.1 establishment, wherein accused No.2 is shown to be the owner in column No.8 so also shown to be the person in-charge of and responsible for the conduct of the business of the accused No.1 establishment as per column No.11 and also the said accused No.2 being M.D., and accused Nos.3 to 5 being Directors of accused No.1 establishment. Ex.P-4 is the certified true copy of the Assessment Order dated 27.11.2024 pertaining to accused No.1 establishment in an Inquiry conducted U/s.7A of the EPF and MP Act. Two certified true copies of track reports pertaining to Ex.P-4 showing due service to accused Nos.1 & 2 are collectively marked as Ex.P-5. Ex.P-6 is the certified true copy of show cause notice dated 05.03.2025 addressed to accused Nos.1 to 5. Ex.P-7 is the certified true copy of written acknowledgment dated 05.03.2025, wherein, it has been acknowledged by accused No.3 i.e., C.O.O., of accused No.1 establishment regarding the receipt of Ex.P-6 on his behalf as well as rest of the Directors. Ex.P-8 is the certified true copy of e-mail dated 12.03.2025, wherein, the accused No.1 company has replied to the show cause notice at Ex.P-6. Ex.P-9 is the Certificate U/s.63 of BSA pertaining to the Ex.P-5 and Ex.P-8.
16. PW-1 has been subjected to cross-examination by the learned counsel for the accused Nos.1 to 5, wherein, it has been admitted regarding the accused No.2 alone being shown as Employer in Column Nos.8 & 11 of Ex.P-3. It is also volunteered as to the accused No.2 was duty bound to disclose the details of other Directors to the complainant Agency. It is also deposed as to the details of the roles of the rest of the Directors is as per Ex.P-2 i.e., as available in MCA portal. It is specifically deposed as the show cause notice at Ex.P-6 was duly served upon accused No.3 and the said accused No.3 received the same on his behalf as well as on behalf of rest of the Directors. It has been accounted as to as there was an acknowledgment regarding the receipt of show cause notice at Ex.P-6 in the letter head at Ex.P-7, it was accepted, though it did not contained the official seal of the establishment.
17. The PW-1 during the course of cross-examination, has not chosen to comment regarding accused No.1 establishment having stopped its operations on his visit to its premises on 05.03.2025. Though the witness has admitted regarding the receipt of e-mail dated 12.03.2025 as per Ex.P-8 with a request to accommodate to pay the arrears of contributions till April/May 2025, so also regarding no any response being made by the Agency, but, he has categorically deposed as to the Agency has also not chosen to precipitate the compliance of Ex.P-8. It is volunteered as to the accused No.1 establishment has failed to comply its commitment to pay the arrears of contributions in the month of April/May 2025. The suggestions as to the accused No.3 as well as other Directors being salaried employees of the accused No.1 establishment, who are not responsible for the management of said establishment, as such they cannot be prosecuted has been specifically denied by the witness. It is admitted as to only the Directors on Board during the default period will be responsible for the default in contributions towards the complainant Agency and the suggestions as to there is no any determination of the roles of individual Directors of accused No.1 establishment has been specifically denied by the witness.
18. The accused No.2 has got examined himself as DW-1 and deposed as to himself being the Director of accused No.1 establishment and deposing on his behalf as well as on behalf of accused Nos.3 to 5. It is categorically deposed as to the accused No.1 establishment is facing severe financial crunches and unable to cope up with its commitments, was operated by borrowing loans from the financial institutions as well as from relatives and friends. It is also accounted regarding the establishment having dues from the clients to an extent of Rs.56 lakhs and necessary legal action has been initiated for recovery of the said dues. It is specifically deposed as to the accused No.1 establishment has stopped its operations since November/December 2024 due to its financial constraints. It has been stressed as to the default in complying statutory requirements towards the complainant Agency is wholly and solely on account of severe financial hardship faced by accused No.1 establishment.
19. DW-1 has been subjected to cross-examination by the complainant, wherein, it has been admitted regarding the accused No.1 establishment duly covered under EPF & MP Act so also himself being Employer as defined U/s.2(e) of the Act. He has also admitted regarding himself being signatory to Ex.P-3 and the said establishment having five Directors from the date of its incorporation till early 2025. It is further elicited as to the accused No.1 establishment being bound to remit the contribution within 15 days of the succeeding month. The witness is admitted regarding order at Ex.P-4 being in accordance with the records maintained by accused No.1 establishment insofar as arrears of contributions. It is also categorically deposed as to the establishment having not chosen to challenge the order at Ex.P-4 before CGIT. It is conceded as to the show cause notice at Ex.P-6 being issued against establishment as well as Directors for default in complying the order at Ex.P-4. It is further admitted as to the Ex.P-8 being in response to Ex.P-6 assuring the PF Commissioner to pay the 50% of the amount assessed in Ex.P-4 before March 2025 and balance by April/May 2025.
20. The accused Nos.3 to 5 have not chosen to adduce their evidence.
21. During the course of arguments, the complainant vehemently argued that, the complainant has very much discharged the burden of proving the guilt against the accused persons by cogent documentary and oral evidence. It has been also emphasized as to the evidence of PW-1 has withstood the test of cross-examination and Ex.P-4 i.e., the order in the Inquiry proceedings U/s.7A of the EPF and MP Act till date has not been challenged by the accused persons. It is also stressed regarding the default of accused persons having very much jeopardized the employees of the accused No.1 establishment. It is also highlighted as to the act of the accused Nos.2 to 5 being contrary to the very object of the statute and very much affecting the rights of the employees. It is highlighted that the payment of contributions by accused persons during the course of trial will not absolve from the criminal liability as the offence is complete soon after the default being committed the accused No.2 by virtue of being the Managing Director and the accused Nos.3 to 5 being the Directors of accused No.1 establishment respectively. It is also emphasized as to the court is empowered to invoke Section 14B of the Act to impose damages considering the facts and circumstances in the case on hand and also the mense rea or actus reus not being essential elements for imposing penalty or damages. Amongst these grounds, it has been sought to convict the accused Nos.1 to 5 for the offences alleged in the compliant.
22. The counsel for the accused Nos.1 to 5 has vehemently argued that, the aspect of the accused Nos.2 to 5 being the Directors and not being responsible for day to day affairs of accused No.1 establishment. It is emphatically argued that, there is no any communication by complainant Department to accused Nos.2 to 5 neither with respect to the assessment order nor with respect to show cause notice. It is also stressed as to accused Nos.1 to 5 having paid the arrears of contributions vide letter dated 22.07.2026 addressed to PF Commissioner. It is emphatically argued that, pursuant to accused No.1 establishment having cleared the arrears of contributions as per the assessment order at Ex.P-4 and also show cause notice at Ex.P-6, the instant proceedings will not survive for the consideration of this court, by highlighting the cross-examination of PW-1. It is also pointed out that as per Section 14(1) of the Act, the mense rea/intention is a prerequisite to incriminate the defaulter as the provision refers to the phrase “knowingly”. It is also highlighted regarding the accused Nos.1 to 5 being falsely implicated in the case on hand though their involvement has not been substantiated to the satisfaction of this court by cogent, oral and documentary evidence. It is also emphasized regarding proviso to Section 14A of the Act, which contemplates only on proof of the offence being committed with the knowledge and despite exercise of all due diligence, will be liable to the punishment. It is claimed that there is no any specific mention regarding the role played by the accused Nos.2 to 5 neither in Ex.P-1 complaint nor it has been discussed in sanction as per Ex.P-2. Amongst these arguments, learned counsel for the accused Nos.1 to 5 sought to acquit the accused Nos.1 to 5 to meet the ends of justice.
Analysis and Evaluation of Evidence as well as Contentions
23. The complainant has very much established the fact of the accused No.1 establishment being very much covered under EPF and MP Act, 1952. This aspect is very much forthcoming from Ex.P-3.
24. The complainant has also substantiated regarding the default on the part of the accused No.1 establishment in so far as remittance of employers share of contribution towards Insurance Funds along with Administrative Charges between May 2019 and July 2019. This aspect is very much forthcoming from the examination of Inquiry Order passed by the competent authority as per Ex.P-4. At this juncture, this court is also justified to draw an adverse inference on account of accused Nos.1 to 5 having not challenged the said Assessment Order as per Ex.P-4 as contemplated U/s.121 of the Bharathiya Sakshya Adhiniyam. In light of admission by the accused No.2 in his cross-examination as to the accused No.3 having appeared in the proceedings as per Ex.P-4. Furthermore, the show cause notice dated 05.03.2025 as per Ex.P-6 was duly acknowledged on behalf of accused No.1 establishment as well as its Directors as per Ex.P-7. That apart, the admission by accused No.2 as to Ex.P-8 being in response to Ex.P-6, which was addressed by accused No.3 to PF Commissioner by referring to Ex.P-6, will certainly inclines the court to hold due service of Ex.P-6. Thereby the specific defence of accused Nos.2 to 5 as to they did not had “knowledge/intention” to commit an offence, pursuant to Ex.P-4 & Ex.P-6 not being duly served upon them cannot be attributed any significance.
25. The arguments of the learned counsel for accused Nos.1 to 5 as to the sanction order as per Ex.P-2 does not discloses the role of the individual persons, who were responsible for the conduct of accused No.1 establishment and thereby there is no application of mind by the Sanctioning Authority will not be amenable on account of accused Nos.1 to 5 having not challenged the said sanction order before the competent authority. Furthermore, there is specific mention regarding the accused Nos.2 to 5 as to their status as Employers U/s.2(e) of the Act and there is also mention regarding the opportunity being given by the Sanctioning Authority prior to passing order as per Ex.P-2.
26. That apart, the arguments as to there is no specific averment regarding the role of accused Nos.2 to 5 in the complaint as per Ex.P-1 so also no averment regarding accused Nos.2 to 5 being vicariously liable for the act of the accused No.1 establishment, will not hold the water pursuant to the averments in paragraph No.7 of the complaint. The reading of the paragraph No.7 of the complaint along with order as per Ex.P-4 i.e., assessment order very much makes clear the role of accused Nos.2 to 5 with respect to accused No.1 establishment. That apart, the testimony of accused No.2/DW-1, very much makes it clear that, the accused No.2 being vicariously liable for the act of accused No.1 establishment.
27. The accused persons having not challenged the Ex.P-4 i.e., the Inquiry Order are very much precluded from contending as to the complaint is false and frivolous, as they have very much been represented during the Inquiry initiated by the complainant Authority U/s.7A of the EPF & MP Act. This court is of the considered view that, the Return of Ownership as per Ex.P-3 and the Assessment Order as per Ex.P-4 are very much covered U/s.119 of the BSA.
28. It is the specific defence of the accused Nos.2 to 5 that, the complainant has not demonstrated regarding the accused Nos.2 to 5 being responsible for the day to day affairs of the accused No.1 establishment, by cogent oral and documentary evidence. In this regard, it has been highlighted by the complainant regarding the accused No.2 being the Managing Director and accused Nos.3 to 5 being the Directors are very much covered U/s.2(e) of the Act, which defines “Employer”, thereby they are statutorily responsible for the day to day affairs of the accused No.1 establishment. In the case on hand, the defence urged by the accused Nos.1 to 5 in so far as the responsibility of accused Nos.2 to 5 being not demonstrated or proved will not survive in light of the dictum of the Hon’ble Apex Court in the decision reported in (1993)3 SCC 217 in Srikantadatta Narasimharaja Wodiyar V/s. Enforcement Officer, Mysuru, wherein, it has been laid down that:
“when it comes to establishment other than factory it is not confined to owner or occupier but to all those who have control or are responsible for the affairs of the Company. It includes even Director. Therefore, every such person who has the ultimate control over the affairs of Company becomes employer. To say therefore that since paragraph 36-A requires an employer to do certain acts the responsibility for any violation of the provision should be confined to such employer or owner would be ignoring the purpose and objective of the Act and the extended meaning of employer in relation to establishments other than the factory. The declaration therefore in Form 5-A including appellant as one of the person in charge and responsible for affairs of the Company was in accordance with law. Therefore, his prosecution for violation of the Scheme does not suffer from any error of jurisdiction or law”
29. An anxious examination of the Ex.P-3, it transpires that, as per column No.11, the accused No.2 is shown to be the person in-charge and responsible for the conduct of the business of the accused No.1 establishment. Further, the column No.8 discloses the accused No.2 as owner of accused No.1 establishment. That apart, the documents enclosed to Ex.P-3 transpires accused Nos.3 to 5 being Directors of the accused No.1 establishment they are sufficient to gather the said accused Nos.2 to 5 being responsible in managing the day to day affairs of accused No.1 establishment.
30. In the case on hand, it has been categorically contended by the accused persons as to the arrears/dues pertaining to the Ex.P-4 & Ex.P-6 have been repaid by accused Nos.2 to 5. The said contention of the accused persons is also forthcoming as per the copy of letter and DD dated 22.07.2026. The complainant has vehemently argued that, the accused Nos.2 to 5 having cleared the arrears of contributions during the pendency of the instant proceedings will not absolve from the violation as contemplated under the provisions of the Act. It is highlighted that soon after the default in remittance of the contributions by the accused persons, the offence has been committed, the subsequent remittance cannot be the ground to acquit the accused persons in the case on hand. It is relevant to note that, the Hon’ble Apex Court and other Hon’ble High Courts have time and again made it clear that, mense rea is not an prerequisite, while considering and deciding in connection to the cases arising out of the EPF and MP Act, pursuant to the Act being one of Benevolent Legislation. Having regard to the scope and object of the Act, the contention of the accused Nos.2 to 5 as to having paid the arrears of contributions during the pendency of the case, in itself will not be a ground to deserving the acquittal in the case on hand. The said defence certainly may be considered as an appropriate aspect to decide the quantum of penalty to be imposed. This view of the court is supported by the decisions reported in
(1) 1999(1) LLJ 255 (AP) in case of Provident Fund Inspector V/s. Chitrala Co-op. Spinning Mills Ltd.,
(2) AIR 1959 Patna 9 in case of State of Bihar V/s. S.P. Bhadani
(3) (1990) Crl. LR 267 (Cal) in case of Ramjhora Tea Company Ltd., V/s. Provident Fund Inspector
31. The arguments of the complainant as to the court is empowered to invoke Section 14B of the Act to impose the damages for belated remittance of EPF contributions by the accused Nos.2 to 5 in itself in absence of necessary averments in the complaint will not be the factor which will be amenable for the consideration of this court. Hence, the said arguments will not hold the water.
32. This court is of the considered view that the accused No.1 establishment being the juristic person is very much managed by the accused No.2, who is designated as the Managing Director and accused Nos.3 to 5 who are designated as Directors of the accused No.1 establishment are responsible for the day to day affairs of the accused No.1 establishment and the said accused Nos.2 to 5 have failed to comply the provisions of the EPF & MP Act by contributing employers share of contributions towards Insurance Fund along with Administrative Charges as per paragraph 8 of the Employees Deposit Linked Insurance Scheme pertaining to the period alleged in the complaint i.e. between May 2019 and July 2019 for the sum of Rs.9,202/-, by cogent, oral and documentary evidence. As such, this court holds that, the accused No.1 establishment and accused No.2 the Managing Director and accused Nos.3 to 5 the Directors of the accused No.1 establishment as guilty of having committed the offence punishable U/s.14(1B) r/w Section 14A of the Act.
CONCLUSION
33. In the light of the discussion made supra, this court is of the considered view that, the complainant has discharged the burden of demonstrating the guilt of the accused Nos.1 to 5 beyond all reasonable doubts, the default on the part of the accused No.1 establishment being managed by the accused Nos.2 to 5, having not remitted the employers share of contributions towards Insurance Fund along with Administrative Charges for the period between May 2019 and July 2019 as per the provisions of the EPF & MP Act and Employees Deposit Linked Insurance Scheme 1976. As such, this court proceeds to hold accused Nos.2 to 5 as guilty U/s.14(1B) r/w Section 14A of the Act.
34. Furthermore, this court is of the considered view that, the accused Nos.2 to 5 are entitled to be given lenient view as they have cleared the dues/arrears during the course of the trail. It is just and proper to hold the said remittance of arrears of contribution is justifiable ground which empowers the court to exercise discretion to impose a lessor penalty. This view is supported by the decisions relied upon by this court in paragraph No.30 of this judgment. As such, this court holds that, there are adequate and special reasons more particularly pursuant to the remittance of arrears during the course of trial, this is the case, which does not warrant the sentence of imprisonment to accused Nos.2 to 5. Accordingly, this court without any hesitation proceeds to answer Point No.1 in the Affirmative.
35. Point N o.2: In the light of the discussions and findings, assigned supra while appreciating the Point No.1, this court proceeds to pass the following:
ORDER
Acting under section 255(2) of Cr.P.C. the accused Nos.1 to 5 are convicted of the offences punishable under sections 14(1B) r/w Section 14A of Employees’ Provident Fund and Miscellaneous Provisions Act, 1952.
The accused No.1 being establishment i.e., juristic person is hereby sentenced to pay fine of Rs.2,500/- for being guilty U/s.14(1B) r/w Section 14A of the Act.
The accused No.2 being Managing Director and accused Nos.3 to 5 being the Directors of accused No.1 establishment are hereby sentenced to pay fine of Rs.2,500/- each for being guilty U/s.14(1B) r/w Section 14A of the Act, in default they shall under go SI for period of 10 days.
Further, pursuant to accused No.1 establishment being managed by accused Nos.2 to 5, they shall jointly pay the aforesaid fine of Rs.2,500/- on behalf of accused No.1 establishment. In default of payment of fine on behalf of accused No.1 establishment, the accused Nos.2 to 5 shall undergo further SI for a period of 5 days.
The complainant is entitled to the compensation of Rs.1000/- out of the fine amount as contemplated under section 395 of BNSS.
The office is hereby directed to place the entire records along with split up C.C. No.81/2026 on the file of this court.
ORDER
Acting under section 255(2) of Cr.P.C. the accused Nos.1 to 5 are convicted of the offences punishable under sections 14(1B) r/w Section 14A of Employees’ Provident Fund and Miscellaneous Provisions Act, 1952.
The accused No.1 being establishment i.e., juristic person is hereby sentenced to pay fine of Rs.2,500/- for being guilty U/s.14(1B) r/w Section 14A of the Act.
The accused No.2 being Managing Director and accused Nos.3 to 5 being the Directors of accused No.1 establishment are hereby sentenced to pay fine of Rs.2,500/- each for being guilty U/s.14(1B) r/w Section 14A of the Act, in default they shall under go SI for period of 10 days.
Further, pursuant to accused No.1 establishment being managed by accused Nos.2 to 5, they shall jointly pay the aforesaid fine of Rs.2,500/- on behalf of accused No.1 establishment. In default of payment of fine on behalf of accused No.1 establishment, the accused Nos.2 to 5 shall undergo further SI for a period of 5 days.
The complainant is entitled to the compensation of Rs.1000/- out of the fine amount as contemplated under section 395 of BNSS.
The office is hereby directed to place the entire records along with split up C.C. No.81/2026 on the file of this court.
The learned counsel for the accused persons have filed the application under section 430(3) of BNSS., seeking to enlarge the accused Nos.2 to 5 on bail till the expiry of appeal period. It is further submitted that, the accused Nos.2 to 5 are intending to file appeal and as they have been convicted. Hence, has sought for enlarging them on bail.
The learned counsel for the complainant has orally objected to the said application and submitted that, the accused Nos.2 to 5 are not entitled to the said relief as the accused Nos.2 to 5 are involved in the socio-economic offence and has also submitted as to the chances of accused Nos.2 to 5 are absconding from the jurisdiction of this court and failure to comply the order of this court to appear in order to undergo the punishment as per the Judgment, as such sought for dismissal of application.
Considering the fact that, the accused Nos.2 to 5 have been granted bail during the course of trial and in view of the sentence being imposed is not exceeding three years, having due consideration as to the accused Nos.2 to 5 intending to challenge the Judgment by preferring an appeal, it is just and appropriate to grant the bail to the accused Nos.2 to 5 till the expiry of the appeal period only. Accordingly, the bail application is hereby allowed and the accused Nos.2 to 5 have been granted bail till the expiry of appeal period.
The bail application is allowed subject to condition that, the accused Nos.2 to 5 shall execute the personal bond for Rs.10,000/-.
Office is hereby directed to take personal bond of the accused Nos.2 to 5.
The accused Nos.2 to 5 shall be present before the court to undergo the sentence on 28-08-2026.
