K.L. Chachra @ Krishan Lal Chachra @ Krishanlal Checra vs State Of Jharkhand & Anr

The present special leave petitions arise out of proceedings initiated under Section 7A of the Employees Provident Fund Act against the Company M/s. India Automotive Ltd., the PetitionerManaging Director, and two other office bearers, by the Enforcement Office for not depositing the Provident Fund and Employees Provident Fund contributions for the period August 1988 to July 1991. The Enforcement filed 53 prosecution cases against the Company and the office bearers in the Court of Chief Judicial Magistrate, Seraikela. The outstanding dues were assessed at Rs. 3,68,070/­.

The respondent­department in the counter affidavit has stated that the entire amount due has been recovered in full. The department has issued no­dues letters dated 27th August 2014 and 8th September, 2014 acknowledging payment of the entire dues by the petitioner.

Subsequently, the Company has gone into liquidation on 25th November, 2011 when the High Court of Jharkhand at Ranchi passed an order for liquidation of the Company M/s. India Automotive Limited vide Order dated 12th March, 2004 in Company Petition No. 9 of 1995. Pursuant thereto, an Official Liquidator was appointed to conduct the liquidation proceedings, and take over the assets and records of the company.

In 2016­2017, the petitioner­erstwhile Managing Director of the Company filed quashing petitions to quash the criminal cases filed by the department on the ground that the entire dues had been fully recovered.

The High Court vide a common order dated 10th July, 2017 noted that the entire amount had been deposited by the petitioner and directed the RPFC, Jamshedpur to conclude the matter in three months.

The High Court vide Order dated 25th April, 2018 directed the matter to be settled by the Lok Adalat.

Aggrieved by the aforesaid order, respondent­department filed Crl. M.P. No. 2623/2018 for recall of the order dated 25th April, 2018. It was contended that the said order was passed without issuing notice to the respondent­department. It was further contended that the offences under Section 14(1A) and 14(1B) of the Employees Provident Funds and Miscellaneous Provisions Act, 1952 are non­ compoundable in nature. Hence, it was not possible to settle the matter before the Lok Adalat.

Subsequently, vide order dated 1st February, 2019, the High Court clarified that the order dated 25th April, 2018 did not mandate that the matter has to be settled. The Sessions Court was to only make an effort to settle the matter. Consequently, it was clarified that before making an effort to settle the matter, the Sessions Court would take into consideration the pleas raised by the parties.

Aggrieved by the aforesaid orders, the petitioner has filed the present special leave petition.

We have considered the submissions made by the counsel for the parties and perused the record with their assistance. It is true that merely on depositing dues for the period August 1988 to July 1991 in the proceedings under Section 7A of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 may not absolve the petitioner from the criminal proceedings instituted against him under Section 14(1A) and 14(1B) of the Act, 1952.

We have taken note of the averments made in the counter affidavit of the second respondent and para 7 in particular, which is reproduced as under:­

"That it is further submitted that proceedings under S.7A of the EPF Act was initiated against the establishment for the period 08/1988 to 07/1991 and assessed the dues of Rs. 3,68,070/­(Three Lakhs Sixty Eight Thousand and Seventy only) with direction to deposit the assessed dues. The establishment failed to deposit the assessed amount and submit statutory return. On the basis of above, the office of the answering respondent filed 53 procesution cases(C2 cases) in the Court of CJM Saraikela against (1) Acharya Lal Chabra, (2) Amrit Lal Chachra, (3) Krishna Lal Chachra and (4) M/s. India Automotive Ltd. on 17/11/94. The amount of Rs. 3,68,070/­ has since been recovered in full in different spell."

In the peculiar facts and circumstances of the cases where the assessed dues of Rs. 3,68,070/­ for the aforesaid period has been deposited and the Company has later gone into liquidation pursuant to which liquidator has been appointed to take over the assets and records of the company and the criminal proceedings are pending against him for the last more than two decades, we are of the view that no useful purpose will be served in sustaining the criminal proceedings initiated against the petitioner (for the period August 1988 to July 1991) in our view deserves to be quashed.

Accordingly, Special Leave Petition (Crl.) No. 7288 of 2019 @ Crl. M.P. No. 2136 of 2017 is allowed and the pending criminal proceedings/prosecutions qua the petitioner to the extent indicated above are quashed and set aside. Accordingly, no orders are required to be passed in Special Leave Petition(Crl.) No. 7289 of 2019 @ Crl. M.P. No. 2623 of 2018 and the same stands disposed of.

It is made clear that this order shall not be treated as a precedent.

Pending application(s), if any, stand disposed of.