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Judgment
Natarajan, J.—These several petitions have been filed by the respective Petitioners to quash the proceedings against them on the file of the
Judicial First Class Magistrate, Coimbatore. On account of the similarity of facts and the common question of law arising for consideration in all
these petitions, they have been clubbed together and are disposed of by the common order.
Against the Petitioners in all the petitions, prosecution has been launched for non-payment of Provident Funds contributions and or
administrative charges, statutorily payable under the Employees'' Provident Funds and Family Pension Fund Act, 1952 and the Employee''
Provident Funds Scheme, 1952 and the Employees'' Family Pension Scheme 1971 (hereinafter referred to as the Act, the 1952 and 1971 scheme
respectively). As illustrative of facts, the case of the Petitioners in Crl. M. P. No. 1034 of 1976 may be referred to.
The Petitioners were the Directors of a textile mill-by name Sri Ranga Vilas Ginning, Spinning and Weaving Mills Limited, Coimbatore. The Mill
was a company registered under the Indian Companies Act. The Mill was in difficulties during the relevant period due to the crisis experienced by
the textile industry in South India on account of strikes, lock-out etc. The complaint preferred by the Provident Fund Inspector, Coimbatore, in
each of these cases, relates to the period 1965 to 1968. As such, the prosecution launched in 1975 and 1976 is hit by Section 468 of the Code of
Criminal Procedure 1973 and the complaint is barred by limitation.
This is the main ground of attack in each of the petitions. Besides, the Petitioners have raised certain other contentions as set out below. The two
erstwhile Directors of Sri Ranga Vilas Mills Ltd., who have challenged the prosecution have further stated in these petitions that the Mill remained
closed from 16th March 1967 and on 26th September 1969 the company was ordered by the High Court to be wound up in Company Petition
Nos. 78 of 1967 and 30 of 1968 and the Official Liquidator was appointed to take charge of the affairs of the company. Subsequently, the
Government of India, by Notification dated 7th January 1970 u/s 18-A of the Industries (Development and Regulation) Act, took over the Mill
and appointed the Tamil Nadu Textile Corporation Limited as the Authorised Controller and the latter took over the Mill on 16th January 1970.
The Industries Department has subsequently declared the Mill as a Relief Undertaking under the Tamil Nadu Relief Undertakings (Special
Provisions) Act, 1969 as and from 2nd February 1970 for a period of one year and it was extended till 1st February 1975. Subsequently the Mill
was taken over by the National Textile Corporation Ltd., a Government of India Undertaking. Even prior to company being wound up, the affairs
of the Mill were not managed, by all the Directors but only by a Managing Agency firm, which was a partnership concern, in which one of the
Directors of the Mill was the Managing Partner. That Managing Partner had filed a suit O.S. No. 145 of 1951 in the Principal Subordinate Judge''s
Court, Coimbatore, against the other partners of the firm, for a declaration that he was the sole managing partner and therefore he was exclusively
entitled to manage the Mill on behalf of the firm. That suit was decreed and a decree for injunction was passed in hit favour and, on account of it,
the other partners including the two Petitioners wets prevented from managing the affairs of the Mill from 1951 onwards and consequently, they
cannot be held liable for non-payment of Provident Fund Contribution and administrative charges.
The Directors of Pankaja Mills Ltd., Coimbatore who are the Petitioners in the other set of petitions, have raised an objection that that Mill also
had been notified as a sick mill and taken over, and after such taking over, all the assets and liabilities of the Mill had vested with the Union of India
and therefore, the prosecution for non-payment of administrative charge could not lie against the former Directors.
Mr. C.K. Venkatanarasimhan, learned Counsel appearing for two of the Directors of Sri Ranga Vilas Mills, have filed a batch of petitions,
contended that since the alleged contraventions had taken place between the years 1965 and 1968 the filing of the complaints against the Directors
for non-payment of contributions and administrative charges in the year 1975 or 1976 would be clearly barred by limitation u/s 468(2)(b) of the
Code of Criminal Procedure 1973. Mr. K.A. Panchapakesan, learned Counsel appearing for the former Directors of Pankaja Mills Ltd., the
Petitioners in the other batch of cases, reiterated the contention of Mr. C.K Venkatanarasimhan. To appreciate the contention of the parties, it is
necessary to refer to some of the provisions of the Act. Section 2 of the Act defines ""contribution"", ""employer"", ''employee'' etc. For our purpose it
is not necessary to refer to these definitions in detail, since it is not disputed that the contribution and administrative charges were payable by the
respective Mill during the period in question, though, in one case, the Petitioners would contend that they were not in charge of the affairs of the
company, while in the other, they would contend that on account of the Government having taken over the textile mill, the liability of the erstwhile
Directors to make the contributions had ceased. Section 6 of the Act refers to the duty of an employer to make his own contribution known as
employer''s contribution to the Employees Provident Fund. Section 14(1A) lays down that an employer who contravenes or makes default in
complying with, the provisions of Section 6 or Clause (a) of Sub-section (3) of Section 17 in so far as it relates to the payment of inspection
charges or paragraph 38 of the scheme in so far at it relates to the payment of administrative charges, shall be punishable with imprisonment for a
term which may extend to six months. Sub-clause (a) and (b) refer to minimum sentences with which we are not concerned, Section 14(2) of the
Act prescribes that a family pension scheme may provide that any person who contravenes, or makes default in complying with any of the
provisions thereof shall be punishable with imprisonment for a term which may extend to six months, or fine which may extend to one thousand
rupees, or with both. Sub-section (l) of Section 14-A lays down that if the offence is committed, was in charge of, and was responsible to the
company for the conduct of its business, 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. From these provisions it is clear that a company has to pay contributions, administrative charges, inspection
charges etc., within the prescribed time and failure to do so will amount to offences under the Act. If the offences was committed by a company
then the Directors and other persons who were in charge of the affairs of the company would also be liable for the contravention.
It is common ground that the several prosecutions launched against the Petitioners relate to non-payment of contributions or administrative
charges between the period 1965 to 1968. According to the Act and the schemes, the respective amounts had to be paid within the 15th of month
next after the month for which the contributions were to be paid. It therefore follows that the last of the payments should have been made on or
before 15th May 1968. But the complaint in each of these cases has been filed only in the year 1975 or 1976. Such being the case, the Petitioners
contend that the bar of Limitation placed by Section 468, Code of Criminal Procedure would come into operation and therefore, the complaints
are ex facie not maintainable.
Section 468 is a new Section introduced in Code of Criminal Procedure 1973 and it has been introduced with ascertain objective. The
Parliament was of opinion that in order to prevent frivolous or vexatious prosecutions as well as to safeguard persons from being dragged to
Criminal Courts long after the commission of an offence or offences by them, which are not of a serious nature a time limit should be provided for
the courts taking cognizance of offences against accused persons. Hence Section 468 of the Code provided that if an offence was punishable with
fine only, the period of limitation shall be six months; if the offence was punishable with imprisonment for a term not exceeding one year, the period
of limitation shall be one year, and if the offence was punishable with imprisonment for a term exceeding one year but not exceeding three years,
the limitation period should be three years.
In the instant cases, the offences complained of would fall u/s 468(2)(b), since the punishment provided for is a term of imprisonment not
exceeding one year. Consequently, the complaints should have been filed within a period of one year from the dates of the commission of the
offences. As the complaints have been filed after a delay of seven to nine years, it necessarily follows that the complaints are barred by limitation.
The Petitioners are therefore well founded in their contention that the complaints are ex facie not maintainable.
The learned Public Prosecutor would, however, contend that the complaints will not be barred by limitation. His contention was that the
offences committed by the Petitioners are continuing offences and therefore, the embargo placed by Section 468 Code of Criminal Procedure will
not be attracted. The argument was that the contributions and administrative charges still remained unpaid and therefore, the Petitioners continued
to be defaulters. Merely because the Act or the schemes provided for a time limit for making the payment, the Public Prosecutor contended, the
Petitioners should not be allowed to escape prosecution on the ground of limitation.
The contention of the Public Prosecutor in this behalf was of a two-fold nature. In the first instance, he contended that the offences committed
by the Petitioners are continuing ones. In support of this contention he placed reliance on Md. Hussain Bhai v. State Indian Factories Journal
(1960) P. 171. That was also a case which arose under the Employees Provident Funds Scheme, 1972 The Directors of a Company were
prosecuted for non-payment of contributions and administrative charges. One of the questions raised in that case was whether the non-payment of
contributions and the non-submissions of returns were continuing offences. Following G.D. Bhattar and Others Vs. The State, Krishnan, J. of the
Madhya Pradesh High Court held as follows:
The creation of the Employees'' Provident Fund and the fixing of the contributions of the employee and of the employer was for the purpose of the
welfare of the employees. The mere fact that the 15th of the month next after the one for which the contributions were due expired, has not, in any
manner, terminated the duty of the employer to pay in the contributions to the fund and send the return to the Commissioner. It is a duty created by
the statute and continues day after day till, of course, the payment is made and the returns are submitted. It is, therefore, obvious that the failure to
pay up contributions and to submit the returns was a continuing wrong which, even on the view propounded by the learned Magistrate, become a
penal offence under paragraphs 76(a) and (c) on the day in October 1953, when the notification was made amending paragraphs 3(b) (v) of the
Scheme.
I am unable to agree with the contentions of the Public Prosecutor in this behalf. It is very difficult to hold that the offences complained of against
the Petitioners in the several cases can be held as continuing offences. Since the contributions and charges had to be paid under the Act or the
Schemes on the 15th of the month next after the one for which the contributions or charges were due the offences become completed as soon as
the contributions or charges were not remitted within the stipulated time. There is nothing in the Act or the Schemes to show that the non-payment
continued to be a recurring offence with each passing day. If the Legislature had intended that defaults committed by employees would be
continuing offences then that would have been clearly indicated in the Act or the Schemes. Some of the provisions of the Indian Companies Act or
the District Municipalities Act may be looked into to find out when offences would constitute continuing ones. I may only refer to Section 162 of
the Indian Companies Act, which lays down that a failure of a company to comply with any of the provisions contained in Sections 159, 160 or
161 would render every officer of the company who is in default, punishable with fine which may extend to fifty rupees for every day during which
the default continued, So, also, Section 308 of the Madras District Municipalities Act lays down that while making a by-law, the Municipal Council
may, subject to the provisions of Clause (1) of Article 20 of the Constitution, provide that a breach thereof shall be punishable with fine which may
extend to fifty rupees, and in case of a continuing breach, with fine which may extend to fifteen rupees for every day during which the breach
continues after conviction for the first breach etc. In this connection, the Supreme Court has clearly laid down in State of Bihar v. Deokaran Nenshi
1973 L.W. (Cri.) 129: 1973 S.C.C (Cri.) 114, the circumstances when an offence can be said to be of a continuing type. Said the Supreme Court
thus:
A continuing offence is one which is susceptible of continuance and is distinguishable from the one which is committed once and for all. It is one of
those offences which arises out of failure to obey or comply with a rule or its requirements and which involves a penalty, the liability for which
continues until the Rule or its requirement is obeyed or complied with. On every occasion that such disobedience or noncompliance occurs and
recurs, there is the offence committed. The distinction between the two kinds of offences is between the act or omission which constitutes an
offence once and for all, and an act of omission which continues, and, therefore, constitute a fresh offence every time or occasion on which it
continues. In the case of a continuing offence, there is thus the ingredient of continuance of the offence which is absent in the case of an offence
which takes place when the act or omission is committed once and for all....
...As in the case of a construction of a wall in violation of a Rule or a by-law of a local body, the offence would be complete once and for all as
soon as such construction is made, a default occurs in furnishing the return by the prescribed Act.
In view of the clear pronouncement of the Supreme Court, the contrary view expressed by Krishnan, J. in Md. Hussain Bhai v. State, XIX Indian
Factories Journal (1960) p. 171 cannot be accepted. Apart from that, it must be noted that the judgment of Krishnan, J. was rendered before the
Code of Criminal Procedure 1973 was enacted. Under the Old Code there was no provision similar to Section 468. No time limit; had been
placed by the Legislature on the; filing of complaints. The situation is, however, different now and we have to examine the validity of prosecutions
in the light of Section 468 of the new Code. When Parliament has clearly intended that prosecutions launched after a certain period will not be
maintainable, it necessarily follows that complaints in respect of completed offences cannot be filed by the prosecution after the time limit
prescribed by Parliament has expired unless it is found that the offences are of a continuing nature. The offence of non-payment of contribution and
administrative charges became complete when the amounts were not remitted on the due date or dates. Merely because the civil liability continued
to exist thereafter, it cannot be said that the non-payment constituted a fresh offence with each passing day.
The second argument of the learned Public Prosecutor was that welfare measure such as the Act and the Schemes should not be allowed to be
defeated by technicalities like the Rule of Limitation, etc. This contention contains a twin fallacy in it. It is no doubt true that welfare measures such
as the Act and the schemes intended for the benefit of employees should not be allowed to be defeated by the employers by raising technical pleas.
But, at the same time, it must not be forgotten that the officers of Government, on whom a duty is cast to be vigilant in the performance of their
duties cannot sleep over matters for years on end and suddenly wake up to the realities of the situation and cover their laches in the discharge of
duties. In all the complaints no reason has been given for filing the complaints after a period of 6 to 9 years. It therefore follows that without any
justification therefore, the officers in charge of the department had unnecessarily procrastinated the filing of the complaints. If the contention of the
learned Public Prosecutor are to be accepted, it would eventually lead to a deterioration in the standard of discharge of duties by officers and
giving the blessings of court to all officers who are slack in the performance of their duties. Secondly, it has to be noted that other provisions in the
Act and schemes are provided for the realization of the amounts due and payable by the employers and it is represented that recovery proceedings
have already been instituted. It cannot, therefore be said that erring and defaulting employers can walk away with the amounts and the employees
or the State will be deprived of the contributions or the administrative charges as the case may be.
Alternatively, it was contended by the Public Prosecutor that even if the offences committed by the Petitioners are held to be completed ones
and not continuing ones, it is open to the Court in which the complaints are filed to condone the delay and take cognizance of the cases. Section
473 Code of Criminal Procedure lays down that notwithstanding anything contained in Section 468 etc. a court may take cognizance of an offence
after the expiry of the period of limitation if it is satisfied on the facts and circumstance of the case that the delay had been properly explained or
that it is necessary so to do in the interest of justice. Placing reliance on Section 473, Code of Criminal Procedure the Public Prosecutor argued
that the complaints against the Petitioners are cases which would justify the Trial Court exercising its powers or discretion and condoning the delay.
I am afraid I cannot accept this contention. As already stated, there is nothing in the complaints to show that the delay had been occasioned due to
justifiable or unavoidable causes. There is no whisper at all in any of the complaints as to why they have been filed after a lapse of six to nine years
from the respective dates when the offences complained of took place. There is also no prayer that in the interests of justice the delay in the filing of
the complaints should be condoned and the complaints taken on file. Furthermore, it is highly doubtful if Section 473 can be invoked by a
complainant who comes to court after a long delay of several years. In my opinion, Section 473 has to be read and interpreted harmoniously with
Section 468. An indiscriminate and unrestricted exercise of the discretion granted to Courts u/s 473 would virtually amount to defeating the wish of
Parliament that the filing of complaints in respect of offences which are not of a serious nature should be controlled by the law of limitation.
Yet another contention raised by the learned Public Prosecutor was that the question of limitation can be raised by the Petitioners before the
Trial Court itself and this Court should not interfere with the proceedings before the Trial Court is given an opportunity to consider the objection no
its merits. Mr. C.K. Venkatanarasimhan states that the Petitioners have raised the question of limitation before the Trial Court. From the records it
is not clear whether such an objection was raised and if so, whether the Trial Court has agreed to consider the objection before taking up the trial
of the cases. However, merely because the Petitioners will have an opportunity to raise the plea of limitation before the Trial Court it cannot be
said that this Court cannot exercise its powers and quash the proceedings. In R. P. Kapur v. State of Punjab AIR 1960. S.C. 266 the Supreme
Court has laid down that the inherent jurisdiction of a High Court to quash proceedings can and should be exercised in certain classes of cases,
one of them being that class of cases where it manifestly appears that there is a legal bar against the institution or continuance of the criminal
proceedings in respect of the offence or offences alleged. Since the complaints are ex facie not maintainable in view of Section 468 , Code of
Criminal Procedure it necessarily follows that this Court can not only exercise its powers, but has to exercise it, when invited to do so by the
Petitioners, to quash the proceedings.
Mr. Panchapakesan raised a further contention that since the Mill had been taken over by Government, the management had passed on to the
nominees of the Government and consequently the erstwhile Directors cannot be called upon to pay Provident Fund contributions or administrative
charges etc. In support of this contention, he placed reliance on Section 4 of the Sick Textile Undertakings (Nationalisation) Act, 1974, I am
unable to agree with this contention, for Section 5 of the very same Act provides that the vesting of the Mill consequent on its being taken over will
not wipe off the liability of the former owner for his acts of omission and commission.
In the result, it follows that the plea of limitation raised by the Petitioner in respect of the several prosecutions has to be sustained.
Consequently, all the petitions will stand allowed and the proceedings against the Petitioners will stand quashed.