Enforcement Officer, E.P.F. Organisation, Mysore vs M/s Kareemsilk International

Ananad Byrakeddy, J.—These appeals are disposed of by this common judgment.

These appeals are preferred in respect of different periods for which the respondent was to make contribution under the Employees Provident Fund and Miscellaneous Provisions Act, 1952 (Hereinafter referred to as the ''EPF Act'', for brevity) as well as the penalty and damages that were attracted in respect of those periods. The Court below having acquitted the respondents of offences punishable under sections 14(1-A) read with 14-A of EPF Act, the department has preferred these appeals.

The case of the appellants is that in terms of the provisions of the EPF Act and the Schemes applicable to the establishment of the respondents, the respondents were required to pay provident fund contributions, administrative charges, pension fund contributions, the Employees Deposit Linked Insurance contributions within 15th of the following months. Since the respondents had failed to pay the prescribed contribution and administrative charges for various periods extending from February, 1999 to January, 2002, prosecutions were launched before the Special Court for Economic Offences and the Court having taken cognizance, had registered a series of cases for the different periods. The-respondents-accused had entered appearance on summons being served. The respondents having pleaded not guilty and having claimed to be tried, evidence was tendered by them and the respondents had failed to tender any evidence in support of their case.

It is the case of the appellants that the Court below having found that there was an admitted delay in payment of the dues though the dues had been realized belatedly by bringing the properties of the respondent-company to auction and the Court below having held that there was no mens rea on the part of the accused in not having complied with the statutory requirement of payment of the contribution and other charges, is clearly erroneous, as it is the settled legal position in a catena of decisions of the Apex Court including the case of the State of Orissa v. K. Rajeshzvar Rao, 1992 (1) SCC 365 that mens rea as required in criminal law would not be an essential ingredient nor would it be relevant in social welfare legislation imposing strict liability. It is this which is the main contention raised by the learned Counsel for the appellants.

There was some controversy as to whether the respondents had indeed satisfied the entire dues which was the subject matter of the proceedings before the Court below. Statements have been filed on either side to justify their respective stand namely, that the respondents would seek to contend that the payments have been made not only as on the date of the impugned judgments, but even subsequently and in fact, excess payment has been made, which would have to be refunded by the appellants. While the appellants in turn have filed a statement, indicating the total dues for different periods. But for the purpose of this appeal, it would be sufficient to notice that by the time the Court below had taken cognizance of several cases, the dues which were the subject-matter of the proceedings, had also been paid.

Therefore, the only question, that would arise for consideration in these appeals is whether by virtue of the delay having occasioned in making such payment, the respondents would still have to be mulcted with punishment as any delayed payment would still attract the rigour of the law and that the respondents would have to suffer punishment even if it is minimal, as sought to be contended by the learned Counsel for the appellants.

However, the reasoning of the Court below in absolving the respondents of all criminal culpability is on the footing that there was material on record to indicate that the industry run by respondents had stopped working from February, 2002, and it was declared as a sick industry and was subject to proceedings before the Board for Industrial and Financial Reconstruction (BIFR) under the Sick Industrial Companies Act, 1985, in respect of which, the assets of the industry were brought to auction sale by the complainant and the dues had been realized. Thereafter, the respondents having made delays in further payment of either sums which was due is only on account of the'' industry having stopped working and having declared as a sick industry and the matter pending before the BIFR. Hence, the Trial Court has come to a conclusion that any default in payment of the dues was not voluntary on their part and it was a forced circumstance on account of serious financial crisis faced during that point of time and the delay and the default in payment was totally out of control, of the respondents and could not be attributed to any wilful commission of crime. The reasoning of the Trial Court cannot be faulted.

The learned Counsel for the appellants however is right in contending that as laid down by the Supreme Court in a line of cases that in so far as the strict liability under social welfare legislation is concerned, ''the absence of mens rea is not relevant. This would also hold good against the respondents if they had completely defaulted in making payments. The fact that payments have been made, but that it was delayed on account of the financial-crisis that the respondents were faced, which was a circumstance beyond their control, was hence, a ground to absolve them of guilt. Consequently, the reasoning of the Court below in this regard cannot be faulted.

Hence, the appeals lack merit and are dismissed.