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Modernization and urbanization have brought about extremist financial changes and lead to new contentions and pressures resulting upon the disintegration old enough old family and intimate security. The progress from rural economy to a modern economy got uncommon went with issues that called for social security aide.
In India, before, government backed social security in a rough type of social assurance was made accessible to the poor and the grievous under the joint family and caste system. Despite the fact that the joint family framework experienced inadequacies and deficiencies, its individuals got some rough type of assurance from the underhanded impacts of different possibilities. Joblessness or some other financial difficulties, mature age and different possibilities were not endured by singular individuals in confinement. In these conditions, the joint family released the obligations of the government managed retirement office.
Likewise, individuals from a specific caste were offered protects and benefits, like clinical guide to the invalid, monetary assistance to widows and vagrants and instructive help with the type of grants and to poor understudies The Social security framework in India has advanced in submission to the effect of Western impact and of the cutting edge metropolitan modern framework. In spite of the fact that the non-mechanical classes additionally are in critical need of government backed retirement, their necessities have been all the more intensely felt after the approach of industrialization in the nineteenth century.
Social reformers, work government assistance associations and numerous reformist businesses convinced the public authority to social security measures as an insurance for the laborers at any rate against a couple of possibilities. The present article deals with a issue related to one such social security legislation.
Facts of the Case
In the present case, the appellant was one of the Directors of a Company registered under the Companies Act This company was also registered under the Factories Act and its object was to manufacture Motorcycles and its accessories. It had a Managing Director, Joint Managing Director and Directors including the appellant for managing the establishment. The respondent- an Enforcement Officer, Regional Provident Fund Commissioner’s Office laid 18 complaints against six accused including the appellant (A-6) and the Company- employer, for the failure to deposit the contribution for the period October to December 1990 to the Provident Fund Account under the Employees Provident Fund and Miscellaneous Provisions Act, 1952, Employees Provident Fund Scheme 1952, Employees Family Pension Scheme, 1971 and Employees Deposit Linked Insurance Scheme 1976, offences punishable under Section 14A of the 1952 Act read with para 76 of the 1952 Scheme.
On the Magistrate taking cognizance of the complaint, the appellant filed Criminal Miscellaneous Petitions in the High Court for quashing the complaint as they did not contain the relevant averments constituting offences against the appellant. It was contended that the appellant was a mere Director of the Company, that he was neither in charge of the company nor was responsible to comply with the provisions of the aforesaid Act and the Schemes thereunder. Reliance was placed on the definition of ’employer’ in Section 2 (e) of the Act and the liability that had been fastened on the Managing Director or the Manager or occupier of the establishment to abide by the Act and the Schemes. The High Court dismissed the applications. Hence the aggrieved parties have preferred the present appeal to the Hon’ble Supreme Court.
whether a Director of a Private Company, who is neither an occupier nor a manager can be prosecuted under Section 14(A) of the Employees' Provident Fund and Miscellaneous Provisions Act, 1952 for violation of the Provident Fund Scheme.
Decision of the Court
The Hon’ble Supreme Court dismissed the appeal and upheld that labiality of the Company under the Provident fund Scheme.
India, being a social welfare State, has taken upon itself the commitments of growing various benefits of Social Security and Social Assistance to its occupants. The public authority oversaw retirement institutions in India decide their fortitude and soul from the Directive Principles of the State Policy as contained in the Constitution of India. Albeit the Constitution of India is yet to see Social Security as a urgent right it requires that the State should attempt to propel the public authority help of people by getting and guaranteeing, as enough as it may, a social solicitation wherein value social, monetary and political will instruct each one with respect to the foundations in regards to public life.
Extraordinarily, Article 41 of the Constitution necessitates that the State ought to inside the restrictions of its monetary limit make compelling arrangement for tying down the option to work, to instruction and to public help with instance of joblessness, mature age, infection and disablement. Article 42 necessitates that the State should make arrangement for safe and secure states of work and for maternity alleviation.
The well planned government backed social security framework for the specialists in the disorderly area will help in improving profitability, add to the agreeable work relations and in this manner to socio and monetary turn of events. It will energize and proliferate the social harmony by decreasing the recurrence of modern contentions, increment the readiness to work, make it simpler to meet conveyance responsibilities and lead to improved quality item, a superior speculation environment and along these lines upgrading the intensity of the economy.
Provident fund is a government assistance conspire for the advantages of the representatives. Under this plan both the worker and manager contribute their part yet entire of the sum is stored by the business. Manager deducted the worker share from the compensation of the representative. The premium acquired on this venture is additionally credited in pf record of the representatives. At the hour of retirement, the collected sum is given to the representatives, if certain conditions are fulfilled.
Understanding the structure of the Act the risk it attaches on the director of the Company and pertinence of the punitive arrangements to the legal infringement or bereach of the act is outlined under it. But it is to be noted that Act is a social welfare legislation authorized to help the workers occupied with the manufacturing plants and factory. The whole Act is coordinated towards accomplishing this target by authorizing arrangements requiring the business to contribute towards Provident Fund, Family Pension and Insurance and keep the Commissioner informed regarding it by recording customary returns and submitting subtleties in structures endorsed for that reason. The Provident Fund Scheme outlined by Central Government under Section 5 of the Act requires the business comparable to a factory or other foundation to submit Form 5A referencing subtleties of its branches and offices, proprietors, occupiers, chiefs, accomplices, supervisors or some other individual or people who have extreme authority over the issues of the manufacturing plant or foundation.
The motivation behind giving details of the proprietors, occupiers and chiefs and so forth isn’t afflict void convention however an intentional purpose to broaden the net of obligation on any and each one for any demonstration or oversight. It is important just as without such duty the whole big-hearted plan may stand disappointed. The tension of the Legislature to guarantee that the workers are not put to any difficulty in regard of Provident Fund is show from Sections 10 and 11 of the Act. The former grants resistance to provident fund from being connected for any obligation exceptional against the employee. Also, the last accommodates priority of provident fund contribution over different obligations if the business is declared indebted or the organization is short of breath up. Such being the idea of provident fund any infringement or break in such manner as to be understood stringently and against the business.
Further, the Sections 14 and 14A accommodate penalties. The one applies to whosoever is blameworthy of avoiding the payment of instalment of Provident fund and to employer in the event that he submits breach of arrangements referenced in its different provisos where as Section 14A secures obligation on specific people if the individual submitting the offense, is an organization. The extent of the two areas is same. 14A is more extensive in its breadth and reach. The previous applies to any individual who is a business or proprietor or is himself answerable for making instalment though last affixes the responsibility on every one of the individuals who are mindful or are accountable for the organization for the offense submitted by it
In the present case, the appealing party contended before the this Court and battled that the perusing the meaning of employer in Section 2(e) of the Act with Sections 30,14(1a), show that the business corresponding to the foundation implies the proprietor or occupier of the factory which incorporates the Agent or the Manager of the production line under the Factories Act and that there was an occupier and Manager recorded for the present organization, and that they were accountable for and were exclusively liable to follow the Act and the Schemes there under and that no particular averments have been submitted in the question making the appealing party answerable for the administration of the plant or the responsibility to conform to the Act and the Schemes. Therefore, the complaint on the appealing party was subsequently unlawful and the discernment taken by the Magistrate was vitiated by the mistake of law.
It is necessary to understand that the Act and the Schemes are independent code for derivation from the compensation of the workers and the duty to contribute in equi-proportion the employer’s share and deposit thereof in the record within the particular time under Act and the Schemes into the record. It is a welfare legislation to give advantages to the representatives according to the plans. They need compulsory consistence and infringement thereof visits with correctional activity. Section 2(e) of the Act characterizes the employer which implies comparable to a foundation which is a factory, the proprietor or occupier of the industrial facility, including the Agent of such proprietor or occupier, the lawful delegate of deceased proprietor or occupier and, where an individual has been named as a Manager of the production line under section 7(1)(f) of the Factories Act, 1948.
The definition is a comprehensive definition bringing inside its ambit the proprietor or occupier too:” its Manager. Section 2(k) characterizes ‘occupier’ which implies the individual who has extreme authority over the undertakings of the production line or factory, and, where the said issues are depended to a Managing Agent such Agent will be considered to be the occupier of the processing plant. Hence, by its all-encompassing definition its range is augmented bringing inside its extension the individual who is in charge or liable for in administration or extreme power over the undertakings of the production line or foundation.
In case of entrustment to a Managing Agent, such Managing Agent will likewise be considered ‘to be the occupier of the factory. Section 6 affixes the commitment for the business in this benefit. It hypothesizes that the commitment will be made by the business to the Fund and will be 8-1/3% of the basic wages, dearness remittances and retaining allowances, assuming any, for the instalment being payable to every one of the workers, regardless of whether utilized by him straightforwardly or through a Contractor. The employee’s commitment will be equivalent to the commitment payable by the employer in regard of him, and so on in its application to any establishments or class of establishments.
Under para 30 of the Employees’ Provident Fund Scheme, 1952 and different Schemes, the business will deposit the commitment to the Fund. That has no application as respects the offense covered under s. 14A by the organizations are concerned. In the present case. Taking note of the above-mentioned points, the court rightly observed that the appealing party having been pronounced himself as one of the individuals In charge of and answerable for conduct of the business and managing the factory, complaint and non- compliance thereof having been listed in ensuing paras of the grievance, it was truly made against the litigant alongside other denounced for the supposed repudiation. Important charges drawing out the element of offense have been made out in the question.
Therefore the present case, gives quite an insight on the social welfare legislation and its importance for the employees.