1. The reliefs sought for in all these Crl.M.Cs are to quash the FIR registered by the Ollur Police in Crime No.1598/2016, and the consequent final report and further proceedings pending before the Judicial First Class Magistrate Court-III, Thrissur in C.C No.1230/2017. The petitioners in Crl.M.C No.9014/2019 are accused Nos.1, 2, 6 and 7. The 4th accused is the petitioner in Crl.M.C No.9079/2019. The petitioners in Crl.M.C No.9076/2019 are accused Nos.8 and 9 in the aforesaid case. The offence alleged against the accused in the aforesaid case is under Section 406 r/w 149 of the Indian Penal Code.

2. The prosecution case is summarised as follows:

                  The accused Nos.1 to 4 and accused Nos.6 and 7 were the former General Managers of Ayurdhara Pharmaceuticals, South Ancheri, a unit of the Kerala State Federation of Scheduled Caste and Scheduled Tribe Development Co-operative Society (referred hereafter as ‘the Federation’ for short) registered under the Kerala Co-operative Societies Act, 1969. The accused No.8 was the former General Manager-in charge-, of Ayurdhara Pharmaceuticals, and the accused No.9 was the General Manager at the time of filing of final report in the aforesaid case. Accused No.5 was the Branch Manager of Ayurdhara Pharmaceuticals, South Ancheri. The accused, who were the office bearers of Ayurdhara Pharmaceuticals, South Ancheri during various tenures from May, 2011 to February, 2016, failed to remit the employee’s share of Provident Fund contribution of the workers of the said establishment during the respective periods, after deducting those amounts from the salaries of the workers of the said establishment. Thus, the accused committed the offence of criminal breach of trust punishable under Section 406 r/w Section 149 I.P.C.

3. The FIR in connection with the aforesaid crime was registered by the Ollur Police on 23.06.2016 on the basis of a complaint dated 11.04.2016 of the Enforcement Officer, Employees' Provident Fund Organization, Thrissur against one C.M.Ajeyya Mohan and one V.Sanil Kumar, who were the Managing Directors of the Federation during the relevant periods, and the 7th accused herein, who was the General Manager of Ayurdhara Pharmaceuticals, South Ancheri. After the completion of the investigation, the Additional Sub Inspector of Police, Ollur filed final report on 28.03.2017 against the present accused, who were the Joint Registrars, Deputy Registrars and U.D.C in the Co-operative Department. The two Managing Directors of the Federation, who were arraigned as accused in the complaint and F.I.R were excluded from the array of accused in the final report for reasons best known to the Additional Sub Inspector who filed the final report.

4. In the present petitions, the petitioners would contend that they will not come under the definition of ‘Employers’ or ‘Occupiers’ of Ayurdhara Pharmaceuticals, South Ancheri as per the relevant provisions of the Employees' Provident Fund and Miscellaneous Provisions Act, 1952. It is further contended that the petitioners cannot be termed as ‘Occupiers’ or ‘Managers’ as per the relevant provisions of the Factories Act, 1948 and the Kerala Factories Rules, 1957. According to the petitioners, the ultimate control over the affairs of the establishment Ayurdhara Pharmaceuticals, South Ancheri, was not vested upon them, and hence the criminal prosecution launched against them, is prima facie unsustainable.

5. Heard the learned counsel for the petitioners, the learned Standing Counsel for the Employee’s Provident Fund Organization, and the learned Public Prosecutor representing the State of Kerala.

6. Section 406 I.P.C provides the punishment for criminal breach of trust, which is defined in Section 405 I.P.C. For the sake of convenience and easy reference, Section 405 I.P.C is extracted hereunder:

                  “405. Criminal breach of trust.—Whoever, being in any manner entrusted with property, or with any dominion over property, dishonestly misappropriates or converts to his own use that property, or dishonestly uses or disposes of that property in violation of any direction of law prescribing the mode in which such trust is to be discharged, or of any legal contract, express or implied, which he has made touching the discharge of such trust, or wilfully suffers any other person so to do, commits “criminal breach of trust”.

                  [Explanation 1].—A person, being an employer 3 [of an establishment whether exempted under section 17 of the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 (19 of 1952) or not] who deducts the employee’s contribution from the wages payable to the employee for credit to a Provident Fund or Family Pension Fund established by any law for the time being in force, shall be deemed to have been entrusted with the amount of the contribution so deducted by him and if he makes default in the payment of such contribution to the said Fund in violation of the said law, shall be deemed to have dishonestly used the amount of the said contribution in violation of a direction of law as aforesaid.]

                  [Explanation 2.—A person, being an employer, who deducts the employees’ contribution from the wages payable to the employee for credit to the Employees’ State Insurance Fund held and administered by the Employees’ State Insurance Corporation established under the Employees’ State Insurance Act, 1948 (34 of 1948), shall be deemed to have been entrusted with the amount of the contribution so deducted by him and if he makes default in the payment of such contribution to the said Fund in violation of the said Act, shall be deemed to have dishonestly used the amount of the said contribution in violation of a direction of law as aforesaid.]

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 7. The petitioners herein are roped in for the commission of offence under Section 406 I.P.C in view of Explanation I to Section 405 I.P.C stated herein above. As per the aforesaid explanation, an employer, who deducts the employee’s contribution of provident fund from the wages of the employees, shall be deemed to have been entrusted with the amount so deducted, and he would be deemed to have dishonestly used the aforesaid amount of contribution, in the event of his failure to deposit such amount in the Provident Fund Account of the employees in accordance with the provisions of the Employees' Provident Fund and Miscellaneous Provisions Act, 1952. Therefore, the primary requirements to be fulfilled for initiating a criminal prosecution in connection with the aforesaid offence, are as follows:

                  i) The accused should be the employer of the workers working in an establishment where the Employee’s Provident Fund and Miscellaneous Provisions Act, 1952 is applicable.

                  ii) The accused should have deducted the employee’s contribution from the wages of those workers.

                  iii) The accused should have defaulted payment of such contribution deducted from the wages of the workers to the provident fund in accordance with the aforesaid Act.

8. As far as the present case is concerned, it has to be stated that the petitioners herein will not come under the definition of ‘Employers’ or ‘Occupiers’ as per the relevant provisions of law. So also, the prosecution records do not contain anything to show that it was the petitioners who deducted the employee’s contribution from the wages of the workers of Ayurdhara Pharmaceuticals, South Ancheri.

9. The term ‘Employer’ is defined in Section 2(e) of The Employees’ Provident Funds And Miscellaneous Provisions Act, 1952 as follows:

                  “2(e) “employer” means— (i) in relation to an establishment which is a factory, the owner or occupier of the factory, including the agent of such owner or occupier, the legal representative of a deceased owner or occupier and, where a person has been named as a manager of the factory under clause (f) of sub-section (1) of section 7 of the Factories Act, 1948 (63 of 1948), the person so named; and (ii) in relation to any other establishment, the person who, or the authority which, has the ultimate control over the affairs of the establishment, and where the said affairs are entrusted to a manager, managing director or managing agent, such manager, managing director or managing agent;]

                  The term ‘Occupier’ of a Factory is defined in Section 2(k) of the Employee’s Provident Fund and Miscellaneous Provisions Act, 1952 as follows:

                  2(k) “occupier of a factory” means the person who has ultimate control over the affairs of the factory, and, where the said affairs are entrusted to a managing agent, such agent shall be deemed to be the occupier of the factory;

10. As per Section 2(n) of the Factories Act, 1948, the Occupier of a Factory means the person who has ultimate control over the affairs of the Factory. Likewise, the term ‘Manager’ is defined in Rule 2(l) of the Kerala Factories Rules, 1957 as the person responsible to the Occupier for the working of the Factory.

11. Going by the aforesaid definitions of the terms ‘Employer’, ‘Occupier’ and ‘Manager’ under the relevant provisions of law, the question to be looked into in the present case is whether the petitioners herein were having the ultimate control over the affairs of the establishment by name Ayurdhara Pharmaceuticals, South Ancheri at the relevant periods when the employee’s contribution of the workers of the above establishment were said to have been deducted, and thereafter omitted to be deposited in the Provident Fund Account concerned. On that score, it could be seen from Annexure-I complaint preferred by the Enforcement Officer itself that the aforesaid establishment is a unit of the Federation, which is having the ultimate control over the affairs of that establishment. The fact that Ayurdhara Pharmaceuticals, South Ancheri, a unit of the Federation, is further disclosed in Annexure-III which is the Form No.5A submitted under the provisions of the Employees' Provident Fund Scheme, 1952. Thus, it is apparent from the prosecution records that the ultimate control over the affairs of Ayurdhara Pharmaceuticals, South Ancheri was upon the Federation under which the aforesaid establishment was functioning.

12. Now, the question to be looked into is about the officers/authorities who are responsible for the management and conduct of affairs of the Federation under which the Ayurdhara Pharmaceuticals, South Ancheri, has been functioning. For ascertaining the above aspect, it is highly necessary to look into the relevant provisions of the bye law of the Federation (The Kerala State Federation of Scheduled Caste and Scheduled Tribe Development Co-operative Society) which has been produced as Annexure-V in Crl.M.C No.9014/2019.

13. As per paragraph No.12 of the Bye Law, the management of the Federation shall vest in the Board of Directors. As per paragraph No.13(i)(6) of the Bye Law, the Managing Director is one of the Ex-officio Directors of the Federation. Paragraph No.13(10) of the Bye Law requires that the Managing Director of the Federation shall be an officer in the cadre of Additional Registrar of Co-operative Societies or an Officer not below the rank of an Additional Registrar of Co-operative Societies appointed by the Government. Paragraph No.22(2) of the Bye Law states that the Chief Executive of the Federation shall be the Managing Director and that the Managing Director shall be responsible for the general administration of the Federation and shall exercise such powers and perform such duties as delegated to him by the Board of Directors from time to time in accordance with the Bye Laws of the Federation.

14. Paragraph No.22(3) of the Bye Law which deals with the powers and duties of the Managing Director is extracted hereunder for the sake of convenience and easy reference:

                  “22(3) : Powers and Duties of the Managing Director:

                  (a) Generally to conduct the business of the Federation and to implement the policy and programs laid down by Board of Directors for the purpose.

                  (b) To supervise and direct the day to day business of the Federation in accordance with the policy laid down by the Board of Directors and appoint such staff as may be necessary with the approval of the Board.

                  (c) To sign on behalf of the Federation in the conduct of its correspondence.

                  (d) To be the officer to sue and be sued on behalf of the Federation.

                  (e) To exercise control and supervision over the staff of the Federation subject to Rules under the Act.

                  (f) To receive all money on behalf of the Federation and issue receipt therefore and pay all costs of management and working funds of the Federation according to the decisions of the Board and for this purpose to operate bank accounts of the Federation and to sign cheques for and on behalf of the Federation. In the absence of the Managing Director all cheques drawn for and on behalf of the Board shall be signed jointly by any two officers authorised by the Board in this behalf.

                  (g) To conduct negotiations and make arrangements for the business of the affiliated societies including purchase of raw materials for the affiliated societies and sale of finished goods and produce collected or cultivated by the affiliated societies, directly or through members, due for the benefit of its members.

                  (h) To maintain proper and accurate accounts and records of working of the Federation.

                  (i) To convene meeting of the Board of Directors Executive Committee as may be necessary, with the approval of the President of any person acting in his behalf, or as provided in byelaw 20, attend such meetings and to record the proceedings of the meetings in the minutes book.

                  (j) To perform such other duties as may be assigned to him by the Board of Directors.”

15. It is clear from the aforesaid provisions of the Bye Law of the Federation that it is the Managing Director of the Federation who is having the ultimate control over the affairs of the Federation and all units functioning under the Federation. So also, it is the Managing Director, who is the empowered officer of the Federation to sue and be sued for and on behalf of the Federation. It is obviously due to the said reason that in Annexure-III Form 5A, the name of the Managing Director during the relevant period was shown as the owner and occupier of the establishment Ayurdhara Pharmaceuticals, South Ancheri. In that view of the matter, the Employer/Occupier of Ayurdhara Pharmaceuticals, South Ancheri is the Federation (the Kerala State Federation of Scheduled Caste and Scheduled Tribe Development Co-operative Society) itself, and the persons who are liable to be prosecuted for the violations alleged in this case, are the Managing Directors of the Federation during the relevant periods who could be termed as the agents of the Employer/Occupier.

16. It is by realising the above aspect that the Enforcement Officer concerned had arraigned two Managing Directors of the Federation during the relevant periods, as the accused Nos.1 and 2 in the complaint. However, the Additional Sub Inspector concerned, who laid the final report before the Court, had excluded the above Managing Directors from the final report without looking into their functions and liabilities as envisaged under the relevant provisions of law. The petitioners herein, who were junior level officers of the Co-operative Department, assigned with the duty to work as General Manager, Branch Manager etc. of the Ayurdhara Pharmaceuticals, South Ancheri, cannot be termed as authorities who were having ultimate control over the affairs of the above establishment. Since it is the Federation which had been paying salaries and effecting deductions from the salaries of the employees of the above establishment, the investigating agency ought to have arraigned the Federation as the first accused, and the Managing Directors concerned, who worked during the relevant periods, as the other accused, in connection with the offence alleged in this case.

17. The learned Standing Counsel for the Employees' Provident Fund Organization argued that the question as to whether the petitioners were having ultimate control over the affairs of the above said establishment, or not, is a factual aspect which has to be decided after evaluating the evidence on record. Thus, it is pointed out that the challenge against the criminal prosecution launched against the petitioners, cannot be dealt with in a proceedings under Section 482 Cr.P.C. I am not inclined to accept the aforesaid argument of the learned Standing Counsel since the law discussed hereinabove would make it clear that the actual authority which was having ultimate control over the affairs of the Ayurdhara Pharmaceuticals, South Ancheri, was the Kerala State Federation of Scheduled Caste and Scheduled Tribe Development Co-operative Society represented by its Managing Director. Therefore, the criminal prosecution launched against the petitioners herein, who were lower level officers of the Co-operative Department, is liable to be terminated to prevent the abuse of process of law.

18. As a conclusion to the above discussion, I find that the reliefs sought for in these petitions are to be allowed.

                  In the result, the petitions stand allowed. The FIR registered in Crime No.1598/2016 of Ollur Police Station, Thrissur and all proceedings pending before the Judicial First Class Magistrate Court-III, Thrissur in C.C No.1230/2017 consequent to the filing of final report in the aforesaid crime, are hereby quashed.