1. The present Criminal Petition is filed under Section 482 of the Code of Criminal Procedure, 1973 (for short, “Cr.P.C.”), seeking to quash the proceedings in C.C.No.783 of 2018 on the file of learned XV Additional Judge-cum-XIX Additional Chief Metropolitan Magistrate, Secunderabad (old C.C.No.3197 of 2017 on the file of the learned XI Additional Chief Metropolitan Magistrate, Secunderabad), for the offences punishable under Sections 406 and 420 of the Indian Penal Code, 1860 (for short, “IPC”).

2. The brief facts of the case are that the respondent- Police authorities received a complaint from the Enforcement Officer of the Employees’ Provident Fund Organisation (EPFO), alleging that the employees’ Provident Fund contributions for the period from January, 2017 to May, 2017, amounting to approximately Rs.69,000/-, were deducted from the salaries of the employees but were not deposited within the statutory period. It is stated that M/s.Arms Builders Pvt. Ltd., which is the petitioner/accused, is an establishment covered under the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 (for short, “EPF Act, 1952”) and, having collected the contributions from the respective employees, failed to deposit the said amounts with the Department.

3. Basing on the said complaint of the de facto complainant, respondent-Police authorities registered a case in Crime No.139 of 2017 dated 05.07.2017. After conducting investigation and examining the relevant witnesses, the Police laid a charge-sheet before the learned XI Additional Chief Metropolitan Magistrate, Secunderabad for the offences under Sections 406 and 420 of IPC. The said charge-sheet was numbered as C.C.No.3197 of 2017 (which on transfer to learned XV Additional Judge-cum- XIX Additional Chief Metropolitan Magistrate, Secunderabad, renumbered as C.C.No.783 of 2018) and is pending adjudication. Aggrieved thereby, the present Criminal Petition has been filed before this Court.

4. The main contention advanced by the learned Senior Counsel appearing for the petitioner is that the very ingredients of Sections 406 and 420 of IPC are not made out, as such, the continuation of the said proceedings is abusive of process of the Court. It is contended that the only allegation leveled against the petitioner was that though the employees’ contributions to the tune of approximately Rs.69,000/- were deducted from their salaries, the same were not deposited within the stipulated period. However, even going by the averments in the charge sheet, the said amount was subsequently deposited. Therefore, it is contended that there was no dishonest intention on the part of the petitioner/accused to deceive the employees to misappropriate or siphon off the said amount so as to attract the offence U/s.406 of IPC and furthermore there is no threat or inducement to deliver the property of the employees to attract the offence U/s.420 of IPC. Hence, the very contents in the charge sheet in toto does not attract the ingredients of the provisions of IPC, thus continuation of the proceedings is unwarranted.

5. Learned Senior Counsel for the petitioner would also contend that the EPF Act, 1952 itself provides for statutory liabilities and penalties in the event of failure on the part of the employer to deposit the employees’ contributions with the competent authority within the prescribed period. Therefore, initiation and continuation of criminal proceedings under the Indian Penal Code, 1860 by invoking the jurisdiction of the criminal Court is, per se, unwarranted, particularly when the allegations, even if taken in toto, do not constitute the offences alleged against the petitioner. Thus, continuation of the proceedings and requiring the petitioner/accused to face trial would amount to an abuse of the process of law. Thus, the learned Senior Counsel seeks quashing of the proceedings in C.C.No.783 of 2018 (old C.C.No.3197 of 2017).

6. Per contra, learned counsel appearing for the respondent No.3 would contend that the petitioner/accused had deducted the amounts from the employees and consciously failed to deposit the same with the statutory authorities within the prescribed period. Subsequently, on realising the same, though the amount was deposited by the petitioner, retaining the amount for a short period amounts to cheating and would attract the ingredients of Section 406 and 420 of IPC. It is contended that apart from the penalties that may be imposed under the EPF Act, 1952, the petitioner/accused is liable to be prosecuted for offences alleged by setting the criminal law into motion. It is further contended that mere availability of penal provisions under the EPF Act, 1952 cannot operate as a bar for initiation of appropriate criminal proceedings before the competent Court of law.

7. Learned Assistant Public Prosecutor appearing for respondent Nos.1 and 2 also contends that the respondent- Police authorities, after conducting a proper investigation and recording the statements of the witnesses, having found that a prima facie case was made out, laid the charge-sheet for the offences under Sections 406 and 420 of IPC and the same was numbered as C.C.No.783 of 2018 (old C.C.No.3197 of 2017) and since the same is pending adjudication before concerned Court, the very dishonest intention would only come to light if full fledged trial is conducted and since prima facie as the ingredients of the offences are made out, the quashing of the proceedings is fatal at this stage. Therefore, it is contended that the Criminal Petition is devoid of merits and is liable to be dismissed.

8. I have heard Sri M.Surender Rao, learned Senior Counsel for the petitioner/accused, Mrs.S.Madhavi, learned Assistant Public Prosecutor for respondent Nos.1 and 2 and Mr.Srinadha Rao Nama, learned counsel for respondent No.3, and, having given the earnest consideration to the submissions made on either side, perused the record.

9. Apparently, the only allegation levelled against the petitioner/accused is that an amount of Rs.69,000/- was deducted from the salaries of the employees towards their Provident Fund contribution and the said amount was retained by the petitioner/accused for a period of about eight to nine months and subsequently deposited with the statutory authorities.

10. The offences alleged against the petitioner are under Sections 406 and 420 of IPC. To attract the offences under Sections 406 and 420 of IPC, what has to be examined is, whether there was dishonest intention on the part of the petitioner/accused to misappropriate the amount. Admittedly, though the said amount was not deposited with respondent No.3 within the prescribed period, the fact remains that, even by the charge sheet, the amount was subsequently deposited.

11. Therefore, the question that falls for consideration before this Court is whether there was any dishonest intention on the part of the petitioner/accused to misappropriate the said amount from the very inception of collecting of the amount from the employees. The principal issue for consideration is whether delayed payment of the Provident Fund contribution amounts to criminal breach of trust or cheating under Sections 406 and 420 of IPC and whether continuation of the proceedings would amount to an abuse of the process of law and whether this Court can exercise the inherent jurisdiction under Section 482 of Cr.P.C to quash the proceedings.

12. Apparently, the parameters for quashing the proceedings under Section 482 of Cr.P.C. have been laid down by the Hon’ble Supreme Court in the case of State of Haryana vs. Bhajan Lal (1992 Sup (1) SCC 335), wherein the following parameters for quashing the proceedings have been indicated:

               i) where the allegations made in the First Information Report or the complaint, even if they are taken at their face value and accepted in their entirety do not prima facie constitute any offence or make out a case against the accused;

               ii) where the allegations in the First Information Report and other materials, if any, accompanying the F.I.R. do not disclose a cognizable offence, justifying an investigation by police officers under Section 156(1) of the Code except under an order of a Magistrate within the purview of Section 155(2) of the Code;

               iii) where the uncontroverted allegations made in the FIR or complaint and the evidence collected in support of the same do not disclose the commission of any offence and make out a case against the accused;

               iv) where the allegations in the FIR do not constitute a cognizable offence but constitute only a non-cognizable offence, no investigation is permitted by a police officer without an order of a Magistrate as contemplated under Section 155(2) of the Code;

               v) where the allegations made in the FIR or complaint are so absurd and inherently improbable on the basis of which no prudent person can ever reach a just conclusion that there is sufficient ground for proceeding against the accused;

               vi) where there is an express legal bar engrafted in any of the provisions of the Code or the concerned Act (under which a criminal proceeding is instituted) to the institution and continuance of the proceedings and/or where there is a specific provision in the Code or the concerned Act, providing efficacious redress for the grievance of the aggrieved party;

               vii) where a criminal proceeding is manifestly attended with mala fide and/or where the proceeding is maliciously instituted with an ulterior motive for wreaking vengeance on the accused and with a view to spite him due to private and personal grudge.

13. Furthermore, the Hon’ble Supreme Court in the case of R.P. Kapur v. The State of Punjab (1960 AIR 862) has also held that the inherent powers of the High Court should be exercised only in exceptional cases and has laid down certain guidelines as to the circumstances in which the proceedings may be quashed, which are as under :

               (i) where there was a legal bar against the institution or continuance of the proceedings;

               (ii) where the allegations in the first information report or complaint did not make out the offence alleged; and

               (iii) where either there was no legal evidence adduced in support of the charge or the evidence adduced clearly or manifestly failed to prove the charge.

14. More particularly, with regard to the offence under Section 406 of IPC, i.e., criminal breach of trust, it is trite law that there should be dishonest intention from the very inception and the necessary ingredients constituting the offence must be made out. A mere mechanical lapse on the part of the petitioner or the concerned person, by itself, cannot constitute an offence of criminal breach of trust. Unless the person against whom the allegations are made had a clear intention to misappropriate the amount, such dishonest intention must have existed from the very time the amounts were deducted.

15. In the present case, the allegation is that, having collected the amounts from the employees, the petitioner did not deposit the same within the prescribed period. However, the fact remains that the amount was subsequently deposited after a certain period. In the considered view of this Court, mere non-deposit of the amount for a limited period, in the absence of any material indicating dishonest intention to misappropriate the same, cannot by itself lead to an inference that the petitioner had the dishonest intention to attract the ingredients under Section 406 of IPC. Thus, in the considered view of this Court, even if the allegations are taken into consideration, the offences U/s. 406 are not attracted.

16. However, one more question which falls for consideration is with regard to Section 420 of IPC, wherein the accused must fraudulently or dishonestly induce a person to deliver any property or omit an act, and such dishonest intention must exist from the very beginning of the transaction. More so, a mere failure to fulfill a promise or a subsequent breach does not automatically amount to cheating.

 17. In the present case, the allegations against the petitioner/accused as to mere non-deposit of the said amount for a limited period is without any material to establish dishonest or fraudulent intention from the inception, would not, in the considered view of this Court, attract the provisions of Sections 406 and 420 of IPC.

18. More so, the Hon’ble Supreme Court in the case of Bhajan Lal (supra) and R.P.Kapur (supra), and in a catena of other cases, has held that when the very evidence collected does not establish a prima facie offence or the allegations do not constitute any offence, even if accepted in toto, continuation of the proceedings would amount to an abuse of the process of law.

19. Furthermore, the very enactment, i.e., the EPF Act, 1952, also envisages certain penalties and penal provisions, wherein, if the employer has not deposited the amounts within the statutory period, the authority can impose appropriate penalty so as to ensure that the employer does not put the rights of the employers jeopardized.

20. Be that as it may, when the said Act itself provides for such penalties, and more particularly, when the said amount was also deposited before the statutory authority after a brief period of eight months, in the light of the guidelines laid down by the Hon’ble Supreme Court in Bhajan Lal (supra), and also in view of the penal provisions envisaged under the EPF Act, 1952, coupled with the fact that the ingredients of Sections 406 and 420 of IPC are not attracted, the very continuation of the proceedings in C.C.No.783 of 2018 (old C.C.No.3197 of 2017) is nothing but a clear abuse of the process of law and setting the criminal law into motion is unwarranted. Thus, in the considered view of this Court, the petitioner has made a case to invoke the inherent jurisdiction of this Court for quashing the proceedings in the calendar case.

21. In that view of the matter, the proceedings in C.C.No.783 of 2018 (old C.C.No.3197 of 2017) cannot be continued and liable to be quashed.

22. Therefore, the proceedings in C.C.No.783 of 2018 on the file of learned XV Additional Judge-cum-XIX Additional Chief Metropolitan Magistrate, Secunderabad (old C.C.No.3197 of 2017 on the file of the learned XI Additional Chief Metropolitan Magistrate, Secunderabad), are hereby quashed. Accordingly, the present Criminal Petition is allowed.

Miscellaneous petitions, if any, pending shall stand closed.