SC and HC Judgments Online at MyNation

Judgments of Supreme Court of India and High Courts

Niranjan Lakhumal Hiranandani … vs Central Bureau Of Investigation … on 11 April, 2018

jdk 1 4.r.crwp.97.18.j.doc

IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CRIMINAL APPELLATE JURISDICTION
CRIMINAL WRIT PETITION NO. 97 OF 2018

Niranjan Lakhumal Hiranandani
s/o Late Dr. Lakhumal Hiranandani
Age 67 years, Occ: Business
having his office at 514,
Dalamal Towers, Nariman Point,
Mumbai – 400 021 .. Petitioner
Vs.
1. Central Bureau of Investigation,
through the Superintendent of
Police,
ACB, Mumbai, having its office at
Plot No. C-35A, G-Block, Behind
MTNL
Building, Bandra Kurla Complex,
Mumbai – 400 098
2. The State of Maharashtra,
through the Public Prosecutor,
High Court, Bombay .. Respondents

….
Mr. A.H.H. Ponda i/b Mr. Brian A. D’Lima Advocate for Petitioner
Mr. H.S. Venegavkar Advocate for Respondent No.1 – CBI
Mr. Arfan Sait A.P.P. for the State
….

CORAM : SMT.V.K.TAHILRAMANI ACTING C.J.
AND M.S.KARNIK, J.

RESERVED ON : FEBRUARY 16, 2018
DECLARED ON : APRIL 11, 2018
IN CHAMBER AT 2.40 P.M.

JUDGMENT : [PER SMT. V.K.TAHILRAMANI, ACJ.]

::: Uploaded on – 11/04/2018 12/04/2018 02:19:10 :::
jdk 2 4.r.crwp.97.18.j.doc

1 Heard the learned counsel for the petitioner, the

learned counsel for respondent no.1 – CBI and the learned

A.P.P. for the State. Rule. By consent of the parties, Rule is

made returnable forthwith and the matter is heard finally.

2 In this petition preferred under Article 226 of the

Constitution of India read with Section 482 of Code of Criminal

Procedure (Cr.P.C.), the petitioner is seeking quashing of

charge-sheet dated 29.9.2010 filed by respondent no.1 – CBI

qua the petitioner in Special Case No. 94 of 2010 which is

pending before the Sessions Court at Mumbai. This case

basically relates to evasion of payment of Employees Provident

Fund (hereinafter referred to as the “PF dues”) dues of persons

who were employed by the contractors of Hiranandani

Properties Pvt. Ltd. (hereinafter referred to as “the Company”)

of which the petitioner is a Director.

3 A preliminary objection was raised by respondents to

the maintainability of the present writ petition on the ground

that there was an alternate remedy of discharge. In this

regard, on the point of alternate remedy, reliance was placed

::: Uploaded on – 11/04/2018 12/04/2018 02:19:10 :::
jdk 3 4.r.crwp.97.18.j.doc

by the learned counsel for the respondent no.1 – CBI on an

unreported judgment of a Two-Judge Bench of the Supreme

Court in Civil Appeal No. 1281 of 2018 decided on 30.1.2018

in the case of Authorized Officer, State Bank of

Travancore and Another Vs. Mathew K.C ., in which it is

observed that the High Court ought not to have entertained the

Writ Petition in view of the adequate statutory remedy

available.

4 Per contra, the learned counsel for the petitioner

relied upon the judgment of a Bench of three Honourable

Judges of the Supreme Court in Prabhu Chawla Vs. State of

Rajasthan and another, reported in (2016) 16 SCC 30.

Reliance was placed more specifically on para nos. 5, 6 and 7

of the judgment which read as under:

“Even so, a general principle pervades this
branch of law when a specific provision is
made: easy resort to inherent power is not
right except under compelling circumstances.

Not that there is absence of jurisdiction but
that inherent power should not invade areas
set apart for specific power under the same

::: Uploaded on – 11/04/2018 12/04/2018 02:19:10 :::
jdk 4 4.r.crwp.97.18.j.doc

Code. In Madhu Limaye Vs. State of
Maharashtra (1997) 4 SCC 551 : 1978 SCC
(Cri.) 10 this Court has exhaustively and, if I
may say so with great respect, correctly
discussed and delineated the law beyond
mistake. While it is true that Section 482 is
pervasive it should not subvert legal interdicts
written into the same Code, such, for instance,
in Section 397(2). Apparent conflict may arise
in some situations between the two provisions
and a happy solution

‘would be to say that the bar
provided in sub-section (2) of Section 397
operates only in exercise of the revisional
power of the High Court, meaning thereby that
the High Court will have no power of revision in
relation to any interlocutory order. Then in
accordance with one of the other principles
enunciated above, the inherent power will
come into play, there being no other provision
in the Code for the redress of the grievance of
the aggrieved party. But then, if the order
assailed is purely of an interlocutory character
which could be corrected in exercise of the
revisional power of the High Court under the
1898 Code, the High Court will refuse to
exercise its inherent power. But in case the

::: Uploaded on – 11/04/2018 12/04/2018 02:19:10 :::
jdk 5 4.r.crwp.97.18.j.doc

impugned order clearly brings about a
situation which is an abuse of the process of
the court or for the purpose of securing the
ends of justice interference by the High Court
is absolutely necessary, then nothing
contained in Section 397(2) can limit or affect
the exercise of the inherent power by the High
Court. But such cases would be few and far
between. The High Court must exercise the
inherent power very sparingly. One such case
be the desirability of the quashing of a criminal
proceeding initiated illegally, vexatiously or as
being without jurisdiction’ (SCC page 555-56,
para 10).

In short, there is no total ban on the
exercise of inherent power where abuse of the
process of the court or other extraordinary
situation excites the Court’s jurisdiction. The
limitation is self-restraint, nothing more. The
policy of the law is clear that interlocutory
orders, pure and simple, should not be taken
up to the High Court resulting in unnecessary
litigation and delay. At the other extreme,
final orders are clearly capable of being
considered in exercise of inherent power, if
glaring injustice stares the Court in the face.
In between is a tertium quid, as Untwalia, J.

::: Uploaded on – 11/04/2018 12/04/2018 02:19:10 :::

jdk 6 4.r.crwp.97.18.j.doc

has pointed out as for example, where it is
more than a purely interlocutory order and less
than a final disposal. The present case falls
under that category where the accused
complain of harassment through the court’s
process. Can we state that in this third
category the inherent power can be exercised?
In the words of Untwalia, J.: (SCC p.556, para

10)

’10. … The answer is obvious
that the bar will not operate to prevent the
abuse of the process of the court and/or to
secure the ends of justice. The label of the
petition filed by an aggrieved party is
immaterial. The High Court can examine the
matter in an appropriate case under its
inherent powers. The present case
undoubtedly falls for exercise of the power of
the High Court in accordance with Section 482
of the 1973 Code, even assuming, although
not accepting, that invoking the revisional
power of the High Court is impermissible’.

I am, therefore clear in my mind that the
inherent power is not rebuffed in the case
situation before us. Counsel on both sides,
sensitively responding to our allergy for

::: Uploaded on – 11/04/2018 12/04/2018 02:19:10 :::
jdk 7 4.r.crwp.97.18.j.doc

legalistics, rightly agreed that the fanatical
insistence on the formal filing of a copy of the
order under cessation need not take up this
Court’s time. Our conclusion concurs with the
concession of counsel on both sides that
merely because a copy of the order has not
been produced, despite its presence in the
records in the court, it is not possible for me to
hold that the entire revisory power stands
frustrated and the inherent power stultified.”

6. In our considered view any attempt
to explain the law further as regards the issue
relating to inherent power of the High Court
under Section 482 Cr.P.C. is unwarranted. We
would simply reiterate that Section 482 begins
with a non obstante clause to state:

“482. Saving of inherent powers of High
Court.— Nothing in this Code shall be deemed
to limit or affect the inherent powers of the
High Court to make such orders as may be
necessary to give effect to any order under
this Code, or to prevent abuse of the process
of any court or otherwise to secure the ends of
justice.”

A fortiori, there can be no total ban on the
exercise of such wholesome jurisdiction where,

::: Uploaded on – 11/04/2018 12/04/2018 02:19:10 :::
jdk 8 4.r.crwp.97.18.j.doc

in the words of Krishna Iyer, J.

“abuse of the process of the court or
other extraordinary situation excites the
Court’s jurisdiction. The limitation is self-
restraint, nothing more”. (Raj Kapoor Case i.e.
Raj Kapoor Vs. State (1980), 1 SCC 43 : 1980
SCC (Cri.) 72, SCC p. 48 para 10).

We venture to add a further reason in
support. Since Section 397 Cr.PC is attracted
against all orders other than interlocutory, a
contrary view would limit the availability of
inherent powers under Section 482 Cr.P.C. only
to petty interlocutory orders ļ A situation
wholly unwarranted and undesirable.

7. As a sequel, we are constrained to
hold that the Division Bench, particularly in
para 28, in Mohit Vs. State of U.P. (2013) 7 SCC
789 : (2013) 3SCC (Cri.) 727 in respect of
inherent power of the High Court in Section
482 Cr.P.C. does not state the law correctly.
We record our respectful disagreement.”

5 Learned counsel for the petitioner further pointed out

that the judgments cited by the learned counsel for respondent

::: Uploaded on – 11/04/2018 12/04/2018 02:19:10 :::
jdk 9 4.r.crwp.97.18.j.doc

no.1 – CBI was on civil law more particularly, under the

Securitization and Reconstruction of Financial Assets and

Enforcement of Security Interest Act, 2002 (SARFAESI Act) and

had nothing to do with the scope of Section 482 of Cr.P.C.,

which has been invoked in the present case. Mr. Ponda further

submitted that it would also be necessary to see the context in

which the observations in State Bank of Travencore (supra)

were made. He pointed out that the said case was under the

SARFAESI Act and the Supreme Court observed that the

SARFAESI Act is a complete Code by itself, providing for

expeditious recovery of dues arising out of loans granted by

financial Institutions, the remedy of appeal by the aggrieved

under Section 17 before Debt Recovery Tribunal, followed by a

right to appeal before the Appellate Tribunal under Section 18.

In view of these facts, the Supreme Court made these

observations. The present case is not under the SARFAESI Act

but it relates to evasion of payment of PF dues in which case

the Employees’ Provident Funds and Misc. Provisions Act, 1952

(EPF Act) would be applicable, however, the authorities have

not followed the procedure under the EPF Act especially

Section 7A, in such case the petitioner cannot seek relief under

::: Uploaded on – 11/04/2018 12/04/2018 02:19:10 :::
jdk 10 4.r.crwp.97.18.j.doc

the EPF Act. He further submitted that as far as remedy of

discharge is concerned, it cannot be said to be an alternate

efficacious remedy, because the parameters to be taken into

consideration for discharge are entirely different from the

considerations to be kept in mind for quashing.

6 The law in relation to Section 482 of Cr.P.C. is well

settled. The Supreme Court in the decision in the case of

Prabhu Chawla (supra), overruled an earlier decision of the

Supreme Court in the case of Mohit alias Sonu Vs. State of

Uttar Pradesh reported in (2013) 7 S.C.C. 789, which took a

view that alternate remedy is a bar under Section 482 of

Cr.P.C.. Other judgments relied upon by the learned counsel

for the petitioner are as under:

(1) Vineet Kumar and others Vs. State of

Uttar Pradesh and Another; (2017) 13 SCC 369;

(2) State of Orissa Vs. Debendra Nath Padhi;

2005 (1) SCC 568.

7 In Vineet Kumar (supra), reliance was placed on

paragraph nos. 22, 23, 24, 25, 29, 40, 40.1, 40.2, 40.4 and 41,

::: Uploaded on – 11/04/2018 12/04/2018 02:19:10 :::
jdk 11 4.r.crwp.97.18.j.doc

which read as under:

“22. Before we enter into the facts of the
present case, it is necessary to consider the
ambit and scope of jurisdiction under Section
482 Cr.P.C. vested in the High Court. Section
482 Cr.P.C. saves the inherent power of the
High Court to make such orders as may be
necessary to give effect to any order under
this Code, or to prevent abuse of the process
of any court or otherwise to secure the ends
of justice.

23. This Court time and again has examined
the scope of jurisdiction of the High Court
under Section 482 Cr.P.C. and laid down
several principles which govern the exercise
of jurisdiction of the High Court under Section
482 Cr.P.C. A three-Judge Bench of this Court
in State of Karnataka Vs. L. Muniswamy
(1977) 2 SCC 699 : 1977 SCC (Cri.) 404 held
that the High Court is entitled to quash a
proceeding if it comes to the conclusion that
allowing the proceeding to continue would be
an abuse of the process of the Court or that
the ends of justice require that the
proceeding ought to be quashed. In para 7 of
the judgment, the following has been stated:

::: Uploaded on – 11/04/2018 12/04/2018 02:19:10 :::
jdk 12 4.r.crwp.97.18.j.doc

(SCC p.703).

“7. … In the exercise of this

wholesome power, the High Court is entitled
to quash a proceeding if it comes to the
conclusion that allowing the proceeding to
continue would be an abuse of the process of
the court or that the ends of justice require
that the proceeding ought to be quashed.

The saving of the High Court’s inherent
powers, both in civil and criminal matters, is
designed to achieve a salutary public purpose
which is that a court proceeding ought not to
be permitted to degenerate into a weapon of
harassment or persecution. In a criminal
case, the veiled object behind a lame
prosecution, the very nature of the material
on which the structure of the prosecution
rests and the like would justify the High Court
in quashing the proceeding in the interest of
justice. The ends of justice are higher than
the ends of mere law though justice has got
to be administered according to laws made
by the legislature. The compelling necessity
for making these observations is that without
a proper realization of the object and purpose
of the provision which seeks to save the
inherent powers of the High Court to do

::: Uploaded on – 11/04/2018 12/04/2018 02:19:10 :::
jdk 13 4.r.crwp.97.18.j.doc

justice, between the State and its subjects, it
would be impossible to appreciate the width
and contours of that salient jurisdiction.”

24. The judgment of this Court in State
of Haryana V. Bhajan Lal; 1992 Supp.(1) SCC
335 : 1992 SCC (Cri.) 426, has elaborately
considered the scope and ambit of Section
482 Cr.P.C. Although in the above case this
Court was considering the power of the High
Court to quash the entire criminal proceeding
including the FIR, the case arose out of an FIR
registered under Sections 161, 165 IPC and
Section 5(2) of the Prevention of Corruption
Act, 1947. This Court elaborately considered
the scope of Section 482 Cr.P.C. / Article 226
of the Constitution in the context of quashing
the proceedings in criminal investigation
After noticing various earlier pronouncements
of this Court, this Court enumerated certain
categories of cases by way of illustration
where power under Section 482 Cr.P.C. can
be exercised to prevent abuse of process of
the Court or secure the ends of justice.

25. Para 102 which enumerates 7

categories of cases where power can be
exercised under Section 482 Cr.P.C. is

::: Uploaded on – 11/04/2018 12/04/2018 02:19:10 :::
jdk 14 4.r.crwp.97.18.j.doc

extracted as follows: (Bhajan Lal case SCC
pp. 378-79).

“102. In the backdrop of the
interpretation of the various relevant

provisions of the Code under Chapter XIV and
of the principles of law enunciated by this
Court in a series of decisions relating to the
exercise of the extraordinary power under
Article 226 or the inherent powers under
Section 482 of the Code which we have
extracted and reproduced above, we give the
following categories of cases by way of
illustration wherein such power could be
exercised either to prevent abuse of the
process of any court or otherwise to secure
the ends of justice, though it may not be
possible to lay down any precise, clearly
defined and sufficiently channelized and
inflexible guidelines or rigid formulae and to
give an exhaustive list of myriad kinds of
cases wherein such power should be
exercised.

(1) 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

::: Uploaded on – 11/04/2018 12/04/2018 02:19:10 :::
jdk 15 4.r.crwp.97.18.j.doc

against the accused.

(2) Where the allegations in the first
information report and other materials, if any,
accompanying the FIR 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.

(3) 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.

(4) 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.

(5) Where the allegations made in the
FIR or complaint are so absurd and inherently

::: Uploaded on – 11/04/2018 12/04/2018 02:19:10 :::
jdk 16 4.r.crwp.97.18.j.doc

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.

(6) Where there is an express legal bar
engrafted in any of the provisions of the Code
or the Act concerned (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
Act concerned, providing efficacious redress
for the grievance of the aggrieved party.

(7) 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.

29. In another case in Priya Vrat Singh
Vs. Shyam Ji Sahai (2008) 8 SCC 232: (2008)
3 SCC (Cri.) 463, this Court relied on Category
7 as laid down in State of Haryana V. Bhajan
Lal. In the above case the Allahabad High
Court had dismissed an application filed
under Section 482 Cr.P.C. to quash the

::: Uploaded on – 11/04/2018 12/04/2018 02:19:10 :::
jdk 17 4.r.crwp.97.18.j.doc

proceedings under Sections 494, 120-B and
109 IPC and Sections 3 and 4 of the Dowry
Prohibition Act. After noticing the
background facts and parameters for
exercise of power under Section 482 Cr.P.C.
the following was stated in paras 8 to 12 :
(Priya Vrat Case (2008) 8 SCC 232:(2008) 3
SCC (Cri.) 463, SCC pp.235-36).

“8. Further, it is pointed out that the
allegation of alleged demand for dowry was
made for the first time in December 1994. In
the complaint filed, the allegation is that the
dowry torture was made sometime in 1992.
It has not been explained as to why for more
than two years no action was taken.

9. Further, it appears that in the
complaint petition apart from the husband,
the mother of the husband, the subsequently
married wife, husband’s mother’s sister,
husband’s brother-in-law and Sunita’s father
were impleaded as party. No role has been
specifically ascribed to anybody except the
husband and that too of a dowry demand in
February 1993 when the complaint was filed
on 6.12.1994 i.e. nearly after 22 months. It is
to be noted that in spite of service of notice,

::: Uploaded on – 11/04/2018 12/04/2018 02:19:10 :::
jdk 18 4.r.crwp.97.18.j.doc

none has appeared on behalf of Respondent
No.1.

10. The parameters for exercise of
power under Section 482 Cr.P.C. have been
laid down by this Court in several cases. Ed:
The reference seems inter alia to be to
Sunder Babu V. State of T.N. (2009) 14 SCC
244 : (2010) 1 SCC (Cri.) 1349 and Engg.
Export Promotion Council Vs. Usha Anand,
(2013) 12 SCC 620 : (2014) 4 SCC (Cri.) 441

11. `19. The section does not confer any new
power on the High Court. It only saves the
inherent power which the Court possessed
before the enactment of the Code. It
envisages three circumstances under which
the inherent jurisdiction may be exercised,
namely, (i) to give effect to an order under
the Code, (ii) to prevent abuse of the process
of Court, and (iii) to otherwise secure the
ends of justice. It is neither possible or
desirable to lay down any inflexible rule
which would govern the exercise of inherent
jurisdiction. No legislative enactment dealing
with procedure can provide for all cases that
may possibly arise. Courts, therefore, have
inherent powers apart from express
provisions of law which are necessary for

::: Uploaded on – 11/04/2018 12/04/2018 02:19:10 :::
jdk 19 4.r.crwp.97.18.j.doc

proper discharge of functions and duties
imposed upon them by law. That is the
doctrine which finds expression in the section
which merely recognizes and preserves
inherent powers of the High Courts. All
courts, whether civil or criminal, possess, in
the absence of any express provision, as
inherent in their constitution, all such powers
as are necessary to do the right and to undo
a wrong in course of administration of justice
on the principle quando lex aliquid alicui
concedit, concedere videtur id sine quo res
ipsa esse non potest (when the law gives a
person anything it gives him that without
which it cannot exist). While exercising
powers under the section, the Court does not
function as a court of appeal or revision.
Inherent jurisdiction under the section though
wide has to be exercised sparingly, carefully
and with caution and only when such
exercise is justified by the tests specifically
laid down in the section itself. It is to be
exercised ex debito justitiae to do real and
substantial justice for the administration of
which alone courts exist. Authority of the
court exists for advancement of justice and if
any attempt is made to abuse that authority
so as to produce injustice, the court has

::: Uploaded on – 11/04/2018 12/04/2018 02:19:10 :::
jdk 20 4.r.crwp.97.18.j.doc

power to prevent abuse. It would be an
abuse of process of the court to allow any
action which would result in injustice and
prevent promotion of justice. In exercise of
the powers court would be justified to quash
any proceeding if it finds that initiation /
continuance of it amounts to abuse of the
process of court or quashing of these
proceedings would otherwise serve the ends
of justice.

20. As noted above, the powers possessed by
the High Court under Section 482 of the Code
are very wide and the very plenitude of the
power requires great caution in its exercise.
Court must be careful to see that its decision
in exercise of this power is based on sound
principles. The inherent power should not be
exercised to stifle a legitimate prosecution.
The High Court being the highest court of a
State should normally refrain from giving a
prima facie decision in a case where the
entire facts are incomplete and hazy, more
so, when the evidence has not been collected
and produced before the Court and the issues
involved, whether factual or legal, are of
magnitude and cannot be seen in their true
perspective without sufficient material. Of

::: Uploaded on – 11/04/2018 12/04/2018 02:19:10 :::
jdk 21 4.r.crwp.97.18.j.doc

course, no hard-and-fast rule can be laid
down in regard to cases in which the High
court will exercise its extraordinary
jurisdiction of quashing the proceeding at any
stage.’

40. Reference to the judgment of this Court
in Prashant Bharti Vs. State (NCT of Delhi)
(2013) 9 SCC 293 : (2013) 3 SCC (Cri.) 920 is
relevant for the present case. In the above
case the complainant lady aged 21 years
lodged an FIR under Sections 328 and 354
IPC with regard to the incident dated
15.2.2007. She sent a telephonic information
on 16.2.2007 and on her statement FIR under
Sections 328 and 354 IPC was registered
against the appellant. After a lapse of five
days on 21.2.2007 she gave a supplementary
statement alleging rape by the appellant on
23.12.2006, 25.12.2006 and 1.1.2007. The
statement under Section 164 Cr.P.C. of the
prosecutrix was recorded. Police filed
charge-sheet under Sections 328, 324 and
376 IPC. Charge-sheet although mentioned
that no proof in support of crime under
Sections 328 / 354 could be found. However,
on the ground of statement made under
Section 164 Cr.P.C. charge-sheet was

::: Uploaded on – 11/04/2018 12/04/2018 02:19:10 :::
jdk 22 4.r.crwp.97.18.j.doc

submitted.

40.1. Para 10 of the judgment which notes
the charge-sheet is as follows: (Prashant
Bharti Vs. State (NCT of Delhi), (2013) 9 SCC
293 : (2013) 3 SCC (Cri.) 920, SCC p. 300)

“10. On 28.6.2007 the police filed a
charge-sheet under Sections 328, 354 and
376 of the Penal Code. In the charge-sheet,
it was clearly mentioned that the police
investigation, from different angles, had not
yielded any positive result. However, the
charge-sheet was based on the statement
made by the complainant / prosecutrix before
the Metropolitan Magistrate, New Delhi under
Section 164 of the Code of Criminal
Procedure, which was found to be sufficient
for the charges alleged against the appellant

– accused. A relevant extract of the charge-
sheet depicting the aforesaid factual position,
is being reproduced below:

‘I, the inspector, tried my best from
all angles to recover the intoxicating
substance Pepsi / Pepsi glass and
undergarments worn at the time of the rape.
But nothing could be recovered and for this

::: Uploaded on – 11/04/2018 12/04/2018 02:19:10 :::
jdk 23 4.r.crwp.97.18.j.doc

reason, the blood sample of the accused
could not be sent to FSL. As from the
investigation so far conducted, no proof could
be found in support of the crime under
Sections 328 / 354 IPC and even the position
of accused Prashant Bharti is not available at
Lodhi Colony at the date and time as his
mobile phone ill (sic.). However, prosecutrix
Priya Porwal made statement on 21.2.2007
and on 27.2.2007 under Section 164 Cr.P.C.
which is sufficient in support of his challan for
the offence under Section 376 IPC.'”

40.2. The writ petition was filed by the
accused for quashing the FIR which was
dismissed by the High Court on 27.8.2007.

Thereafter, charges were framed on
1.12.2008. Dissatisfied with the framing of
charges criminal revision petition was filed
which was dismissed by the Delhi High Court
on 16.1.2009 (Prashant Bharti Vs. State, 2009
SCC OnLine Del 4204). The order of the
Additional Sessions Judge has been extracted
by this Court in para 14 which is quoted
below: (Prashant Bharati Vs. State (NCT of
Delhi), (2013) 9 SCC 293 : (2013) 3 SCC (Cri.)
920, SCC p. 301).

::: Uploaded on – 11/04/2018 12/04/2018 02:19:11 :::

jdk 24 4.r.crwp.97.18.j.doc

“14. Dissatisfied with the action of
the trial Court in framing charges against
him, the appellant – accused filed Criminal
Revision Petition No. 08 of 2009, whereby he
assailed the order dated 1.12.2008 passed by
the Additional Sessions Judge, New Delhi.
The Delhi High Court dismissed the revision
petition on 16.1.2009 (Prashant Bharati V.
State, 2009 SCC OnLine Del 4204), by inter
alia observing as under (Prashant Bharti Case
i.e. Prashant Bharti Vs. State, 2009 SCC
OnLine Del 4204 – SCC OnLine Del para 12):

’12. Truthfulness or falsity of the
allegations, essentially pertains to the realm
of evidence and the same cannot be pre-
judged at this initial stage. I do not find any
illegality or infirmity in the impugned order.
Consequently, this revision petition is
dismissed in limine while making it clear that
anything herein shall not be construed as an
opinion on merits at trial.'”

40.4. Thus, the above was the case where
despite statement under Section 164 Cr.P.C.
by the prosecutrix the Court referring to
material collected during investigation had
held that the case was fit where the High

::: Uploaded on – 11/04/2018 12/04/2018 02:19:11 :::
jdk 25 4.r.crwp.97.18.j.doc

Court ought to have quashed the criminal
proceedings.

41. Inherent power given to the High Court
under Section 482 Cr.P.C. is with the purpose
and object of advancement of justice. In case
solemn process of Court is sought to be
abused by a person with some oblique
motive, the Court has to thwart the attempt
at th very threshold. The Court cannot
permit a prosecution to go on if the case falls
in one of the categories as illustratively
enumerated by this Court in State of Haryana
Vs. Bhajan Lal, 1992 Supp (1) SCC 335 : 1992
SCC (Cri.) 426. Judicial process is a solemn
proceeding which cannot be allowed to be
converted into an instrument of operation or
harassment. When there are materials to
indicate that a criminal proceeding is
manifestly attended with mala fide and
proceeding is maliciously instituted with an
ulterior motive, the High Court will not
hesitate in exercise of its jurisdiction under
Section 482 Cr.P.C. to quash the proceeding
under category 7 as enumerated in State of
Haryana Vs. Bhajan Lal; 1992 Supp (1) SCC
335: 1992 SCC (Cri.) 426, which is to the
following effect (SCC p. 379, para 102)

::: Uploaded on – 11/04/2018 12/04/2018 02:19:11 :::
jdk 26 4.r.crwp.97.18.j.doc

“102. (7) 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.”

Above category 7 is clearly
attracted in the facts of the present case.
Although, the High Court has noted the
judgment of State of Haryana Vs. Bhajan Lal,
1992 Supp (1) SCC 335: 1992 SCC (Cri.) 426,
but did not advert to the relevant facts of the
present case, materials on which final report
was submitted by the IO. We, thus, are fully
satisfied that the present is a fit case where
the High Court ought to have exercised its
jurisdiction under Section 482 Cr.P.C. and
quashed the criminal proceedings”.

8 In State of Orissa Vs. Debendra Nath Padhi (supra) ,

reliance was placed by the learned counsel for petitioner on

paragraph 29 of the judgment in which the Supreme Court has

observed thus:

::: Uploaded on – 11/04/2018 12/04/2018 02:19:11 :::

jdk 27 4.r.crwp.97.18.j.doc

“We are of the view that jurisdiction under
Section 91 of the Code when invoked by
accused the necessity and desirability would
have to be seen by the Court in the context of
the purpose of investigation, inquiry, trial or
other proceedings under the Code. It would
also have to be borne in mind that law does
not permit a roving or fishing inquiry.
Regarding the argument of accused having to
face the trial despite being in a position to
produce material of unimpeachable character
of sterling quality, the width of the powers of
the High Court under Section 482 of the Code
and Article 226 of the Constitution of India is
unlimited whereunder in the interests of
justice the High Court can make such orders as
may be necessary to prevent abuse of the
process of any court or otherwise to secure the
ends of justice within the parameters laid
down in Bhajan Lal’s case”.

9 From the above judgments in the case of Prabhu

Chawla, Vineet Kumar, Sunder Babu Vs. State of Tamil

Nadu, Engg. Export Promotion Council, Priya Vrat Singh

Debendra Padhi, it is clear that the powers under Section 482

Cr.P.C. and 226 of the Constitution of India can be used to

::: Uploaded on – 11/04/2018 12/04/2018 02:19:11 :::
jdk 28 4.r.crwp.97.18.j.doc

quash a case to prevent abuse of process of Court or to secure

ends of justice. In addition, 7 categories are set out in

Bhajanlal in which FIR / case can be quashed.

10 This petition is under Article 226 of the Constitution of

India and under Section 482 of Cr.P.C. It has invoked the

inherent jurisdiction of this Court under Section 482 of Cr.P.C.

and extra ordinary powers under Article 226 of the Constitution

of India. An application for discharge cannot be said to be an

alternate efficacious remedy. As per the judgment of Three-

Judge Bench of the Supreme Court in Debendra Nath Padhi’s

case (supra) in paragraph 29, it has laid down that a document

which is not forming part of the charge-sheet is being pressed

into service, which is of sterling quality, then, only the Court

under Section 482 of Cr.P.C. can look into the said document

whereas while considering a discharge application the Court

cannot look into any such material. The judgment of the

Three-Judge Bench of the Supreme Court in Prabhu Chawla

(supra) is also important to show that the present petition is

maintainable. Thus, the preliminary objection raised about the

maintainability of this petition, has no substance.

::: Uploaded on – 11/04/2018 12/04/2018 02:19:11 :::
jdk 29 4.r.crwp.97.18.j.doc

11 Apart from the above, the learned counsel for the

petitioner has also relied upon category 7 laid down in the

decision in the State of Haryana Vs. Bhajan Lal case which is

reported in 1992 (Suppl) (1) SCC 335, wherein the FIR can be

quashed which contention, we will deal a little later.

12 As far as the merits of the case are concerned, the

learned counsel for CBI submitted that all the charges are

attracted in the case of the petitioner i.e. Sections 120-B, 467,

468, 471 and 420 read with Section 511 of IPC. The brief facts

of the prosecution case against the petitioner are as under:

(I) On 4.3.2006 there was a surprise inspection

conducted on the company of the petitioner.

Subsequently Inspection Report dated 14.3.2006 was

prepared by a team of Provident Fund Officers, which

admittedly (as seen from FIR) alleges incorrect figures

of turnover and accordingly a fake figure of alleged

evasion of payment of provident fund dues was

stated. It is pertinent to note in relation to this, that

::: Uploaded on – 11/04/2018 12/04/2018 02:19:11 :::
jdk 30 4.r.crwp.97.18.j.doc

in the F.I.R. it is stated that the evasion of provident

fund dues was to the tune of Rs.160 crores. This

F.I.R. was lodged on 29.3.2008. The charge-sheet in

the said case was filed in October, 2010, however, in

the charge-sheet, this figure of evasion of provident

fund dues to the tune of Rs. 160 crores has

disappeared and instead, it is stated that the evasion

of provident fund dues is about Rs. 9 crores.

(II) The second charge is that after registration

of the F.I.R., meetings were held with contractors

wherein, it was decided to prepare false wage records

of the employees of the contractors, to show as if

wages which were earned by the workers of the

contractors of the company were above, Rs.250/- per

day and above Rs. 6500/- per month so as to come

out of the ambit of Section 3 of the Employees

Provident Fund Act. Thus, it is a case of attempt to

cheat.

(III) Thirdly, it is alleged that the petitioner

::: Uploaded on - 11/04/2018 12/04/2018 02:19:11 :::
jdk 31 4.r.crwp.97.18.j.doc

prepared forged records to show that 48 employees

of the petitioner who were actually employed in the

year 2006, were shown as employed in 2004 / 2005

and PF dues pertaining to them were paid.

13 Before going into these charges, it would be

necessary to place on record a few facts which are as under:

The current proceedings arise out of an F.I.R.

registered on 29.3.2008. The prosecution case is that on

4.3.2006, there was a surprise inspection conducted on the

company. Thereafter the Inspection Report was prepared

which is dated 14.3.2006 / 5.4.2006 (page no.419). This

Inspection Report shows that there was evasion of payment of

provident fund dues to the tune of Rs. 640 crores. As stated

earlier, the raid on the premises took place on 4.3.2006,

however, prior to that Writ Petition No. 2593 of 1997 was

preferred before the High Court of Judicature at Bombay Bench

at Nagpur in which the petitioners were Builders Association of

India Vs. Union of India, (2) Central Provident Fund

Commissioner, (3) Regional Provident Fund Commissioner, (4)

::: Uploaded on - 11/04/2018 12/04/2018 02:19:11 :::
jdk 32 4.r.crwp.97.18.j.doc

Legal Advisor of Ministry of Labour, (5) Joint Secretary to

Government of India. In the said case, on 8.9.1997 the

following order was passed:

"Rule. In view of the fact that the similar writ
petition being W.P. No. 2047 of 1996 has been
admitted and interim relief has been granted
by this Court, interim relief in terms of prayer
clause (iv):

"(iv) issue an ad-interim direction or order re-
straining the respondents, their servants, and /
or agents from giving effect to the
communication Annexure, D, E, F and F-1 or
similar such communication to any of the
petitioners in relating to the coverage of site
workers under the PF Act and PF Scheme and
payment of PF contribution, in respect of the
site workers, or initiate any proceedings
relating thereto and / or demanding any
payment of any PF contribution from the
petitioners or any of them. In so far as casual
and / or temporary site workers engaged under
the multi - tier system in their business, during
the pendency final disposal of the writ petition.

                                         Expedited.                     Place this matter for

::: Uploaded on - 11/04/2018 12/04/2018 02:19:11 :::
jdk 33 4.r.crwp.97.18.j.doc

hearing along with W.P. No. 2047 of 1996".

14 This order pertained to site workers that is workers

working on building construction sites. It is to be noted that

the order was passed in the writ petition filed by Builders'

Association of India of which the Hiranandani Group of

Companies are members. It is further to be noted that Sandip

Dwellers Pvt. Ltd. was one of the petitioners in the bunch of

writ petitions along with Builders' Association of India.

15 This stay on payment of PF dues which was granted

by Nagpur Bench of the High Court, continued till 28.2.2006 on

which day, the said writ petition was disposed of. The raid on

the company was conducted on 4.3.2006 i.e. within four days

of the writ petition being disposed of. In such case, it would be

impossible for anyone to comply with all EPF formalities and to

pay the dues within a period of four days. When the petition

filed by Sandip Dwellers Pvt. Ltd. was disposed of, in the last

paragraph of the decision in the said case, it is stated that writ

petitions are therefore, partially allowed. The impugned order

under section 7-A dated 5.3.2001 at Annexure-S in W.P. No.

::: Uploaded on - 11/04/2018 12/04/2018 02:19:11 :::
jdk 34 4.r.crwp.97.18.j.doc

1164 of 2001 is quashed and set aside. Demands, if any,

served upon petitioners in other petitions are also quashed.

Petitioners to file appropriate replies / amendments to their

reply if already filed, if necessary in response to notices issued

by Regional Provident Fund Commissioner and said authority to

proceed further to hold inquiry and investigate as per

provisions of Section 7-A of Employees' Provident Funds and

Misc. Provisions Act, 1952. The said inquiries shall be

conducted and completed as early as possible and in any case

within a period of six months from the date of communication

of these orders to respondents. Rule made absolute

accordingly. No costs.

16 Thus, it is seen from the last para of the judgment in

Sandeep Dwellers Pvt. Ltd. that an inquiry under Section 7-A of

the EPF Act was mandatory to ascertain the dues without which

the dues could not be ascertained. In fact, this is also the

prosecution case that this can be clearly seen from the

statement of PW 1 Rajesh Kumar Sinha. Rajesh Kumar Sinha

was the Regional Provident Fund Commissioner. In his

statement, in the last paragraph he has stated that:

::: Uploaded on - 11/04/2018 12/04/2018 02:19:11 :::

jdk 35 4.r.crwp.97.18.j.doc

"On being asked, I state that in the case of
inspection of Hiranandani Group of Companies
on 04.03.2006 and 27.03.2006 as per the EPF
Act and rules of the department inquiry under
Section 7A of the EPF Act was necessary to
determine the dues in respect of 137
uncovered employees as reflected in the
report of Enforcement Officers dated
14.03.2006 as well as in respect of the salary,
wages and labour components as reflected in
the report of Enforcement Officer dated
27.03.2006 and 31.03.2006 which has not
been done in this case.

[EMPHASIS SUPPLIED]

17 By virtue of this, it is clear that no PF dues could be

ascertained unless inquiry under Section 7-A of the EPF Act was

conducted which has admittedly not been conducted in the

present case till date.

18 Chapter IV of the Employees' Provident Funds and

Miscellaneous Provisions Act, 1952 provides for determination

of Provident Fund and recovery of dues.

::: Uploaded on - 11/04/2018 12/04/2018 02:19:11 :::

jdk 36 4.r.crwp.97.18.j.doc

Section 7-A provides for determination of moneys

due from employers :-

(1) The Central Provident Fund Commissioner, any

Additional Central Provident Fund Commissioner, any

Deputy Provident Fund Commissioner, any Regional

Provident Fund Commissioner or any Assistant

Provident Fund Commissioner may, by order,----

(a) in a case where a dispute arises regarding the
applicability of this Act to an establishment, decide
such dispute; and

(b) determine the amount due from any employer
under any provision of this Act, the Scheme or the
Pension Scheme or the Insurance Scheme, as the
case may be, and for any of the aforesaid purposes
may conduct such inquiry as he may deem
necessary.

(2) The officer conducting the inquiry under sub-
section 1 shall, for the purposes of such inquiry have
the same powers as are vested in a court under the
code of Civil Procedure, 1908 (5 of 1908), for trying a
suit in respect of the following matters, namely:----

::: Uploaded on - 11/04/2018 12/04/2018 02:19:11 :::

jdk 37 4.r.crwp.97.18.j.doc

(a) enforcing the attendance of any person or
examining him on oath:

(b) requiring the discovery and production of
documents;

(c) receiving evidence on affidavit;

(d) issuing commissions for the examination of
witnesses,

and any such inquiry shall be deemed to be a judicial
proceeding within the meaning of sections 193 and
228, and for the purpose of section 196 of the Indian
Penal Code (45 of 1960).

(3) No order shall be made under sub-section 1,
unless the employer concerned is given a reasonable
opportunity of representing his case.

(3A) Where the employer, employee or any other
person required to attend the inquiry under sub-
section 1 fails to attend such inquiry without
assigning any valid reason or fails to produce any
document or to file any report or return when called
upon to do so, the officer conducting the inquiry may
decide the applicability of the Act or determine the
amount due from any employer, as the case may be,
on the basis of the evidence adduced during such
inquiry and other documents available on record.

::: Uploaded on - 11/04/2018 12/04/2018 02:19:11 :::

jdk 38 4.r.crwp.97.18.j.doc

(4) Where an order under sub-section (1) is passed
against an employer ex-parte, he may, within three
months from the date of communication of such
order, apply to the officer for setting aside such order
and if he satisfies the officer that the show cause
notice was not duly served or that he was prevented
by any sufficient cause from appearing when the
inquiry was held, the officer shall make an order
setting aside his earlier order and shall appoint a date
for proceeding with the inquiry:

Provided that no such order shall be set aside merely
on the ground that there has been an irregularity in
the service of the show cause notice if the officer is
satisfied that the employer had notice of the date of
hearing and had sufficient time to appear before the
officer.

Explanation.-----

Where an appeal has been preferred under this Act
against an order passed ex parte and such appeal has
been disposed of otherwise than on the ground that
the appellant has withdrawn the appeal, no
application shall lie under this sub-section for setting
aside the exparte order.

(5) No order passed under this section shall be set
aside on any application under sub-section (4) unless
notice thereof has been served on the opposite party.

::: Uploaded on - 11/04/2018 12/04/2018 02:19:11 :::

jdk 39 4.r.crwp.97.18.j.doc

Section 7-C provides for determination of escaped
amount :-

Where an order determining the amount due from an
employer under section 7-A or section 7-B has been
passed and if the officer who passed the order -

(a) has reason to believe that by reason of the
omission or failure on the part of the employer to
make any document or report available, or to
disclose, fully and truly, all material facts necessary
for determining the correct amount due from the
employer, any amount so due from such employer for
any period has escaped his notice;

(b) has, in consequence of information in his
possession, reason to believe that any amount to be
determined under section 7-A or section 7-B has
escaped from his determination for any period
notwithstanding that there has been no omission or
failure as mentioned in clause (a) on the part of the
employer, he may, within a period of five years from
the date of communication of the order passed under
section 7-A or section 7-B, re-open the case and pass
appropriate orders re-determining the amount due
from the employer in accordance with the provisions
of this Act:

::: Uploaded on - 11/04/2018 12/04/2018 02:19:11 :::

jdk 40 4.r.crwp.97.18.j.doc

Provided that no order re-determining the amount
due from the employer shall be passed under this
section unless the employer is given a reasonable
opportunity of representing his case.

Section 7-D provides for Employees' Provident

Funds Appellate Tribunal :-

(1) The Central Government may, by notification in
the Official Gazette, constitute one or more Appellate
Tribunals to be known as the Employees' Provident
Funds Appellate Tribunal to exercise the powers and
discharge the functions conferred on such Tribunal by
this Act and every such Tribunal shall have
jurisdiction in respect of establishments situated in
such area as may be specified in the notification
constituting the Tribunal.

(2) A Tribunal shall consist of one person only to be
appointed by the Central Government.

(3) A person shall not be qualified for appointment as
a Presiding Officer of a Tribunal hereinafter referred
to as the Presiding Officer, unless he is, or has been,
or is qualified to be,----

                    (i) a Judge of a High Court; or

::: Uploaded on - 11/04/2018 12/04/2018 02:19:11 :::
jdk 41 4.r.crwp.97.18.j.doc

(ii) a District Judge.

Sub-section (1) of Section 7-L provides for Orders
of Tribunal :-

(1) A Tribunal may, after giving the parties
to the appeal, an opportunity of being heard, pass
such orders thereon as it thinks fit, confirming,
modifying or annulling the order appealed against or
may refer the case back to the authority which
passed such order with such directions as the tribunal
may think fit, for a fresh adjudication or order, as the
case may be, after taking additional evidence, if
necessary.

Section 7-N provides for finality of orders
constituting a Tribunal.----

No order of the Central Government
appointing any person as the Presiding Officer shall
be called in question in any manner, and no act or
proceeding before a Tribunal shall be called in
question in any manner on the ground merely of any
defect in the constitution of such Tribunal.

Section 7-Q :- provides for Interest payable by
the employer.----

The employer shall be liable to pay simple

::: Uploaded on - 11/04/2018 12/04/2018 02:19:11 :::
jdk 42 4.r.crwp.97.18.j.doc

interest at the rate of twelve per cent per annum or
at such higher rate as may be specified in the
Scheme on any amount due from him under this Act
from the date on which the amount has become so
due till the date of its actual payment:

Provided that higher rate of interest specified in the
Scheme shall not exceed the lending rate of interest
charged by any scheduled bank.

Section 8. Mode of recovery of moneys due from
employers - Any amount due -

(a) from the employer in relation to an establishment
to which any Scheme or the Insurance Scheme
applies in respect of any contribution payable to the
Fund or, as the case may be, the Insurance Fund,
damages recoverable under section 14B,
accumulations required to be transferred under sub-
section 2 of section 15 or under sub-section 5 of
section 17 or any charges payable by him under any
other provision of this Act or of any provision of the
Scheme or the Insurance Scheme; or

(b) from the employer in relation to an exempted
establishment in respect of any damages recoverable
under section 14-B or any charges payable by him the
appropriate Government under any provision of this

::: Uploaded on - 11/04/2018 12/04/2018 02:19:11 :::
jdk 43 4.r.crwp.97.18.j.doc

Act or under any of the conditions specified under
section 17 or in respect of the contribution payable by
him towards the Pension Scheme under the said
section 17, may, if the amount is in arrear, be
recovered in the manner specified in section 8-B to 8-
G.

Section 8-A provides for Recovery of moneys by
employers and contractors.

(1) The amount of contribution that is to say, the
employer's contribution as well as the employee's
contribution in pursuance of any Scheme and the
employer's contribution in pursuance of the Insurance
Scheme and any charges for meeting the cost of
administering the Fund paid or payable by an
employer in respect of an employee employed by or
through a contractor may be recovered by such
employer from the contractor, either by deduction
from any amount payable to the contractor under
any contract or as a debt payable by the contractor.

(2) A contractor from whom the amounts mentioned
in sub-section (1) may be recovered in respect of any
employee employed by or through him, may recover
from such employee the employee's contribution
under any Scheme by deduction from the basic
wages, dearness allowance and retaining allowance if

::: Uploaded on - 11/04/2018 12/04/2018 02:19:11 :::
jdk 44 4.r.crwp.97.18.j.doc

any payable to such employee.

(3) Notwithstanding any contract to the contrary, no
contractor shall be entitled to deduct the employer's
contribution or the charges referred to in sub-section
(1) from the basic wages, dearness allowance, and
retaining allowance if any payable to an employee
employed by or through him or otherwise to recover
such contribution or charges from such employee.

Explanation. - In this section, the expressions
"dearness allowance" and "retaining allowance" shall
have the same meanings as in section 6.

SECTION 8-F provides for other modes of
recovery.

SECTION 14 provides for Penalties. It reads thus :-

(1) Whoever, for the purpose of avoiding any
payment to be made by himself under this Act, the
Scheme, the Pension Scheme or the Insurance
Scheme or of enabling any other person to avoid
such payment, knowingly makes or causes to be
made any false statement or false representation
shall be punishable with imprisonment for a term
which may extend to one year, or with fine of five
thousand rupees, or with both.

::: Uploaded on - 11/04/2018 12/04/2018 02:19:11 :::

jdk 45 4.r.crwp.97.18.j.doc

(1-A) 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 as it relates to
the payment of administrative charges, shall be
punishable with imprisonment for a term which may
extend to three years but -

(a) which shall not be less than one year and a fine of
ten thousand rupees in case of default in payment of
the employees' contribution which has been deducted
by the employer from the employees' wages;

(b) which shall not be less than six months and a fine
of five thousand rupees, in any other case:

Provided that the Court may, for any adequate and
special reasons to be recorded in the judgment,
impose a sentence of imprisonment for a lesser term.

(1-B) An employer who contravenes, or makes default
in complying with, the provisions of section 6-C, or
clause (a) of sub-section 3-A of section 17 in so far as
it relates to the payment of inspection charges, shall
be punishable with imprisonment for a term which
may extend to one year but which shall not be less

::: Uploaded on - 11/04/2018 12/04/2018 02:19:11 :::
jdk 46 4.r.crwp.97.18.j.doc

than six months and shall also be liable to fine which
may extend to five thousand rupees:

Provided that the Court may, for any adequate and
special reasons to be recorded in the judgment,
impose a sentence of imprisonment for a lesser term.

(2) Subject to the provisions of this Act, the Scheme,
the Pension Scheme or the Insurance 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 one year, or with fine
which may extend to four thousand rupees, or with
both.

(2-A) Whoever contravenes or makes default in
complying with any provision of this Act or of any
condition subject to which exemption was granted
under section 17 shall, if no other penalty is
elsewhere provided by or under this Act for such
contravention or non-compliance, be punishable with
imprisonment which may extend to six months, but
which shall not be less than one month, and shall also
be liable to fine which may extend to five thousand
rupees.

Section 14-A provides for offences by companies :-

::: Uploaded on - 11/04/2018 12/04/2018 02:19:11 :::

jdk 47 4.r.crwp.97.18.j.doc

(1) If the person committing an offence under this
Act, the Scheme or the Pension Scheme or the
Insurance Scheme is a company, every person who at
the time the offence was committed was incharge of,
and was responsible to, the company for the conduct
of the business of the company, 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:

Provided that nothing contained in this sub-section
shall render any such person liable to any
punishment, if he proves that the offence was
committed without his knowledge or that he
exercised all due diligence to prevent the commission
of such offence.

(2) Notwithstanding anything contained in sub-section
(1), where an offence under this Act, the Scheme or
the Pension Scheme or the Insurance Scheme has
been committed by a company and it is proved that
the offence has been committed with the consent or
connivance of, or is attributable to, any neglect on
the part of, any Director or Manager, Secretary or
other officer of the company, such Director, Manager,
Secretary or other officer shall be deemed to be
guilty of that offence and shall be liable to be

::: Uploaded on - 11/04/2018 12/04/2018 02:19:11 :::
jdk 48 4.r.crwp.97.18.j.doc

proceeded against and punished accordingly.

Explanation -For the purposes of this section, -

(a) "Company" means any body corporate and
includes a firm and other association of individuals;
and

(b) "Director" in relation to a firm, means a partner in
the firm.

14-AA. Enhanced punishment in certain cases after
previous conviction - Whoever, having been convicted
by a court of an offence punishable under this Act,
the Scheme or the Pension Scheme or the Insurance
Scheme, commits the same offence shall be subject
for every such subsequent offence to imprisonment
for a term which may extend to five years, but which
shall not be less than two years, and shall also be
liable to a fine of twenty five thousand rupees.

Section 14-AC provides for cognizance and trial of
offences.

Section 14-B provides for power to recover the
damages in the case where an employer makes
default in the payment of any contribution to the
Fund and charges payable under any other provision

::: Uploaded on - 11/04/2018 12/04/2018 02:19:11 :::
jdk 49 4.r.crwp.97.18.j.doc

of this Act or of any Scheme.

ANALYSIS OF THE PROVISIONS :-

19 The Act is a complete Code in itself. It is a Special

Act. The Act provides for a procedure for determination of

moneys due from employers towards PF dues. During the

course of inquiry under Section 7-A of the Act a dispute

regarding the applicability of the Act to an establishment has to

be decided. Thereafter, the determination of the amount due

from any employer is to be made. The inquiry has to be

conducted in accordance with the procedure laid down under

Section 7-A of the said Act. The inquiry under Section 7-A shall

be deemed to be a judicial proceeding within the meaning of

sections 193 and 228, and for the purpose of section 196 of the

Indian Penal Code. Against the order passed under Section 7-A

the aggrieved person has remedy of preferring an appeal to

the Tribunal.

Section 8 provides for mode of recovery of moneys

due from employers.

Section 14 provides for penalties in as much as

::: Uploaded on - 11/04/2018 12/04/2018 02:19:11 :::
jdk 50 4.r.crwp.97.18.j.doc

avoiding of any payment to be made under this Act or the

Scheme or of enabling any other person to avoid such payment

knowingly makes or causes to be made any false statement or

false representation shall be punishable with imprisonment for

a term which may extend to one year or with fine of five

thousand rupees, or with both.

Section 14-A is a provision which deals with the

offences by companies.

Section 14-AB provides that notwithstanding

anything contained in the Code of Criminal Procedure, 1898, an

offence relating to default in payment of contribution by the

employer punishable under this Act shall be cognizable.

Section 14-AC provides for cognizance and trial of

offences and upon sanction of the Central Provident Fund

Commissioner or such other officer as may be authorised by

the Central Government.

Section 14-B provides for power to recover damages

in case where an employer makes default in the payment of

any contribution to the Fund or charges payable under any

::: Uploaded on - 11/04/2018 12/04/2018 02:19:11 :::
jdk 51 4.r.crwp.97.18.j.doc

other provision of this Act or any scheme.

20 The reading of the provisions of the Act clearly

indicates that the Regional Provident Fund Commissioner is

empowered by law under Section 7A in a case where a dispute

arises regarding the applicability of the Act to an

establishment, to decide such dispute and determine the

amount due from the employer under the scheme and for the

purpose of conducting enquiry he has been vested with the

same powers as are vested in the Court for trying a Suit under

the Civil Procedure Code and the said enquiry is also deemed

to be a judicial proceeding within the meaning of sections 193

and 228 and for the purpose of section 196 of the IPC. The

said order passed under Section 7A is appealable before the

Tribunal and the order passed by the Tribunal attains finality

under section 7N. The said order passed under section 7A can

also be reviewed under section 7B or re-determined under

section 7C. For non-payment of the said amount, the employer

can be prosecuted and penalty can be imposed under section

14 and recovery can be made as per procedure laid down

under section 8.

::: Uploaded on - 11/04/2018 12/04/2018 02:19:11 :::

  jdk                                                52                                              4.r.crwp.97.18.j.doc

21 This Court in the case of Mr.E.S.Sanjeeva Rao Vs.

Central Bureau of Investigation, Mumbai and ors. reported in

2013 ALL MR (Cri) 933 has held that though the officer who

passes an order under section 7A is not termed as a 'Judge', he

falls within the definition of section 19 of the IPC as well as

section 2 of the Judges (Protection) Act, 1985 since he is

empowered by law to determine the amount and decide the

dispute and the proceeding is 'legal proceeding' in view of

section 7A (2) of the said Act. The proceeding therefore is a

'legal proceeding' and the order which is passed is a definitive

order and if the order is confirmed in Appeal, it attains finality

and on the basis of the said order recovery can be made and

the mode of recovery is similar to the execution of decree as

laid down under CPC which is evident from provisions of section

8A and 8B.

22 The provisions of the Act therefore envisages not only

deciding the disputes regarding applicability of the Act to an

establishment and determining amount due from any employer

under any provisions of this Act but also provides for the

procedure to recover the money due from the employers after

::: Uploaded on - 11/04/2018 12/04/2018 02:19:11 :::
jdk 53 4.r.crwp.97.18.j.doc

conducting the enquiry as laid down by provisions of the said

Act. The Act also provides for penal consequences. An

elaborate procedure laid down in the Act clearly indicates that

the said Act is a complete code in itself.

23 When the Act itself has provided for a mechanism and

elaborate procedure for determining the amount due from any

employer by the Authorities under the said Act, it would run

counter to the provisions of the Act if any other authority not

empowered under the Act determines the amount due from

any employer or arrives at a finding where there is any default

in the compliance of the provisions of the said Act. It is only

after the dispute regarding the applicability of the Act to an

establishment is decided and upon determination of the

amount due from any employer if upon the finding recorded

that there has been any omission or failure on the part of the

employer to make any document or report available or to

disclose fully and truly all material facts necessary for

determining the correct amount due from employer that the

question of invoking the penal provisions will arise. The

matters for determination of dues from the employer or his

::: Uploaded on - 11/04/2018 12/04/2018 02:19:11 :::
jdk 54 4.r.crwp.97.18.j.doc

liability to pay the contribution under the Act of the scheme is

to be determined in the course of the enquiry to be conducted

under the said Act.

24 The action of the enforcement agencies in initiating

criminal prosecution on the basis of the enforcement agencies

themselves coming to a conclusion that the employer /

contractor has made default and not paid the dues to the

employees is impermissible. The action of the enforcement

agencies therefore in initiating the criminal proceedings is

premature. The criminal prosecution lodged against the

petitioners on the basis of the conclusion arrived at by the

enforcement agency regarding non-payment of provident fund

dues and manipulation of the record is not tenable in the teeth

of the provisions of the said Act. The power to arrive at such a

finding is vested with the authorities under the said Act.

25 The Act therefore covers all possible contingencies for

recovery of the Provident Fund dues in cases where the

employer makes a willful default in making of the payments

under the Act or the Scheme framed thereunder. The employer

::: Uploaded on - 11/04/2018 12/04/2018 02:19:11 :::
jdk 55 4.r.crwp.97.18.j.doc

can raise dispute regarding the applicability of the Act or that

he is not liable to pay the contribution under the Act towards

the Provident Fund. The liability can be determined only after

an inquiry under Section 7-A of the Act is conducted. The dues

can be recovered only after an order is passed under Section 7-

A after following the procedure laid down therein and after

giving opportunity to the employer. The Act is a complete

Code in itself. It is Special Act to deal with Provident Fund dues

and hence, it will prevail over the General Act. An employer

can be held liable only after his liability is determined after

following the procedure laid down under the said Act. In other

words, unless the procedure is followed i.e. an enquiry is

conducted as contemplated under Section 7-A, the liability

cannot be determined. The Act contemplates that an

opportunity be given to the employer to answer after notice is

issued to him. In the present case, no notice was issued to the

petitioner. He was not given an opportunity of representing his

case as visualized under Section 7-A (3). Thus, unless an

enquiry is held under Section 7-A, an employer cannot be held

liable. The enquiry has to be conducted in consonance with

the principles of natural justice after giving the employer a

::: Uploaded on - 11/04/2018 12/04/2018 02:19:11 :::
jdk 56 4.r.crwp.97.18.j.doc

reasonable opportunity of representing his case. Thus, the

provisions clearly stipulate that an officer conducting the

enquiry may decide the applicability of the act and determine

the amount due from any employer on the basis of the

evidence adduced during such enquiry and other documents

available on record. The Apex Court in the case of Food

Corporation of India Vs. Provident Fund Commissioner and

others, reported in (1990) 1 Supreme Court Cases 68 has

observed thus :

"8. It is of importance to remember that the
Commissioner while conducting an inquiry
under section 7-A has the same powers as are
vested in a Court under the Code of Civil
Procedure for trying a suit. The section reads
as follows:

" 7-A Determination of moneys due from
Employer-- (1) The Central Provident Fund
Commissioner, any Deputy Provident Fund
Commissioner or any Regional Provident Fund
Commissioner may, by order determine the
amount due from any employer under any
provision of this Act (the scheme or the Family
Pension Scheme or the Insurance Scheme as
the case may be) and for this purpose may

::: Uploaded on - 11/04/2018 12/04/2018 02:19:11 :::
jdk 57 4.r.crwp.97.18.j.doc

conduct such inquiry as he may deem
necessary.

(2) The Officer conducting the inquiry under
sub-section (1) shall, for the purposes of such
inquiry, have the same powers as are vested in
a Court under the Code of Civil Procedure,
1908, for trying a suit in respect of the
following matters, namely:

(a) enforcing the attendance of any person or
examining him on oath;

(b) requiring the discovery and production of
documents;

(c) receiving evidence on affidavit;

(d) issuing commissions for the examination of
witnesses.

and any such inquiry shall be deemed to be a
judicial proceeding within the meaning of
Sections 193 and 228, and for the purpose of
Section 196 of the Indian Penal Code."

9. It will be seen from the above provisions
that the Commissioner is authorised to enforce
attendance in person and also to examine any
person on oath. He has the power requiring the
discovery and production of documents. This

::: Uploaded on - 11/04/2018 12/04/2018 02:19:11 :::
jdk 58 4.r.crwp.97.18.j.doc

power was given to the Commissioner to
decide not abstract questions of law, but only
to determine actual concrete differences in
payment of contribution and other dues by
identifying the workmen. The Commissioner
should exercise all his powers to collect all
evidence and collate all material before
coming to proper conclusion. That is the legal
duty of the Commissioner. It would be failure
to exercise the jurisdiction particularly when a
party to the proceedings requests for
summoning evidence from a particular
person."

26 We may also state that the petitioner is not being

held liable to pay PF dues of his employees but the PF dues of

employees of his contractors. The petitioner would be liable to

pay dues only if his contractors failed to pay the dues of the

workers. The dues which the petitioner would have to pay if

the contractors defaulted can be determined only after an

enquiry because the workers of all the contractors would not

be working exclusively on the sites of the petitioner and would

also be working on sites of other construction companies

hence, if the contractors defaulted in paying PF dues of their

::: Uploaded on - 11/04/2018 12/04/2018 02:19:11 :::
jdk 59 4.r.crwp.97.18.j.doc

workers, the petitioner would not be liable for the entire

amount as throughout the year the workers would have been

working in various sites of different construction companies.

Section 8-A provides for recovery of monies but the amount

can be determined only after enquiry under Section 7-A. No

amount can be determined without an enquiry under Section 7-

A. The prosecution without holding an enquiry under Section 7-

A cannot say that the petitioner has evaded or tried to evade

payment of PF dues of about 9 crores.

27 We are of the firm opinion that as procedure under

Section 7-A of the EPF Act was not followed, no FIR could

have been registered against the petitioner which FIR

essentially relates to evasion of payment of PF dues.

Registration of this FIR against the petitioner amounts to abuse

of process of Court which cannot be countenanced and in order

to secure the ends of justice, such an FIR and the proceedings

relating thereto have to be quashed. Despite this finding, we

are dealing with the offences under IPC with which the

petitioner has been charged with for the sake of convenience.

As far as the offences under Indian Penal Code are concerned,

::: Uploaded on - 11/04/2018 12/04/2018 02:19:11 :::
jdk 60 4.r.crwp.97.18.j.doc

also for the below mentioned reasons, we are of the opinion

that no case is made out against the petitioner.

28 The prosecution case is based on the Inspection

Report on 4.3.2006 during the inspection of the office of the

Company at Powai Mumbai. The said Inspection Report makes

for very interesting reading, whereas under law, employees

provident fund is required to be paid only on basic salary that

too, in respect of employee who is drawing less than Rs.6500/-

per month or less than Rs.250/- per day. As regards employees

whose salary is above Rs.6500/-, the same is optional. The

calculations in the Inspection Report are based on multiple

errors, including the wrong heads, such as labour and wages,

colour and painting, repairs and maintenance, security,

professional fees, salary, staff welfare, garden development

and maintenance, construction expenses, hire charges, house-

keeping, doors and windows, excavation, fabrication, marble

and tiles, polishing and rock cutting. The Inspection Report in

respect of the Company records the following:

SALARY AND WAGES PAID UNDER DIFFERENT HEADS

::: Uploaded on - 11/04/2018 12/04/2018 02:19:11 :::
jdk 61 4.r.crwp.97.18.j.doc

For the year 2003 - 2004 For the year 2004 - 2005
Salary and wages paid under Salary and wages paid under
different heads: different heads:

                          Rs. 641285881100                                                          Rs. 3477554900
Wages on which Rs.702685000 Wages on which PF Rs.756313800
PF paid as per paid as per Section
Section 6 6
Wages on which Rs.640583196100 Wages on which PF Rs.27252411100
PF not paid not paid

29 From the FIR and the charge-sheet, it is clear that

while copying the figure of Rs. 64128581100, the same has

been wrongly written as Rs. 6412858 81100. Thus, instead of

mentioning Rs.64 crores and odd on which PF had to be paid,

the figure is shown as Rs.641 crores by writing the above figure

641285881100. The figure "8" which is typed in bold print is

either wrongly and carelessly written or mischievously written.

30 Similarly, in the case of Roma Builders Pvt. Ltd. the

salary and wages paid under different heads is shown as

Rs.2,36,88,7495/- instead of Rs.23,68,8749/-. Here also the last

figure of 5 typed in bold print has been wrongly or

mischievously written. The total expenses of the said Company

::: Uploaded on - 11/04/2018 12/04/2018 02:19:11 :::
jdk 62 4.r.crwp.97.18.j.doc

were Rs.21.85 crores approximately and hence, there could not

be the total of selective heads of expenses of Rs.23.68 crores

as alleged salary and wages. As far as the Company of the

petitioner is concerned, in respect of PF dues of the employees

working in the establishment of the petitioner's Company,

there is ZERO liability. This is an admitted fact. As stated

earlier, according to the prosecution, the evasion of payment of

Provident Fund dues is not of the employees of the Company of

the petitioner but of the employees of the contractors engaged

by the Company. These employees were all site workers.

31 It is further pertinent to note that there is no

complaint of non-payment or non-receipt of PF dues from any

of the employees of the Hiranandani Group of Companies to

the PF authorities nor has the prosecution been able to collect

even a single statement of any such employee. Similarly, there

is no complaint by any employee of any of the contractors

working for the petitioner. Though the charge-sheet is filed,

more than 2½ years after the lodging of FIR, it does not

consist of single such statement of evasion of payment of PF

dues. It is a matter of record that the FIR was lodged on

::: Uploaded on - 11/04/2018 12/04/2018 02:19:11 :::
jdk 63 4.r.crwp.97.18.j.doc

29.3.2008 and the charge-sheet was filed in October, 2010. It

is significant to note that PW 6 Shri. Bhaskar Salunkhe who was

working as Enforcement Officer in the office of Regional

Provident Fund Commissioner has confirmed miscalculation

and gross errors in the said Inspection Report. He has stated

that:

"On being asked, I state that at page No.5 of
our Inspection Report dated 27.3.2006 in the
Inspection Note Book, inadvertently, instead of
Rs. 64,12,85,811.00, we had mentioned Rs.
641,28,58,811.00 and as a result the wages
on which Provident Fund was not paid was
calculated to the tune of Rs.640,58,31,961.00
(Rs.641,28,58,811 - Rs.70,26,850".

32 The same is the case with PW 7 Shri. Surendra

Mayekar who was the Assistant Accounts Officer in the office of

the Regional Provident Fund Commissioner. PW 7 Shri.

Mayekar has stated as under:

"M/s. Roma Builders Pvt. Ltd. (PF Code No.
MH/40383) Rs.23,68,87,495.00 (for the year
2004-05). Now, after going through this

::: Uploaded on - 11/04/2018 12/04/2018 02:19:11 :::
jdk 64 4.r.crwp.97.18.j.doc

document and upon being asked, I state that
actually the above amount should be
Rs.2,36,88,749.60. I state that due to
calculation / totaling mistake, the above figure
was arrived at in the calculation sheet.

On being asked, I state that at Page No.5 of
our Inspection Report dated 27.3.2006 in the
Inspection Note Book, inadvertently, instead of
Rs.64,12,85,811.00, we had mentioned
Rs.641,23,58,811.00 and as a result the wages
on which Provident Fund was not paid was
calculated to the tune of Rs.640,58,31,961.00
(Rs.641,28,58,811 - Rs.70,26,850)."

33 In this background, it is necessary to see the entire

case. The charges against the petitioner are (1) Cheating

under Section 420 read with Section 511 of IPC (Attempt to

cheat), (2) Forgery under Sections 467, 468 and 471 of IPC and

conspiracy to do the acts under (1) and (2).

34 In so far as the offence of cheating is concerned, the

said offence of cheating requires deception and making a false

representation and thus inducing a person to do an act which

::: Uploaded on - 11/04/2018 12/04/2018 02:19:11 :::
jdk 65 4.r.crwp.97.18.j.doc

he would not do or do being so induced. In the present case, if

this is the test on the touchstone of the allegations, the

following facts are revealed:

35 The allegation of the year 2008 is that in April 2008, a

meeting was held wherein the petitioner allegedly told PW 34

Arjun Tikam and PW 35 Sudhir Panchal who are both partners

in a construction company that they should show more wages

of their employees, so that the EPF Act would not be attracted.

The prosecution has recorded the statements of various

witnesses and according to them also, there were meetings

attended by contractors and several other persons and the

representatives of the Company. In this connection, we would

like to refer to the statement of PW 23 Dinesh Patel wherein he

has stated as under:

"On being asked, I state that after
CBI conducted search in the office of
Hiranandani Group of Powai Mumbai in April,
2008, a meeting was called in the O/o Shri.
C.K.Pithawalla, Director Hiranandani Group in
which almost all civil contractors including me
attended. In the said meeting Shri. Pithawalla

::: Uploaded on - 11/04/2018 12/04/2018 02:19:11 :::
jdk 66 4.r.crwp.97.18.j.doc

told that CBI is conducting investigation
regarding non-payment of EPF dues by the
companies of Hiranandani Group. He asked us
to immediately get our firm registered with EPF
department and submit wages register from
2003 onwards to his office and only then our
payments would be released. He further told
that unless we comply in this regard we will
not get our dues and no further work will be
given to us. We informed Shri. Pithawalla that
we are not maintaining any wages register of
the construction workers. Upon this, Shri.
Pithawalla told that they will provide EPF
consultants who will do this job for us. In the
said meeting besides Shri. Pithawalla other
officers of Accounts department and HR
departments were present. Shri. Pithawalla
also introduced us to Advocate Shri. B.K.
Ashok. Shri. Ashok gave the name of Shri.
Ketan Bhanushali and some other consultants
who were present in the said meeting and
asked us to contact them for preparation of
wages register. In the said meeting we had
taken our Income Tax Consultant Shri.
Tulsibhai Patel. Myself and my brother Shri.
Navinbhai Patel discussed the matter with Shri.
Tulsibhai Patel and we introduced Shri.
Tulsibhai Patel to Shri. Ketan Bhanushali.

::: Uploaded on - 11/04/2018 12/04/2018 02:19:11 :::

jdk 67 4.r.crwp.97.18.j.doc

Thereafter Shri. Tulsibhai Patel met Shri. Ketan
Bhanushali at Dahisar, Mumbai. Shri.
Bhanushali asked him to give income tax
returns and balance sheet for last six years
which Shri. Tulsibhai Patel did and thereafter
Shri. Bhanushalli prepared computerized
wages register of M/s. Jeet Enterprises, M/s.
Rahul Enterprises, M/s. Limani Associates and
M/s. Limani Enterprises. We had paid
Rs.20,000/- in cash to Shri. Bhanushalli. The
names of the labourers were incorporated from
the wages card laying in my office. Shri.
Pithawalla and Shri. B.K. Ashok had advised us
to show daily wages of each labourer more
than RS.250/- so that they do not fall under the
EPF Act. Accordingly the per day wages of the
labourers in the said computerized registers
was shown Rs.270/- and above per day".

36 From the above, it is clear that the said witness

claims that he was told by Mr. C.K. Pithawalla (accused no.8)

and Mr. B.K. Ashok (accused no.9) to show the daily wages of

each labourer as more than Rs.250/- per day so that they do

not fall under EPF Act and accordingly, the per day wages of

the labourers were to be shown in the wage register of Rs.

::: Uploaded on - 11/04/2018 12/04/2018 02:19:11 :::

jdk 68 4.r.crwp.97.18.j.doc

270/- and above per day. The prosecution has also relied on

the statements of some other witnesses like PW 24 Tulsidas

Patel and PW 25 Ketan Bhansali, which are also to the same

effect. Thus, it is clear that these witnesses have not stated

anything against the petitioner. In such case, it appears

inherently improbable that petitioner would personally tell only

two witnesses i.e. PW 34 Arjun Tikam and PW 35 Sudhir

Panchal who are the partners of M/s. Pranam Construction

Company to prepare wage registers in the same way when

already such instructions were given by Shri. C.K. Pithawalla

(accused no.8) and Mr. B.K. Ashok (accused no. 9). Secondly, it

is to be noted that there was no deception as the prosecution

case appears to be that it was done with consent of the

contractors. It is not a case of deception or false

representation by the petitioner. From this, it is clear that

charge of cheating read with Section 511 cannot be fastened

on the petitioner.

37 The Supreme Court in the case of Mohammed

Ibrahim and others Vs. State of Bihar and another reported in

(2009) 8 SCC 751 in paragraphs 18 to 28 has in detail dealt

::: Uploaded on - 11/04/2018 12/04/2018 02:19:12 :::
jdk 69 4.r.crwp.97.18.j.doc

with the offence of cheating. In para nos. 18 and 19, the

Supreme Court has observed as under:

" 18. ..... The essential ingredients of the
offence of "cheating" are as follows:

(i) deception of a person either by
making a false or misleading representation or
by dishonest concealment or by any other act
or omission;

(ii) fraudulent or dishonest inducement
of that person to either deliver any property or
to consent to the retention thereof by any
person or to intentionally induce that person
so deceived to do or omit to do anything which
he would not do or omit if he were not so
deceived; and

(iii) such act or omission causes or is
likely to cause damage or harm to that person
in body, mind, reputation or property;

19. To constitute an offence under
Section 420, there should not only be cheating,
but as a consequence of such cheating, the
accused should have dishonestly induced the

::: Uploaded on - 11/04/2018 12/04/2018 02:19:12 :::
jdk 70 4.r.crwp.97.18.j.doc

person deceived;

                    (i)                  to       deliver             any          property              to    any
person, or

(ii) to make, alter or destroy wholly or in

part a valuable security (or anything signed or
sealed and which is capable of being
converted into a valuable security."

38 The case of the petitioner would not be covered by

any of the above categories. The Supreme Court has further

observed in para 22 that "As the ingredients of cheating as

stated in Section 415 are not found, it cannot be said that there

is an offence under Section 420 of IPC". In the present case, as

far as purported act of the petitioner telling PW 34 Arjun Tikam

and PW 35 Sudhir Panchal to show more wages is concerned, it

would not fall under Section 420 of IPC.

39 In so far as the allegation of forgery in respect of the

year 2006 is concerned, the prosecution has relied upon the

statement of PW 37 Chander Thapper. According to Chander

Thapper, 48 employees were all appointed in April 2006 by the

::: Uploaded on - 11/04/2018 12/04/2018 02:19:12 :::
jdk 71 4.r.crwp.97.18.j.doc

Company and the petitioner has given a letter to the CBI

confirming this fact. There is no dispute as far as the petitioner

or the CBI that the petitioner had confirmed that 48 employees

were all appointed in April 2006. According to the prosecution,

these 48 employees were appointed in April 2006 yet, they

were shown as employed in the year 2005 and Provident Fund

dues in relation to these 48 employees were paid as if they

were employed in the year 2005. The question arises is, why

would the petitioner and his company back-date the date of

employment of these 48 persons and pay Provident Fund

thereof when in relation to these 48 persons, they were not

required to pay Provident Fund in the year 2005. This is

absolutely absurd and it does not stand to reason that the

Provident Fund was paid of 48 persons pertaining to the year

2005 when those employees were not on the rolls of the

Company in the year 2004 or 2005. When these 48 persons

were not on the rolls of the Company in the year 2005, there

would be no question at all of paying any Provident Fund dues

in relation to these 48 employees. Therefore, the prosecution

case that the petitioner has done forgery by showing that these

48 employees though appointed in the year 2006, were shown

::: Uploaded on - 11/04/2018 12/04/2018 02:19:12 :::
jdk 72 4.r.crwp.97.18.j.doc

as employed in the year 2005 and Provident Fund of Rs.

2,20,962/- was paid accordingly, cannot stand as there is no

reason for the petitioner to do so. It does not help the

petitioner in any manner. On the contrary, the statements

show that it was not the petitioner but it was Joseph Reddy

(accused no.7) who was responsible for the records which is

clear from the statement of PW 37 Chander Thapper.

40 Let us now deal with the law of "forgery". The

following are the important points to be noted as regards the

law of "forgery" which is applicable to both the charges of

forgery. The prosecution case as far as "forgery" is concerned,

seems to be making incorrect recitals as regards charge no.1

and back-dating as regards charge no.2. A bare perusal of

Section 463 of IPC which defines "forgery" shows that (1)

making a false document within the meaning of Section 464 is

a mandatory pre-requisite to fall in any of the provisions of

"forgery" including Sections 465, 467, 468 and 471 of IPC and

(2) making a false document is defined under Section 464 of

IPC which reads as under:

::: Uploaded on - 11/04/2018 12/04/2018 02:19:12 :::

jdk 73 4.r.crwp.97.18.j.doc

"464. Making a false document.-- A person
is said to make a false document or false
electronic record -

First.--- Who dishonestly or fraudulently -

                    (a)         makes,              signs,            seals            or       executes         a
document;

(b) makes or transmits any electronic record
or part of any electronic record;

(c ) affixes any electronic signature on any
electronic record;

(d) makes any mark denoting the execution of
a document or the authenticity of the
electronic signature,

with intention of causing it to be believed that
such document or part of document, electronic
record or electronic signature was made,
signed, sealed, executed, transmitted or
affixed by or by the authority of a person by
whom or by whose authority he knows that it
was not made, signed, sealed, executed or
affixed; or

Secondly.--- Who, without lawful authority,

::: Uploaded on - 11/04/2018 12/04/2018 02:19:12 :::
jdk 74 4.r.crwp.97.18.j.doc

dishonestly or fraudulently, by cancellation or
otherwise, alters a document or an electronic
record in any material part thereof, after it has
been made, executed or affixed with electronic
signature either by himself or by any other
person, whether such person be living or dead
at the time of such alteration; or

Thirdly.--- Who dishonestly or fraudulently
causes any person to sign, seal, execute or
alter a document or an electronic record or to
affix his electronic signature on any electronic
record knowing that such person by reason of
unsoundness of mind or intoxication cannot, or
that by reason of deception practised upon
him, he does not know the contents of the
document or electronic record or the nature of
the alteration."

41 Thus, it is clear that "forgery" can be done only by

three methods viz;-

(1) by a person who signs or prepares a
document, or by or under the authority of the
person, he knows, he does not possess;
(2) by altering a document in material
particulars;

::: Uploaded on - 11/04/2018 12/04/2018 02:19:12 :::

jdk 75 4.r.crwp.97.18.j.doc

(3) by obtaining the consent of a person who
cannot give consent, like a person who is
insane or under intoxication or in any manner,
unable to give free consent;

42 These are the only three methods of making a false

document. The prosecution case does not fit into any of these

three categories.

43 As regards charge no.2 of back-dating goes, it is the

prosecution case that though 48 employees of the company of

the petitioner were appointed in April 2006, they were shown

as appointed in the year 2005 and the alleged arrears of PF

dues were paid for the period 1.10.2005 to 31.3.2006. In this

connection, it was submitted by the learned counsel for the

petitioner that mere back-dating is not an offence after

17.10.2010 when Section 464 of IPC came to be amended.

Prior to the said amendment, Section 464 clause (1) read as

under:

"464. Making a false document.--

A person is said to make a false document--

::: Uploaded on - 11/04/2018 12/04/2018 02:19:12 :::

jdk 76 4.r.crwp.97.18.j.doc

First -- Who dishonestly or fraudulently makes,
signs, seals or executes a document or part of
a document, or makes any mark denoting the
execution of a document, with the intention of
causing it to be believed that such document
or part of a document was made, signed,
sealed or executed by or by the authority of a
person by whom or by whose authority he
knows that it was not made, signed sealed or
executed, or at a time at which he knows that
it was not made, signed, sealed or
executed;"

44 After the 2010 amendment, Section 464 of IPC reads

as under:

"464. Making a false document. --- A person is said to
make a false document or false electronic record----

First.--- Who dishonestly or fraudulently---

(a) makes, signs, seals or executes a document or
part of a document;

(b) makes or transmits any electronic or part of any
electronic record;

::: Uploaded on - 11/04/2018 12/04/2018 02:19:12 :::

jdk 77 4.r.crwp.97.18.j.doc

(c ) affixes any electronic signature on any electronic
record;

(d) makes any mark denoting the execution of a
document or the authenticity of the electronic
signature,

with the intention of causing it to be believed that
such document or part of document, electronic
record or electronic signature was made, signed,
sealed executed, transmitted or affixed by or by the
authority of a person by whom or by whose authority
he knows that it was not made, signed, sealed,
executed or affixed; or

Secondly.--- Who, without lawful authority,
dishonestly or fraudulently, by cancellation or
otherwise, alters a document or an electronic record
in any material part thereof, after it has been made,
executed or affixed with electronic signature either by
himself or by any other person, whether such person
be living or dead at the time of such alteration; or

Thirdly.--- Who dishonestly or fraudulently causes any
person to sign, seal, execute or alter a document or
an electronic record or to affix his electronic signature
on any electronic record knowing that such person by

::: Uploaded on - 11/04/2018 12/04/2018 02:19:12 :::
jdk 78 4.r.crwp.97.18.j.doc

reason of unsoundness of mind or intoxication
cannot, or that by reason of deception practised upon
him, he does not know the contents of the document
or electronic record or the nature of the alteration."

45 Therefore, it is clear that the words "or at a time

when he knows that it was not made, signed, sealed or

executed" are deliberately removed by the Legislature.

Therefore, back-dating is no longer an offence. As far as

forgery is concerned, in fact, while making submissions, the

prosecution had no answer to this contention and also as to

why the petitioner would make such payments of PF dues of

the 48 employees for the period from 1.10.2005 to 31.3.2006,

when these 48 employees were appointed on 1.4.2006.

46 It is well settled by various judgments of other High

Courts as well as the Apex Court that just making false recitals

is no "forgery". It is only if "forgery" is done by any of the

three methods as mentioned in the Section, then only it can be

said that the offence of "forgery" has been committed. For

useful reference, we may refer to the below mentioned

decisions:

::: Uploaded on - 11/04/2018 12/04/2018 02:19:12 :::

jdk 79 4.r.crwp.97.18.j.doc

(1) Mohammed Ibrahim and others Vs. State of
Bihar and Another; (2009) 8 SCC 751 (supra);
(2) Motisinh Gambhirsinh Vs. The State; AIR 1961
Gujarat 117;

(3) State V. Parasram; AIR 1965 Rajasthan 9;
(4) Shankerlal Vishwakarma Vs. State of
Madhya Pradesh; 1991 Cri.L.J. 2808;

47 If the case does not fall in any of the three methods

by which "forgery" can be done, it cannot be said that

"forgery" has been committed. The petitioner's case does not

fall under any of these three methods. If the petitioner cannot

be held liable for cheating or forgery he cannot be held liable

for conspiracy to do these acts.

48 It is pertinent to note that the Company of the

petitioner is not prosecuted. It is to be noted that the

Company is a person, within the meaning of Section 11 of IPC.

In the FIR, the Companies of Hiranandani Group of Companies

were shown as accused persons i.e. original nos. 5 to 9. The

petitioner was a Director of the said Companies, however, in

the charge-sheet, it is clear that the said five companies have

been dropped for the reasons best known to the prosecution. If

the Company is dropped as an accused, then it necessarily

::: Uploaded on - 11/04/2018 12/04/2018 02:19:12 :::
jdk 80 4.r.crwp.97.18.j.doc

means that the Company which is the actual person involved in

the present case, has committed no crime according to the

prosecution.

49 That a Company can be prosecuted as an accused, is

clear from the judgment of the Supreme Court in the case of

Iridium India Telecom Ltd. Vs. Motorola Incorporated and

others; reported in (2011) 1 SCC 74. This is reflected in para

nos. 55, 59, 63 and 66. It is further clear that the Company

cannot escape criminal liability for a criminal offence merely

because punishment prescribed is that of imprisonment and

fine and hence, not having made the Company as an accused,

there can be no vicarious liability just because the person holds

the designation as a Director of the Company. This is clear

from the fact that the person necessarily is not vicariously

liable unless he has done some specific acts which is clear from

the observations in para nos. 42 to 44 of the decision of the

Supreme Court in Sunil Bharti Mittal Vs. Central Bureau of

Investigation, reported in (2015) 4 SCC 609.

50 The respondent no.1 - CBI has relied upon the

::: Uploaded on - 11/04/2018 12/04/2018 02:19:12 :::
jdk 81 4.r.crwp.97.18.j.doc

following decisions to support their contention that the case

cannot be quashed. The said decisions are as under:

(1) State of Maharashtra through C.B.I. Vs. Vikram

Anantrai Doshi reported in 2014 Cri.L.J. 4879 (SC);

(2) C.B.I. Vs. Jagjit Singh reported in 2013 (10) SCC

686;

(3) Sam Zal Bastawala and Another Vs. State of

Andhra Pradesh and others reported in 2014 Cri.L.J.

1513;

(4) Central Bureau of Investigation Vs. Maninder

Singh, reported in (2016) 1 SCC 389.

51 All these decisions would not apply to the present

case as the same relate to quashing by consent and these

decisions are not on the point of quashing of case under

Section 482 of Cr.P.C.

52 Learned counsel for the petitioner has placed reliance

on the decision of the Supreme Court in the case of State of

Haryana Vs. Bhajan Lal, 1992 Suppl. (1) SCC 335. He has

submitted that various categories of cases have been laid

::: Uploaded on - 11/04/2018 12/04/2018 02:19:12 :::
jdk 82 4.r.crwp.97.18.j.doc

down by the Supreme Court in the case of Bhajan Lal (supra).

whereunder criminal cases can be quashed. Category 7 which

according to learned counsel, is relevant, is as under:

"(7) 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."

53 The learned counsel for the petitioner contended that

category 7 laid down in Bhajan Lal's case squarely applies in

the present case because the inspection sheet makes use of

fake figures of evasion of payment of Provident Fund dues of

Rs.160 crores, which the prosecution has not been able to

substantiate, though the investigation was going on for more

than two years. The FIR also bears out that the said figure of

Rs.160 crores which is entirely incorrect and now according to

the prosecution, the correct figure is about 9 crores. It is

pertinent to note that this figure of 9 crores is also arrived at,

without any inquiry under Section 7-A of the EPF Act which is

mandatory. In fact, the statements of PW 1 Rajesh Sinha and

::: Uploaded on - 11/04/2018 12/04/2018 02:19:12 :::
jdk 83 4.r.crwp.97.18.j.doc

PW 2 Ambadas Wasnik show that enquiry under Section 7-A

should have been conducted but it has not been done. PW 1

Rajesh Sinha has stated that as per the EPF Act and Rules,

inquiry under Section 7-A of the EPF Act was necessary to

determine the dues which has not been done in this case.

Without conducting such inquiry under Section 7-A the figure of

9 crores is arrived at which is mentioned in the charge-sheet.

Learned counsel for the petitioner submitted that despite

knowing that the figure of Rs.160/- crores are false figures, the

FIR was registered and once FIR was lodged, then they had to

justify it and sought to arrest the petitioner. He submitted that

the prosecution is nothing but mala fide and out of vengeance

and oppression against the petitioner. Hence, he submitted

that the prosecution case is fully covered by category 7 as

stated in Bhajan Lal's case, hence, the case against the

petitioner, be quashed.

54 Learned counsel for the petitioner submitted that the

present case is also a clear case of abuse of process of Court

as the prosecution has been launched without conducting an

inquiry under section 7-A of the EPF Act. He submitted that a

::: Uploaded on - 11/04/2018 12/04/2018 02:19:12 :::
jdk 84 4.r.crwp.97.18.j.doc

case can be quashed to prevent abuse of process of Court or to

secure ends of justice which principle has been recognized in

three celebrated judgments i.e . Prabhu Chawla (supra),

Vineet Kumar (supra) and Priya Vrat Singh Vs. Shyam Ji

Sahai (2008) 8 SCC 232: (2008) 3 SCC (Cri.) 463. The

observations of the Supreme Court in these cases have

already been reproduced above. It may be stated that the

same principle has been stated in Sunder Babu Vs. State of

Tamilnadu; (2009) 14 SCC 244, Engg. Export Promotion

Council Vs. Usha Anand; (2013) 12 SCC 620 and State of

Orissa Vs. Debendra Nath Padhi; 2005(1) SCC 568.

55 The learned counsel for the petitioner submitted that

where the chances of conviction of a person are bleak then

quashing has to be resorted to and the case should not be sent

to the trial. In support of his contention, he has placed reliance

on para no.7 of the decision of the Supreme Court in the case

of Madhavrao Jivajirao Scindia Vs. Sambhajirao Chandrajirao

Angre reported in 1988 (1) SCC 692: 1988 AIR 709: 1988 SCR

(2) 930. Para no.7 in the said decision reads as under:

"7. The legal position is well-settled that

::: Uploaded on - 11/04/2018 12/04/2018 02:19:12 :::
jdk 85 4.r.crwp.97.18.j.doc

when a prosecution at the initial stage is asked
to be quashed, the test to be applied by the
court is as to whether the uncontroverted
allegations as made prima facie establish the
offence. It is also for the court to take into
consideration any special features which
appear in a particular case to consider
whether it is expedient and in the interest of
justice to permit a prosecution to continue.
This is so on the basis that the court cannot be
utilised for any oblique purpose and where in
the opinion of the court chances of an ultimate
conviction is bleak and, therefore, no useful
purpose is likely to be served by allowing a
criminal prosecution to continue, the court
may while taking into consideration the special
facts of a case also quash the proceeding even
though it may be at a preliminary stage."

[ Empahasis supplied]

56 The Supreme Court in para no.9 of the decision in the

case of Manik Taneja and another Vs. State of Karnataka and

Another reported in (2015) 7 SCC 423, has held as under:

"9. The legal position is well-settled that when
a prosecution at the initial stage is asked to be
quashed, the test to be applied by the Court is
as to whether the uncontroverted allegations

::: Uploaded on - 11/04/2018 12/04/2018 02:19:12 :::
jdk 86 4.r.crwp.97.18.j.doc

as made, prima facie, establish the offence. It
is also for the Court to take into
consideration any special features which
appear in a particular case to consider
whether it is expedient and in the interest of
justice to permit the prosecution to continue.
Where, in the opinion of the Court, the chances
of ultimate conviction is bleak and no useful
purpose is likely to be served by allowing a
criminal prosecution to continue, the Court
may quash the proceeding even though it may
be at a preliminary stage."

57 The special features of this case are that it revolves

around evasion of payment of PF dues and without holding an

enquiry under Section 7-A the prosecution came to be

launched. Such a prosecution cannot be allowed to continue.

The case is also such that chances of conviction are bleak and

no useful purpose is likely to be served by allowing a criminal

prosecution to continue.

58 The entire case revolves around the evasion of

payment of Provident Fund dues. Here it is to be noted that

even as per the prosecution case, this evasion of payment of

PF dues is not in relation to any employees of the petitioner but

::: Uploaded on - 11/04/2018 12/04/2018 02:19:12 :::
jdk 87 4.r.crwp.97.18.j.doc

it relates to employees of the contractors engaged by the

petitioner's Company. In such case, the primary liability would

be that of the contractors and only if the contractors fail in

making payment of PF dues then only would the question

arise of the petitioner's Company to pay the same.

59 The learned counsel for the petitioner submitted that

taking the prosecution case at its highest against the

petitioner, there is no offence disclosed against him in the first

place. Secondly, assuming that there is some element of

creation of some record i.e. showing the employees who were

appointed in the year 2006 as having been appointed earlier

year and accordingly their Provident Fund dues being paid does

not cause any loss to anyone. In any event, as discussed

above the acts of the petitioner would not amount to an

offence of "forgery" or "cheating". There is no question of

there being any forgery for the reasons mentioned above

inasmuch as there is no false document within the meaning of

Section 464 of IPC as it stands after amendment.

60 The learned counsel for the petitioner reiterated that

it is a clear case of malafide where the prosecution has

multiplied the amounts for reasons best known to them with

::: Uploaded on - 11/04/2018 12/04/2018 02:19:12 :::
jdk 88 4.r.crwp.97.18.j.doc

oblique motives and has written an extremely higher inflated

amount in the FIR and thereafter charge-sheeted the petitioner

simply because, he is mentioned in the FIR, only to take

revenge out of vendetta.

61 No doubt, it was submitted by the learned counsel for

the petitioner that the entire case of the prosecution squarely

falls in category 7 of Bhajan Lal's case as interpreted by the

Supreme Court in the case of Vineet Kumar (supra) and Priya

Vrat Singh (supra), hence, it is the fit case for this Court to

exercise its inherent jurisdiction and quash the charge-sheet

against the petitioner. However, as stated earlier, the entire

case revolves around evasion of payment of Provident Fund

dues. As stated earlier, these dues did not even pertain to the

employees of the petitioner but to the employees of the

contractors of the petitioner. It is the primary duty of the

contractors to pay the PF dues and only if they fail to do so,

then the liability would fall on the petitioner, however, whether

there is any liability to pay the PF dues can only be determined

after an inquiry under Section 7-A of the EPF Act is conducted.

In the present case, admittedly, till today for the said period,

::: Uploaded on - 11/04/2018 12/04/2018 02:19:12 :::
jdk 89 4.r.crwp.97.18.j.doc

no inquiry has been conducted to determine the dues which

are to be paid by the petitioner. After the liability is

determined and the petitioner is called upon to pay and if the

petitioner fails to pay the same, then only he can be

prosecuted and held liable for the same.

62 In the present case, no inquiry under Section 7-A of

the EPF Act has been conducted till date. Looking to the fact

that the petitioner is being prosecuted in a case revolving

around non-payment of PF dues without any inquiry being

conducted under Section 7-A of the EPF Act, we are of the

opinion that it amounts to an abuse of the process of the court

and in order to secure the ends of justice, the FIR and the

proceedings relating thereto need to be quashed. Accordingly,

the FIR and proceedings relating thereto i.e. Special Case No.

94 of 2010 pending before the Special Court (CBI Cases), Court

Room No. 48, Court of Sessions, Mumbai, are quashed.

Petition is allowed and is disposed of accordingly. Rule is made

absolute in above terms.

            M.S.KARNIK, J.                                                                              ACTING CHIEF JUSTICE

kandarkar

::: Uploaded on - 11/04/2018 12/04/2018 02:19:12 :::

Leave a Reply

Your email address will not be published. Required fields are marked *

Copyright © 2018 SC and HC Judgments Online at MyNation
×

Free Legal Help just WhatsApp Away

MyNation HELP line

We are Not Lawyers but No Lawyer will give you Advice like We do

Please to read Group Rules – CLICK HERE, If You agree then Please Register CLICK HERE and after registrationJOIN WELCOME GROUP HERE

We handle Women centric biased laws like False 498A, Domestic Violence(DV ACT), Divorce, Maintenance, Alimony, Child Custody, HMA 24, 125 CrPc, 307,312, 313,323 376, 377, 406, 420, 506, 509; and also TEP, RTI etc

Web Design BangladeshWeb Design BangladeshMymensingh