INDERJIT C. PAREKH & ORS versus V. K. BHATT & ANR.

Citation: [1974] 3 S.C.R. 50 · Decided: 08-01-1974 · Supreme Court of India · Bench: M. HAMEEDULLAH BEG · Disposal: Dismissed

Cited by 1 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

50 
INDERJIT C. PAREKH & ORS • 
•• 
V. K. BHATI & ANR. 
January, 8, 1974 
[M. H. BEG AND Y. V. CHANDRACHUD, JJ.] 
Bombay Relief Undutaklnir (Special Provis/om) Ad 1958-S. 4 (I) (•) (iv)-
Whether personal liability of directors falls within the scope of s~tlon. 
The appellants, five of whom were directors and one an officer of a company, 
were prosecuted under the Employees Provident Funds Act, 1952 on the grouod 
that they had failed to pay the contribution to the Provident Fund and thereby 
committed an offence punishable under paragraph 76(a) of the Employ..S Provi-
dent Fund Scheme, 1952. Later, an investigation was made into the affairs of the 
company under s. I 5 of the lodustries (Devefopment aod Regulation) Act, 1951 aod 
an order was issued authorisina the Gujarat State Textile Corporation to take over 
the management of the company. By a notification the State Government dec-
lared the company to be a"'rclief undertaking" unde< s. 4 (I) (a) (iv) of the Bombay 
Relief Undertaking.'! (Special Provisions) Act, 1958 and directed that "'all rights, 
privileges, obligations and liabilities a<orued or in<umd before the undertaking .... 
declared a relief undertaking aad any remedy for the enforcement thereto shall 
be suspended and all the procutli'ngs relevant tMreto pending before any court, 
tribunal. officer or authority shall be. stayed" with 
effect from a certain date. 
An application filed by the appellants for stay of the prosecution in view of the noti· 
ti.cation issl.led by the Government was rejected by the lower court on the' view that 
the operation of s. 4 of the 1958 Act was restricted to the statutes mentioned in the 
Schedule to thkt Act and that clause (iv) of s. 4 (I} (a) did not contemplate stay of 
criminal proceedings. On appeal the High Court summarily rejected the revision 
application. The appellants came in appeal to this Cou~ by special leave. 
On the question whether the proaecution pending against the appellants under 
paragraph 76 (a) of the Employees Provident Funds Scheme 1952 is liable to be 
stayed. by virtue of the notification issued by the State Government. 
D~ing the, appeal, 
A 
B 
c 
D 
E 
HELD : The personal liability of the directors and officers does not fall within 
the scope of s. 4 (1) (a) (iv) of the Act. The responsibility to pay the contnbution 
to the Fund was of the appellants and if they had defaulted in paying the amount 
they were liable to be prosecuted under paragraph 76 (a) of the Scheme. The phrase 
"'all proceedings relative thereto" patently means all proceedings relating to "an) 
f 
right, privilege, obligation or liability accrued or incurred before the undertaking 
was declared a relief undertaking". Sub-clause (iv) concerns itself with the pre· 
existing obligations and liabilities of the .undertaking and not of its directors. 
managers or other officers. Neither the language of the statute nor its object would 
justify the extension of the immunity so as to cover the individual obligations and 
liabilities of the directors and other officers of the undertaking. If they had in· 
curred such obligation or liabilities as distinct from the obligations or liabilities of 
the undertaking·they were liable to be proceeded against for their personal acts 
of commission and ommission. The remedy in that behalf cannot be suspended 
G 
nor can a proceeding already commenced against them in their individual capacity 
be stayed. [52E; 53EJ 
The occasion for declaring an. industry as a "relief undertaking" would arise 
out of causes connected with the defaults on the part of its directors and other officers. 
To declare a moratorium on legal 
actions against persons whose activities 
. have nece3sitated the issuanc; of a notifi:ation in the interest of unemployment 
relief is to give such persons the benefit of their own wrong. Section 4 (1) (a) (iv) 
H 
advisedly limits the pOwer of the State Government to direct suspension of all 
rem,dies and stay of proceed.jogs involving the obligations and liabilities in relation 
to a relief undertaking and which were incurred before the undertaking was dec-
lared a relief undertaking. [53FJ 
A 
B 
c 
D 
E 
F 
G 
H 
I. c. PAREKH v. v. K. BHATT (Chandrachud, /.) 
51 
CRIMINAL APPELLATE JURISDICTION : Criminal Appeal No. 57 
of 1973. 
Appeal by special leave from the judgment and order dated the 9th 
February 1973 of the Gujarat High Court at Ahmedabad in Criminal 
Revision Application No. 86 of 1973. 
Y. S. Chitaley and S. 

Excerpt shown. Read the full judgment & AI analysis in Lexace.