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TMI Blog1989 (8) TMI 294X X X X Extracts X X X X X X X X Extracts X X X X ..... he company failed to pay its dues both under the Provident Funds Act and the Employees' State Insurance Act. Respondent No. 2, the Regional Provident Fund Commissioner, thereupon issued several show-cause notices to the petitioners to show cause as to why action should not be taken for having committed an offence under sections 14 (1A) and 14 (2) by contravening the provisions of the Provident Funds Act. Respondent No. 4, the Regional Director, Employees' State Insurance Corporation, also issued notices to show cause why proceedings under section 85 of the Insurance Act should not be adopted for failing to pay the contribution. In pursuance of the notices, respondent No. 3, the Provident Fund Inspector, filed prosecutions against the petitioners for having committed default and the said prosecutions are pending in the court of the Metropolitan Magistrate. Prosecutions were also launched by respondent No. 5 in respect of violation of the provisions of the Employees' State Insurance Act. Respondent Nos. 2 and 4 also passed orders determining the amount due from the company in respect of the contributions to be made under the Provident Funds and the Insurance Acts. The present pet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appointment, he ought fairly to be excused, the court may relieve him, either wholly or partly, from his liability on such terms as it may think fit : Provided that, in a criminal proceeding under this sub-section, the court shall have no power to grant relief from any civil liability which may attach to an officer in respect of such negligence, default, breach of duty, misfeasance or breach of trust. (2) Where any such officer has reason to apprehend that any proceeding will or might be brought against him in respect of any negligence, default, breach of duty, misfeasance or breach of trust, he may apply to the High Court for relief and the High Court on such application shall have the same power to relieve him as it would have had if it had been a court before which a proceeding against that officer for negligence, default, breach of duty, misfea sance or breach of trust had been brought under sub-section (1). (3) No court shall grant any relief to any officer under sub section (1) or sub-section (2) unless it has, by notice served in the manner specified by it, required the Registrar and such other per son, if any, as it thinks necessary, to show cause why such relief s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nstituted against the officers of the company to enforce liability arising out of violation of provisions of other statutes. There is an intrinsic indication in sub-section (3) of section 633 to hold that exercise of powers under sub-section (2) must be restricted in respect of proceedings arising out of violations of the Companies Act. Sub-section (3) provides that relief under sub-section (2) shall not be granted without notice being served in the manner specified to the Registrar and such other person to show cause why the relief should not be granted. The expression "such other person" would cover shareholders of the company or the person authorised by the Central Government to launch a prosecution. Sub-section (3) does not contemplate service of notice on any other authorities who are likely to institute prosecution or enforce a civil liability in accordance with statutory provisions other than the provisions under the Companies Act. Section 14AC of the Provident Funds Act provides that no court shall take cognizance of any offence punishable under the Provident Funds Act except on a report in writing of the facts constituting such offence made with the previous sanction o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section was company law and the relation of the officer (or auditor) of a company to the company and not to third persons. The proceedings which qualified for the statutory relief were claims made by companies, or on their behalf or for their benefit by, e.g., liquidators, the Board of Trade, private prosecutors, including penal proceedings for the enforcement of the Companies Act, but not proceedings for the recovery of debts or the enforcement of civil liability to strangers." (p. 701) Lord Justice Griffiths observed in his judgment : "In my judgment, section 448 has no application to the present claim. Although the section is expressed in wide language, it is, in my view, clearly intended to enable the court to give relief to a director who, although he has behaved reasonably and honestly, has nevertheless failed in some way in the discharge of his obligations to his company or their shareholders or who has infringed one of the numerous provisions in the Companies Acts that regulate the conduct of directors."(at page 704) I am in respectful agreement with the decision of the Court of Appeal. Shri Tulzapurkar heavily relied upon the decision of the Delhi High Court in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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