Section 406 of the IPC provides for prosecution for criminal breach of trust. Explanation I – of Section 405 provides for prosecution for deduction of employees contribution from the wages payable to the employees and failure to credit the same to Provident Fund or family pension fund established by law. The Provident Fund Act provides for deduction of contribution of employees and after the deduction the employer is required to deposit the same with Provident Fund authorities within stipulated time. The amount so deducted from the wages of the employees is entrusted with the employer and the employer is required to deposit the same in time with Provident Fund Department. The employers used to take their sweet time and therefore Explanation I was inserted by Act 40 of 1973.
The ingredients of the offence of the Section 14(1) and Section 406 of the IPC are different. Section 14(1) relates to default in making the payment of contribution. Section 406 of the IPC relates to misappropriation of money entrusted to the employer to be deposited towards contribution under Provident Fund Act in India. Therefore the proceeding under IPC being a general Act and prosecution under Provident Fund Act being special legislation is maintainable independently and principal of double jeopardy is therefore not attracted.
This view has been upheld in Lakshmi Narayan Engineering Works Ltd V/s UOI, 1984 (Punjab and Haryana HC). An identical view is also taken by the Hon’ble Madhya Pradesh High Court as well as the Hon’ble Calcutta High Court.