An employer of an establishment deducts an employee’s contribution fro

An employer of an establishment deducts an employee’s contribution from his wages for crediting the same to the Family Pension Fund as per law but does not credit the same as required by law. The employer

would be guilty of committing no offence under any law on his promise to deposit the amount
would be guilty of having violated the law and would be punishable only under the relevant labour legislation
would be guilty of having committed the offence of criminal breach of trust under the Indian Penal Code, 1860
would not be guilty of having committed the offence of criminal breach of trust under the Indian Penal Code, 1860
This question was previously asked in
UPSC CISF-AC-EXE – 2024
The correct answer is C. An employer who deducts employee contributions (such as for Family Pension Fund, Provident Fund, etc.) from wages but fails to deposit them with the appropriate authority commits the offence of criminal breach of trust under the Indian Penal Code, 1860.
– Section 405 of the IPC defines criminal breach of trust. It involves a person being entrusted with property or dominion over property, and then dishonestly misappropriating it or converting it to their own use, or dishonestly using or disposing of that property in violation of a legal contract or mode of discharge of trust.
– When an employer deducts contributions from an employee’s wage, they are temporarily holding that money in trust for the purpose of depositing it into the relevant fund. Failure to deposit it amounts to dishonest misappropriation or conversion of this entrusted money.
Various court judgments in India have held that failure by an employer to deposit employee contributions after deducting them constitutes criminal breach of trust under Section 406 (punishment for criminal breach of trust) read with Section 405 of the IPC. While there might also be penalties under relevant labour legislation (like the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952, or the Employees’ State Insurance Act, 1948), the act can also constitute a criminal offence under the IPC. Promising to deposit later does not absolve the employer of the offence once the deduction has been made and not deposited as required by law.
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