(PER : HONOURABLE MR.JUSTICE JAYANT PATEL) 1. As in both the matters, common inter-connected questions arise for consideration, they are being considered simultaneously.
2. Special Civil Application No.5126 of 2011 has been preferred by the petitioner, who has purchased the rights of the decree, which was passed in favour of the respondent No.1 Bank. The prayer made by the petitioner in the petition is for appropriate directions for fixing the liability of the outstanding Provident Fund dues of Rs.21,15,405/- on the respondent No.1 Bank and it is also prayed that the P.F. Authority may be directed to recover the aforesaid amount from the respondent No.1 Bank.
3. Whereas Special Civil Application No.16681 of 2011 has been preferred by the Officers of the Bank for challenging the action of issuance of demand notice and further action of the PF Authority on the premise that the officers of the petitioner Bank are not liable and to pay PF dues, since the rights are assigned to respondent No.3 of the decree on “as is where is” and “whatever there is basis”.
4. We have heard Mr.Trivedi as well as Mr.Pranav Desai, learned Counsel for the petitioners in the respective petitions and Mr.Mehta, learned Counsel appearing for the Provident Fund Authority. Respondent No.4 is served, but none appears on its behalf.
5. It is undisputed that the deed of assignment of decree, dated 24.5.2010 by Bank of India in favour of Bharat Construction was executed and the same is produced at Annexure-C in SCA No.16681 of 2011. The Conditions No.5 and 6 of the deed reads as under:-
“5. Since the Sale/Assignment of the said Decree/Recovery Certificate is strictly on ‘as is where is basis’ and ‘as is what is basis’, on execution of this Deed of Assignment, all suits, appeals and any other legal proceedings pending or filed thereafter on the subject of this Assignment shall be the sole responsibility of the Assignee and the Assignor shall not be concerned with the same.
6. The Sale/Assignment is without any liability on the Assignor and the Assignor shall appropriate the said amount of Rs.2 Crore (Rupees Two Crore only) towards the decretal claim and the surplus, if any, towards any other amounts due and payable by the Judgement Debtor to the Assignor.”
6. The aforesaid two conditions make it clear that the assignment is on ‘as is where is basis” and thereafter, there is assignment by the Bank to the assignee, Bharat Construction.
7. Even if it is considered that the dues of the PF may have priority over the secured creditor or otherwise, in light of the decisions of the Apex Court reported in the case of Maharastra State Cooperative Bank Ltd. Vs. Assistant Provident Fund Commissioner and Others, reported in (2009) 10 SCC 123; in the case of Central Bank of India Vs. State of Kerala and Others, reported in (2009) 4 SCC, 94; and in the case of Employees Provident Fund Commissioner Vs. Official Liquidator of Esskay Pharmaceuticals Limited., reported in (2011) 10 SCC 727, there is no prohibition in law brought to our notice by the learned Counsel for the PF Authority that once the demand notice is issued, the property cannot be transferred or sold or decree cannot be assigned against consideration. Under these circumstances, if the decree is assigned by the Bank to Bharat Construction, the assignee on the basis ‘as is where is’ and ‘whatever there is basis’, such action cannot be said to be prohibited in law and it will be for the Bharat Construction, the assignee to meet with the aspect of satisfaction of PF dues or otherwise. Whatever the defence that may be available to the original decree holder i.e. Bank of India, may be available to the purchaser/assignee Bharat Construction, but at the same time, if any charged dues are there of any authority, it will be for the assignee Bharat Construction to meet with the same or to satisfy the same.
8. Once the PF Authority having known that the decree is assigned on ‘as is where is’ basis, it may proceed in accordance with law against the assignee or the concerned property by virtue of assignment, but the demand thereafter from the officers of the Bank cannot be sustained.
9. Bharat Construction having acquired the rights of decree on principles of ‘as is where is and whatever there is’ basis would not be entitled to the declaration that it is the liability to satisfy the PF dues is that of the Bank and not of itself.
10. Under these circumstances, SCA No.5126 of 2011, subject to the aforesaid observations deserves to be dismissed. Hence, dismissed.
11. In view of the aforesaid observations, SCA No.16681 of 2011 is allowed to the extent that the action of the PF Authority after the deed of assignment against the officers of the Bank by the impugned correspondence cannot be sustained in the eye of law and hence, they are set aside, but with the observation that it will be open to the PF Authority to proceed in accordance with law against the assignee of the decree i.e. Bharat Construction and at that stage, the rights and contentions of both the sides, including that of Bharat Construction shall remain open, as to whether the amount is payable or not, save and except the question, which is already observed and decided in the present order.
12. Both the petitions are disposed of accordingly.
Considering the facts and circumstances, there shall be no order as to costs.
(JAYANT PATEL, J.) (MOHINDER PAL, J.) vinod