IN THE HIGH COURT OF JUDICATURE AT HYDERABAD FOR THE STATE OF TELANGANA AND THE STATE OF ANDHRA PRADESH WEDNESDAY, THE THIRD DAY OF DECEMBER TWO THOUSAND AND FOURTEEN Present HON’BLE SRI JUSTICE P.NAVEEN RAO WRIT PETITION No.36959 of 2014 Between:
M/s. Charminar Concrete Products Pvt. Ltd., Rep. by its Managing Director P. Subba Rao, Presently O/o. H.No.16-2-836/3, Madhava Nagar, Saidabad, Hyderabad-59 & another .. Petitioners AND The Commissioner, Employees Provident Fund (Bhavishyanidi) Office, Barkatpura, Hyderabad & another .. Respondents The Court made the following:
HON’BLE SRI JUSTICE P.NAVEEN RAO WRIT PETITION No.36959 of 2014 ORDER:
The first petitioner is enrolled with the Employees Provident Fund Organization, Andhra Pradesh, for the purpose of application of the provisions of the Employees Provident Funds and Miscellaneous Provisions Act, 1952 (for short, ‘the Act’), to the employees of the first petitioner company. Alleging that the first petitioner company failed to pay the contributions to the provident fund on the employees engaged by the first petitioner company, proceedings were initiated under Section 7A of the Act and orders were passed on 25.06.2012 determining an amount of Rs.43,59,927/- as the amount due towards contribution on account of the delayed payment, etc., for the period from September, 2009 to June, 2011. Even after the orders were passed, as the amount quantified is not paid, the proceedings are initiated for recovery of the amount. Show cause notice was issued on 28.11.2013 demanding payment of the amount due. Even after the show cause notice was issued, as the amount demanded was not paid, proceedings to prosecute the Chairman and the Managing Director of the first petitioner company i.e., the second petitioner are initiated. Notice is received in S.T.C.Nos.500138 to 500161 of 2013 and the petitioners instituted W.P.No.24455 of 2014.
2. It was contended that the petitioners were not served with any notice prior to the notice received from the Court and that the petitioners have filed a review petition seeking to review the decision under Section 7A of the Act, dated 25.06.2012, and the said review petition is pending consideration. Having regard to the said submission, by order, dated 12.09.2014, made in W.P.M.P.No.30629 of 2014, this Court granted interim stay as prayed for for a period of four (4) weeks. The competent authority considered the review petition filed by the petitioners and passed orders on 23.09.2014 which was received by the petitioners on 11.11.2014. The grounds of review were considered and orders were passed rejecting the prayer for review.
3. Heard Sri Nagaraju Naguru, learned counsel for the petitioners and Sri R.N. Reddy, learned Standing Counsel for Respondents 1 and 2.
4. Learned counsel for the petitioners contended that as there was denial of the reasonable opportunity and that the petitioners were not in receipt of notices, the order under challenge is not sustainable and is, therefore, liable to be set aside on that ground. In support of his contention, the learned counsel for the petitioners placed reliance on a decision of this Court in Aparna Constructions and Estates Pvt. Ltd. Vs.
Regional P.F. Commissioner-II (C&R), Hyderabad and
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another . This Court found that the order under Section 7A of the Act was passed on the basis of a report, dated 05.10.2011 and the copy of the report was not furnished to the petitioner. It is held that such a course is contrary to the very spirit of the provision in Section 7A of the Act. This Court found that effective adjudication did not take place and, therefore, having considered the same, this Court set aside the order under Section 7A of the Act and remitted for consideration afresh.
5. Learned Standing Counsel contended that against the orders passed under Section 7A of the Act and the consequential orders, appeal shall lie to the Provident Fund Appellate Tribunal under Section 7-I of the Act. The appeal being an effective and efficacious remedy provided by the statute, without exhausting the said appeal the petitioner cannot invoke the jurisdiction of this Court. He further submits that sufficient opportunity was afforded to petitioners, but they have not availed the same. He, therefore, submits that there is no error in the impugned action.
6. The grievance of the petitioners is that though the order refers to service of notices, as the industry became sick in the year 2010, the industry was not operational and, therefore, the employees were also not engaged. There were internal disputes among the Directors of the company which compelled the industry to be closed and, therefore, the factory office was also closed. It is not known who received the notices. At no point of time the petitioners were informed of causing of notices. The competent authority proceeded to conduct enquiry and passed orders treating the first petitioner company as non- responsive and setting ex parte. The second petitioner came to know the news for the first time when he received the notices of institution of S.T.C.Nos.500138 to 500161 of 2013. In the review petition also the petitioners specifically brought to the notice of the authority that the first petitioner company was not functioning for a long time and that the petitioner was not aware of the proceedings initiated by the authority under the Act. Therefore, there was no occasion for the second petitioner to place the relevant facts before the authority.
7. The respondent authority has not given further opportunity of conducting an enquiry under Section 7A of the Act, but summarily dismissed the review petition on the ground that the review petition was not filed within three (3) months as mandated by Section 7A (4) of the Act. Though the order of review also refers to the consideration on merits, there is no discussion on what basis the grounds urged by the petitioners were not considered. Though there is no due diligence on the part of the second petitioner in ventilating his grievance before the competent authority immediately after he has come to know about the proceedings, but the fact remains is records would disclose, the first petitioner company is not working and was closed long ago. As asserted by the learned counsel for the petitioners the company office is not located at the place where the notices were addressed and shifted to other place and, therefore, the petitioners were not in knowledge of proceedings before the competent authority. There is no material on record to substantiate that the petitioners had knowledge of proceedings and have deliberately avoided to participate in the proceedings before the competent authority.
8. Having regard to the peculiar facts of this case and in order to give reasonable opportunity for the petitioners to present their side of the case with reference to their liability of contributions under the Employees Provident and Miscellaneous Provisions Act, 1952, fixed by the authority, it is just and proper to set aside the proceedings under Section 7A of the Act as well as the order passed in the review petition subject to the petitioners depositing an amount of Rs.12,00,000/- (Rupees twelve lakhs only) within a period of two (2) weeks from the date of receipt of a copy of this order. If the petitioners do not deposit the amount, the orders already passed shall revive. Matter is remitted to the Assistant Commissioner of Provident Fund (Compliance-II), Hyderabad (2nd respondent) for re-consideration of the issue. Learned counsel for the petitioners has stated that the address for communication of all correspondence and notices from the respondent authorities is the same as now disclosed in the writ petition. The 2nd respondent shall issue notice fixing the date of hearing by supplying all the relevant documents in support of the amount determined against the petitioners. As and when such a notice is received, the petitioners shall appear and participate in the enquiry. The petitioners shall co-operate. If the petitioners do not appear on the date fixed for hearing, it is open to the Assistant Commissioner of Provident Fund to proceed against the petitioners and finalize the proceedings.
9. In view of the remittance of the matter for re-enquiry under Section 7A of the Act, no proceedings for criminal prosecution are maintainable. However, if the petitioners do not comply with the conditions imposed above or do not co- operate for completion of the enquiry, it is always open to the Assistant Commissioner of Provident Fund (Compliance-II), Hyderabad (2nd respondent) to reopen the proceedings before the criminal Court. The Writ Petition is allowed accordingly. There shall be no order as to costs. Miscellaneous petitions, if any, pending in this writ petition, shall stand closed.
P.NAVEEN RAO, J Date: 3rd December, 2014 KL HON’BLE SRI JUSTICE P.NAVEEN RAO WRIT PETITION No.36959 of 2014 Date: 3rd December, 2014 KL
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