THE HON'BLE SRI JUSTICE A.V. SESHA SAI WRIT PETITION No.24747 of 2004 Dated: 16.07.2014 Between:
Komala Anjaneyulu PETITIONERS AND
1. The Recovery Officer (EPF), O/o. S.R.O., APSFC Building, Balasamudram, Hanumakonda, Warangal District, and another.
RESPONDENTS ORDER:
This writ petition, filed under Article 226 of the Constitution of India, assails the notice No.AP/WGL/Recy/17966/KRN/2004/926, dated 01.12.2004 issued by the 1st respondent, asking the petitioner to appear and to show cause as to why the petitioner should not be committed to civil prison in execution of the certificate forwarded by the Authorised Officer under the provisions of the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 (hereinafter called ‘the Act’).
2. Heard Sri M. Rama Rao, learned counsel for the petitioner and Smt. Ch. Lakshmi Kumari, learned counsel for the respondents, apart from perusing the material available on record.
3. Under the supervision of Sri Srividya Niketan, an educational society, which came into being in 1978, a High School in the name and style of Srividya Niketa High School has been established in 1978 and the petitioner acted as correspondent of the same during 1988- 2000 and in 2000 one Smt. Sridevi became the correspondent, who took over the charge in the same year. The 1st respondent vide notice No.AP/WGL/Recy/17966/KRN/2004/926, dated 18.03.2004/22.03.2004 called upon the petitioner to appear and show cause as to why he should not be committed to civil prison in execution of a certificate forwarded by Authorised Officer. The petitioner submitted an explanation dated 23.04.2004, requesting to drop all further proceedings. Subsequently, vide proceedings No. AP/SRO/WL/ENF/REC/17966/KRN/2004/40, dated 16/23.04.2004, the Assistant Provident Fund Commissioner (REC), S.R.O. Warangal informed that in the event of failure to comply with the provisions of the Act, the recovery action would be initiated against the petitioner. Subsequently, the 1st respondent issued the impugned notice dated 01.12.2004, asking the petitioner to show cause as to why he should not be committed to civil prison in execution of the certificate forwarded by the Recovery Officer under Section 8C(2) of the Act.
4. Challenging the said notice dated 01.12.2004 as being arbitrary, illegal and mala fide, the present writ petition has been filed.
5. Responding to the Rule Nisi issued by this Court, a counter affidavit is filed by the respondents, stating that earlier the respondents issued summons to attend the enquiry under Section 7A of the Act and despite receipt of reminders, petitioner did not attend the enquiry and he filed W.P.No.5549 of 1993, questioning the summons and the same was disposed of on 31.03.1995, directing to examine the matter relating to coverage of E.P.F Act for the said establishment afresh within two months. It is further stated that in pursuance of the directions of this Court in the above writ petition, the respondent issued summons to the writ petitioner, asking him to attend for enquiry on 7.08.1995 vide notice No.336, dated 17.05.1995. In response to the same, the petitioner sent a telegram, asking for adjournment and the respondent adjourned the enquiry on the request of the petitioner on a number of occasions i.e., on 29.05.1995, 12.06.1995, 14.06.1995, 13.07.1995, and 07.08.1995. The matter was posted for enquiry on 21.08.1995 and orders were passed under Section 7A of the Act, fixing the liability of Rs.1,42,799/- for the period from 3/1985 to 8/1994. It is further stated in the counter affidavit that the 1st respondent issued a recovery certificate vide notice No.5222 dated 22.03.2004 and the petitioner failed to remit the dues as such another notice was issued on 01.12.2004, which is impugned in the present writ petition.
6. Broadly, there are two contentions raised by the learned counsel for the petitioner, they are:
6.1. The action of the respondents in proceeding against the petitioner personally without first proceeding against the establishment is illegal and arbitrary.
6.2. The action of resorting to the mode of arrest without recourse to other modes of recovery is highly arbitrary, unreasonable and contrary to law and violative of Article 21 of the Constitution of India.
7. Per contra, it is strenuously contended by the learned Standing Counsel for the respondents that the impugned action is strictly in conformity with the provisions of the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 (hereinafter called ‘the Act’) and the impugned action is a sequel to the orders passed under Section 7A of the Act. It is further contended by the learned counsel for the petitioner that having failed to question the orders passed under Section 7A of the Act, petitioner herein cannot raise any objection for the mode of recovery and it is open for the respondents to adopt any one of the modes as prescribed under the statute.
8. In the light of the above pleadings, submissions and contentions, now the questions which fall for consideration of this Court are:
1. Whether the respondent authorities can proceed against the petitioner herein for recovery of the amount?
2. Whether the respondent authorities are justified in adopting the mode of recovery by way of arrest of the petitioner herein?
9. For the purpose of dealing with the point No.1, it is apt and appropriate to refer to the provisions of Section 2(e) and Section 8B of the Act.
“Section 2 (e) of the Act defines employer, which reads as under.
“Section 2(e):- (i) in relation to an establishment which is a factory; the owner or occupier of the factory, including the agent of such owner or occupier, the legal representative of a deceased owner or occupier and, where a person has been named as manager of the factory under Clause (f) of sub-section (1) of Section 7 of the Factories Act, 1948 (63 of 1948), the person so named; and (ii) in relation to any other establishment, the person who or the authority which, has the ultimate control over the affairs of the establishment, and where the said affairs are entrusted to a manager, managing director or managing agent, such manager, managing director or managing agent;
8B. Issue of certificate to the Recovery Officer
(1) Where any amount is in arrears under section 8, the authorized officer may issue, to the Recovery Officer, a certificate under his signature specifying the amount of arrears and the Recovery Officer, on receipt of such certificate, shall proceed to recover the amount specified therein from the establishment or, as the case may be, the employer by one or more of the modes mentioned below:
(a) attachment and sale of the movable or immovable property of the establishment or, as the case may be, the employer;
(b) arrest of the employer and his detention in prison;
(c) appointing a receiver for the management of the movable or immovable properties of the establishment or, as the case may be, the employer:
PROVIDED that the attachment and sale of any property under this section shall first be effected against the properties of the establishment and where such attachment and sale is insufficient for recovering the whole of the amount of arrears specified in the certificate, the Recovery Officer may take such proceedings against the property of the employer for recovery of the whole or any part of such arrears.
(2) The authorized officer may issue a certificate under sub-section (1), not withstanding that proceedings for recovery of the arrears by any other mode have been taken.”
10. From a reading of the above provision of law it would be clear that the term employer also includes the person who or the authority which has the ultimate control over the affairs of the establishment. In the instant case, the petitioner, admittedly, was in-charge of the affairs of the institution during the relevant period. Therefore, it cannot be said by any stretch of imagination that the petitioner is not liable and cannot be proceeded against. Therefore, the point No.1 is answered in favour of the respondents herein and against the petitioner herein.
11. Coming to point No.2, it is to be noted that as per the provisions of Section 8-B (1) of the Act where any amount is in arrear under Section 8, the authorised officer may issue, to the Recovery Officer, a certificate under his signature specifying the amount of arrears and thereupon the Recovery Officer, on receipt of such certificate, shall proceed to recover the amount specified therein from the establishment or, as the case may be, the employer by one or more of the modes mentioned in Clauses (a) (b) and (c) of Section 8B (1).
12. It is the contention of the petitioner herein that the action of the respondents in resorting to the mode of recovery by way of arrest when other modes of recovery as prescribed under Section 8-B (a) and (c) are available, is impermissible and illegal. This aspect is no longer res integra. This Court in REGIONAL PROVIDENT FUND COMMISSIIONER v. M/S. DECCAN FOAM PLASTICS PRIVATE
[1]
LIMITED while dealing with the issue under Section 8-B of the Act,
at paragraphs 9 to 12, held as under:
“9. We shall first refer to the order passed by our own Court. The Division Bench after making an analysis of Section 8B(1) of the Act, observed that the attachment and sale of any property under Section 8B(1) of the Act shall first be effected against the properties of the establishment and where such attachment and sale is insufficient, for recovery of the whole of the amount of arrears specified in the certificate, the Recovery Officer may take such proceedings as against the property of the employer for recovery of the whole or any part of such arrears. It is further observed that arrest of the employer and his detention in prison cannot at all be made in view of the proviso to Section 8B(1) of the Act.
10. The submission of the learned Standing Counsel is that the proviso, which inter-alia, provides that the attachment and sale of any property under Section 8B(1) of the Act shall first be effected against the properties of the establishment and the proceedings against the property of the employer for recovery of the whole or any part of the arrears can be initiated only after the sale of the attached properties of the establishment is found to be insufficient for recovery of the amount, is only for the purposes of 8-B(a) of the Act alone. It means that the properties of the employer can be attached and the proceedings can be initiated for recovery of the amounts only after the attachment of sale of movable and immovable properties of the establishment and not before that. There is no dispute about the same. According to the learned counsel for the appellants, not only the properties of the establishment both movable and immovable properties can be attached for realization of the arrears pursuant to the recovery certificate, but simultaneously, employer can also be arrested for the purposes of his detention in prison even without exhausting the remedy of attaching both the movable and immovable properties of the employer.
11. In our considered opinion, the submission is misconceived and we are not inclined to read the provision in the manner suggested by the learned Standing Counsel. That under Section 8B(1) of the Act even the movable and immovable properties of the employer cannot be attached and sold for the purposes of realization of the arrears without first exhausting the remedy of attaching and bringing the properties of the establishment for sale and, if that is so, it would be absurd to hold that employer can be arrested for the purpose of sending him to imprisonment without even finding whether the attachment and sale of the properties of establishment for realization of the arrears is sufficient or not.
12. It is for that reason, this Court took the view that the arrest of the employer and his detention in prison cannot at all be made in view of the proviso to Section 8B(1) of the Act without exhausting the remedy of attachment and sale of properties of establishment for realization of amounts of arrears. The proviso cannot be read in isolation but is to be read along with 8B(1)(a)(b)(c) of the Act. It is no doubt true that the Punjab and Haryana High Court took the view holding that nothing in Section 8B(1) and other provisions of the Act prevents Recovery Officer to adopt the method specified in clause (b) of Section 8B(1) of the Act before exhausting the other modes of recovery. Such an interpretation, in our considered opinion, causes hardship and inconvenience. It is settled rule of interpretation that no statutory provision can be read in such a manner, which results in hardship and inconvenience.”
13. In the instant case also there is absolutely no evidence to show that the respondents herein made efforts to recover the amount by the modes prescribed under Clauses (a) and (c) of Section 8-B (1) of the Act. Therefore, this Court is of the considered opinion that the action of the respondents in resorting to the mode of recovery as prescribed under Section 8-B (1) (b) without exhausting the other modes of recovery cannot be sustained. This Court, also finds that there is absolutely no justification on the part of the respondent authorities in resorting to the recovery by way of arrest.
14. In these facts and circumstances and having regard to the principles laid down by this Court in the above referred judgment, writ petition is allowed, setting aside the show cause notice dated 01.12.2004 issued by the Recovery Officer, Warangal/first respondent herein in AP/WGL/Recy/17966/2004/926. However, it is made clear that the respondents are at liberty to proceed against the petitioner by adopting the other modes of recovery as prescribed under Section 8-B (1) of the Act. As a sequel, the miscellaneous petitions, if any, shall stand closed. No order as to costs.
JUSTICE A.V. SESHA SAI.
Date: 16th July, 2014 Js/grk THE HON'BLE SRI JUSTICE A.V. SESHA SAI WRIT PETITION No.24747 of 2004 Dated: 16.07.2014
[1] 2005 (1) ALT 645 (D.B.)