Gujarat High Court
Regional Provident Fund Commissiner vs Bank Of Baroda & on 13 August, 2014
Author: Ks Jhaveri
Bench: Ks Jhaveri
C/LPA/2095/2011 JUDGMENT
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
LETTERS PATENT APPEAL NO. 2095 of 2011
In SPECIAL CIVIL APPLICATION NO. 8706 of 1991
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR.JUSTICE KS JHAVERI
and
HONOURABLE MR.JUSTICE A.G.URAIZEE
===========================================================
1 Whether Reporters of Local Papers may be allowed to see
the judgment ?
2 To be referred to the Reporter or not ?
3 Whether their Lordships wish to see the fair copy of the
judgment ?
4 Whether this case involves a substantial question of law as
to the interpretation of the Constitution of India, 1950 or any
order made thereunder ?
5 Whether it is to be circulated to the civil judge ?
================================================================
REGIONAL PROVIDENT FUND COMMISSINER....Appellant(s)
Versus
BANK OF BARODA & 1....Respondent(s)
================================================================
Appearance:
MR JOY MATHEW, ADVOCATE for the Appellant(s) No. 1
MR NARENDRA KHARE, ADVOCATE for the Respondent(s) No. 1
MR PATHIK M ACHARYA, ADVOCATE for the Respondent(s) No. 2
OFFICIAL LIQUIDATOR for the Respondent(s) No. 2
================================================================
CORAM: HONOURABLE MR.JUSTICE KS JHAVERI
Page 1 of 8
C/LPA/2095/2011 JUDGMENT
and
HONOURABLE MR.JUSTICE A.G.URAIZEE
Date : 13/08/2014
ORAL JUDGMENT
(PER : HONOURABLE MR.JUSTICE KS JHAVERI)
1. The present appeal has been filed under Clause 15 of the Letters Patent by the appellantoriginal respondent No.1 against the order dated 25.11.2010 passed by the learned Single Judge of this Court in Special Civil Application No.8706 of 1991, whereby the learned single Judge has allowed the petition.
2. The facts in brief are that the appellant herein is the Regional Provident Fund Commissioner, State of Gujarat, appointed under Section 5D of the Provisions of the Employees Provident Fund and Miscellaneous Provisions Act, 1952. It is the case of the appellant that the respondent No.2M/s Rajprakash Spinning Mills Ltd. was having P.F.Code No.GJ/4178 and it was in default in compliance with the provisions of the Act and therefore, an amount of Rs.31.32 lacs was due from the respondent No.2 on account of Provident Fund and allied dues/damages payable under the said Act. In the year 1991 the appellant came to know that the respondent No.2Company has an account in the respondent No.1Bank. Therefore, the appellant issued a Notice under Section 8(F) of the Act on 19.3.1991 to the Chairman of respondent No.1Bank and the Branch Manager, Khambhat Branch calling upon them to remit the amount lying in the said account in exercise of powers conferred under Section 8F(3)(II) of the Act. It is Page 2 of 8 C/LPA/2095/2011 JUDGMENT the case of the appellant that in spite of receipt of the notice, the respondent No.1Bank has allowed the respondent No.2Company to withdraw an amount of Rs.16,20.955/.
2.1. It appears from the record that the respondent No.1Bank has challenged the action of the appellant of issuing notice under Section 8F of the Act by filing a petition being Special Civil Application No.8706 of 1991. This Court vide order dated 10.1.1992 directed the respondent No.1Bank to open a bank account in the name of the appellant in their Khambhat Branch and credit an amount of Rs.16,20,955/. The respondent No.1Bank challenged the said order before the Apex Court. The Apex Court remanded the matter before this Court for fresh consideration. After matter being remanded, this court vide impugned judgment and order dated 25.11.2010 quashed and set aside the notice issued under Section 8F of the Act. Hence, this appeal.
3. Learned counsel for the appellant submitted that learned Single Judge has committed an error in allowing the petition. He further submitted that in view of the provisions of the Act, the appellant has power to recover the amount and therefore, the notice under Section 8F of the Act was issued to respondent No.1Bank. 3.1. He relied upon the decision of the Apex Court in the case Page 3 of 8 C/LPA/2095/2011 JUDGMENT of Maharashtra State Cooperative Bank Limited Vs. Assistant Provident Fund Commissioner and Ors, reported in (2009) 10 SCC 123.
4. On the other hand learned advocate for the respondent supported the impugned order of learned Single Judge and submitted that the learned Single Judge after considering the material on record has passed the impugned order, therefore, there is no germane reason to interfere with the impugned judgment and order.
5. We have heard learned counsel for the appellant as also learned advocate appearing for the respondent and perused the material on record. We have also perused the impugned order passed by the learned Single Judge and found that the learned Single Judge has given cogent and convincing reasons in arriving at the conclusion. The learned Single Judge while deciding the petition has observed in paragraph Nos.15, 16, 17 and 18 as under: "15. Mr. Parikh is also right in canvassing before the Court that after receipt of the notice under Section 8(F) of the Act, the Bank is merely garnishee to pay any amount lying to the credit of the respondent No.2 Bank. As a garnishee, the Bank has an equitable right to adjust any credit of the respondent No.2 against its dues and therefore, the Bank being garnishee could not have been asked to pay the dues to the respondent No.1 in priority of dues of the petitioner Bank. In the case of the London and South Western Railway Company (supra), the Court of Queen's Bench has rightly Page 4 of 8 C/LPA/2095/2011 JUDGMENT held that:
Under the Common Law Procedure Act, 1854, where a debt due from the garnishee to the judgment debtor has been attached, the garnishee has no right to retain the amount of any debt due to him from the judgment creditor, and the judge must order execution to levy the whole amount due from the garnishee to the judgment debtor.
Here in the present case, there is no amount due from the Bank to the respondent No.2 on the contrary, the Bank has to recover a very huge amount from the respondent No.2. The powers exercised by the respondent No.1 under Section 8(F) of the Act, are similarly to the powers vested with the Civil Court to issue garnishee orders. The principles which are applicable to the garnishee orders would apply with full force to the orders and/or notices, issued under Section 8(F) of the Act. This power can be exercised only when there is any debt due due or any amount held by the petitioner Bank on behalf of the respondent No.2Company. In K.M. Adam Vs. Income Tax Officer(supra), the Madras High Court has held that:
Where a banker lends money on an overdraft and the customer is always in debit, there is no stage at which the banker is a debtor to the customer, nor any point of time at which he holds any money of the customer on the latter's account. In the case of unutilized overdraft account, Section 46 (5A) of the Income Tax Act cannot be resorted to as a creditfreeze and it was beyond the jurisdiction of the Income Tax Officer to issue such an order under Section 46(5A) of the Act.
In the case of Canara Bank Vs. Tecon Engineers and Others (supra), the Kerala High Court has held that:
No attachment can be made when there is no existing debt due by the garnishee to the judgmentdebtor, and if the judgment debtor has already parted with his interest in the debt by assignment or created an equitable charge in respect of the same in favour of another person, the attaching creditor Page 5 of 8 C/LPA/2095/2011 JUDGMENT acquires no larger rights than his debtor.
The Court further held in the said case that:
An interest was created in favour of the Bank over the monies due to the contractor. Such interest related to the amount then due and amount accruing in future. Income Tax liability could not be enforced over the amounts which had already been transferred in favour of the Bank.
16. Mr. Parikh is also justified in canvassing before the Court that pursuant to the order passed by the Civil Court, the Bank is only acting as a receiver for the account in question and the Bank could not act contrary to the order of the Civil Court. If the Bank would have acted contrary to the order and parted with the amount, if any, lying in the said account in favour of the respondent No.1, pursuant to the notice issued under Section 8(F) of the Act, it would amount to contempt of the order of the Court. In the case of Kanhaiyalal Vs. Dr. D.R. Banaji and other (supra), it is held that:
it is settled law that proceedings taken in respect of a property which is in the possession and management of a Receiver appointed by Court under Order40 Rule1, Civil Procedure Code, without the leave of that Court, are illegal in the sense that the party proceeding against the property without the leave of the Court concerned, is liable to be committed for contempt of the Court, and that the proceedings so held, do not affect the interest in the hands of the Receiver who holds the property for the benefit of the party who, ultimately, may be adjudged by the Court to be entitled to the same.
The Court further held in the said case that:
The general rule that property in custodia legis through its duly appointed Receiver is exempt from judicial process except to the extent that the leave of that Court has been obtained, is based on a very sound reason of public policy, namely, that there should be no conflict of jurisdiction between different Courts. If a Court has exercised its power to appoint a Receiver of a certain property, it has done so with a view to preserving the property for the benefit of the rightful owner as Page 6 of 8 C/LPA/2095/2011 JUDGMENT judicially determined. If other Courts or Tribunals of co ordinate or exclusive jurisdiction were to permit proceedings to go on independently of the Court which has placed the custody of the property in the hands of the Receiver, there was a likelihood of confusion in the administration of justice and a possible conflict of jurisdiction.
17. The same principle has been reiterated by the Apex Court in the case of Krishna Kumar Khemka Vs. Grindlays Bank P.L.C. and others(supra).
18. There is one more aspect of the matter because of which the impugned notices are not held to be just and proper. The very first notice was issued by the respondent No.1 on 19th March, 1991. As such, on that date, there was no transaction in the impugned current account of the respondent No.2 with the petitioner Bank. The very first entry of Rs.538.41/ was in that account on 21 st March, 1991. During the period of two months, several transactions were taken place and the credit entries are reflected in the said account. The total credit found in that account are to the tune of Rs.16,20,955/. On 08.05.1991, the petitioner Bank had remitted an amount of Rs.16,621.76ps. to the respondent No.1 as on that date, the said amount was available in the current account in question. Thus, at no point of time, the credit was to the tune of Rs.16,20,955.76ps. It, therefore, appears to the Court that the petitioner Bank has remitted more amounts than what was available in the said account on the date of issuance of the first notice under Section 8(F) of the Act. Even on this ground, the action of the respondent No.1 is not justified."
6. In view of the aforesaid, we are of the opinion that the learned Single Judge is completely justified in allowed the petition. In our opinion, the view taken by the learned Single Judge on the basis of the different decisions of different high courts and the Apex Court is just and proper.
Page 7 of 8
C/LPA/2095/2011 JUDGMENT
7. We have gone through the decision relied upon by learned advocate for the appellant and found that the same will not apply to the facts of the present case.
8. For the foregoing reasons, the present appeal stands dismissed. Interim relief, if any, stands vacated.
(K.S.JHAVERI, J.) (A.G.URAIZEE,J) pawan Page 8 of 8