Chattisgarh High Court
M/S Kumar Undertaking vs Canara Bank on 31 July, 2025
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2025:CGHC:37494
NAFR
HIGH COURT OF CHHATTISGARH, BILASPUR
WPC No. 3974 of 2025
M/s Kumar Undertaking Through Its Proprietor Pradeep Kumar
Dhurve Having Its Registered Office At H.No.- 606, Near Pawan
Kirana Stores, Sangram Chowk, Sikola Bhata, Ward - 14, Durg,
Chhattisgarh 492001
... Petitioner(s)
versus
1 - Canara Bank A Body Corporate Constituted By And Under The
Banking Companies (Acquisition And Transfer Of Undertakings Act,
1970), With Its Branch Office At Plot No. 745/1, Main Road Rasmada
Post, Rasamada, District- Durg Chhattisgarh 491001
2 - Employees Provident Fund Organisation Through Its Assistant
Provident Fund Commissioner And Recovery Officer, With Its
Regional Office At Bhavishya Nidhi Bhawan, Indira Gandhi
Commercial Complex, D-Block, Pandri, Raipur- Chhattisgarh -
492004
---- Respondents
For Petitioner : Mr. Ankit Pandey, Advocate For Respondent No.1 : Mr. Soumitra Kesharwani, Advocate appears on behalf of Mr. Akash Gupta, Advocate For Respondent No.2 : Mr. Sunil Pillai, Advocate Hon'ble Shri Justice Arvind Kumar Verma Order on Board 2/8 31/07/2025
1. During the course of argument, learned counsel for Respondent No.2 has placed some documents which have been taken on record and copy of the same supplied to learned counsel for the petitioner and with the consdent of counsel for the parties, matter is heard finally.
2. The petitioner has been filed this writ petition on the following relief(s) :
"10.1 10.1.Issue a writ of mandamus, certiorari or any other appropriate writ, order or direction, quashing and setting aside the impugned letter dated 24/07/2025 issued by Respondent No. 1, whereby the Petitioner's bank account bearing maintained with its Durg Branch has been illegally and arbitrarily frozen/held pursuant impugned notice dated 23/07/2025 issued under Section 8F of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 by Respondent No.2 Assistant Provident Fund Commissioner and Recovery Officer, EPFO Raipur;
10.2. Declare that the purported recovery action initiated by Respondent No.2 EPFO in respect of alleged dues of M/s Padmini Dhurve, Sangram Chowk, Sikola Bhata, Durg, Chhattisgarh - 491001, cannot in law be enforced against the Petitioner or its bank account, as the Petitioner is an independent and unconnected proprietorship firm, namely M/s Kumar Undertaking, having no nexus with the said establishment;
10.3. Issue a writ of mandamus or any other appropriate writ, order or direction directing Respondent No.1 to forthwith lift the freeze/hold imposed on the Petitioner's Bank Account No. 3/8 404321000014 and restore full operational access to the Petitioner in respect of the said account;
10.4. Declare the impugned action of Respondents No.1 and 2 as ultra vires and violative of the fundamental rights guaranteed to the Petitioner under Articles 14, 19(1)(g), and 300A of the Constitution of India;
10.5. Direct the Respondents to compensate the Petitioner for any penal or statutory consequences suffered or to be suffered by the Petitioner under the GST regime or any other law, arising solely due to the illegal restraint placed upon its bank account;
10.6. Pass such other or further orders as this Hon'ble Court may deem fit and proper in the interest of justice, equity, and good conscience, including the award of costs in favour of the Petitioner."
3. Learned counsel for the petitioner contended that the present writ petition is being preferred by the Petitioner against the coercive and patently illegal action of Respondent No.1 Bank in placing an unlawful hold/restriction on the operation of the Petitioner's Bank Account No. 404321000014 on 24/07/2025, purportedly in compliance with a notice issued by Respondent No.2, i.e., the Assistant Provident Fund Commissioner and Recovery Officer, Employees' Provident Fund Organization (EPFO), Raipur, under Section 8F of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952, dated 23/07/2025, whereby Respondent No.2 has sought recovery of an amount of ₹16,89,679/- from the Petitioner's account, despite the said demand actually being raised against an entirely different and unrelated 4/8 establishment, namely M/s Padmini Dhurve. The impugned notice dated 23/07/2025 issued under Section 8F by Respondent No.2, and the subsequent action of Respondent No.1 Bank dated 24/07/2025 in placing a hold on the Petitioner's bank account, constitute the direct cause of grievance in the present writ petition. Both actions are challenged herein on the grounds of being wholly without jurisdiction, factually misconceived, legally unsustainable, and undertaken in gross violation of principles of natural justice, as well as the Petitioner's fundamental rights under Articles 14, 19(1)(g), and 300A of the Constitution of India. The Petitioner submits that there exists no order or adjudication against it under the provisions of the EPF Act, nor has the Petitioner ever been put to notice of any default, demand, or recovery under the said Act. The impugned action has been initiated without issuing any notice, without affording any opportunity of hearing, and without any determination of liability, solely on the basis of an erroneous and unverified assumption that the Petitioner is liable for the dues of a third-party entity, with whom it has no legal or financial connection. The Petitioner is aggrieved by the impugned notice dated 23/07/2025 (Annexure P-4) issued by Respondent No.2, and the consequential action of placing a hold on Petitioner's Bank Account on 24/07/2025, which together constitute the order(s)/action(s) under challenge in the present petition. 5/8
4. Reliance has been placed by the petitioner in the order passed by the High Court of Gujarat at Ahmedabad in the case of Geetaben J. Patel Vs. Assistant Sales Tax Commissioner & Ors. Para -3 of the said order held as under :-
"3. Having heard learned counsel for for the parties and having perused documents on record, we do not see any authority in law permitting respondent No. 1 to attach the property of the petitioner for the dues of her husband. Nothing has been brought on record to suggest that the property in question was purchased from the sources other than that off the petitioner herself. It is not the case of the Department that the same translation of December 31, 1994 was "benami" transaction and that the husband of the petitioner had funded for purchase of the property. In any case, as noted, the sale took place on December 31, 1994 and the husband of the petitioner started his current business in the year 1998. The sales tax dues pertain to the assessment year 1999-2000. Nothing has been stated in the affidavit in reply to justify the action of the Department in attaching the property of the petitioner for the dues of her husband. By merely stating that only qua share of the husband, the said property was attached, would not further the case of the Department. This is in fact curious statement. It does not clarify whether the share referred to is that of the sales tax dues or of the interest in the property. If later is the case, there is nothing on the record to suggest that the husband had any right, title or interest in such property."
5. Further, reliance has been placed in the order passed by the Madhya Pradesh High Court in the case of Ferro Concrete Construction (I) Pvt. Ltd. Vs. Regional Provident Fund Commissioner, Indore & Others. Para 11 to 14 are held as under :-
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"11. In substance, the ratio of the Supreme Court decision rendered in the case of Biharilal supra, is that it is mandatory on the part of the Recovery Officer before passing any order under these two sections to hold an inquiry after giving due opportunity to the person concern, allow him to state on oath whether he has to pay any amount to the defaulter and if so under what head, against which transaction or whether he holds any money on account of defaulter and if so how much, whether any money is due or not and if so, its extent? It is only after the person concern files and makes a statement on oath on any of the facts referred supra, then depending upon the statement so made, the Recovery Officer will proceed to pass an order. In other words, holding of an inquiry into the requirement of section 8F(3)(vi) is mandatory and any deviation from the compliance will result in vitiating the order.
12. The aforesaid principle equally applies to cases falling in section 8F(3) of the Act and hence, Recovery Officer while exercising the powers under section 8F(3), has to follow the aforesaid principle enunciated by the Supreme Court in the case of Biharilal.
13. Coming to the facts of the case, I find that Recovery Officer (respondent No. 2) while initiating and eventually passing the order dated 11-4-2001 (Annexure P9) did not even care to read section 8F(3)
(vi) what to say recorded a finding as contemplated therein. Indeed, while proceeding to pass an impugned order, he committed an error of law in proceeding ex parte against the petitioner. The recovery officer neither properly apprised the petitioner of the facts on which he was proposing to proceed against the petitioner, nor he allowed the petitioner to comply the requirement of section 8F(3) (vi) ibid. In substance, the whole proceedings are in total disregard to the provisions of section 8F(3) ibid and hence, liable to be quashed.
14. When there is no compliance of the mandatory procedure contained in the Act, when there is no factual 7/8 foundation to proceed, when the authority do not extend adequate opportunity to the person concern to defend the proceedings in terms of requirement of Act, then such proceedings are not liable to be sustained and deserves to be quashed. They are accordingly quashed."
6. Learned counsel for respondent No.2 contended that as per EPFO document No.CG/18663/PF/RAI/DAM/Cir-III/2023 dated 12.11.2021 and under Section 14B of the EPF Act, combined summon under Section 14B & 7Q of the Act was issued to the Employer of the establishment directing him to appear virtually before the Regional Provident Fund Commissioner - II and to show cause as to why penal damage & interest as envisaged in the Act be not recovered from the establishment vide summon dated 12.02.2021. None appeared on 03.03.2021, hence hearing was adjourned to 08.04.2021, 15.07.2021, 03.08.2021, 02.09.2021, 21.09.2021, 13.10.2021 and lastly on 02.11.2021. On 02.11.2021, Shri Pradeep Kumar Dhurve, Proprietor of the establishment appeared for the establishment and stated that the calculation sheet regarding rely of interest and penalty was received by him, which was sent by the department through post and Email.
7. I have heard learned counsel for the parties and perused the record with utmost circumspection.
8. Considering the facts and circumstances of the case and submission made by learned counsel for the parties, it is crystal clear that after giving notice and after giving due opportunity of hearing to the 8/8 petitioner, respondent authority has passed the order against the petitioner. It is also pertinent to mention here that as per document, Pradeep Kumar Dhurve is a Proprietor and there is a three specimen signatures of the petitioner with respect to Padmini Dhurve or claims/returns related matter in EPFO and in Page No.14 there is a digital signature of the petitioner in specimen signature card and in Page No.15 petitioner put signature on the document of Padmini Dhurve as employer, but the petitioner is filed the petition and trying to demonstrate here that there is no relationship between the petitioner and Padminit Dhurve. Therefore, it is also crystal clear that the petitioner has not come with clean hand. Therefore, the relief which has been sought by the petitioner cannot be granted in exercise of writ jurisdiction, in view of the considered opinion of this Court, no case is made out for any interference.
9. Accordingly, the petition being devoid of any merit is liable to be and is hereby dismissed.
10. No order(s) as to cost(s).
Sd/-
(Arvind Kumar Verma) Judge Vasant