Madras High Court
Thanthai Periyar Transport vs The Managing Director on 2 February, 2012
Author: K.Chandru
Bench: K.Chandru
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 02.02.2012
CORAM:
THE HONOURABLE MR.JUSTICE K.CHANDRU
W.P.No.2323 of 2012 and
M.P.No.1 of 2012
Thanthai Periyar Transport
Corporation Limited,
Employees Provident Fund Trust,
(Now known as Tamil Nadu State
Transport Corporation) Villupuram,
Limited, EPF Trust, Rep. By its Chairman,
No.3/137, Salamedu, Valudha Reddy Post,
Villupuram - 605 602, Tamil Nadu. ...Petitioner
vs.
1.The Managing Director,
Madhyapradesh State Industrial Development Corporation,
(A Government of Madhya Pradesh
undertaking), AVN Towers I, II and II Floors,
Plot No.192 Zone 1,
Maharana Pratap Nagar, Bhopal,
Madyapradesh - 462 011.
2.The General Manager (Accounts)
Madhya Pradesh State Industrial Development Corporation,
(A Government of Madhya Pradesh
undertaking), AVN Towers I, II and II Floors,
Plot No.192 Zone 1,
Maharana Pratap Nagar, Bhopal,
Madyapradesh - 462 011.
3.M/s.Karvy Consultant Limited,
Rep. By its Manager,
G-1, Swathi Court, No.22, Vijayaragava Road,
T.Nagar, Chennai - 600 017. ...Respondents
This Writ Petition has been preferred under Article 226 of Indian Constitution praying for issue of a Writ of mandamus, directing the respondents either jointly or severally to refund the investment amount of Rs.20,00,000/- together with accrued interest fully from 01.05.2002 to till the date of payment forthwith to the petitioner.
For Petitioner : Mr.T.Chandrasekaran
O R D E R
This writ petition is filed by the Thanthi Periyar Transport Corporation Limited, Employees Provident Fund Trust, presently known as Tamil Nadu State Transport Corporation, Villupuram Limited, represented by its Chairman.
2. In this writ petition, the petitioner Trust seeks for a direction by issuance of a writ in the nature of mandamus to the respondents to jointly or severally to refund the investment amount of Rs.20 lakhs together with accrued interest from 01.05.2002 to till the date of payment.
3. It is seen from the records that the petitioner Trust is an exempted Trust from the provisions of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 and they got exemption under Section 17 of the Act. The Petitioner Trust collects provident fund from the employees nearly 6500 workers working in the Tamil Nadu State Transport Corporation, having its headquarters at Villupuram.
4. Para 27A of the Employees' Provident Funds Scheme, 1952, deals with the exemption of class of employees. Para 27AA deals with terms and conditions of exemption. It shall be subject to the terms and conditions as given in Appendix A.
5. Para 17 of Appendix A reads as follows:-
"17. The Board of Trustees shall invest the monies of the provident fund as per the directions of the Government from time to time. Failure to make investments as per directions of the Government shall make the Board of Trustees separately and liable to surcharge as may be imposed by the Central Provident Fund Commissioner or his representative."
6. Similarly, in paragraphs 19,20 and 21 of Appendix A, it was directed as follows:-
"19. All such investments made, like purchase of securities and bonds, should be lodged in the safe custody of depository participants, approved by Reserve Bank of India and Central Government, who shall be the custodian of the same. On closure of establishment or liquidation or cancellation of exemption from EPF Scheme, 1952, such custodian shall transfer the investment obtained in the name of the Trust and standing in its credit to the RPFC concerned directly on receipt of request from the RPFC concerned to that effect.
20. The exempted establishment shall intimate to the RPFC concerned, the details of depository participants (approved by Reserve Bank of India and Central Government), with whom and in whose safe custody, the investments made in the name of trust, viz., Investments made in securities, bonds, etc have been lodged. However, the Board of Trustees may raise such sum or sums of money as may be required for meeting obligatory expenses such as settlement of claims, grant of advances as per rules and transfer of member's P.F. accumulation in the event of his/her leaving service of the employer and any other receipts by sale of the securities or other investments standing in the name of the Fund subject to the prior approval of the Regional Provident Fund Commissioner.
21. Any commission, incentive, bonus or other pecuniary rewards given by any financial or other institutions for the investments made by the Trust should be credited to its account."
7. It is claimed by the petitioner that the Central Government by their notification dated 27.03.1997 directed the Board of Trustees of the exempted Funds to invest the accumulation of amounts collected under the Provident Fund as per the pattern indicated by them. The investment pattern and the percentage of amount to be invested was stated as 25% in Central Government Securities, 15% in Government Securities and other negotiable securities, 40% in respect of Bonds/Securities of public Financial institutions and 20% to be invested in any of the 3 categories set out above.
8. According to the petitioner, they decided to invest the amounts under the first respondent company viz., Madhya Pradesh State Industrial Development Corporation (for short MPSIDC) having office at Bhopal in Madhya Pradesh utilising the agency viz., the third respondent M/s.Karvy Consultants Limited. The petitioner Trust forwarded the demand draft of Rs.20 lakhs to the third respondent with a covering letter dated 04.11.1999. According to the petitioner, a resolution was also passed by the Board of Trustees of the Thanthai Periyar Transport Corporation Limited Employees Provident Fund Trust, Villupuram authorising any two Management Trustees to deal in and execute necessary documents pertaining to the investment in 14.40% Bonds issued by the first respondent MPIDC. Necessary application form was filled up and petitioner Trust also received a letter of allotment from the first respondent dated 25.03.2000. They were promised to pay 14.40% annual interest at every six months starting from 1st May 2000.
9. However, it was claimed that interest were received upto 31.10.2001. They also claimed that there were delays in respect of interest payment and hence, they had sent a letter dated 05.10.2002 addressed to the first respondent at Bhopal stating that the auditors have raised objections regarding the delayed payment in respect of interest since the money belonged to the workers. Further reminder letters were sent on 19.11.2002, 10.02.2003 and 20.03.2003. A reply was sent on 31.03.2003 on behalf of the first respondent stating that despite their willingness to make payment of interest, they could not do so due to severe liquidity problem that they were facing and they will try to make the payment of Half yearly interest on 14.40% Bonds very soon. In response to the said reply, a letter was sent by the petitioner Trust on 03.07.2003 followed by letters dated 09.09.2003 and 31.01.2004, for which once again, a similar reply was sent on 17.02.2004.
10. It was at that stage, the petitioner Trust issued a legal notice through the District Government Pleader at Villupuram on 15.05.2004. This was followed by further letters dated 31.08.2004 and 12.10.2004 on behalf of the Deputy Manager of the Provident Fund of the Petitioner Trust. In these letters, they claimed the interest dues for four instalments i.e., 30.10.2002, 30.04.2003, 30.10.2003 and 30.04.2004 . It was claimed a sum of Rs.1,44,000/- less T.D.S. of Rs.30,240/- was paid to them on 27.07.2004. The actual amount received was Rs.1,13,760/- as per the endorsement found in the office copy of the petitioner's letter dated 12.10.2004.
11. On behalf of the first respondent, the Deputy General Manager, Bhopal sent a fax message dated 25.01.2005 stating that they were having liquidity problems and they are preparing an action plan to liquidate all the dues. Though it is claimed that the petitioner Trust received a reply from the first respondent filed in pages 33 and 34 of the affidavit, they had enclosed only the copy of pages 2 and 3 of the letter. The first page of the letter is not enclosed by the petitioner in their typed set. In any vent, in that reply for which date is not furnished, it was averred as follows:-
"...We, therefore, request you to please consider the proposal for repayment of the principal amount in full final settlement with open mind and keeping in view the resources and constraints of the Corporation. Kindly let us know of our acceptance to the proposal in the enclosed form so that we may organize the funds required for making payment of principal amount."
12. On behalf of the Tamil Nadu State Transport Corporation Villupuram, Deputy Manager(PF) had sent a letter to the first respondent, a copy of which was marked to the Government of Madhya Pradesh, Secretary to Industries to settle the entire amount together with interest. Further reminders were sent on 10.04.2006 and 10.08.2006. In response to the letter dated 10.08.2006, the General Manager (Bonds) of the first respondent informed them that MPSIDC is facing liquidity problem and litigations and as soon as they receive funds and litigations are cleared, they will to settle the amount. It transpires another state owned Transport Corporation having its headquarters at Kumbakonam who were also similarly cheated by the first respondent had filed a writ petition before this Court seeking for refund of the amount.
13. It was at this stage, the Transport Corporation through its Managing Director sent a letter to the Government of Tamil Nadu informing them about the entire transaction and asked the help of the State Government to take up the issue with the Government of Madhya Pradesh. They also sent a letter to the Government of Tamil Nadu on 29.05.2008, wherein they had mentioned the total investment made by various Corporations of Tamil Nadu, which is as follows:-
"M/s.ASTC Ltd., EPF Trust Rs.37.00 lakhs M/s.DCTC Ltd., EPF Trust Rs.20.00 lakhs M/s.TPTC Ltd., EPF Trust Rs.20.00 lakhs M/s.JTC Ltd., EPF Trust Rs.40.00 lakhs Total Rs.117.00 lakhs"
14. Further, when the petitioner trust received a notice of the convening of meeting of the bondholders on 16.06.2008, for considering the scheme of Arrangement, settlement and compromise under Section 391 and 393 of the Companies Act, they were informed that as per the scheme, bond holders will be placed under Class III Scheme Creditors. Clause - I Scheme of creditors being IDBI and Syndicate Bank. Class-II Scheme of creditors are 10 persons who are Unsecured Creditors and there were as many as 175 Bondholder who had invested total sum of Rs.64.64 crores in the Bonds. Out of this amount, Rs.1.17 crores have been invested by the 4 Transport Corporation Provident Fund Trust. They were also informed that Class - III Scheme Creditors, will be paid the principal amount in four instalments. The first instalment will be paid within 60 days of the approval of the Scheme of settlement. The balance will be paid in three Half-Yearly instalments. A retired Judge of the High Court Justice S.C.Pandey was appointed by the Ministry of Corporate Affairs, New Delhi as the Chairperson of the Bondholders meeting. The decision of the 3/4th of the Bondholders who will be attending the meeting will become final if they hold an aggregate of not less than 25% of the total Bond value. By this process, as Class Scheme holders, the petitioner will only get Rs.15 lakhs as against the investment of Rs.20 lakhs and that too only the principal amount. Therefore, they sought for permission of the Government for necessary guidance on the issue and to proceed further for attending the meeting.
15. Thereafter, the petitioner Trust sent a letter dated 12.06.2008 to the first respondent stating that they should not have treated the PF trust Bondholders on par with other creditors. In the earlier correspondence, it was indicated that they will settle the entire principal amount. Therefore, they requested the first respondent to help them to arrange the full refund. In the meanwhile, the State Government informed the Petitioner Transport Corporation to place the matter before the Board of Directors of the Corporation for appropriate resolution. The first respondent also informed the petitioner Trust that as of now the Scheme already intimated to them is in operation.
16. In the mean while, the meeting of the Board of Directors of Tamil Nadu State Corporation was convened on 09.09.2008 and it was resolved that the Board do not accept the proposal and directed the Managing Director to refer the matter to the Government so as to take up the issue with the Madhya Pradesh Government. The Transport Corporation also addressed a letter dated 27.08.2009 to the chair person appointed for the meeting that in the meeting convened by the Bond holders on 23.09.2008, they do not accept the proposed scheme and have also voted against the Scheme. They had not received either the final outcome of the meeting or the settlement of their dues.
17. The petitioner by a letter dated 26.10.2009 was informed that the implementation of the Scheme was in progress and they were waiting for approval by the Company Law Board. It was thereafter, the petitioner has come forward to file the present writ petition with the prayer already referred to above.
18. It is not clear as to how the writ petition is maintainable both on the ground of territorial jurisdiction as well as on the ground of non-maintainability of the writ petition to enforce the contractual obligation between parties. On the first question of cause of action, the petitioner Trust had stated since the third respondent agency is having office at Chennai and through whom they had invested the money part of cause of action said to have been arisen within the state of Tamil Nadu. But however a perusal of the letter of allotment found in Pages 11 and 12 of the typed set shows that in respect of any clearance regarding redeemable bond, the investors were directed to approach the address referred to below :-
Please address all your correspondence, quoting your Regd. Folio No. to :
Karvy Consultants Limited 46,Avenue 4, Street No.1, Banjara Hills, Hyderabad - 500 034.
19. It is not clear when they had approached the third respondent for making investment and they had already got letter of allotment and also interest in few instalments as to what further role the third respondent could have over the first respondent. The first respondent is a Government created corporation having exclusive functioning at Bhopal. It is not the case of the petitioner that the first and second respondents have got any branch at Chennai or anywhere in Tamilnadu. Therefore, it cannot be said that any cause of action has arisen within the State of Tamil Nadu so as to exercise writ jurisdiction in terms of Article 226(2) of the Constitution.
20. Even assuming without admitting that the territorial jurisdiction vest with this Court to deal with the issue, it is not clear as to how a writ petition under Article 226 is maintainable for the relief claimed in this writ petition. It is also not clear under whose advise the petitioner Trust had invested money in a Corporation that too in a far of place at Madhya Pradesh without knowing the credentials of such Corporation especially when there are enough agencies within Tamil Nadu whose credentials can be verified in a day to day basis by having constant vigil on the money market. Therefore, it leads to an irresistible conclusion that not only the petitioner Corporation, but three other Transport Corporation in respect of the PF Trust had invested money in the first respondent Corporation. The Managing Director of the four Transport Corporations are the chairman of the four Provident Fund Trust had invested a sum of Rs.1.17 crores , the hard earned money of the workers. The present attempt to file a writ petition in a contractual matter is nothing but a statistical purpose to hoodwink the subscribing members/ transport workers that they are taking effective steps. The moment they came to know about the liquidity problem of the first respondent Corporation, the Corporation should have filed a winding up application before the Company Court in Madhya Pradesh or they should have filed an appropriate civil suit attaching the properties of the first respondent Corporation for recovering the amounts. Instead of doing so and by entering into a running correspondence, it is not clear as to how they are saying cause of action arises for recovering the amounts. If they are able to pursue the State Government to take up the issue with the Madhya Pradesh Government to salvage the amounts sunk in the first respondent Corporation, no one will have any quarrel. But at the same time, the prayer of the petitioner cannot be countenanced by this Court as it involves a contractual obligation in relation to money matter of a state owned Corporation in Madhya Pradesh. If at all any remedy open to them is for the petitioner to pursue the appropriate forum is the courts in Madhya Pradesh with a civil litigation. Certainly a writ petition will not lie in such matters.
21. The Supreme Court while dealing with the power under Article 226 relating to investment of contractual right has held such a writ petition is not maintainable and the court must draw a clear line between the powers of a civil court and that of a writ court and the High Court cannot usurp the jurisdiction of the Civil Court in such matters. In this context, it is necessary to refer to certain decisions of the Supreme Court which will have bearing on this issue.
22. In National Highways Authority of India v. Ganga Enterprises, reported in (2003) 7 SCC 410, in paragraph 6,it was held as follows:-
"6. The respondent then filed a writ petition in the High Court for refund of the amount. On the pleadings before it, the High Court raised two questions viz.: (a) whether the forfeiture of security deposit is without authority of law and without any binding contract between the parties and also contrary to Section 5 of the Contract Act; and (b) whether the writ petition is maintainable in a claim arising out of a breach of contract. Question (b) should have been first answered as it would go to the root of the matter. The High Court instead considered Question (a) and then chose not to answer Question (b). In our view, the answer to Question (b) is clear. It is settled law that disputes relating to contracts cannot be agitated under Article 226 of the Constitution of India. It has been so held in the cases of Kerala SEB v. Kurien E. Kalathil2, State of U.P. v. Bridge & Roof Co. (India) Ltd.3 and Bareilly Development Authority v. Ajai Pal Singh4. This is settled law. The dispute in this case was regarding the terms of offer. They were thus contractual disputes in respect of which a writ court was not the proper forum. Mr Dave, however, relied upon the cases of Verigamto Naveen v. Govt. of A.P.5 and Harminder Singh Arora v. Union of India6. These, however, are cases where the writ court was enforcing a statutory right or duty. These cases do not lay down that a writ court can interfere in a matter of contract only. Thus on the ground of maintainability the petition should have been dismissed."
(Emphasis added)
23. In Shanti Devi v. State of Sikkim reported in (2008) 14 SCC 220, in paragraphs 21 and 22, the Supreme Court held as follows:-
"21. What is of grave concern is the fact that the learned Judges completely disregarded the civil law relating to eviction and directed the writ petitioner on her writ petition for different reliefs to hand over possession of the tenanted premises to Respondent 2. The case in hand is an example of how the writ courts have in recent times either forgotten or ignored the line between the reliefs which could be given by the civil courts and the constitutional courts. The learned Judges appear to have lost sight of the fact that they were deciding a writ petition for reliefs prayed for by the writ petitioner and not a civil suit for eviction against her and that in such a proceeding no mandatory order of eviction could be passed and certainly not against the writ petitioner herself. In fact, after imposing the cost of rupees one lakh while dismissing the writ petition, the learned Judges added insult to injury by directing the writ petitioner to also vacate the premises, where she was running her business for about thirty years, within a week from the date of the order.
22. While deciding the writ petition, the learned Judges appear to have shifted their focus from the reliefs prayed for in the writ petition to what relief could be given to the respondents therein. This appears to be the reason for the learned Judges to have passed a mandatory order of eviction on the appellant's writ petition, wherein she had, inter alia, prayed for a direction on the authorities to issue a fresh trade licence to her on her husband's death. The learned Judges referred to the order passed in the earlier writ petition filed by the appellant for similar reliefs which had been disposed of with a direction to the appellant to approach the Joint Secretary of the department concerned for guidance as to how the requirements for the grant of a trade licence could be complied with. The learned Judges do not appear to have considered the fact that the appellant had complied with all the requirements except the requirement of obtaining a no-objection certificate from Respondent 2 who was bent upon evicting her from the tenanted premises from where she was running her business. The learned Judges generally observed that the appellant had totally failed to comply with the directions and the terms and conditions contained in the State's letter dated 17-9-2004. The order imposing cost of rupees one lakh and directing the appellant to vacate her tenanted premises and to deliver possession thereof to Respondent 2 follows such observation. The constitutional issues raised by the appellant regarding the provisions of the Sikkim Trade Licence and Miscellaneous Provisions Rules, 1985, were neither considered nor addressed by the learned Judges while disposing of the writ petition. The learned Judges have, in fact, observed that it was not necessary for the Court to go into the matter in-depth as the writ petition deserved to be dismissed with heavy costs."
24. In P.R. Murlidharan v. Swami Dharmananda Theertha Padar, reported in (2006) 4 SCC 50, the supreme court observed as follows:-
"13. Furthermore, the jurisdiction of the civil court is wide and plenary. In a case of this nature, a writ proceeding cannot be a substitute for a civil suit."
25. Hence, the writ petition is liable to be dismissed. However, this court is not inclined to leave the matter at it. From the above narration of facts, it will be clear that some of the officers of the Transport Corporation must have obtained pecuniary advantage in investing huge amounts with a Corporation which do not have enough wherewithal to repay. This aspect will have to be enquired into by the State Government. When the Transport Corporation sought for guidance from the State Government, the State Government should have ordered for an enquiry including a vigilance enquiry to find out as to whether any pecuniary advantage was obtained by the officers of the various transport corporations in investing the money into the first respondent corporation and also fixing the responsibility on those officers. It cannot be made to appear as if that the Trustees of which the Managing Director is its ex-officio chairman of Transport Corporation have taken prudent steps in securing the amounts collected from the workers as well as transport corporations. Therefore, a copy of the order will be marked to the Chief Secretary to Government, Government of Tamil Nadu, Fort St.George, Chennai -600 009 for further action including any civil or criminal action against officers of such corporation who are responsible for such investment. They should render advise for appropriate steps to be taken by such Trust or the Transport Corporation in an appropriate Court. They should not rest contend themselves about a non-maintainable writ petition filed before this Court for statistical purpose.
26. An exempted Trust under Section 17 is also controlled by the provisions of Para 27, 27A, 27AA of the Appendix set out above. Besides in Para 20 of the EPF Scheme 1952, every PF Trust shall intimate the Provident Fund Commissioner the nature of investment standing in the name of the fund. Therefore, the Regional Provident Fund Commissioner Tamil Nadu and Pondicherry Region, must also enquire from the records whether any such intimation was given to them and the further course of action that the provident fund organisation is proposed to take against the exempted Trust which had lost as much as Rupees One Crore in investing in some dubious Corporation. Hence, a copy of this order will also be marked to the Regional provident Fund Commissioner.
27. The writ petition stands dismissed with the above directions. No costs. Consequently, connected miscellaneous petition is closed.
Index : Yes/No 02.02.2012
Internet: Yes/No
svki
To
1.The Managing Director,
Madhyapradesh State Industrial Development Corporation,
(A Government of Madhya Pradesh
undertaking), AVN Towers I, II and II Floors,
Plot No.192 Zone 1,
Maharana Pratap Nagar, Bhopal,
Madyapradesh - 462 011.
2.The General Manager (Accounts)
Madhya Pradesh State Industrial Development Corporation,
(A Government of Madhya Pradesh
undertaking), AVN Towers I, II and II Floors,
Plot No.192 Zone 1,
Maharana Pratap Nagar, Bhopal,
Madyapradesh - 462 011.
3.The Chief Secretary to Government,
Government of Tamil Nadu,
Fort St.George, Chennai - 600 009.
4.The Regional Provident Fund Commissioner, (TN & P)
Royapettah High Road, Chennai -600 014.
K.CHANDRU,J.
Svki
W.P.No.2323 of 2012
02.02.2012