Auto Piston Mfg. Co. (P) Ltd. And Another vs Auto Piston Mfg. Co. (P) Ltd on 30 August, 2012

[Cites 5, Cited by 1]

Punjab-Haryana High Court

Auto Piston Mfg. Co. (P) Ltd. And Another vs Auto Piston Mfg. Co. (P) Ltd on 30 August, 2012

1. The case in hand is one in which serious infirmities in the procedure adopted by the Employees Provident Fund Appellate Tribunal (for short, `the Tribunal') have been brought to the notice of this court. Earlier also, the issue was considered in C.W.P. No. 17157 of 2010--M/s Mahindra and Mahindra Ltd. v. The Employees Provident Fund Appellate Tribunal and another, decided on 24.7.2012.

2. The petitioners herein have approached this court challenging the order dated 14.12.2010, passed by the Tribunal in Appeal No. 86/11 of 2007.

3. Briefly, the pleaded facts are that vide order dated 16.1.2007, assessment of damages under Section 14-B of the Employees' Provident Fund and Miscellaneous Provisions Act, 1952 (for short, 'the Act') for the period from August, 1986 to March, 2001 was made. The order was impugned by the petitioners before the Tribunal by filing the appeal. The appeal having been rejected vide impugned order, the petitioners are before CWP No. 1526 of 2011 [2] this court.

4. Learned counsel for the petitioners primarily submitted that the Tribunal has principal seat at New Delhi. No doubt, it can hold court at camp office at different places in the country. The case of the petitioners was taken up at Camp Office, Amritsar on 14.12.2010, but qua the same no notice was served upon the petitioners or their counsel, on account of which they were unable to put in appearance and the appeal was dismissed. In the absence of notice, decision of the appeal ex-parte, which was filed way back in the year 2007, while taking up the same at Camp Office at Amritsar in 2010, has prejudiced the petitioners. They came to know about the impugned order only when a notice dated 18.1.2011 to show cause as to why arrest warrants be not issued, was received from the Recovery Officer. Immediately steps were taken and the petitioners approached this court. He further submitted that in case an opportunity is granted, the petitioners will present their case before the Tribunal. The damages in the present case have been levied for the period from August, 1986 to March, 2001, for which even notice was issued for the first time on 14.12.2006 after huge delay. Due to huge losses suffered, the petitioner-company had approached Board for Industrial and Financial Reconstruction (for short, ' the BIFR') under the Companies Act, 1956 for rehabilitation. While rejecting the plea, BIFR recommended for winding up of the company to this court. Vide order dated 1.2.2001 passed in CP No. 17 of 2001, this court directed winding up of the petitioner-company and the official liquidator was ordered to take over the management and the assets.

5. Thereafter, the management filed C. P. No. 47 of 2001, titled as Shri Piara Singh and another vs Auto Piston Mfg. Co. (P) Ltd., and others before this court for revival of the company. The dues of the secure creditors were settled. The banks were paid in terms of full and final settlement. On 27.4.2006, a sum of ` 94,33,759/- was even paid to the provident fund organisation. On 16.1.2007, the Assistant Provident Fund Commissioner (for short, 'the Commissioner') passed order against the petitioner raising a demand of ` 78,13,433/- on account of interest and damages. Simultaneously on the same date, another demand of ` CWP No. 1526 of 2011 [3] 2,06,39,633/- was raised on account of interest and damages. The petitioner company preferred appeal against the aforesaid order before the Tribunal. Vide order dated 27.6.2007, the Tribunal stayed the operation of the impugned order passed by the Commissioner subject to deposit of ` 50,00,000/-. The appeal thereafter came up for hearing on 31.8.2010. As both the parties did not have notice of hearing, none appeared on that date. As the building in which the office of the Tribunal was situated, caught fire on 31.8.2010, the case was adjourned to 18.11.2010. Even though the case was to be listed on 18.11.2010 but still on 12.11.2010, it was directed to be listed on 14.12.2010 at Camp office, Amritsar. The notice allegedly issued for the aforesaid date was not served upon the petitioner-company. The appeal was decided ex-parte on 14.12.2010.

6. On the other hand, learned counsel for the respondents submitted that despite opportunity the petitioner-company did not represent its case before the Tribunal. The Tribunal did not have any other option but to dispose of the appeal. Once the appeal had been filed, the petitioner should have enquired about the status thereof. It could not just sit at home and wait for its decision. The cases of the Amritsar or nearby area were kept for hearing at the camp office at Amritsar only for the benefit of the establishments. Nothing has been produced on record to show that the notice issued by the Tribunal fixing the date of hearing at Amritsar was not served upon the petitioner-company. Under the circumstances, no interference of this court is called for in the case in hand.

7. Heard learned counsel for the parties and perused the paper book. 8. The record of the Tribunal had been called for. It has been perused.

9. The manner in which the proceedings have been conducted and the record has been maintained before the Tribunal needs to be noticed before this court proceeds to deal with the case on merits.

10. On the first page on file of the Tribunal is the opening sheet apparently filled by a Judicial Clerk in the office of the Tribunal in appeal no. 86 (II) 07. It shows that the appeal was filed on 31.1.2007. It was directed to be listed before the court on 15.2.2007. On 15.2.2007, the hand CWP No. 1526 of 2011 [4] written order is there on the back of the page, which reads as under:-

1 "Sh. Pradeep Saini, Adv. Appellant.

Sh. S.K. Pandey, Advo. Respdt.

Case at request adjd to 27.4.07 at 10 AM for filing reply. Copy of appeal is sent on the counsel today."

Sd/-

15.2.07"

11. Thereafter on the next page is a communication sent by the counsel for the appellant on 26.7.2007 informing the Tribunal about filing of Civil Writ Petition No. 11219 of 2007 before this court, which was received in the office on 27.7.2007 and was directed to be placed on file. Along with the aforesaid communication copy of the writ petition was annexed which is running into 58 pages. Thereafter is the reply filed by the Regional Provident Fund Commissioner to the appeal pending before the Tribunal and in the end is the order dated 14.12.2010 passed by the Tribunal along with a letter forwarding the same to the petitioner-company. In the letter forwarding the record to this court, the Registrar of the Tribunal has mentioned that it contains the memo of parties, the reply and the final order, total 66 pages. In the subject of the letter, correct title of the case has been mentioned but in the body of the letter it is mentioned as "M/s Sibar Medicare Ltd. vs. APFC, Guntur". It is stated in the letter that pages 1 to 59 is the memo of appeal, whereas the same is the copy of CWP No. 11219 of 2007 filed by the petitioners before this court.

12. With the writ petition, the petitioners have placed on record, an order dated 27.6.2007 (Annexure P-9) passed by the Tribunal directing admission of the appeal and mentioning that copy of the appeal was served upon the counsel for the respondent, who was granted four weeks' time to file reply. The operation of the impugned order before the Tribunal was stayed subject to deposit of ` 50 lacs within four weeks. The same is extracted below:-

"27.06.2007 Present Shri P. K. Saini, Counsel for the appellant.

Shri S. K. Pandey, Counsel for the respondent.

CWP No. 1526 of 2011 [5]

Appeal is admitted for hearing Shri S. K. Pandey accepted the notice for the respondent. Copy of the appeal served on him. Let him file reply within four weeks with an advance copy of the same to the appellant. Matter be listed before the registrar for completing pleadings. Till disposal of appeal, operation of impugned order shall remain stayed and respondent is directed not to take any coercive measure against the appellant subject to appellant depositing a sum of Rs. Fifty lakh with the respondent within four weeks from today."

13. The aforesaid order is not available on record sent by the Tribunal. The CWP No. 11219 of 2007 filed by the petitioners impugning the order dated 27.6.2007 before this court was disposed of on 1.10.2007 waiving of the requirement of pre-deposit and directing the Tribunal to hear the appeal on merits. The aforesaid order also is not available in the record sent by the Tribunal.

14. The petitioner has also placed on record an order dated 31.8.2010 (Annexure P-11) passed by the Registrar, which is as under:-

Date : 31.08.2010 Present None for the appellant None for the respondent.

Fresh notice be issued to both the parties.

The respondent is directed to file counter within 8 weeks.

The case is adjourned to 18.11.2010.

Sd/-

(Vishwanath) Registrar, EPFAT."

15. Copy of the aforesaid order is also not available in the record of the Tribunal. Considering the fact that the orders produced by the petitioners with the petition were not available on record of the Tribunal, on 24.8.2012, counsel for the petitioners was asked to produce the copies thereof from which the same were typed. Today, he produced before this court a certified copy of the order dated 31.8.2010. As to why the aforesaid CWP No. 1526 of 2011 [6] order is not on record on the file of the Tribunal is a matter of guess.

16. Annexure P-12 placed on record is a notice dated 23.9.2010 intimating the parties the next date of hearing as 18.11.2010. Even the copy of the aforesaid notice is also not on record. Though a photo copy thereof was produced by counsel for the petitioners in court.

17. Annexure P-13 is copy of another notice dated 12.11.2010 intimating fixation of hearing of the appeal on 14.12.2010 in the camp office at Amritsar. Even the aforesaid notice is also not on record. Photo copy of this notice as well was produced by the petitioners at the time of hearing. As to by adopting which mode the aforesaid notice was served upon the petitioner-company is not borne out from the record. On 14.12.2010, the Tribunal by passing a cryptic order dismissed the appeal filed by the petitioner-company in its absence.

18. The case in hand is not an isolated case in which the procedure adopted by the Tribunal does not inspire confidence. Earlier also in Civil Writ Petition No. 17157 of 2010 M/s Mahindra and Mahindra Ltd. Vs The Employees Provident Fund Appellate Tribunal and another vide order dated 24.7.2012, the record of the appeal before the Tribunal pertaining to that case was examined and number of discrepancies were noticed. The observations made by this court in M/s Mahindra and Mahindra Ltd.' s case (supra) are extracted below:-

"25. Before parting with the order, this court would like to comment on the manner in which the proceedings have been conducted. As has already been noticed above, the case was not being taken up date-wise i.e. on a date fixed for hearing. There are two different orders passed on one date fixing two different dates of hearing. The Tribunal is discharging important quasi judicial function. The cases cannot be dealt with in the manner in which the same has been dealt with in the present case. In some of the zimni orders even it has not been mentioned as to who had signed that order. Neither the name of the person who had signed it nor his CWP No. 1526 of 2011 [7] designation has been mentioned. In future it is directed that in all interim or final orders whatever are passed in an appeal or other proceedings by the Tribunal, the officer who signs those orders, his name and designation shall be clearly mentioned.

26. In courts all proceedings take place in writing. As the file shows in the present case after 21.9.2007 when the case was adjourned to 14.12.2007, only a notice is available on record fixing the date of hearing as 19.5.2010 at Chandigarh. There is no order to take up the file on any date and directing for fixing next date of hearing and issuance of notice to the parties. In the absence thereof, under what authority a notice was issued to the parties is not available on record. The Principal seat of the Tribunal is at Delhi. As was informed, some times, it holds Circuit Bench at different places. Whichever cases are to be fixed at Circuit Bench, there has to be specific order in the file fixing the case in a particular bench. The aforesaid order should either be passed in the presence of the counsels or the parties when it listed at the Principal Bench or it should be ensured that the notice has, in fact, been served upon both the parties. Whatever the appeal is taken up for hearing there has to be an interim order on record passed on that date showing the proceedings. One of the method to ensure service of notice on the parties could be through the concerned Regional office of Employees' Provident Fund Organisation, as the establishment normally pertains to that area. We are living in the era of technology. For the means of communication, the same should be utilised. Wherever the establishments are having fax or email I.D. efforts should be made to sent a copy of the notice through that mode as well. In case it is CWP No. 1526 of 2011 [8] successful, this can be adopted as the method of service of notice in future. In addition thereto, the counsel who filed the appeal should also be informed. The same can also be by way of emails. At the time of filing of the appeal, it should be a requirement that the party, and the counsel who has filed the appeal should provide their complete address, telephone number, fax number and email address so as to enable the Tribunal to communicate with them."

19. In the present case as well, there is nothing on record to show as to who directed preponing of hearing of the case from 18.11.2010 and directed its fixation at Amritsar on 14.12.2010, by a notice dated 12.11.2010. Without recording a definite finding regarding the fact that notice has been served on the petitioner-company , the appeal was taken up for hearing and dismissed ex-parte. Though it is claimed that the case was fixed for hearing before the Tribunal on 14.12.2010 and a perusal of the impugned order, Annexure P-14, passed by the Tribunal shows that the appellant did not advance arguments and the appeal was reserved for orders as per rule 15 after hearing the respondent. There is no order available on file to that effect. But strangely enough that though on 14.12.2010, the appeal was reserved for order, however, the order is also of the same date. In case it was pronounced on same date, where was the question of reserving the same. The normal place of business of the Tribunal is at Delhi though it holds court at different places in the country but before a case is fixed to be taken at camp office it has to be ensured that the notice has been duly served on the party concerned.

20. Hence, from the perusal of the record, it could not be made out that the petitioner-company was intimated about the fixation of date of hearing at camp office at Amrisar, because of which it could not put in appearance there, which resulted in dismissal thereof.

21. No doubt, once on account of absence of counsel for the parties on 31.8.2010, the appeal was taken up before the Registrar of the Tribunal, notice was directed to be issued to both the parties for 18.11.2010 and the CWP No. 1526 of 2011 [9] date of hearing fixed before the Tribunal being 14.12.2010, the petitioner- company could very well find out what happened on 18.11.2010 and thereafter followed the case even if listed before the Tribunal at Amritsar. However, the fact remain that what to talk of finding from the record that notice dated 23.9.2010 intimating the date of hearing before the Tribunal as 18.11.2010 was served upon the petitioner-company or not, even a copy of the notice is also not available on record. Hence, the benefit of doubt to that extent is granted to the petitioners.

22. As the petitioner-company has been condemned unheard without intimating it about the date of hearing fixed at Circuit Bench at Amritsar, the impugned order passed by the Tribunal deserves to be set aside on this score alone.

23. Still further, a perusal of the order passed by the Tribunal shows that the same is totally cryptic. The order contains 11 paragraphs. What to talk of the reasons, even the citations of the cases referred to in the order have not been mentioned correctly. The operative part of the order is extracted below:-

"6) The applicability of the Act is not questioned. The default is also not disputed. Financial up and down is a common problem in very industrial establishment. So the same is not a justified ground. In the case of Essky Machinery Ltd. vs. RPFC reported in 1998 LLR at page 925, the Hon'ble High Court of Orissa held that, "The financial grounds will not be sufficient for waiving penal damages for delay in deposit of EPF contribution." Similar view was held by the lordship in the case of Hindustan Times Ltd. vs. Union of India reported in 1998 Vol.-II SCC at page 242.

7) In a speaking order reason was assigned stating the objections raised in the proceedings. In the case of RPFC Vs. Allahabad Canning Company reported in 1978 LIC at page 998 the Hon'ble High Court of Allahabad held that "the reason expected to be recorded in a speaking order CWP No. 1526 of 2011 [10] must necessarily depend on the nature of the contention raised in the reply to the show cause notice." Similar view was held by the lordship in the case of TCM Woolen Mills Ltd. Vs RPFC reported in 1980 Vol. 57 FJR at page 222.

                  8)    No inconsistency is noticed.
                  9)    No inconsistency is noticed.

10) Hence ordered the appeal is dismissed. The order of the authority is hereby confirmed.

11) Send the copy of the order to both parties and record the consent to the record room."

24. Paras 8 and 9 of the order as reproduced above, gives an impression as it was nothing else but comments prepared by some authority for filing reply to some petition. With reference to what the Presiding officer of the Tribunal has mentioned, "No inconsistency is noticed" is not borne out from the record. In paras 8 and 9 of the memo of appeal filed by the petitioner-company before the Tribunal, the averments were regarding the date of receipt of the order and that the impugned order deserves to be set aside.

25. The doctrine of audi alteram partem has three basic essentials. Firstly, a person against whom an order is required to be passed must be granted an opportunity of being heard. Secondly, the concerned authority should provide a fair and transparent procedure and lastly, the authority concerned must apply its mind and dispose of the matter by a reasoned or speaking order.

26. The issue regarding passing of cryptic order was considered by Hon'ble the Supreme Court time and again. It was opined that the requirement of indicating reasons has been judicially recognised as imperative. The reason is the heartbeat of every conclusion and without the same, it becomes lifeless. The reasons at least sufficient to indicate application of mind to the matter before the court is an indispensable part of a sound judicial system. It enables the affected party to know why the decision has gone against him. It is the reasoning alone that can enable a higher or an appellate court to appreciate the controversy in issue in its CWP No. 1526 of 2011 [11] correct perspective and hold whether the reasoning recorded by the authority/court, whose order is impugned, is sustainable in law. Non- recording of reasons could lead to dual infirmities; firstly, it may cause prejudice to the affected party and secondly, more particularly, hamper proper administration of justice. "Reasons" are the links between the materials on which certain conclusions are based and the actual conclusions. Reference can be made to judgments of Hon'ble the Supreme Court in State of Uttaranchal and another v. Sunil Kumar Singh Negi, (2008) 11 SCC 205 and Assistant Commissioner Commercial Tax Department Works Contract and Leasing Kota v. M/s Shukla and Brothers, (2010) 4 SCC 785.

27. Reference to a judgment of Hon'ble the Supreme Court in State of Orissa v. Dhaniram Luhar, (2004) 5 SCC 568 for the purpose is also relevant. Paragraph 8 thereof is extracted below:

"8. Even in respect of administrative orders Lord Denning, M. R. In Breen Amalgamated Engg. Union observed:

"The giving of reasons is one of the fundamentals of good administration."

In Alexander Machinery (Dudley) Ltd. v. Crabtree it was observed:

"Failure to give reasons amounts to denial of justice."

"Reasons are live links between the mind of the decision-taker to the controversy in question and the decision or conclusion arrived at." Reasons substitute subjectivity by objectivity. The emphasis on recording reasons is that if the decision reveals the "inscrutable face of the sphinx", it can, by its silence, render it virtually impossible for the Courts to perform their appellate or exercise the power of judicial review in adjudging the validity of the decision. Right to reason is an indispensable part of a sound judicial system; reasons at least sufficient to indicate an application of mind to the matter before court. Another rationale is that the CWP No. 1526 of 2011 [12] affected party can know why the decision has gone against him. One of the salutary requirements of natural justice is spelling out reasons for the order made; in other words, a speaking-out. The "inscrutable face of the sphinx" is ordinarily incongruous with a judicial or quasi-judicial performance."

28. If the order passed by the Tribunal is considered on various para-meters/principles laid down in the judicial pronouncements with reference to cryptic order, the only conclusion can be that the order in question is not a reasoned order. Hence, the same deserves to be set aside on this ground as well.

29. For the reasons mentioned above, the impugned order passed by the Tribunal is quashed. The matter is remitted back to the Tribunal for fresh consideration on merits. The parties through their counsels are directed to appear before the Tribunal on 1.11.2012 for further proceedings.

30. The petition stands disposed of.

( Rajesh Bindal ) Judge 30.8.2012 mk (Refer to Reporter)

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