Gauhati High Court
WP(C)/2155/2017 on 28 January, 2025
Author: Soumitra Saikia
Bench: Soumitra Saikia
1
GAHC010195142017
THE GAUHATI HIGH COURT AT GUWAHATI
(The High Court of Assam, Nagaland, Mizoram and
Arunachal Pradesh)
PRINCIPAL SEAT AT GUWAHATI
WP(C) No.2155/2017
Sri. Anil Hazarika,
Son of Lt. Sarbeswar Hazarika,
Resident of Suarnarekha Path, Kamar
Chuburi,
Tezpur, Post Office- Tezpur,
Police Station- Tezpur,
District- Sonitpur, Assam, Pin- 784001,
Presently holding the post of Managing
Director,
M/s. Assam Polyster Co-operative Society
(APOL) Limited.
...... Petitioner
-Versus-
1. The Union of India, represented by the
Secretary to the Government of India,
Ministry of Labour & Employment, New Delhi
- 110001.
2. The Central Provident Funds Commissioner,
Employees Provident Funds Organization,
1|P a ge
Bhavishya Nidhi Bhawan, New Delhi -
110066.
3. The Regional Provident Funds Commissioner,
Employees Provident Funds Organization,
Bhangagarh, Guwahati - 781005.
4. The Assistant Provident Fund Commissioner
& Authorized Officer, Employees Provident
Funds Organization, Bhangagarh, Guwahati
- 781005, Kamrup Metropolitan District,
Assam.
5. The Recovery Officer, Employees Provident
Funds Organization, Bhangagarh, Guwahati
- 781005, Kamrup Metropolitan District,
Assam.
6. The Additional Chief Secretary to the
Government of Assam, Cooperation
Department, Dispur, Guwahati - 781006.
7. The Registrar of Co-operative Societies,
Assam Khanapara, Guwahati - 781022.
8. The Officer-in-Charge, Chandmari Police
Station, Guwahati - 781003, Kamrup
Metropolitan District, Assam.
......Respondents.
BEFORE HON'BLE MR. JUSTICE SOUMITRA SAIKIA For the Petitioners: Mr. M. Mahanta, Advocate For the Respondents: Mr. D. Dey, SC, PF Mr. S.K. Talukdar,
2|P a ge SC, Cooperation Dept. Date of Hearing: 04.12.2024, 10.12.2024,17.12.2024, & 28.01.2025 Date of Judgment and order : 28.01.2025 Judgment and Order (Oral) Heard Mr. M Mahanta, learned counsel for the petitioner. Also heard Mr. D. Dey, learned Standing Counsel for the Provident Fund for respondent Nos. 2, 3, 4 and 5, Mr. S.K. Talukdar, learned Standing for the Corporation Department for respondent Nos. 6 and 7.
The petitioner before this Court at the relevant point in time was employed as the Managing Director of the Assam Polyester Cooperative Society Ltd. which was popularly known as APOL. The society was registered on 14.09.1981 having 99.20% of its share by the Government of Assam. Apart from the shareholding pattern in the Cooperative Society, the Government of Assam also provided financial assistance from time to time. The Cooperative Society had run a Mill for manufacturing of polyester yarn for use in textile. Subsequently, because of huge financial losses suffered by the Society and also because of certain difficulties which arose in the course of
3|P a ge the management of the Society, the Management of the Mill and the Society was forced to stop the production. The Mill was purportedly closed from December, 2016. Because of extreme financial crunch suffered by the Society, even monthly salaries of the employees could not be paid because of its failure to pay statutory dues under the Employees' Provident Funds and Miscellaneous Provisions Act, 1952, for the periods of June 2006 to August 2012, a certificate came to be issued by the Recovery Officer of the Employees Provident Fund Organization for recovery of arrear provident fund dues. The petitioner at the relevant point in time, having assumed the charge of the Office of the Managing Director took steps for payment of the arrears due and paid an amount of Rs. 10,00,000/- in two installments despite the extreme financial crunch suffered by the Society. The petitioner took all steps to generate funds by requesting the appropriate Department of the Government for financial assistance. However, the complete dues in respect of provident fund arrears could not be cleared in spite of efforts put in by the petitioner during his tenure as the Managing Director. Thereafter, a showcause notice dated 16.03.2017 was issued to the petitioner and the petitioner appeared personally before the Recovery Officer on 28.03.2017 along with the Chairman and Vice Chairman of the APOL and submitted their replies. Thereafter, the Recovery Officer issued a Warrant of Arrest bearing No.As/1874/Recovery/733-34 dated 29.03.2017 against the petitioner directing the arrest of the petitioner in exercise of its powers under section
4|P a ge 8(B) of the Employees Provident Fund and Miscellaneous Provisions Act, 1952. Being aggrieved, the present writ petition has been filed before this Court.
The learned counsel for the petitioner contends that the petitioner, who was serving as the Managing Director of APOL retired on 30.09.2019, and after his superannuation, the position was filled by another incumbent. Learned counsel for the petitioner submits that under Section 8(B) of the Employees Provident Fund & Miscellaneous Provisions Act, 1952 (hereinafter referred to as the Act of 1952), the Recovery Officer has a specific sequence of actions to follow at the time of recovering the dues. The first method involves the attachment and sale of movable or immovable property of the establishment, and only after that the Recovery Officer can resort to measures like arrest and imprisonment. The petitioner's counsel argues that the Recovery Officer bypassed the first mode of recovery by directly issuing an arrest warrant against the petitioner. This was despite the petitioner's earlier appearance before the Recovery Officer, where he provided a detailed explanation of the poor financial state of the Corporation, which led to the pending arrears. The counsel further asserts that the Recovery Officer should have pursued attachment and sale of the Corporation's property before resorting to arrest. Additionally, the counsel mentions that the Cooperative Society owes a sum of Rs.71,00,000/- (Rupees seventy-one lakh), which remains unpaid, and it is necessary for both the Society and the relevant Government Department to take action to
5|P a ge resolve the matter. He refers to judgment of the Bombay High Court rendered in Kanalyalal Prabhudas Maru and Others vs. Regional Providnt Fund Commissioner, Maharashtra and Goa & Others reported in 2002 (1) LLN
918. Referring to the said judgment, he submits that in a similarly situated matter the Bombay High Court had also rendered a finding that ordinarily the first mode of recovery is attachment and sale of property to be resorted to by the Recovery Officer rather than issuing a warrant of arrest in the name of the Primary Officer. He also refers to the judgment of the Andhra Pradesh High Court rendered in D.R. Venkatesh VS Regional Provident Fund Commissioner, Hyderabad reported in 2004 3 LLJ 952 and Regional Provident Fund Commissioner, Bangalore VS Deccan Foam Plastics Pvt. Ltd. reported in 2005 2 LLJ 11. Referring to the judgments rendered by the Andhra Pradesh High Court, learned counsel for the petitioner submits that in those matters also the Hon'ble Court had rendered a finding that the recovery ought to be resorted to by following the procedure prescribed in under section 8(B) before issuance of a warrant of arrest. He, therefore, submits that in view of the fact that the Recovery Officer did not resort to the first mode of recovery and also taking into consideration the superannuation of the writ petitioner in the meantime, his warrant of arrest should be interfered with and set aside leaving the question of recovery of provident fund dues to be recovered from the society by the means prescribed under the provisions of the Act of 1950 read with Assam Cooperative Societies Act 2007.
6|P a ge Mr. D. Dey learned counsel representing the respondent Provident Fund Authorities submits that an affidavit has been filed enclosing the claims of the writ petitioner. He submits that as per the records available with the provident fund authority, an amount of Rs.10,00,000/- (Rupees ten lakhs) was due towards arrear provident fund and in spite of notices being issued, the petitioner failed to take necessary steps for payment of the provident fund dues. He submits that since the petitioner at relevant point in time was employed as a Managing Director, the Primary Officer of the Cooperative Society, the warrant of the arrest as prescribed under section 8(B) was issued against him. He submits that if the Cooperative Society releases the payments due then the warrant can be recalled.
Mr. S.K. Talukdar, learned Standing Counsel representing the Cooperative Department, also submits, referring to the affidavit filed on behalf of the Co-operation Department, that the Cooperative Society had been facing severe financial difficulties. A decision was adopted during a meeting of the Task Force for PSE reforms held on 08.07.2024, wherein the proposal for floating a Voluntary Retirement Scheme (VRS) was discussed. Once the proposal is finalized, and steps are taken for implementing the VRS, including the execution of agreements with the employees who opt for VRS, it is imperative that the proposal includes all necessary provisions, including the payment of provident fund dues, in case the proposal fails or faces any complications in its execution. He makes his
7|P a ge submission on instructions received from the Additional Registrar of the Cooperative Societies Department, Government of Assam.
The learned counsel for the parties have been heard and the pleadings available on record have been perused.
The provisions of the relevant Act placed before the Court have also been carefully noted and also the judgments pressed into service.
There is no dispute with regard to the facts as urged by the learned counsel for the parties. Therefore, the only question before this Court is whether a warrant of arrest can be issued under Section 8(B) without first resorting to the procedure prescribed under Section 8(b)(a) namely attachment of the property for realising the amount due. Therefore, reference to the relevant provisions of Section 8(B) of the Employees Provident Fund and Miscellaneous Provisions Act, 1952 reads as under:
[8B. Issue of certificate to the Recovery Officer.--(1) 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 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 proportion 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 authorised officer may
8|P a ge issue a certificate under sub-section (1), notwithstanding that proceedings for recovery of the arrears by any other mode have been taken.
A careful perusal of the Section 8(B) of the Employees Provident Fund and Miscellaneous Provisions Act, 1952 reveals that there are three modes of recovery. The arrest of the employer and his detention in prison is the second mode prescribed under Section 8(B) for recovery. From the pleadings available before the Court as well as the submissions made by the learned counsel for the parties, it is seen that there was no attempt by the Provident Fund Authority to resort to recovery by the first mode, namely, attachment and sale of movable or immovable property of the establishment or the employer. The Bombay High Court in Knalyalal Prabhudas Maru (supra) had the occasion to deal with a similar issue. Upon perusal of the judgments rendered in D.R. Venkatesh Vs. Regional Provident Fund Commissioner, Hyderabad reveals that the High Court of Bombay had returned the finding that notwithstanding the arrest and detention of the employer being prescribed as one of the modes for recovery under section 8(B) of the Act of 1952, ordinarily the first mode as prescribed namely attachment and sale of movable or immovable property ought to have been resorted to towards recovery of arrear provident fund dues.
The Andhra Pradesh High Court had also returned a similar finding following the judgment by the Bombay High Court.
The pleadings available before the Court does not reflect that such a mode was resorted to by the Provident Fund Authorities or at least offer any explanation as to why
9|P a ge such a course was not or could not be resorted to by the Provident fund authorities, notwithstanding that it is clearly prescribed under the provisions of section 8(B). It is also necessary to mention here that during the course of the hearing the learned Standing Counsel representing the Provident Fund Authorities, on a pointed query by the Court regarding provident fund the dues outstanding payable by the society concerned, the learned counsel representing the Provident Funds Department placed before the Court a communication to show that for the period 06/2006 to 08/2012, out of the total amount of Rs.42,25,839/- (Rupees forty two lakh twenty five thousand eight hundred thirty nine) towards provident fund dues, an amount of Rs.34,54,073/- (Rupees thirty four lakh fifty four thousand seventy three) has been remitted leaving an amount of Rs.7,71,766/- (Rupees seven lakh seventy one thousand seven hundred sixty six) as the amount due have been paid by the authorities. The instructions placed before the Court are kept in the case record.
From these instructions it is seen that notwithstanding the financial hardship projected to have been suffered by the Cooperative Society, a substantial amount has already been remitted towards provident fund dues and the arrears. That apart, there is also no dispute that the petitioner who was employed as the Managing Director of the Cooperative Society had in the meantime superannuated w.e.f 30.09.2019 and a new incumbent has been appointed in place. Although no specific materials are 10 | P a g e placed before the Court, learned counsel for the Cooperative Society also submits that there is a process underway for liquidation of the Cooperative Society. In this context it is also necessary to refer to the provisions of the Assam Cooperative Act, 2007, which provides for recovery of sums due and enforcement of obligations and also prescribes for cancellation of registration and winding up proceedings in respect of Cooperative Society registered under the Cooperative Societies Act.
Under such circumstances, this Court is persuaded to adopt the view of the Bombay High Court as well as the and Andhra Pradesh High Court and hold that the action of the provident fund authorities are not justified in issuing a warrant of arrest against the petitioner in the first instance towards recovery of outstanding or arrear provident fund dues. The prescribed authority ought to have resorted to the first mode prescribed under section 8(B) towards recovery. As discussed above no explanation has been given by the respondent authority for not resorting to the first mode of recovery prescribed under 8(B) and issuance of a warrant of arrest instead against the petitioner. There is also no material on record to suggest that the petitioner refrained from offering cooperation in respect of the steps undertaken by the authority towards recovery of the arrear dues.
Under such circumstances, this Court is inclined to allow the writ petition and interfere with the warrant of arrest dated 29.03.2017 issued against the writ petitioner. In view of the discussions above, the warrant of arrest 11 | P a g e issued by the respondent authority against the writ petitioner is hereby set aside. However, this Court directs the Provident Fund Authority to initiate proceedings as applicable under the provisions of law for recovery of the outstanding dues against the said Cooperative Society. The Cooperation Department is also given liberty to take steps for winding up of the Cooperative Society in the event it is found that the conditions necessary for proceeding for winding up in respect of the same Cooperative Society is applicable.
With the above observations and directions, the writ petition stands allowed and accordingly disposed of.
The interim order is made absolute and stands merged.
JUDGE (S.BORMAN) 12 | P a g e