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Vishakha Facility Management P Ltd vs Regional Provident Fund Commissioner on 9 September, 2021

Author: Prathiba M. Singh

Bench: Prathiba M. Singh

                                                             Digitally Signed By:DINESH
                                                             SINGH NAYAL
                                                             Signing Date:10.09.2021 16:08:31


$~1
*      IN THE HIGH COURT OF DELHI AT NEW DELHI
+              W.P.(C) 5630/2020 & CM APPL. 29630/2021
       VISHAKHA FACILITY MANAGEMENT P LTD ..... Petitioner
                    Through: Mr. Rahul Sharma, Advocate.
                    versus

       REGIONAL PROVIDENT FUND COMMISSIONER ... Respondent
                      Through: Mr. Rajesh Kumar, Ms. Pooja Gupta
                               and Mr. Saurabh Kumar, RPFC for
                               R-1/EPFO. (M: 8989836941)
                               Mr. Tushar Sannu, Standing Counsel
                               with Ms. Ankita Bhadouriya, Mr.
                               Subham     Jain,  Advocates    for
                               Respondents/IHBAS and Mr. Subhas
                               Chandra Office Assistance for
                               IHBAS. (M: 9911991166)
       CORAM:
       JUSTICE PRATHIBA M. SINGH
                ORDER

% 09.09.2021

1. This hearing has been done through hybrid mode.

2. The application has been moved by the Petitioner seeking directions for withdrawal of letters of attachment issued by the Respondent- Regional Provident Fund Commissioner (hereinafter, 'RPFC') to the clients and banks of the Petitioners. In view of such letter, it is stated that the Petitioners were unable to pay the amount of Rs 50,00,000/- to the RPFC as deposit, as directed by this Court vide order dated 4th August 2021.

3. In view of this situation, and the Petitioner's resultant inability to use their bank accounts or client payments to pay the aforesaid sum of Rs.50,00,000/- to the Respondent, this Court vide order dated 3rd W.P.(C) 5630/2020 Page 1 of 5 Digitally Signed By:DINESH SINGH NAYAL Signing Date:10.09.2021 16:08:31 September, 2021, had suspended the letters freezing the Petitioner's accounts and directed the banks to ensure the Petitioner was able to conduct its usual business. The Court had also directed Mr Saurabh Kumar, RPFC-II to appear on the next date and place on record, all letters through which the Petitioner's accounts had been frozen. Further, this Court had directed the Petitioner to deposit the sum of Rs 50,00,000/- with the CGIT till 8th September, 2021.

4. Further to the last order, a short affidavit has been filed by the RPFC, deposed by Mr. Saurabh Kumar, RPFC-II, who is present in Court today. He has placed on record various notices issued under Section 8F of the Employees' Provident Fund and Miscellaneous Provisions Act, 1952 (hereinafter, "Act"), subsequent to the recovery notice of demand dated 22nd July 2021, passed by the RPFC.

5. A perusal of the same shows that notices have been issued by the RPFC to the clients of the Petitioner, namely, M/S ESIC Hospital, Northern Railways, IHBAS, M/s Indira Gandhi ESIC Hospital, East Central Railway, Shri Mata Vaishno Devi Shrine Board, ORM Office (Jaipur), Campus, Station Road, Divisional Railway Office, (Firozpur, Punjab), Divisional Rail Manager Office (Prayagraj, Uttar Pradesh) and various other clients. Further notices have also been issued for attachment of bank accounts, to various banks namely, Andhra Bank, Corporation Bank, Jain Co-operative Bank, Indian Bank, Punjab National Bank, AXIS Bank, Andhra Bank (Patna Bihar), Andhra Bank (Mathura, U.P.), Corporation Bank (Jaipur) Punjab National Bank (Ahmedabad), Punjab National Bank (Katra, Jammu), Union Bank of India (Dehradun, Uttarakhand), Central Bank of India (Patna, Bihar), State Bank of India (Dilshad Garden, Delhi).

Digitally Signed By:DINESH SINGH NAYAL Signing Date:10.09.2021 16:08:31

6. When enquired by the Court as to under what powers did RPFC take the action of issuing attachment letters and bank freezing letters, ld. Counsel for RPFC and Mr Saurabh Kumar, Recovery Officer, submit that the action was taken under Section 8F of the Act, and certain other provisions. When further enquired as to why the orders of the Central Government Industrial Tribunal (hereinafter 'CGIT') dismissing the appeal due to the failure to deposit, etc. was not awaited for, the answer of Mr. Rajesh Kumar, ld. Counsel is that since the CGIT's order dated 3rd March 2020 was subject to deposit of pre-deposit amount of Rs.3,40,44,872/- and since the stay was vacated, the RPFC took the said action as per the Act.

7. Subsequent to the order dated 12th July, 2021, this Court had granted further time on 4th August, 2021 for deposit of Rs.50,00,000/-. However, after the order of 4th August, 2021, the emails written by the EPFO to the banks were extremely vague and ambiguous as is recorded in the previous order. Thus, none of the banks had de-frozen the accounts. Further, the letters written by the EPFO to the clients of the Petitioner have also had a cascading effect as dues from the said clients have also not been paid to the Petitioners, causing the entire cycle of generation of revenues to come to a complete standstill.

8. On the last date i.e. 3rd September, 2021, this Court had clearly directed that all notices freezing the bank accounts would stand suspended and the letters issued to the clients of the Petitioner shall also stand suspended. However, Mr. Sharma, ld. Counsel for the Petitioner, submits that none of the bank accounts have been de-frozen, except one bank account in Indian Bank. Mr. Rajesh Kumar, ld. Counsel now submits that though the letters/emails sent by RPFC to banks and clients of the Petitioner, W.P.(C) 5630/2020 Page 3 of 5 Digitally Signed By:DINESH SINGH NAYAL Signing Date:10.09.2021 16:08:31 after the order dated 4th August, 2021, may not have been happily worded, after the last order of this Court dated 3rd September, 2021, various emails and letters dated 6th September, 2021 were written to all clients and banks stating that the previous letters stood withdrawn.

9. In view of the order dated 3rd September, 2021 read with the letters dated 6th September, 2021 issued by the RPFC, there is no doubt, whatsoever, that all the freezing orders stand withdrawn. Any bank acting contrary to the order dated 3rd September, 2021, would be liable to face action, in accordance with law. It is made clear that none of the freezing orders shall apply either qua the clients or qua the banks, pursuant to this writ petition.

10. In future the EPFO office ought to ensure that such indiscriminate communications to clients and freezing orders of bank accounts are not written so as to jeopardise the business interests of employers. Instead, less stringent steps such as debit-freeze etc., may be considered as a first step. Freezing of bank accounts ought to be resorted to in exceptional circumstances. Moreover, as observed in the previous order, even after the order dated 4th August 2021, the emails de-freezing the bank accounts were ambiguous.

11. Accordingly, the Petitioner is now directed to make the payment of Rs.50,00,000/-, as directed, within two weeks. If the said payment is not made, the CGIT is permitted to proceed in accordance with law. If the Petitioner faces any difficulties owing to the RPFC's letters issued to the clients or to the banks, it is permitted to move an application before this Court giving the specific names of the officer and of the organisation which is still giving effect to the earlier orders passed by the RPFC. Upon such an W.P.(C) 5630/2020 Page 4 of 5 Digitally Signed By:DINESH SINGH NAYAL Signing Date:10.09.2021 16:08:31 application being moved, this Court would then consider the same in accordance with law.

12. The recovery officer who is present today in Court shall ensure that in future such actions which result in complete freezing of the cycle of revenue are not taken as the same would also be detrimental to the RPFC itself because it would thereafter not be possible for the employers to recover revenues from their clients. Such action ought to be taken after due deliberation and consideration and not in a knee jerk manner.

13. With these observations, the application is disposed of.

14. List before the CGIT on 4th October, 2021 for appropriate orders. The stand of the EPFO is that the Petitioner herein is a habitual defaulter and has also caused enormous difficulties to IHBAS. Accordingly, it is made that if the amount of Rs.50,00,000/- is not deposited by the Petitioner with the CGIT, Mr. Vibhor Kaushik, Director of the Petitioner (Ph No. 9212690456), would be personally liable.

PRATHIBA M. SINGH, J.

SEPTEMBER 9, 2021 Rahul/AK/MS W.P.(C) 5630/2020 Page 5 of 5