Gujarat High Court
Eagle vs Assistant on 22 June, 2011
Author: H.K.Rathod
Bench: H.K.Rathod
Gujarat High Court Case Information System
Print
SCA/15527/2010 19/ 19 ORDER
IN
THE HIGH COURT OF GUJARAT AT AHMEDABAD
SPECIAL
CIVIL APPLICATION No. 15527 of 2010
=========================================================
EAGLE
FASHIONS PVT LTD - Petitioner(s)
Versus
ASSISTANT
PROVIDENT FUND COMMISSIONER & 1 - Respondent(s)
=========================================================
Appearance
:
MR
PH PATHAK for
Petitioner(s) : 1,
MS E.SHAILAJA for
Respondents
=========================================================
CORAM
:
HONOURABLE
MR.JUSTICE H.K.RATHOD
Date
: 22/06/2011
ORAL
ORDER
1. Heard learned advocate Mr.P.H.Pathak for petitioner - Eagle Fashions Pvt. Ltd. and learned advocate Ms.E. Shailaja for respondents - PF Authority.
2. In present petition, petitioner - employer has challenged order passed by PF Authority under Section 7A of PF Act and also order passed by appellate Tribunal rejecting appeal and also challenged order passed by PF Authority under Section 7B of PF Act.
3. In facts of present case, in year 1997, present petitioner - company is registered as Private Limited Company under provisions of Companies Act and it has its unit situated at Silvasa and land at Silvasa was purchased in year 1997. The land at Silvasa having a factory which is carrying out business of texturing of synthetic yarns and was a small unit. The factory was started with 15 employees and more. The establishment was inspected by Area Enforcement Officer, authority under Act and had allotted PF Code Number GJ-VAP-46332 as an employer code. It was learnt that there were some complaint by unknown person (unrecognized union representative) alleging that there is violation of provision of Act by company. Therefore, Assistant PF Commissioner of PF Department had issued notices to establishment for conducting inquiry under Section 7A of Company. On 5.1.2005, one of younger member of family and brother of one of Directors of Company, Mr.Rajesh Bhnwarlal Jajjoo, was suffering from severe disease and during hearing of 7A inquiry has passed away. On 6.1.2005 and 18.1.2005, a representative of petitioner had attended proceedings on both occasions. But because of unfortunate incident viz. death of younger brother, late Shri Rajesh Bhanwarlal Jajjoo who died on 5.1.2005, petitioner - company was not able to produce entire record before PF Authority in 7A inquiry. Therefore, petitioner - company is not able to attend 7A inquiry before PF Authority and thereafter, ex-parte order under Section 7A has been passed by PF Authority which has been served at Head Office at Surat. Thereafter, application was made by petitioner under Section 7B of PF Act, which also came to be rejected by PF Authority. Then petitioner had approached to appellate Tribunal by way of Appeal No.699(5)/2005, which also came to be dismissed by appellate Tribunal on 3.5.2010, against which present petition is preferred by petitioner.
4. Learned advocate Mr.Pathak has referred to observations mad by PF Authority while passing ex-parte order under Section 7A and also referred observations made by PF Authority while rejecting 7B application and averments made in 7B application which is at Page-23, particularly Item No.8 where specific averments have been made by petitioner that 12 names shown by unrecognized trade union for industry, are fictitious, except few. Accordingly, ex-parte order, which is passed on the strength of such fictitious application, without examining the witnesses in support of that requires to be revised and reversed the order which has been passed by PF Authority because it has violated basic principles of natural justice, not giving proper opportunity to petitioner. He also submitted that Page-25 number of documents have been produced by petitioner before PF Authority in review application under Section 7B (Page-26) dated 15.4.2005 but, none of documents has been considered by PF Authority, not only that even these documents are not dealt with by PF Authority while deciding 7B application. Except that, no other submission is made by learned advocate Mr.Pathak before this Court.
5. Affidavit-in-reply is filed by respondents which is at Page-56. Against that, no rejoinder is filed by present petitioner.
6. Learned advocate Ms.E. Shailaja appearing on behalf of respondents submitted that more than that reasonable opportunities were given to petitioner but, that has not been availed of by petitioner which facts have been narrated in detail by respondents in affidavit-in-reply. That may be considered while deciding present petition on merits.
7. I have considered submissions made by both learned advocates and also perused orders passed by PF Authority under Section 7A, 7B and also order passed by appellate Tribunal. Annexure-B (Page-11) is a typed copy of order passed by PF Authority under Section 7A where Assistant PF Commissioner, who has received complaint dated 26.2.2004 to the effect that establishment had not enrolled their employees under PF Act and this complaint was signed by 40 employees and their names, designation, joining date and salary per day was mentioned therein. Therefore, Area Enforcement Officer Mr K. Ravindran was deputed to verify aforesaid facts and submit his report. The Enforcement Officer visited on 12.4.2004 and reported that there were 3 units of Eagle Group of industries and thay are functioning at the address given in complaint. The Enforcement Officer has directed to Shri M.L.Yogi, Manager of 3 units to submit documents i.e. Books of Accounts, Attendance and Wages Register etc. The establishment failed to submit documents, hence directions were issued to establishment to produce same in office of Assistant PF Commissioner on 15.4.2004 and then, on 29.4.2004. But establishment failed to produce any record. Therefore, inquiry under Section 7A was initiated by summons dated 20.7.2004. Thereafter, proceedings were conducted on 29.7.2004, 12.8.2004, 18.8.2004, 25.8.2004, 16.9.2004, 30.9.2004, 24.11.2004, 9.12.2004, 6.1.2005 and finally on 18.1.2005. The employees Shri Vijay Shankar, Shri Madan Singh and Shri Rohit Kumar appeared on behalf of employees and raised contention that they have been dismissed from service as they have been demanding PF benefits and therefore, they have approached PF office regularly. They also stated that they wish to return to their native places in Balia and Naroda District respectively and hence, want settlement of their P.F. Dues. The workers representative stated that company is not having any record in respect of their employees and hence they are not producing same and despite many adjournments they have not been able to produce the same before Assistant PF Commissioner. They have produced a list of employees with their designation, joining date and salary per day. He also submitted a letter dated 11.2.2004 wherein 40 workers have requested him to take up their cause. The workers submitted that original list of 40 employees are working with M/s.Eagle Synthetics Pvt. Ltd. and Eagle Fashions. They also stated that this does not include names of employees of M/s.Eagle Fibers Ltd. The bifurcation of employees working in M/s.Eagle Synthetics Pvt. Ltd. and M/s. Eagle Fashions has been provided by them. The workers and representative requested that inquiry should be concluded as many adjournments have already been granted and matter is being delayed and they cannot indefinitely wait for their dues, as they wish to go home.
7.1 Shri Ketan Patel, Authorized Representative had appeared on behalf of petitioner - establishment. During proceeding on 24.11.2004, Authorized Representative admitted that 3 units located at Silvasa are part and parcel of unit located at Surat. They are all having their head quarters at 302, Trivedi Chambers, Ring Road, Surat and there is common ownership and management. He was provided a copy of complaint with date of joining and names of employees. He requested for time to submit records. He was also advised to attend inquiry with responsible official of company. One representative Shri M.L.Yogi appeared on behalf of establishment on 10.1.2005 but, he did not provide any documents to corroborate or rebut evidence produced and provided by employees, as referred above. As repeated opportunities had been provided to company to produce records and they had always failed to do so. Therefore, ultimately Assistant PF Commissioner had come to conclusion on the basis of available records and following order has been passed by Assistant PF Commissioner, which is as under :
"As the employees have given their identity cards in support of their employment in the company there was no doubt that the employees have been working for it. I have no option but to quantify the dues on the basis of their signed statements which is placed before me. The ex-parte order determining the dues in the present case is appropriate and in the interest of justice so that the dues can be quantified and recovery action initiated for realizing the dues. The same shall be disbursed to the rightful claimants as soon as the same is recovered from the employer.
The following employees of the establishment would be the beneficiaries of the assessed amount as per the returns and complaint dated 26.2.2004 once it is recovered from the employer in accordance with the provisions of the law.
Sanjay Singh Madan Singh Ram Singh Swami Prakash Mukesh Rintusingh Santosh Kumar Raj Kumar Pradeep Arjun Sirst Siraj Now, therefore I, Siddharth Singh, Assistant PF Commissioner, Gujarat State in exercise of the powers conferred on me u/s.7A(1)(4) of the EPF & MP Act 1952 hereby determine the said amount of Rs.4,41,578/- (Rupees Four Lakh Forty One Thousand Seven Hundred Fifty Eight only) as due from M/s.Eagle Fashions Pvt. Ltd. on account of the PF and Employees' Pension Fund and Insurance Fund contributions and Administrative charges towards PF and insurance Fund and Interest u/s.7Q for the period 8/97 to 12/2004 in accordance with the provisions of the EPF and MP Act,1952.
----------------------------------------------------------------------------------------------------------
Period Provident Fund Employee Insurance Fund Total 7Q int.
Courts
Adm & pension Conts Adm
Chs
Conts Chs
A/c I
A/c II A/c X A/c XX A/c XXI
I I
8/97
to 215184 15102 114370 6871 178
351704 90053
=============================================== Interest as 7Q amounting to Rs.90053/- is levied up to the date of assessment only. Further interest will be intimated in due course.
The above amount has been determined on the basis of document and records placed before me at the inquiry. Without prejudice to the findings of the present inquiry, any escaped amount that is brought to notice by departmental representative, employees or any other reliable source shall be determined under the provisions of Section 7(C) of the Employees Provident Fund and Misc. Provisions Act,1952.
I further order that the aforesaid amount shall be paid by the establishment in respective accounts within a period of 15 days from the date of receipt of this order and the receipted copy of the challan produced in support thereof failing which the same shall be recovered in the manner prescribed in Section 8G of the Act. This will be without prejudice to any other action that may lie under the provisions of law for which the establishment has already rendered itself liable."
8. After 7A order passed by PF Commissioner dated 22.3.2005, application under Section 7B made by petitioner company on 15.4.2005 which has been examined by Assist. PF Commissioner in detail and rejected same on 17.6.2006. The contention which has been raised by petitioner company has been rejected by giving detailed reasons in support of its conclusion by Assist. PF Commissioner. The PF Act comes into operation by its own vigour and it applies if the conditions stated in the Act are satisfied. The operation of the Statute does not depend on any decision being taken by Authorities under Statute. But it depends on its own provisions. The Assist. PF Commissioner while rejecting 7B application has made following observations in order dated 17.6.2006 :
" The employer is to obtain particulars from the workmen and submit a report to the PF Commissioner and remit the monthly contribution to the provident fund even without any order from the authorities.
It is observed that far too many opportunities had been provided but the establishment failed to produce the records hence the assessing officer was constraining to arrive at a conclusion on the basis of available records.
There is no irregularity in the service of the proceedings that were held and the employer has been given sufficient opportunity and time to appear at the inquiry moreover the establishment has failed to submit any further evidence to refute the allegations made by the employees. After going through the application for review there is in my opinion insufficient ground for a review therefore, the application is rejected under Section 7(B)(4). It is therefore directed that the employer should report compliance as per the order passed under Section 7A of the EPF & MP Act,1952 immediately so that the employees of the company can be extended social security benefit."
9. The appellate Tribunal has also considered this aspect while deciding appeal (Page-43) dated 3.5.2010 in ATA No.699(5)/2005 where following observations are made :
"6. The applicability of the Act is not challenged. The order reveals that number of opportunity was granted to the appellant and Shri Ketan Patel, authorized representative for the appellant appeared and had not cooperated by producing any document though he was supplied copy of the complaint of the employees. The order of the authority reveals that 12 employees were not given the benefit of EPF Act and these employees also produced their Identity Card and names of these employees were also noted in the order. So it cannot be said that the workers are not identifiable. In the case of ESIC v. Hurrison Maliam Pvt. Ltd. in Civil Appeal No. 1133/90 the Hon'ble Apex Court held that, "it was the duty of the respondent company to get the necessary details of the workers employed by the contractor at the commencement of the contract since the primary responsibility of contribution is on the principal employer. On the admitted facts the respondent company had engaged the contractor to execute the work. It was also the duty of the respondent company to get the temporary identity certificate issued to the workmen and to pay the contribution. Since the company failed to do so it cannot be held to say that the workers are unidentifiable. Thus, it has only itself to thank for its default." In this case, the appellant had not cooperated during the inquiry not furnished the list.
7. Since number of opportunities were granted to the appellant and the appellant appeared before the authority. There is no breach of principle of natural justice. No infirmity is noticed in the order of the authority.
8. Hence ordered, the appeal is dismissed. Copy of order be sent to the parties. File to consigned to record room."
10. It is also necessary to consider averments made by PF Authority in affidavit-in-reply dated 22.3.2011. Relevant averments made in Para.4 to 16 are quoted as under :
"4. So far as to the averments made in para 1 are concerned it is denied in toto and it is to state that the present petitioner M/s.Eagle Fashion Pvt. Ltd. is registered under section 2A of EPF & MP Act w.e.f. 23.9.2000 under schedule head "Textile" being a sister of Eagle Synthetic P Ltd, 302, Trivedi Chambers, Ring Road, Surat. The contention of the establishment that the petitioner started its commercial production on 1.9.2001 is immaterial as the coverage is made u/s 2A of EPF & MP Act 1952 and the premises at Silvasa as per Sale Deed, have been purchased in July 1997. On the basis of complaint received dated 26.2.2004, some of the employees have also represented that they have been engaged in M/s Eagle Fashions from August 1997 to investigate this matter, the petitioner establishment was inspected and it was found that benefits under the EPF & MP Act 1952 were not extended to the complainant employees.
5. So far as to the averment made in para 2 are concerned it is to state that a complaint dated 26.2.2004 was received that the petitioner establishment M/s Eagle Fashions Pvt. Ltd. has not enrolled their employees under EPF & MP Act. The complaint was signed by 40 employees and their name, designation, joining date and salary per day was mentioned therein. Hence the contention of the petitioner that some unknown person had made the complaint is denied in toto. Thereafter, the enforcement officer, Shri K. Ravindran visited the petitioner establishment on 12.4.2004 and reported that there were 3 units of M/s Eagle group of industries that were functioning at the said address. He directed Shri M.L.Yogi, Manager of the 3 units to submit documents i.e. Books of Accounts, Attendance and wages register etc. The petitioner establishment failed to submit the documents hence, directions were issued to produce the same in the office of the Employees Provident Fund authorities on 15.4.2004 and then on 29.4.2004. The petitioner establishment failed to produce any record called for from it hence inquiry under section 7A of EPF & MP Act,1952 was initiated vide summons dated 20.7.2004.
6. So far as to the averment made in para 3 are concerned it is to state that the proceeding under section 7A of EPF & MP Act, 1952 were conducted on 29.7.2004,. 12.8.2004, 18.8.2004, 25.8.2004, 16.9.2004, 30.9.2004, 24.11.2004, 9.12.2004, 6.1.2005 and finally on 18.1.2005.
Shri Ketan Patel, authorized officer representative appeared on behalf of the petitioner establishment. During the proceeding on 24.11.2004 the authorized representative admitted that 3 units located at Silvasa are part and parcel of unit locate at Surat. Annexed and marked Annexure-I is a copy of the proceedings dated 24.11.2004 referred above. They are all having their Head Quarters at 302, Trivedi Chambers, Ring Road, Surat and there is common ownership and management. He was provided a copy of complaint with the date of joining and the names of the employees. He requested time to submit records. He was also advised to attend the inquiry with responsible officials of the company. Shri M.K.Yogi, Authorized Signatory / Manager appeared on behalf of the establishment on 18.1.2005 but he also did not provide any documents to corroborate or refute the evidence provided by the employees.
As ample opportunities (more than nine hearings spread over a period of six months) had been provided to the petitioner establishment to produce the records and having failed to do so, the respondent authority in inquiry under section 7A was constrained to arrive at a conclusion on the basis of the available records and order under Section 7A of EPF & MP Act,1952 was passed by the respondent authority. It is further submitted that the petitioner establishment covered under the EPF and MP Act 1952 is duty bound to follow the provisions of the Act in its totality and breach of any provisions provided therein renders it liable for appropriate action by the respondent authority under the Act.
7. So far as to the averments made in para 4 are concerned the same is denied in toto and it is to state that during the hearings of inquiry conducted under section 7A the petitioner establishment was represented by its authorized representative as stated in the preceding paragraphs and hence it cannot be construed that the order passed by the respondent authority under section 7A could in any way be termed as an ex-parte order and, therefore, the impugned order has been passed considering the evidence which was on record.
8. So far as to the averments made in para 5 are concerned the same is denied in toto as the petitioner is merely trying to mislead this Hon'ble Court by diverting the issue and it is to state that the contention of the petitioner establishment that it started its commercial production only in 2000 is contrary to its own stand taken under paragraph 1 to the petition wherein it is stated that the production started from 1st September 2001, however the same is immaterial as the coverage is made under Section 2A and the premises at Silvasa, as per the sale deed, have been purchased in July 1997. Some of the employees have also represented that they have been engaged in M/s Eagle Fashions from August 1997. The engagement of employees in any kind of activity not necessarily production at factory premises in Silvasa would bring them under the preview of the EPF & MP Act-1952 under Section 2A.
9. So far as to the averments made in para 6 are concerned the same is denied in toto and it is to state that since the case of the petitioner establishment did not have merits for review under Section 7B the same was rejected vide a detailed order dated 17.06.2006.
10. So far as to the averments made in para 7 are concerned, I have no comments to offer being a matter of record.
11. So far as to the averments made in para 8 are concerned the same is denied in toto as the Hon'ble EPF-AT, New Delhi while dismissing the appeal by the petitioner establishment vide its order dated 03.05.2010 has held that since number of opportunities were granted to the petitioner establishment and the petitioner establishment having appeared before the authority there is no breach of principle of natural justice and no infirmity is noticed in the order of the respondent authority.
12. So far as to the Grounds (A) to (C) are concerned the same is denied in toto in view of what has already been stated in the preceding paragraphs particularly paragraphs 5, 6 and 11 to this affidavit. It is further stated that the respondent authority has passed a very reasoned order after considering all the available records presented before it as stated in the preceding paras and has applied the provisions under the EPF and MP Act 1952 lawfully.
13. So far as to the Grounds (D) are concerned the same are denied in toto and it is to state that the complaint dated 24.02.2004 was signed by 40 employees and their name, designation, joining date and salary per day was mentioned therein was not controverted during the inquiry stated above despite ample opportunity provided to the petitioner establishment. It is to further state and submit that in fact the petitioner establishment even failed to produce the documents called for from it as has been referred to in the preceding paragraphs. Further Shri Ketan Patel, authorized representative had already admitted during the proceeding under Section 7A of EPF & MP Act, 1952 on 24.01.2004 that the 3 units located at Silvasa are part and parcel of the unit located at Surat. They are all having their Head Quarters at 302, Trivedi Chamber, Ring Road, Surat and there is common ownership and management.
14. So far as to the Ground (E) to (H) are concerned the same are denied in toto in view of what has already been stated in the preceding paragraphs the same not being repeated for the sake of brevity. The orders passed by the respondent authority and the EPFAT have been passed in consonance with the provisions of the EPF & MP Act 1952 with proper application of mind considering the facts of the case. 15. So far as to the para 9 are concerned the same is denied in toto as ample opportunity as detailed in preceding paragraphs was provided to the petitioner establishment to present its case and having failed to do so the present petition deserves to be dismissed in limine. It is further to state that the petitioner is trying to mislead this Hon'ble Court by stating that it has already deposited amount as directed by the respondent authority, in fact what is deposited is only 75% (Rs.2,63,800/- out of Rs.3,51,705/-) of the principal amount assessed. The deposit made does not include the interest assessed under section 7Q amounting to Rs.90,053/- as on the date of order passed under 7A.
16. In view of the aforesaid facts and circumstances, this Hon'ble Court may uphold the action of the respondent authority in light of the fact that the above provisions to the effect were incorporated in the Act to ensure the success of the various social security schemes administered by the Respondent Authorities for effective and prompt compliance by the employers like the petitioner. Hence, this Hon'ble Court may order outright rejection of the petition as decision in favour of the petitioner in this petition may inspire the employers for making delayed/ belated remittance of dues which will adversely affect the interest of the subscribers of the Employees Provident Fund, and uphold the action initiated by the respondent department pursuant to the powers vested under EPF & MP Act. Thus the prayer made may be rejected and the petition be dismissed in limine."
11. In view of averments made in affidavit-in-reply of PF Authority, it is very clear that despite ample opportunity provided to petitioner - establishment, the petitioner - establishment even failed to produce relevant documents called for from it, as has been referred in affidavit-in-reply. In 7A inquiry, matter has been adjourned on number of occasions as referred in Para.6 of reply. But, in spite of that fact, while giving reasonable opportunity by PF Authority to petitioner but, that opportunity has not been availed of by petitioner - establishment. The death of younger brother as contended by learned advocate Mr.Pathak i.e. 5.1.2005 but, before that, about more than 7 adjournments have been given and hearing was fixed by PF Authority. However, for remaining absent on earlier occasions, no explanation is given by petitioner - establishment to PF Authority. Therefore, contentions raised by learned advocate Mr.Pathak cannot be accepted in light of specific averments made by PF Authority in affidavit-in-reply. The appellate Tribunal has rightly discussed that principles of natural justice is not violated by PF Authority because number of occasions, matter has been adjourned for giving reasonable opportunity but, that opportunity intentionally and deliberately not availed by petitioner
- establishment. For that, no explanation given by petitioner before PF Authority in 7B proceeding and also not before appellate authority. Therefore, in light of this background and considering submissions made by both learned advocates, according to my opinion, in spite of fact that more than reasonable opportunities were given to petitioner establishment, even though documents which have been called for by Department have not been produced on record by petitioner - establishment. Therefore, PF Authority has rightly decided matter relying evidence / documents produced by concerned employees in absence of record from petitioner and in absence of petitioner - establishment's representative and therefore, PF Authority has not committed any error while passing order under Section 7A /7B of PF Act. Similarly, appellate Tribunal has also given detailed reasons in support of its conclusion and appellate Tribunal has also not committed any error which requires interference by this Court while exercising powers under Article 227 of Constitution of India. Hence, there is no substance in present petition. Accordingly, present petition is dismissed. No order as to costs.
[ H.K.RATHOD, J. ] (vipul) Top