Calcutta High Court (Appellete Side)
Subhash Chandra Saha vs Rpfc & Others on 16 July, 2013
Author: Harish Tandon
Bench: Harish Tandon
1
16.7. 13 W.P. 4014 (W) of 2004
Subhash Chandra Saha
-vs-
RPFC & Others
Mr. Arunava Ghosh
Mr. Anant Kumar Shaw
Mr. Pushpal Chakraborty ... For Petitioner
Mr. Shiv Chandra Prasad ... For Respondents
The writ petition is filed at the instance of the ex partner of an establishment who had failed to deposit the provident fund amount under the Employees' ac Provident Fund and Miscellaneous Provisions Act, 1952.
The bone of contention, in this writ petition, is that the show cause notice, by the Recovery Officer, Employees' Provident Fund Association, upon the petitioner is an outcome of malice and there is every chance of apprehension that the authorities would issue warrant of arrest if the petitioner appears before the said authority.
According to the petitioner, the establishment was a proprietorship concern of the respondent no. 4 and the petitioner was inducted as a partner on March 31, 1997. The said partnership was dissolved subsequently by a deed of dissolution dated December 2, 1999.
A proceeding was initiated and an order of attachment of the immovable property of the petitioner was passed on September 17, 2001. The petitioner made a representation against the said order of attachment disclosing the copies of the deed of dissolution and the newspaper cutting in support of the contention that he is no longer associated and/or connected with the said establishment, which is now a partnership concern of the respondent no. 4. Subsequently, show cause notice is issued to the petitioner as to why he should not be committed to civil prison.
2Mr. Arunava Ghosh, the learned senior advocate appearing for the petitioner, vehemently submits that Section 8B of the Employees' Provident Fund and Miscellaneous Provisions Act, 1952 contains provision for arrest of employer and detention in prison apart from the power to attach and sale of the moveable and immovable property of the establishment or the employer and the appointment of receiver for managing of the moveable or immovable properties of the establishment or the employer.
Mr. Ghosh further submits that Section 8G of the said Act requires the provisions of Second and Third Schedules of the Income Tax Act, 1961 and the Income Tax (Certificate Proceedings) Rules, to be followed with necessary modifications.
Rule 73 of Second Schedule of the Income Tax Act, 1961 provides that no order for arrest and detention in civil prison of a defaulter shall be made unless the Recovery Officer has issued and served a notice upon the defaulter calling upon him to appear before him on the date so specified in the notice and upon recording reasons in writing relating to its satisfaction that the defaulter has not dishonestly transferred, concealed and/or removed any part of his property or that the defaulter refuses and neglects to pay despite having means to pay the same or substantial part thereof.
Sub-rule (2) of Rule 73 of the Second Schedule of the Income Tax Act, 1961 confers power on the Recovery Officer to issue warrant of arrest of the defaulter provided the defaulter is likely to abscond or leave the local limits of the jurisdiction of the said Recovery Officer.
Mr. Ghosh further brought to the notice of this Court that the said respondent no. 4 was, in fact, detained in civil prison and was subsequently released and thereafter the authorities have initiated a proceeding 3 against the petitioner and there is a reasonable possibility that the petitioner, if appears before the Recovery Officer, would be detained in prison.
In support of his contention that the Recovery Officer cannot issue warrant of arrest unless the formalities required under Rule 73 of the Second Schedule to the Income Tax Act, 1961 are complied with, Mr. Ghosh relies upon the judgments in the case of Vikram Poddar -vs- RPF Commissioners & Others, reported in 2001 (1) CHN 476 and Jagdish Roy -vs- The Regional Provident Fund Commissioner, West Bengal & Others, reported in 2006 (2) CLJ 506.
Mr. Prasad, the learned advocate appearing for the Regional Provident Fund Authorities, vehemently submits that the notice, as contemplated under Section 7A of the Employees' Provident Fund and Miscellaneous Provisions Act, 1952, requires to be issued on the employer which was, in fact, issued and the respondent no. 4 appeared and was given an opportunity of hearing and the authority ultimately determined the amount due to the said establishment and issued the certificate.
Mr. Prasad audaciously submits that pursuant to the notice if one of the partners of the partnership firm has appeared, the law does not provide for service on each of the partners as the word 'employer' has to be given a comprehensive meaning to include any of the partners and placed reliance upon an unreported judgment of this Court in the case of Sri Sayan Ghosh - vs- The Regional Provident Fund Commissioner, West Bengal & Others (W.P. 1095 of 1998 decided on June 19, 1998).
Mr. Prasad further submits that the writ petition is not maintainable against the show cause notice as the authority has not yet decided the matter finally.
Lastly, Mr. Prasad submits that the authorities are not expected to act beyond the precincts of 4 law and they are to follow and obey the rules and procedures provided for and the apprehension of the petitioner is unfounded.
Having considered the respective submissions, the Writ Court should not normally interfere with the show cause notice unless it is demonstrated that the same has been issued by an authority not competent therefor or is otherwise bad being not in accordance with the prescribed mode or the parameters. The power of judicial review should not be exercised on mere apprehension that the authorities would not follow the procedure provided for. The power of judicial review should not be exercised like an appellate Court as it is not the decision but the decision making process which is amenable to the writ jurisdiction. Admittedly, determination has been made under Section 7A of the said Act and certificate has been issued to the Recovery Officer.
Section 8B of the Employees' Provident Fund and Miscellaneous Provisions Act, 1952 confers the powers on the Recover Officer to take recourse to one or more of the modes i.e.
(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 moveable or immovable properties of the establishment or, as the case may be, the employer.
Section 8G of the Act have brought the provisions of Second and Third Schedules to the Income Tax Act, 1961 and the Income Tax (Certificate Proceedings) Rules to be followed with necessary modifications.
5Rule 73 of Second Schedule of the Income Tax Act, 1961 requires service of notice upon the defaulter to show cause as to why he should not be committed to civil prison and no order of arrest and detention in civil prison shall be passed without recording reasons in writing relating to satisfaction, as embodied therein. It would be profitable to quote the said provision which reads thus:
"Notice to show cause "73. (1) No order for the arrest and detention in civil prison of a defaulter shall be made unless the Tax Recovery Officer has issued and served a notice upon the defaulter calling upon him to appear before him on the date specified in the notice and to show cause why he should not be committed to the civil prison, and unless the Tax Recovery Officer, for reasons recorded in writing, is satisfied -
(a) That the defaulter, with the object of obstructing the execution of the certificate, has, after [the drawing up of the certificate by the Tax Recovery Officer], dishonestly transferred, concealed, or removed any part of his property, or
(b) that the defaulter has, or has had since [the drawing up of the certificate by the Tax Recovery Officer], the means to pay the arrears or some substantial part thereof and refuses or neglects or has refused or neglected to pay the same.
(2) Notwithstanding anything contained in sub-
rule (1), a warrant for the arrest of the defaulter may be issued by the Tax Recovery Officer if the Tax Recovery Officer is satisfied, by affidavit or otherwise, that with the object or effect of delaying the execution of the certificate, the defaulter is likely to abscond or leave the local limits 6 of the jurisdiction of the Tax Recovery Officer. (3) Where appearance is not made in obedience to a notice issued and served under sub-rule (1), the Tax Recovery Officer may issue a warrant for the arrest of the defaulter.
[(3A) A warrant of arrest issued by a Tax Recovery Officer under sub-rule (2) or sub-rule (3) may also be executed by any other Tax Recovery Officer within whose jurisdiction the defaulter may for the time being be found.] (4) Every person arrested in pursuance of a warrant of arrest under [this rule] shall be brought before the Tax Recovery Officer [issuing the warrant] as soon as practicable any event within twenty-four hours of his arrest (exclusive of the time required for the journey):
Provided that, if the defaulter pays the amount warrant of arrest as due and the costs of the arrest to the officer arresting him, such officer shall at once release him. [Explanation - For the purpose of this rule, where the defaulter is a Hindu undivided family, the karta thereof shall be deemed to be the defaulter.]"
This Court, in the case of Vikram Poddar (supra) does not lay down that the Recovery Officer, without following the formalities required under Rule 73 of Second Schedule of the Income Tax Act, 1961, can issue warrant of arrest. This Court, in the case of Jagadish Roy (Supra) also did not lay down that the authorities are not required to follow the provisions of Rule 73 of Second Schedule of the Income Tax Act, 1961.
Had the order issuing warrant of arrest been challenged, the proposition, as laid down in the aforesaid reports, would have come to the assistance of the petitioner if the authorities, without following the procedure provided under the aforesaid Rule, has issued the same. Such a stage has not reached as yet.
7It is also not in dispute that the petitioner has not filed reply to the said show cause notice. If the law requires certain parameters and/or formalities to be followed and/or adhered to before issuing warrant of arrest, the Court would not presume that the authority would not follow the said provision. The Recovery Officer, who is discharging the duty judicially, is not expected to act de horse the legal spheres or to act beyond the boundaries of the law.
The petitioner has not been able to satisfy that the authority, who issued the show cause notice, is not competent or that the said show cause notice is issued without following the prescribed modes.
With this observation the writ petition is disposed of.
The petitioner was enjoying an interim order in this writ petition and, therefore, did not file reply to the show cause notice within the period, as provided therein. This court, therefore, feels that the petitioner should be given an opportunity to file reply to the show cause notice, which shall be done within four weeks from date.
The authorities are expected to take utmost care for expeditious hearing of the said proceeding, in accordance with law.
There will, however, be no order as to costs.
(Harish Tandon, J.)