Gujarat High Court
Reliance Industries Limited vs Assitant Provident Fund Commissioner - ... on 20 April, 2023
NEUTRAL CITATION
C/SCA/4130/2008 JUDGMENT DATED: 20/04/2023
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 4130 of 2008
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE ANIRUDDHA P. MAYEE Sd/-
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1 Whether Reporters of Local Papers may be allowed No
to see the judgment ?
2 To be referred to the Reporter or not ? No
3 Whether their Lordships wish to see the fair copy No
of the judgment ?
4 Whether this case involves a substantial question No
of law as to the interpretation of the Constitution
of India or any order made thereunder ?
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RELIANCE INDUSTRIES LIMITED & 1 other(s)
Versus
ASSITANT PROVIDENT FUND COMMISSIONER - SUB REGIONAL
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Appearance:
MR KS NANAVATI, SR. COUNSEL, WITH MR KUNAL NANAVATI WITH MR
SHYAM NAIK WITH MR SHRIVASTAV FOR NANAVATI
ASSOCIATES(1375) for the Petitioner(s) No. 1,2
MR AV NAIR(5602) for the Respondent(s) No. 1
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CORAM:HONOURABLE MR. JUSTICE ANIRUDDHA P. MAYEE
Date : 20/04/2023
ORAL JUDGMENT
The present Special Civil Application is filed praying for the following reliefs:-
"19(A) Your Lordships may be pleased to issue a writ of mandamus / certiorari or a writ in the nature of mandamus / certiorari, or any other appropriate writ, order or direction, quashing and setting aside the impugned order dated 25.2.2008 passed by the respondent under Page 1 of 14 Downloaded on : Sun Sep 17 18:41:08 IST 2023 NEUTRAL CITATION C/SCA/4130/2008 JUDGMENT DATED: 20/04/2023 undefined Section 7 A of the Employees Provident Funds and Miscellaneous Provisions Act, 1952; and be further pleased to remand the matter to the respondent authority and direct the respondent authority to hear afresh and decide the inquiry under Section 7 A of the PF Act, after making the contractors as parties and summoning them and requiring them to produce the relevant materials and records, which are in their exclusive and sole possession;
(B) Pending the hearing and final disposal of the present petition, Your Lordships may be pleased to stay the operation and implementation of the order dated 25.2.2008 passed by the respondent under Section 7 A of the Employees Provident Funds and Miscellaneous Provisions Act, 1952;
(C) An ex-parte ad interim relief in terms of prayer (B) may kindly be granted."
2. It is the case of the petitioner company that on 11.6.2007 and 12.6.2007, a team from the office of Assistant Provident Fund Commissioner, Surat came to inspect the manufacturing unit of the petitioner at Hazira. Thereafter, on 22.6.2007, the respondent called upon the petitioner company to submit the required documents by 25.6.2007 failing which an inquiry under Section 7(A) of the Employees Provident Funds and Miscellaneous Provisions Act, 1952 ["the Act" for short] would be initiated. Thereafter, vide letter dated 26.6.2007 the petitioner informed the respondent that they had submitted the information / details pertaining to the compliance of the Page 2 of 14 Downloaded on : Sun Sep 17 18:41:08 IST 2023 NEUTRAL CITATION C/SCA/4130/2008 JUDGMENT DATED: 20/04/2023 undefined payment of the provident fund in respect of their employees to the inspection team at the time of their visit on 11 th and 12th June, 2007. It was further pointed out that there were several contractors who were working with the petitioner company and therefore, it was their responsibility to maintain the books of account in respect of the payment of the provident fund of the employees engaged through the contractors and it was prayed that the respondent may ask such contractors to produce the relevant records which were in their possession. That thereafter notice dated 22.8.2007 came to be issued for an inquiry under Section 7(A) of the Act for the period from April-2005 to March- 2007 regarding the compliance of the employees engaged through the contractors and the petitioner was directed to remain present on 4.9.2007 for the hearing in the said inquiry. That by letter dated 29.8.2007, the petitioner made a request for finalizing the schedule for the inspection at the company's manufacturing unit so that the concerned contractors for whom the inquiry was initiated could be kept present along with the relevant provident fund records which were in exclusive possession of such contractors with the intention to assist the respondent in the inquiry. Thereafter through several correspondences, the petitioner company produced the list of Page 3 of 14 Downloaded on : Sun Sep 17 18:41:08 IST 2023 NEUTRAL CITATION C/SCA/4130/2008 JUDGMENT DATED: 20/04/2023 undefined contractors employed by the petitioner company at its Hazira unit and also requested the respondent authority to summon all the contractors with relevant records. That thereafter on 18.2.2008, the petitioner company produced a list of contractors employed by the petitioner at its Hazira unit who were separately covered under the Act. Thereafter the hearing was adjourned to 25.2.2008 when the petitioner company filed its written representation. Several discrepancies were also pointed out to the respondent with respect to the contractors who the respondent believed had not complied with the provisions of the Act. In order to clarify such a position, it was once again requested by the petitioner company to the respondent authority to issue summons to all the contractors so that the relevant material and provident fund records could be produced before the respondent authority so as to enable it to come to a proper decision as to the exact amount of differential provident fund required to be deposited by the petitioner company if at all there is any. That thereafter by the impugned order dated 25.2.2008, the respondent authority directed the petitioner company to make payment of provident fund for 40 contractors for the year 2005-2006 and for 34 contractors for the year 2006-2007 aggregating to an amount of Rs.83,54,559/- within a period of Page 4 of 14 Downloaded on : Sun Sep 17 18:41:08 IST 2023 NEUTRAL CITATION C/SCA/4130/2008 JUDGMENT DATED: 20/04/2023 undefined seven days from the receipt of the copy of the said order.
Aggrieved, the petitioners have filed the present Special Civil Application.
3. Mr. K.S.Nanavati, learned senior counsel appearing for the petitioners has submitted that the impugned order is in teeth of the principles of natural justice and has been passed without any substantive or effective hearing. He submits that the respondent authority has failed to exercise its jurisdiction and discharge its legal duty by summoning the contractors and calling upon them to produce the relevant material and provident fund records maintained by them to clarify the factual position which are in their sole knowledge though specifically requested for and prayed for by the petitioner during the inquiry. He further submits that without rejecting such a prayer on behalf of the petitioner company, the respondent authority has proceeded to decide and adjudicate the proceedings under Section 7(A) of the Act without giving proper hearing to the petitioner company and directed it to make a payment of provident fund for the alleged employees who were employed through the contractors without collecting necessary evidence. He submits that the petitioner company had raised many Page 5 of 14 Downloaded on : Sun Sep 17 18:41:08 IST 2023 NEUTRAL CITATION C/SCA/4130/2008 JUDGMENT DATED: 20/04/2023 undefined discrepancies in respect of the list of contractors through which the petitioner company was employing workmen. He further submits that the squad of the enforcement officers who had come to inspect the records at the Hazira unit of the petitioner company had submitted their report dated 25.2.2008 to the respondent authority which was taken into account while deciding the liability in the impugned order. He submits that the said report was never made available to the petitioners and no opportunity was granted to assail the report on the basis of which the impugned order was passed. He submits that the report of the enforcement officer is dated 25.8.2008 and the impugned order is also passed on the same day. He submits that the said action on the part of the respondent authority is in complete breach of principles of natural justice and contrary to the settled position of law. He submits that the impugned order be set aside and the petitioners be granted opportunity to counter the report dated 25.2.2008 as submitted by the enforcement officer to the respondent authority. He submits that grave prejudice have been caused without allowing the petitioner company to give its reply to the said report. He submits that the respondent authority has passed the impugned order based on the said report and has saddled the petitioner company with Page 6 of 14 Downloaded on : Sun Sep 17 18:41:08 IST 2023 NEUTRAL CITATION C/SCA/4130/2008 JUDGMENT DATED: 20/04/2023 undefined financial liability without granting any hearing in respect of the report submitted by the enforcement officer. He, therefore, submits that the impugned order be set aside and the matter be remanded to the respondent authority for fresh hearing after giving opportunity to the petitioner to make their submissions on the report dated 25.2.2008.
4. Per contra, Mr. A.V.Nair, learned advocate appearing for the respondent authority submits that enough opportunity was granted to the petitioner company to produce relevant records in respect of the payment of provident fund in respect of the employees who were employed through the contractors. He submits that the petitioner company was also given ample opportunity of hearing, however, the petitioner company insisted on issuance of summons to the various contractors for adjudication in the present case. He submits that the representative of the petitioner company could only produce a list of contractors which was incomplete. He submits that the enforcement officer's report dated 25.2.2008 was submitted to the respondent authority on the same day when the impugned order came to be passed. He submits that on the basis of the said report and after having completed due procedure of inquiry, Page 7 of 14 Downloaded on : Sun Sep 17 18:41:08 IST 2023 NEUTRAL CITATION C/SCA/4130/2008 JUDGMENT DATED: 20/04/2023 undefined the impugned order came to be passed. It is submitted that at the time of pronouncement of the impugned order, no representative appeared on behalf of the petitioner company. He submits that as far as the contention of the petitioner company to summon various contractors engaged by it is concerned, it would have been impossible for the respondent authority to call such contractors. He further submits that the respondent authority was of the opinion that the contractors were not required to be summoned in the present case as regards the relevant records had also been produced by the petitioner company from which the provident fund could be assessed. He submits that the enforcement officer of the respondent authority has perused the said record while submitting its report dated 25.2.2008. He, therefore, submits that no prejudice is caused to the petitioner since the report was based on the documents made available by the petitioner itself.
In support of his contention, he relies on the judgment passed by the Hon'ble Supreme Court in 2020 AIR SC 5215 - State of U.P. v. Sudhir Kumar Singh & Ors. wherein in para-39 the analysis of the various judgments in respect of breach of audi alteram partem rule has been illustrated. He submits that in view of the analysis of the Hon'ble Supreme Court in the said Page 8 of 14 Downloaded on : Sun Sep 17 18:41:08 IST 2023 NEUTRAL CITATION C/SCA/4130/2008 JUDGMENT DATED: 20/04/2023 undefined judgment, no prejudice has been caused to the present petitioner. He submits that the law as laid down by the Hon'ble Supreme Court is that it is the duty of the principal employer to provide the details with respect to the identity of the employees or with respect to the provident fund being paid to the employees even if engaged through the contractor. He further submits that in the present case in any event liability was with the petitioner company and therefore, no error has been committed in the impugned order. He, therefore, submits that the present Special Civil Application be dismissed.
5. Heard learned counsels for the parties and perused the documents on record.
6. The record reveals that in the present case several issues arise due to disputed facts which are involved. The final adjudication in the present case would require detailed examination and assessment of oral as well as documentary evidence which has been produced on record by the petitioner company as also by the report of the enforcement officer dated 25.2.2008. It is not in dispute that the judgment of the Hon'ble Supreme Court in case of Food Corporation of India v. Provident Page 9 of 14 Downloaded on : Sun Sep 17 18:41:08 IST 2023 NEUTRAL CITATION C/SCA/4130/2008 JUDGMENT DATED: 20/04/2023 undefined Fund Commissioner - (1990) 1 SCC 68 which is also subsequently considered in case of Bharat Heavy Electricals Ltd. v. Employees' State Insurance Corporation - (2008) 3 SCC 247 has held that the contractors would be necessary party for adjudicating the dispute relating to alleged dues payable in respect of the employees engaged in the company through contractors.
7. In the present case, it is revealed that the opportunities have been granted to the petitioner company to place the material on record and to file its written reply / submissions. However, it is also not disputed that on 25.2.2008 when the hearing took place in the presence of the representative of the petitioner company, a report of the enforcement officer came to be placed before the respondent authority for its consideration. Thereafter, the order came to be reserved and was kept for pronouncement at 5:30 p.m. on the same day when the respondent authority proceeded to pass the impugned order in absence of the representative of the petitioner company. It is not disputed that in the present case, the impugned order and the liability as assessed by the respondent authority has been done taking into consideration the report submitted by the Page 10 of 14 Downloaded on : Sun Sep 17 18:41:08 IST 2023 NEUTRAL CITATION C/SCA/4130/2008 JUDGMENT DATED: 20/04/2023 undefined enforcement dated 25.2.2008. Nothing has come on record to show that the copy of the said report was made available to the petitioner company and that further any opportunity of hearing has been granted to the petitioner company in respect of the said report of the enforcement officer.
8. In this background, as submitted by the learned senior counsel for the petitioners, the action on the part of the respondent authority of passing of the impugned order based on the said report is in violation of principles of natural justice.
9. In the present case, the petitioner company has been issued show cause notice dated 29.8.2007 calling upon them as to why the alleged dues towards the provident fund for the period from April-2005 to March-2007 should not be recovered from it in respect of the employees engaged through the contractors. The said show cause notice came to be issued after the inspection by the enforcement officer on 11.6.2007 and 12.6.2007. Thereafter, the proceedings proceeded further and hearing was done on various dates. During the said hearings, the petitioners appear to have filed various documents and other material on record before the respondent authority for the Page 11 of 14 Downloaded on : Sun Sep 17 18:41:08 IST 2023 NEUTRAL CITATION C/SCA/4130/2008 JUDGMENT DATED: 20/04/2023 undefined purpose of inquiry under Section 7(A) of the Act. The said facts have also been observed by the respondent authority in the impugned order dated 25.2.2008.
10. It is seen that the impugned order assessing the liability of the petitioner company is based on the enforcement officer's report dated 25.2.2008. There are several disputed questions of fact. In the opinion of this Court, the petitioner company ought to have been granted opportunity to dispute the findings of the enforcement officer's report dated 25.2.2008. The record reveals that no such opportunity has been granted and the impugned order has been passed on the same day on which date the inquiry report came to be submitted. Therefore, the impugned order is in contravention of the settled principles of natural justice.
11. For the aforesaid reasons, this Court is inclined to entertain the present writ petition. In light of the aforesaid factual position and the observations made hereinabove, the impugned order is set aside. The matter is remanded back to the respondent No.1 authority to be decided afresh with a direction that the petitioner company shall be provided with the copy of Page 12 of 14 Downloaded on : Sun Sep 17 18:41:08 IST 2023 NEUTRAL CITATION C/SCA/4130/2008 JUDGMENT DATED: 20/04/2023 undefined the enforcement officer's report dated 25.2.2008 and that the petitioner company shall be offered opportunity of hearing on the said report before the said report can be considered by the respondent authority to pass appropriate order in an inquiry under Section 7(A) of the Act. Since the case pertains to the inquiry of the provident fund for the years April-2005 to March- 2007, the respondent authority is directed to decide the case as expeditiously as possible and preferably within a period of one year from the date of receipt of this order. It is directed that no unnecessary adjournment shall be granted in the present case. The petitioner company shall be at liberty to file its submissions to the report dated 25.2.2008 and also will be at liberty to place any such material on record as necessary in support of its contentions and is also permitted to move appropriate application in the interest of justice, if so required. The respondent authority is directed to consider all the objections of the petitioner company to the said report dated 25.2.2008 and shall decide the same dealing with all the contentions giving cogent reasons based on the evidence on record. The petitioner company shall cooperate with the expeditious hearing of the case and learned counsel undertakes that no frivolous adjournments will be sought for.
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NEUTRAL CITATION C/SCA/4130/2008 JUDGMENT DATED: 20/04/2023 undefined With the aforesaid observations and direction, present Special Civil Application stands allowed. Rule is made absolute to aforesaid extent. No order as to costs.
Sd/-
(ANIRUDDHA P. MAYEE, J.) KAUSHIK D. CHAUHAN Page 14 of 14 Downloaded on : Sun Sep 17 18:41:08 IST 2023