Gujarat High Court
Paschim vs Recovery on 27 April, 2011
Author: H.K.Rathod
Bench: H.K.Rathod
Gujarat High Court Case Information System
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SCA/14969/2010 18/ 18 ORDER
IN
THE HIGH COURT OF GUJARAT AT AHMEDABAD
SPECIAL
CIVIL APPLICATION No. 14969 of 2010
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PASCHIM
GUJARAT VIJ CO.LTD. FORMERLY G.E.B & 1 - Petitioner(s)
Versus
RECOVERY
OFFICER AND ASSISTANT PROVIDENT FUND COMMISSIONER & 1 -
Respondent(s)
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Appearance
:
Mr
KB Trivedi, Senior Advocate with MS LILU K BHAYA
for
Petitioner(s) : 1 - 2.
Mr. NIRAL R MEHTA for Respondent(s) : 1 -
2.
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CORAM
:
HONOURABLE
MR.JUSTICE H.K.RATHOD
Date
: 27/04/2011
ORAL
ORDER
Heard learned Senior Advocate Mr. KB Trivedi with learned Advocate Ms. Lilu K. Bhaya for petitioners and learned Advocate Mr. Niral R. Mehta for respondents.
Considering submissions made by both learned advocates, question raised in this petition would require examination. Hence, Rule. Service of notice of rule is waived by learned Advocate Mr. Niral R. Mehta appearing for respondents PF Authority. With consent of both learned advocates, matter is taken up for final hearing today.
By filing this petition, petitioner - Paschim Gujarat Vij Company Limited, (Government of Gujarat Company) (Formerly Gujarat Electricity Board) having its registered / Head Office at Race Course, Vadodara (Gujarat) and Circle Office at Porbandar has challenged order passed by respondent PF Authority as per prayers made in paragraph 21(A),(B) and (C) which are quoted as under:
"21(A) To issue a writ of mandamus or a writ in the nature of mandamus or any other appropriate writ, order or direction which the Hon'ble Court may deem fit, just and proper quashing and setting aside the judgment and order dated 8.9.2010 passed by Learned Employees' Provident Fund Appellate Tribunal, New Delhi in Appeal NO. ATA/830(5)/2004 and further be pleased to allow the said appeal and quash and set aside the order dated 30.9.2004 passed by the respondent no.2 for the reasons stated in the Memo of Petition.
(B) To issue a writ of mandamus or a writ in the nature of mandamus or any other appropriate writ, order or direction which the Hon'ble Court may deem fit, just and proper quashing and setting aside the order dated 24.9.2010 passed by the respondent no.1 under Sec. 8-F of the Act attaching the Bank Account of the petitioner and directing the Bank to pay Rs.81,11,245/- by way of Demand Draft from the account of the petitioner without serving the petitioner copy of the judgment rejecting the appeal or notice calling upon the petitioner to pay the amount for the reasons stated in the Memo of Petition.
(C) Pending admission, hearing and final disposal of the above Special Civil Application to stay the execution, implementation and operation of the order dated 24.9.2010 issued by the respondent No.1 on the State Bank of India Manek Chowk Branch,Porbandar and restrain the respondents, their agents and servants from recovering amount of Rs.81,11,245.00 pursuant to attachment order dated 24.9.2010 directing the State Bank of India Manek Chowk Branch,Porbandar to pay an amount of Rs.81,11,245.00 for the reasons stated in the Memo of Petition."
In this matter, affidavit in reply is filed by respondents page 101. During pendency of petition, one Draft Amendment has been placed on record which is dated 9th December, 2010. It has been allowed by this court and accordingly, amendment is made in this petition by petitioner in view of order passed by this court dated 14th December, 2010. Para 15(A),(B),(C),(D) (i) to (vi) and (E) have been added to petition pursuant to order of this court dated 14.12.2010.
Respondents
- PF Authority has passed order in proceedings under section 7A of Employees' Provident Fund and Miscellaneous Provisions Act, 1952. Petitioner is having PF Code No. GJ/920-G. Respondent PF Authority passed aforesaid order under section 7-A on 30th September, 2004 and directed present petitioner to pay due amount while determining dues payable by petitioner establishment under PF Act and Schemes framed thereunder on basis of information available on record as laid before Provident Fund Authority for period under reference from 2000 to 2004. Total amount comes to Rs.59,84,367.00 with interest under section 7-Q to be paid by petitioner which amount comes to Rs.17,70,769.00. Thereafter, order passed by PF Authority was challenged by petitioner before Employees Provident Fund Appellant Tribunal, New Delhi by filing Appeal ATA No. 830(5)04 wherein appellate tribunal has decided appeal on 8.9.2010 and appeal preferred by petitioner has been dismissed. Then, respondent PF Authority has issued order dated 24th September, 2010 while exercising powers under section 8F of Employees' Provident Funds and Miscellaneous Provisions Act and addressed a letter to State Bank of India (earlier State Bank of Saurashtra) Porbandar to remit amount mentioned in order total comes to Rs.81,11,245.00. It is submitted by learned Senior Advocate Mr. KB Trivedi that in view of order passed by PF Authority under section 8F of Act which is dated 24.9.2010, that amount is already transferred in account of respondent PF Department. However, learned Advocate Mr. Niral R. Mehta appearing for respondents PF Department is not having any clear instructions whether such amount as referred to above has been transferred to account of respondent PF Department or not.
When matter was examined by Competent Authority under section 7A of PF Act, representative from petitioner appeared before competent authority and submitted proof of having been submitted statutory returns. Establishment has failed to produce pay roll, muster roll, voucher etc. in respect of contractor engaged by establishment despite adjournments granted by competent authority in proceedings under sec. 7A of Act. Before competent authority, an affidavit of Shri BA Parmar, (SE) was submitted by petitioner wherein it was stated that records for period from 16.11.1995 to 31.3.2000 are not available. However, establishment produced Form No. 26-C from 1.4.2000 to 31.1.2004 along with list of 30 contractors which are self employed wherein employer himself is doing work for which affidavits are produced on record before competent authority. List of 410 contracts with details of contract, contract amount paid, labour charges invoiced therein etc. were submitted by petitioner establishment before competent authority, however, petitioner establishment failed to produce pay roll, muster roll, names of labourers etc. and have stated to have paid wages at rate of 16 per cent of contract amount. This aspect was examined by competent authority and it was considered that 16 per cent wages is not considered to be justified and same has not been acceptable and therefore, 20 per cent wages are considered on contract amount paid and find out that employer in relation to establishment is liable to remit dues payable under the Act and Schemes framed thereunder for period under reference. Dues for period from 11.1995 to 02.2000 could not be determined by competent authority as record is not available with establishment for reason of natural calamity in shape of cyclone and earthquake as constrained in affidavit dated 3.8.2004. However, in event if subsequently any fact is discovered to contrary of affidavit or any claim is advanced by contract labour for period upto February, 2000 from November, 1995, establishment shall be liable to make payment on account of provident fund.
Appellate Tribunal has considered order passed by competent authority under section 7A of PF Act and only considering definition of employee under section 2(f) of Act, came to conclusion that it is duty of principal employer to prepare list of employees engaged by him as per para 36 A&B. Persons engaged by contractor were working for appellant means present petitioner establishment and, therefore, present petitioner being principal employer, having primary responsibility for payment of contribution and to get necessary details of workmen employed by contractor. Petitioner had engaged contractor to execute work, then, it is duty of petitioner to get necessary details of workmen employed by contractors at commencement of contract since primary responsibility for payment of contribution is on principal employer. It was observed that it was also duty of petitioner company to get temporary identity certificate issued to workmen and to pay the contribution. It was also observed that since petitioner failed to do so, it cannot be heard to say that workmen are unidentifiable. It was observed that in this case, appellant has not prepared any list nor supplied same to competent authority, so,at this stage, he is not permitted to say that workmen are not identifiable. Therefore, appellate tribunal has rejected appeal preferred by petitioner and confirmed order passed by competent authority under section 7A of PF Act.
In light of this back ground, contention which has been raised by petitioner before this Court in para 15(A) (B),(C),(D) (i) to (vi) and 15(E) in petition amended as per this Court's order dated 14.12.2010 are quoted as under:
"15(A) Petitioners have challenged the order dated 8.9.2010 of the appellate authority which in fact confirms the order of the Assistant Provident Fund Commissioner dated 30.9.2004. It is submitted that the said order is passed on conjectures and surmises since the same is rendered in utter disregard of the documents on record. Petitioners further submit that the liability sought to be imposed on the petitioner can never be fastened as services of all those people were hired on principal to principal basis and not on contractual basis. Therefore, the alleged liability totalling to the tune of Rs.81,11,245/- can never be fastened on the petitioner company.
15(B) Petitioners submit that it is pertinent to note that in this case, neither the alleged contractors nor their employees are available. It is pertinent to note that even in such cases where the persons are either not found to be working with the alleged contractors or not working in the capacity of employees of such contractors and are not registered with the office of the petitioners or the contractors, any deposit made by the petitioners is not going to benefit any of the alleged workers.
15(C) It is submitted that the amounts paid to various independent parties are not wages and that therefore there was no question of deducting any amount therefrom by way of provident fund dues and therefore no question arises of depositing the alleged PF dues thereon. Whilst assuming without admitting that they are wages, then in that case also, there is no question of depositing the entire share i.e. share of employer and employees, insamuch as at no point of time any amount from the order value paid to the said independent parties has been deducted and retained by the petitioner company. It is true that the petitioner company had produced Form No.26C containing the names of all such independent parties to whom various amounts were paid from time to time during the period from 1.4.2000 to 31.3.2004 along with the affidavits of 30 independent parties which were self employed. For ready reference, copy of the said Form No. 26C containing the names of in all 410 parties is annexed hereto and marked as Annexure C. 15(D) In order to show the nature of work performed by each of the said parties long with other information, the petitioners also submitted various details as indicated hereinbelow.
(i) Statement containing the names of in all 276 parties along with the nature of work performed by them with total amount paid to them i.e. Rs.7,80,21028/- 20% of the said amount coming to the tune of Rs.1,56,04,206.00 on which alleged PF dues to the tune of Rs.39,96,237.00 have been worked out.
(ii) List of 30 parties out of the aforesaid 276 parties referred to in Statement A along with their respective affidavits which were filed before the respondents.
(iii) List of 45 parties of the aforesaid 276 parties along with their affidavits which came to be filed before the Appellate Authority.
(iv) Statement B indicating the names of 134 parties with the total amount paid to them to the tune of Rs.3,88,04,539/- during the period in question which were engaged for a longer period.
(v) Summary as regards the calculation of alleged PF dues while assuming that the amounts i.e. the order value paid to 410 parties and indicated in statement A and Statement B are wages @ 29 % and 16% respectively.
(vi) Summary showing the calculation of alleged PF dues with reference to the employer share @ 20 per cent and 16% and 16% of the said order value.
For ready reference all the aforesaid details are annexed hereto and collectively marked as Annexure C (colly) If one peruses first summary of calculation referred to above, it becomes abundantly clear that if 276 independent parties indicated in Statement A are excluded, the total liability comes to the tune of Rs.15,90,055.00 while considering both the shares of employer and employees. However, in reality when there was no question of deducting the employees share, at the best, liability of the petitioner company could be confined to its own share i.e. employer's share which come to the tune of Rs.8,45,008.00 with reference to the parties indicated in Statement B while assuming that it was only 16% of the total order value which allegedly represented the alleged wages.
15(E) Petitioners submit that there is no justification or reasons given by the respondents for raising the amount of alleged wages from 16% to 20%. Petitioners submit that though the aforesaid details were produced by the petitioners and affidavits were also filed stating inter alia that the parties were not the workers of the petitioners company nor were they workers of the alleged contractors and that they are self employed,but unfortunately such details have not been considered by the respondents as well as by the appellate authority. It was specifically brought to the notice of the respondents as well as the appellate authority that the advocate is giving his professional services whereas other independent parties rendered their services as principals and despite this, such glaring facts have not been appreciated by the respondents as well as by the appellate authority though voluminous material was placed below them."
Learned Senior Advocate Mr. KB Trivedi has also emphasized in his submissions that whatever contentions raised in draft amendment were also raised before PF Authority in proceedings under section 7A but those contentions have not been considered either by competent authority or by appellate tribunal under section 7I of PF Act.
I have perused affidavit in reply filed by respondent PF Authority. In affidavit in reply also, same and similar stand has been taken by respondent PF Authority page 101 to 116. Relevant averments made by respondent PF Department in para 13 of affidavit in reply which being answer to amended paragraph 15A and paragraph 14 being answer to amended paragraph 15B. Except that, no other affidavit is filed by respondent PF Authority before this Court. Therefore, para 13 and 14 of affidavit in reply filed by respondent PF Department are quoted as under:
"13. With regard to amended paragraph no. 15 A, I say and submit that for the purpose of EPF & MP Act, 1952, the contractors who have worked for the petitioners and the workers engaged by such contractors certainly be termed as employees of the petitioners within the meaning of section 2(f) of the Act. For the sake of brevity, I crave leave to reproduce the section for ready reference as under:
2(f) : "employee" means any person who is employed for wages in any kind of work manual or otherwise, in or in connection with the work of (an establishment) and who gets his wages directly or indirectly from the employer , and (includes any person,-
(i) employed by or through a contractor in or in connection with work of the establishment;
(ii) engaged as an apprentice not being an apprentice engaged under the Apprentices Act, 1961 (52 of 1961) or under the Standing Orders of the establishment;] Bare perusal of the aforesaid Section, it is abundantly made clear that the employees engaged through the contractor for the work of the petitioners establishment for the purpose of compliance of the Act and it is the prime duty of the petitioners establishment being principal employer to secure compliance of all the employees of the establishment including those employed through contractors. More so, as per the provisions of section 8A read with paragraph 26, 30, 36,36B and 38 of the EPF Scheme, 1952,t he principal duty has been cast upon the petitioners to secure compliance of such contractor's employee being the principal employer. It is pertinent to note that the petitioners itself has provided list of 410 contractors working for the petitioner establishment with the details of contract, contract amount paid, labour charges involved therein, etc. and has further admitted to have paid wages @ 16% of the contract amount.
However, Respondent/Authority after having taken into consideration totality of facts and ratio laid down by the Hon'ble Madras High Court in the case of Regional Director, ESIC v/s. Sundaram Clayton reported in 2004 LLR 627, deemed fit to consider wages @ 20 % of the contract amount in absence of non submission of documents like pay roll, muster roll and wage register in connection with the contractors by the petitioners. Under the circumstances, the order dated 30.9.2004 is justified and in consonance with the Act and the Scheme. It is thus the petition deserves to be dismissed being devoid of any merits.
14. With regard to mended paragraph 15B is concerned, I say and submit that contention raised by petitioners therein that deposit made by the petitioners is not going to benefit any of the alleged worker is nothing but an effort to take advantage of their own misdeeds. It is further submitted that on the one hand petitioners have not maintained the list of workers, wages paid and muster roll of the contractor's employees and/or having chosen not to produce before the respondent authority during the course of enquiry for the reasons best known and on the other hand is contending that deposit made by the petitioners I s not going to benefit any of the alleged workers, which is in my respectful submission nothing but an after thought with a view to evade PF liability and circumvent their own misdeeds. Under the circumstances, it will be just and proper for this Hon'ble High Court to dismiss the petition with exemplary cost."
In light of this back ground and considering submissions made by both learned advocates and also considering controversy on factual aspects as has been raised by petitioner establishment and no sufficient material and evidence led by petitioner establishment before competent authority in proceedings initiated under section 7A of PF Act, whether section 2(f) of Act defining employee is attracted or not, that question is required to be examined which is giving definition of employee because stand taken by petitioner establishment is that contractor who has been engaged for particular kind of work to be performed by him but there was no employee of contractor but he himself was contractor of petitioner and on that basis, contractor himself is to be considered Principal and there is agreement between principal and principal and question of engaging any employee by contractor does not arise. According to my opinion, these facts are required to be re-examined by respondent PF Authority being facts to be determined and to consider stand taken by petitioner establishment. For that, at the relevant point of time, such material was not produced by petitioner establishment and no oral evidence was led by petitioner establishment in support of such contentions. Therefore according to my opinion, decision which has been taken by competent authority under under section 7A of PF Act is required to be quashed and set aside so that entire controversy between petitioner establishment and PF Department could be decided a fresh and that would meet ends of justice between parties.
I have perused order passed by competent authority under section 7A of PF Act. I have also perused order passed by Appellate Tribunal and perusal of aforesaid both orders makes it clear that they have not satisfactorily examined issue/controversy between parties perusal of aforesaid both orders makes it clear that this controversy is still remaining between parties and in exercise of powers under Article 226/227 of Constitution of India, this Court cannot re-examine factual aspects and re-appreciated factual aspect and this Court also cannot appropriately deal with and decide factual aspects. Therefore, according to my opinion, if order passed by competent authority under section 7A of Act dated 30.9.2004 as well as order passed by Appellate Tribunal dated 8.9.2010 in appeal ATA No. 830(5)04 as well as order dated 24.9.2010 passed by PF Authority under section 8F of Act are quashed and set aside without expressing any opinion on merits while remanding matter back to respondent PF authority to consider aforesaid aspects, this will meet ends of justice between parties.
Accordingly, for reasons recorded above, order passed by competent authority under section 7A of Act dated 30.9.2004 as well as order passed by Appellate Tribunal dated 8.9.2010 in appeal ATA No. 830(5)04 as well as order dated 24.9.2010 passed by PF Authority under section 8F of Act are quashed and set aside without expressing any opinion on merits and matter is remanded back to respondent PF Authority with a direction to respondent competent authority to decide and determine dues of petitioner establishment while initiating proceedings under section 7A of Act a fresh and give reasonable opportunity of hearing to petitioner establishment and it is open for petitioner establishment to produce all relevant and material documents/records and also to lead oral evidence to establish contentions/stand before competent authority and competent authority under section 7A of PF Act is directed to decide afresh proceedings under sec. 7A of Act while re-examining entire issue and controversy on the basis of evidence on record, as early as possible, within period of six months from date of receipt of copy of present order and thereafter to communicate decision to petitioner establishment. It is made clear by this Court that while reconsidering and re-examining matter as per remand order passed by this Court, naturally competent authority would not be influenced by earlier order dated 30th September, 2004 passed by it as well as order passed by appellate tribunal dated 8th September, 2010 and will pass appropriate fresh reasoned order on basis of record available before competent authority without being influenced by aforesaid orders in accordance with law.
In pursuance to order dated 24.9.2010, if amount is transferred by Branch Manager, State Bank of India, Porbandar in account of PF Department, then, that amount would remain with PF Department subject to final out come of remanded proceedings under section 7A of PF Act, meaning thereby, it is subject to result of proceedings under sec. 7A of PF Act as per this remand order passed by this Court but if Branch Manager, State Bank of India, Porbandar has not transferred such amount in account of respondent PF Department as per order dated 24.9.2010, then, it is directed to Branch Manager, State Bank of India, Porbandar to transfer such amount from account of petitioner establishment to account of PF Department immediately, within period of one week from date of receipt of copy of present order. For that purpose, registry of this Court is directed to send yadi of this order to State Bank of India, Porbandar.
In view of above observations and directions,this Court has not examined any factual aspects and controversy between parties while remanding matter and has also not expressed any opinion on merits. Therefore, order passed by competent authority under section 7A of Act dated 30.9.2004 as well as order passed by Appellate Tribunal dated 8.9.2010 in appeal ATA No. 830(5)04 as well as order dated 24.9.2010 passed by PF Authority under section 8F of Act are quashed and set aside without expressing any opinion on merits while remanding matter back to competent authority under PF Act to decide afresh proceedings under section 7A of Act after giving reasonable opportunity of hearing to petitioner and it is open for petitioner establishment to lead oral evidence and also to produce documentary evidence and material before competent authority in proceedings under sec. 7A of Act and competent authority under PF Act will have to decide remanded matter strictly in accordance with law as well as consider documentary and oral evidence which are on record, without being influenced by earlier orders as referred to above. Rule is accordingly made absolute to extent indicated herein above with no order as to costs.
(H.K. Rathod,J.) Vyas Top