Calcutta High Court
Vikram Poddar vs Regional Provident Fund Commissioner ... on 25 September, 2000
Equivalent citations: (2001)IILLJ518CAL
Author: Bhaskar Bhattacharya
Bench: Bhaskar Bhattacharya
JUDGMENT Bhaskar Bhattacharya, J.
1. In this application, the petitioner, one of the erstwhile Directors of the employer, has challenged an order, dated September 1, 2000, passed by the Recovery Officer, West Bengal, pursuant to notice of show cause issued upon the petitioner for recovery of the Provident Fund dues of the employer concerned. This writ application has been disposed of before asking the respondents to file affidavit because Sri Gupta appearing on behalf of the respondents has produced the entire case record.
2. Sri Bhanja Chowdhury, the learned advocate appearing on behalf of the petitioner has, firstly, contended that the entire recovery proceeding was illegal inasmuch as the same was not preceded by any valid order under Section 7-A of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952, nor was any notice served upon the petitioner prior to the passing of such order.
3. From the record produced before this Court, it appears that already an order under Section 7-A of the Act has been passed and the company was represented by its authorised agent.
4. In my view, for the purpose of passing necessary order under Section 7-A of the Act, no notice need be served upon each and every Director individually when the employer has been served. Thus I find no substance in the aforesaid contention of Sri Bhanja Chowdhury.
5. Sri Bhanja Chowdhury next contends that in view of the fact that the company is a sick company and it has been referred to BIFR, the recovery proceeding against the petitioner was illegal.
6. I am not at all influenced by the aforesaid contention of Sri Bhanja Chowdhury. Merely because the company is a sick company and it has been referred to BIFR, such fact is not an impediment in recovering the dues of provident fund. In this connection Sri Gupta has relied upon a Division Bench decision of this Court in the case of Kusum Engineering Company Limited v. Regional Provident Fund Commissioner, West Bengal, in Appeal No. 599 of 1990 wherein the aforesaid view has been adopted.
7. I, however, find that warrant of arrest cannot be issued unless the formalities required under Rule 73 of the Second Schedule to the Income Tax Act, 1961 are complied with. According to Section 8-G of the Employees' Provident Funds and Miscellaneous Provisions Act, the provisions of the Second and Third Schedules in the Income-Tax Act, 1961 and the Income Tax (Certificate Proceeding) Rules, 1962, as in force from time to time, shall apply with necessary modifications as if the said provisions and the rules referred to the arrears of the amount mentioned in Section 8 of this Act instead of to the Income Tax.
8. Therefore, for the purpose of recovering any amount mentioned in Section 7-A of the Act, Rule 73 should be strictly followed. According to the said rule warrant of arrest cannot be issued unless the Tax Recovery Officer, for reasons recorded in writing, is satisfied that the defaulter with the object or effect 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 the property, or 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.
9. It appears from the record that no such satisfaction has been recorded by the Recovery Officer though he has taken decision to issue warrant of arrest through appropriate authority. Such course is opposed to Rule 73 of the Income Tax Rules. I, therefore, set aside the order and direct that although the Recovery Officer will be entitled to recover the dues from the petitioner through any other mode prescribed under law, but he cannot be arrested for recovery of the sum unless the Recovery Officer complied with the provisions contained in Rule 73 mentioned above.
10. The writ application is thus disposed of with the aforesaid observation.
11. No order as to Costs.
12. Let xerox certified copy of the order, if applied for be supplied by Friday. Writ application disposed of.