Kerala High Court
Guruvayoor Co-Operative Urban Bank vs The Assistant Provident Fund on 27 July, 2012
Author: C.T. Ravikumar
Bench: C.T.Ravikumar
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT:
THE HONOURABLE MR.JUSTICE C.T.RAVIKUMAR
FRIDAY, THE 27TH DAY OF JULY 2012/5TH SRAVANA 1934
WP(C).No. 31545 of 2010 (P)
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PETITIONER(S):
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GURUVAYOOR CO-OPERATIVE URBAN BANK
LTD.NO.F.1652, HEAD OFFICE, WEST NADA
GURUVAYOOR, REPRESENTED BY ITS GENERAL MANAGER
IN CHARGE.
BY ADVS.SRI.A.JAYASANKAR
SRI.MANU GOVIND
RESPONDENT(S):
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1. THE ASSISTANT PROVIDENT FUND
COMMISSIONER, EMPLOYEES PROVIDENT FUND, ORGANIZATION
BHAVISHYANIDHI BHAVAN, P.B.NO.1895, KOCHI - 17.
2. STATE BANK OF TRAVANCORE,
GURUVAYOOR BRANCH, KOMATH BUILDING, EAST NADA
GURUVAYOOR - 680 101, REPRESENTED BY ITS MANAGER.
BY ADV. SRI.S.GOPAKUMARAN NAIR (SR.)
BY ADV. SRI.M.CHANDRA BOSE, SC, EPF.
THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON
27-07-2012, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:
tss
W.P.(C) NO.31545/2010
APPENDIX
PETITIONER'S EXHIBITS:-
P1:- COPY OF ORDER DTD. 2.7.2010.
P2:_ COPY OF APPEAL FILED BEFORE THE EMPLOYEES PROVIDENT FUND APELLATE
TRIBUNAL, NEW DELHI.
P3:- COPY OF DEMAND DRAFTS DTD. 3.9.2009.
P4:- COPY OF LETTER DT.D 29.9.2010.
P5:- COPY OF ORDER DT.D 1.9.2010.
P6:- COPY OF STATEMENT OF ACCOUNT RECEIVED FROM THE 2ND RESPONDENT
BANK.
P7:- COPY OF PETITION FOR STAY FILED BY THE PETITIONER
RESPONDENT'S EXHIBITS:-
NIL
//TRUE COPY//
P.S. TO JUDGE
tss
C.T. RAVIKUMAR, J.
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W.P.(C). No.31545 OF 2010
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Dated this the 27th day of July, 2012
JUDGMENT
The petitioner is a society registered under the Kerala Co- operative Societies Act and it is engaged in banking business on the strength of the licence issued by the Reserve Bank of India. The petitioner-Bank was brought under the purview of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 (for short the 'EPF Act') with code No.KR/10116 with effect from 1.1.1983 and a coverage notice to that effect was also duly published. The Enforcement Officer who is also the Inspector appointed under section 13 of the EPF Act conducted an inspection in the Bank and reported that the Bank had not enrolled all its eligible employees as members of EPF Scheme. It was specifically reported that 10 persons who are engaged by the Bank as deposit collectors have not, so far been, extended the benefit under the EPF Act and the Scheme. The Bank was then issued with a notice dated 21.10.2009 requiring to enroll all the aforesaid 10 persons as members of the provident fund W.P.(C).31545/10 2 scheme and to remit the various dues. Based on the dispute raised by the Bank, it was decided to initiate an enquiry under section 7A of the EPF Act to decide the eligibility of those non-enrolled employees to get enrolled as members of the EPF Scheme and based on its outcome to determine the dues payable for the period from 5/1989 to 12/2009. On conclusion of the said enquiry, it was found that those persons are eligible and entitled to be enrolled as members of the EPF Scheme and consequently, an amount of Rs.1,42,746/- was assessed as the amount of EPF dues payable by the Bank under section 7A of the EPF Act. The petitioner was then, directed to remit the assessed amount within 15 days from the date of receipt of Ext.P1 assessment order dated 2.7.2010. The petitioner-Bank contended that the deposit collectors could be held as employees of the Bank as defined under section 2(f) of the EPF Act and therefore, Ext.P1 was illegal and liable to be interfered with. Raising grievance against Ext.P1, the petitioner preferred Ext.P2 appeal as envisaged under section 7-I of the EPF Act before the Employees Provident Fund Appellate Tribunal. Along with Ext.P2 appeal memorandum, Ext.P3 demand draft showing W.P.(C).31545/10 3 remittance of 75% of the assessed amount and Rs.500/- as court fee to show compliance with the said pre-condition for filing the appeal was forwarded. Pending Ext.P2 appeal before the EPF Appellate Tribunal, the petitioner-Bank received Ext.P4 letter dated 29.9.2010 sent by the first respondent to the second respondent acknowledging receipt of a demand draft in lieu of attachment recommended by the first respondent. Ext.P5 order dated 1.9.2010 issued by the first respondent under section 8F of the EPF Act was also enclosed therewith. The contention of the petitioner-Bank is that it received Exts.P4 and P5 only on 1.10.2010. Immediately on receipt of Exts.P4 and P5, the petitioner made enquiry with the second respondent and it was informed that an amount of Rs.1,42,746/- from the account of the petitioner with the second respondent had been transferred in the name of the first respondent vide a demand draft. Ext.P6 is the statement of accounts of the petitioner-Bank received from the second respondent. It is contended that prior to the issuance of Ext.P5, the petitioner was not put on notice. No hearing was conducted. In fact, it is only after attachment, copy of Ext.P1 order was issued along with W.P.(C).31545/10 4 Ext.P4 letter. Ext.P1 order is dated 2.7.2010 and the period provided under the statute for preferring an appeal against an order under section 7-I is 60 days. Ext.P2 appeal was filed before the expiry of the said statutorily prescribed period and it is pending consideration before the EPF Appellate Tribunal. In the said circumstances, it is contended that the initiation of steps as per Ext.P5 that too, in blatant violation of the principles of natural justice, within the statutory time limit for preferring an appeal is highly illegal, arbitrary and liable to be set aside. It is specifically contended that neither the first respondent nor the second respondent had issued any notice to the petitioner before transferring the aforesaid amount that stood in the credit of the petitioner's account with the second respondent- bank.
2. A statement has been filed in this writ petition on behalf of the first respondent. It is admitted thereunder that recovery measures for realisation of the amount assessed as per Ext.P1 in exercise of the powers conferred under section 8F (3) of the EPF Act were taken. In compliance with the bank account attachment order, a demand draft for Rs.1,42,746/- was received by the first respondent W.P.(C).31545/10 5 from the second respondent-bank. It is further stated therein that the first respondent was absolutely unaware of filing of Ext.P2 appeal by the petitioner against Ext.P1 before the EPF Appellate Tribunal. It is the contention that if the said information and details regarding filing of Ext.P2 appeal were known to the office of the first respondent, recovery steps for realising the amount assessed as per Ext.P1 would not have been initiated during its pendency. The tenor of the statement of the first respondent is that the petitioner- Bank is at fault on account of its failure to intimate the first respondent properly and timely with respect to the filing of Ext.P2 appeal. That apart, it is contended therein that the question of eligibility of the deposit collectors of a bank as members of the EPF scheme is covered by a judgment of the Hon'ble Apex Court in Civil Appeal No.3355 of 1998. At this juncture, I may hasten to add that, that question cannot, now, be decided by this Court in this proceedings as in view of the statutory remedy provided to redress the grievances against Ext.P1 assessment order, the petitioner has already preferred an appeal under section 7-I of the EPF Act before the EPF Appellate Tribunal, New W.P.(C).31545/10 6 Delhi and that statutory appeal is pending. There can be no doubt with respect to the fact that when an appeal is statutorily provided and the parties have resorted to that remedy, the correctness of the original order can be decided only in the appeal.
3. Now, the question to be considered is only with respect to the legality and sustainability of Ext.P5. Even according to the first respondent, if the factum of filing of Ext.P2 appeal and remittance of 75% of the assessed amount to satisfy the pre-condition for filing appeal were made known, the first respondent would not have taken coercive action of issuing attachment order by invoking the power under section 8F (3) of the EPF Act. As already noticed hereinbefore, the first respondent finds fault with the petitioner-Bank for not properly and timely informing it regarding the filing of Ext.P2 appeal and the remittance of 75% of the assessed amount. I am of the considered view that the first respondent cannot be permitted to justify the illegal action in resorting measures for realising the excess amount invoking the powers under section 8F (3) of the EPF Act W.P.(C).31545/10 7 without even waiting for the expiry of the time stipulated for preferring an appeal against its order in terms of the provisions under section 7-I of the EPF Act, that too, without putting the petitioner on notice. On account of such undue hasty action on the part of the first respondent, the petitioner has now remitted an amount very much in excess of the amount originally assessed as per Ext.P1 inasmuch as in addition to remittance of 75% of the amount assessed as per Ext.P1 the amount covered by Ext.P1 was transferred from the account of the petitioner to the first respondent following Ext.P5. That apart, even the very question whether the petitioner is liable to pay the amount assessed as per Ext.P1 and in that matter, the very sustainability of the assessment under Ext.P1 is a matter pending before the EPF appellate tribunal. The right, if any, to recover the assessed amount under section 8F (3) of the EPF Act in terms of Ext.P1 would undoubtedly depend upon the outcome of Ext.P2 appeal. In the circumstances, there can be no justification at all for the first respondent for realising the assessed amount resorting to the powers under section 8F (3) of the EPF Act prior to the expiry of the period stipulated for preferring W.P.(C).31545/10 8 Ext.P2 appeal. Such undue hasty action cannot be justified at all by any volume of explanation. In fact, the first respondent would admit the fact that it would not have invoked any recovery step for realising the amount covered by Ext.P1 assessment order if the pendency of Ext.P2 appeal was made known to it. When that be the position, having come to know about the pendency of the appeal, there is no justification for the first respondent to retain the amount obtained by resorting to the powers under section 8F (3) of the EPF Act in an undue hasty manner, any further. What makes such an action contemptuous and deprecative is the manner in which it was done. Neither the first respondent nor the second respondent issued any notice or communication whatsoever to the petitioner before transferring the said amount that stood in the credit of the petitioner's account with the second respondent. The competent officers under respondents 1 and 2 shall take appropriate steps to avoid recurrence of such situations in future. The first respondent cannot feign ignorance of the fact that an appeal has been provided under section 7- I of the EPF Act in terms of the provisions under section 7(2) of the W.P.(C).31545/10 9 Employees Provident Funds Appellate Tribunal (Procedure) Rules, 1997. The time provided for filing an appeal is 60 days from the date of issuance of the order to be challenged. In this case, Ext.P1 order is dated 2.7.2010 and according to the petitioner, the said order was served on him only on 28.7.2010. Ext.P5 is dated 1.9.2010. Even if the time for filing the appeal is calculated from 2.7.2010, there was no justification for the first respondent to issue Ext.P5 for realising the assessed amount on 1.9.2010. The date of issuance of copy of Ext.P1 cannot be said to be beyond the knowledge of the first respondent as it was the first respondent who issued the copy of that order to the petitioner. Taking into account the aforesaid circumstances, this writ petition is disposed of as hereunder:-
The first respondent shall return 75% of the amount covered by Ext.P1 together with the interest thereon from the date of its recovery till the date of payment to the petitioner expeditiously, at any rate, within a period of one month from the date of receipt of a copy of this judgment. The entitlement of the petitioner to get refund of 25% recovered by the first respondent resorting to the powers under section W.P.(C).31545/10 10 8F (3) of the EPF Act along with interest would depend upon the outcome of Ext.P2 appeal. Needless to say that the entitlement of the petitioner to receive back the 75% of the assessed amount remitted as pre-condition for filing the appeal would be subject to the result of Ext.P2 appeal. To avoid recurrence of any such situations, a copy of this judgment shall be forwarded to the second respondent who in turn, will forward its copy to its Head Office, forthwith to enable the competent authority of the Bank to take appropriate steps for avoiding its recurrence. The first respondent shall also take appropriate steps to avoid recurrence of such situations in future.
C.T. RAVIKUMAR
(Judge)
spc/
W.P.(C).31545/10 11
C.T. RAVIKUMAR, J.
JUDGMENT
September, 2010
W.P.(C).31545/10 12