Madras High Court
M/S.Sri Ganapathi Mills vs The Regional Provident Fund ... on 25 November, 2008
Author: S.Nagamuthu
Bench: S.Nagamuthu
BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT DATED : 25/11/2008 CORAM THE HONOURABLE MR.JUSTICE S.NAGAMUTHU W.P(MD)No.2905 of 2007 and M.P.(MD).No.1 of 2007 M/s.Sri Ganapathi Mills 'B' Unit, Bye Pass road, Virudhunagar, Rep. by its Managing Director, Mr.K.Vee.Rajenthiran ... Petitioner Vs. 1.The Regional Provident Fund Commissioner, Lady Doak College Road, Chokkikulam, Madurai-2. 2.The Assistant Provident Fund Commissioner, Employees Provident Fund Organisation, Lady Doak College Road, Chokkikulam, Madurai-2. 3.The Manager, Karur Vysya Bank Ltd., Virudhunagar Branch, Virudhunagar. 4.The Enforcement Officer, Complaint Circle-16, Employees Provident Fund Office, Lady Doak College Road, Madurai. ... Respondents PRAYER Writ Petition filed under Article 226 of the Constitution of India, to issue a Writ of Certiorarified Mandamus, calling for the records relating to the impugned order of the first respondent made in proceedings No.TN/MDU/PDC(1)/8F0506/2007, dated 22.02.2007/15.03.2007 and quash the same and consequently direct the first respondent to pass orders in the enquiry as per the enquiry notice dated 04.12.2006 issued by the first respondent regarding the liability of the petitioner to pay interest and damages. !For Petitioner ... Mr.A.Veerasamy ^For RR-1,2 and 4 ... Mr.Murali Sankar For Respondent No.3 ... No Appearance ****** :ORDER
***** The first respondent made an order under Section 8(F) of the Employees' Provident Funds and Miscellaneous Provisions Act of 1952, by his proceedings No.TN/MDU/PDC(1)/8F0506/2007, dated 22.02.2007/15.03.2007, thereby calling upon the third respondent to pay a sum of Rs.4,72,228/- by means of demand draft from and out of the money being held by the Bank on account of and on behalf of the petitioner herein. The petitioner challenges the said order in this Writ Petition.
2. There is no denial of the fact that a sum of Rs.4,72,228/- is due from the petitioner towards the interest for Employees' Provident Fund contribution. Despite demand notice, the amount was not paid. Admittedly, the petitioner has got his account in the third respondent bank, where sufficient fund lies in the account. Therefore, in exercise of the power conferred under Section 8(F) of the Employees' Provident Funds and Miscellaneous Provisions Act of 1952 (hereinafter referred to as the 'Act'), the first respondent has directed the third respondent to pay the amount.
3. The learned counsel appearing for the petitioner would raise three contentions mainly. The first one is that no recovery certificate was issued to the Recovery Officer under Section 8(B) of the Act and in the absence of issuance of such a certificate, the order under Section 8(F) is not sustainable. Section 8(F) of the Act reads as follows:-
"Notwithstanding the issue of a certificate to the Recovery Officer under Section 8B, the Central Provident Fund Commissioner or any other officer authorised by the Central Board may recover the amount by any one or more of the modes provided in this section."
4. A cursory perusal of the above provision would disclose that there is no condition precedent for issuing an order under Section 8(F) of the Act that there should have been a recovery certificate issued under Section 8(B) of the Act. Thus, the first contention raised by the learned counsel for the petitioner fails.
5. The second contention is that before passing an order under Section 8(F) of the Act, an enquiry is to be held and only after affording opportunity to the employer, an order could be made under Section 8(F) of the Act. The learned counsel relies on a judgment of the Madhya Pradesh High Court in Ferro Concrete Construction (I) Pvt. Ltd., vs. Regional Provident Fund Commissioner reported in 2002(1) LLJ 986. But, in the counter, it is stated that no such enquiry needs to be held. From the rival contentions raised, it is to be now analyzed as to whether enquiry needs to be held under Section 8(F) of the Act, before any order being passed by the authority. Section 8(F)(3) of the Act mandates that a notice in writing requires to be issued to the person, who holds the money belonging to the employer. In the judgment relied on by the learned counsel for the petitioner, after referring to a judgment of the Hon'ble Supreme Court in Biharilal Ramcharan v. ITO reported in 1984(131) ITR, 129, 136 (SC), the learned judge of the Madhya Pradesh High Court, in paragraph-11, has held as follows:
"In substance, the ratio of the Supreme Court decision rendered in the case of Biharilal (supra), is that it is mandatory on the part of the Recovery Officer before passing any order under these two sections to hold an inquiry after giving due opportunity to the person concerned, allow him to state on oath whether he has to pay any amount to the defaulter and if so under what head, against which transaction or whether he holds any money on account of defaulter and if so how much, whether any money is due or not and if so, its extent? It is only after the person concerned files and makes a statement on oath on any of the facts referred supra, then depending upon the statement so made, the Recovery Officer will proceed to pass an order. In other words, holding of an inquiry into the requirement of Section 8-F(3)(vi) is mandatory and any deviation from the compliance will result in vitiating the order."
6. A close reading of Section 8(F)(3) of the Act, the judgment of the Hon'ble Supreme Court cited supra and the above findings of the Madhya Pradesh High Court would make it very clear that such a notice and such an enquiry is required to be afforded to the person, who is allegedly holding the money belonging to the employer. Absolutely, there is no necessity to issue any notice to the employer. Thus, the second ground raised by the learned counsel for the petitioner also fails.
7. The next contention of the learned counsel for the petitioner is that the Employees' Provident Fund Contribution has paid in installments only by virtue of the order of this Court and, therefore, for the belated payment by means of installments, the petitioner cannot be held responsible for the interest. But, I am not persuaded by the said argument. Since the petitioner fails to pay the amount due, he becomes liable to pay interest. The order granted by this Court is only to avoid any stringent action to recover the amount from the petitioner. Statutory liability under the Act cannot be nullified by a judicial order of this Court. Therefore, the third ground raised by the learned counsel for the petitioner also fails. The learned counsel for the petitioner has not argued any other point requiring consideration.
8. In the result, there are no merits in the Writ Petition. Thus, the Writ Petition fails and the same is, accordingly, dismissed. No costs. Consequently, the connected miscellaneous petition is also dismissed.
SML To
1.The Regional Provident Fund Commissioner, Lady Doak College Road, Chokkikulam, Madurai-2.
2.The Assistant Provident Fund Commissioner, Employees Provident Fund Organisation, Lady Doak College Road, Chokkikulam, Madurai-2.
3.The Enforcement Officer, Complaint Circle-16, Employees Provident Fund Office, Lady Doak College Road, Madurai.