Jharkhand High Court
Himanshu Chandra Mondal vs Employees Provident Fund Organisation ... on 30 September, 2021
Equivalent citations: AIRONLINE 2021 JHA 1690
Author: Rajesh Shankar
Bench: Rajesh Shankar
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IN THE HIGH COURT OF JHARKHAND AT RANCHI
W.P.(C) No. 682 of 2021
Himanshu Chandra Mondal ... ... Petitioner
Versus
1. Employees Provident Fund Organisation through Central Provident Fund
Commissioner, New Delhi
2. Employees Provident Fund Organisation through the Chairman, Central
Board of Trustees, New Delhi
3. Employees Provident Fund Organisation through the Assistant Provident
Fund Commissioner, (Compliance), Regional Office, Ranchi
4. Employees Provident Fund Organisation through its Recovery Officer,
District Office, Dhanbad
5. Employees Provident Fund Organisation through its Regional Provident
Fund Commissioner-II, District Office, Dhanbad
6. Senior Superintendent of Police, Dhanbad
7. Bhartiya Vidya Mandir School, Koyla Nagar Township, P.S.-Saraidhela,
District- Dhanbad, through its Principal ... ... Respondents
CORAM: HON'BLE MR. JUSTICE RAJESH SHANKAR
For the Petitioner : Mr. Ratnesh Kumar, Advocate
For the State : Ms. Rashmi Lal, A.C. to Sr.S.C.-III
For the Resp.-EPFO : Mr. Prashant Pallav, Advocate
Order No. 10 Dated: 30.09.2021
The present case is taken up through video conferencing.
2. The present writ petition has been preferred for quashing the warrant
of arrest dated 28.10.2020 (Annexure-8 to the writ petition) issued by the
Recovery Officer, Employees Provident Fund Organization (EPFO), Dhanbad
(the respondent no.4) against the petitioner in terms with power conferred
under Section 8B(1)(b) of the Employees' Provident Fund and
Miscellaneous Provisions Act, 1952 (in short, "the Act, 1952").
3. By way of an Interlocutory Application being I.A No. 2082 of 2021,
the petitioner sought addition of prayer in the writ petition to the extent of
quashing the warrant of arrest dated 19.03.2021 (Annexure-11 to the said
interlocutory application) issued by the respondent no. 4 during the
pendency of the writ petition.
4. The facts of the case as stated in the writ petition is that the
respondent no. 7 (Bharitya Vidya Mandir School) got itself registered with
the Employees' Provident Fund Organization (EPFO) in the year 2017 by
submitting a declaration form under Employees Enrolment Campaign, 2017
and information to this effect was given to the respondent no. 7 on
13.07.2017. The respondent no. 3 initiated a proceeding under Section 7-A
of the Act, 1952 against the respondent no. 7 for determination of the
amount of dues for the period from May 2011 to April 2018 and in the said
proceeding, the respondent no. 7 was represented by its Principal as well
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as Accountant & Teacher. The respondent no. 3, vide order dated
30.10.2018, determined an amount of Rs. 6,40,053/- as EPF and allied
dues to be paid by the respondent no. 7 for the period from May 2011 to
April 2018. The respondent no. 7, vide its letter dated 28.01.2019,
informed the Central Provident Fund Commissioner, New Delhi regarding
depositing an amount of Rs. 29,42,890/- with the respondent-EPFO and
further requested to waive the outstanding dues of Rs. 6,40,053/- as the
financial condition of the school was very poor. The respondent no. 4, vide
its notice/letter dated 19.08.2020, informed the Principal of the respondent
no. 7 that there was no provision to allow/grant time or to make payment
in instalments and thus directed to deposit the due amount of
Rs.17,56,072/- within 10 days from receipt of the notice. Thereafter, the
Principal of the school wrote letter dated 27.08.2020 to the Regional
Provident Fund Commissioner- II, EPFO, Dhanbad (the respondent no. 5)
to close the provident fund account of the school on the ground that its
financial condition was adversely affected due to Covid-19 pandemic. The
said letter was countersigned by the petitioner being the former Chairman
of the managing committee of the school. The respondent-EPFO was
dealing the said matter with the school through its Principal who was
representing the school before the EPFO authorities, but the respondent
no.4 despite knowing the said fact, issued show cause notice to the
petitioner on 01.10.2020 seeking reply as to why a warrant of arrest should
not be issued against him. Subsequently on 28.10.2020, the respondent
no. 4 issued warrant of arrest against the petitioner directing the Senior
Superintendent of Police, Dhanbad (the respondent no. 6) to arrest and
produce him. Since, the Central Government Industrial Tribunal-cum-Court
No. 2, Dhanbad cannot entertain the cases of individuals, the petitioner has
preferred the present writ petition.
5. Mr. Ratnesh Kumar, learned counsel for the petitioner, submits that
pursuant to show cause notice dated 01.10.2020 issued by the respondent
no. 4, the petitioner appeared in the office of the respondent no. 5 on
13.10.2020, however the said respondent was not present in the office on
the said date. Therefore, the petitioner, vide Email dated 13.10.2020,
requested the respondent no. 5 for another opportunity of being heard.
However, without providing any opportunity of hearing to the petitioner, the
warrant of arrest was issued against him on 28.10.2020, a copy of which
was received by him on 02.11.2020 (evening). It further is submitted that
at the relevant point of time, the petitioner was elected as the Chairman of
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the managing committee of the school only to look after the school as a
guardian and custodian and was not at all involved in its daily management
activities and day-to-day affairs. The petitioner has been brought in the
picture only at the time of issuance of warrant of arrest which is not only
unjustified but also amounts to harassment of a senior citizen who
accepted to be the custodian and guardian of the school benevolently. The
alleged EPF dues of the school is for the period from 05/2011 to 04/2018
whereas the petitioner was elected as chairman of the managing
committee of the school on 08.06.2018 and the said managing committee
was dissolved on 17.11.2020. Hence, the petitioner did not have any
concern with the said alleged EPF dues of the school. The impugned
warrant of arrest dated 28.10.2020 has been issued under the provisions of
Section 8B(1)(b) of the Act, 1952 which provides for the arrest of the
employer and his detention in prison for recovery of arrear of EPF amount
from an establishment. The term "employer" has been defined under
section 2(e) of the Act, 1952. As per Section 2(e) (ii) of the said Act, the
"employer" means a person who, or the authority which, has the ultimate
control over the affairs of the establishment. The petitioner was a Chairman
of the Managing Committee of the said school and he was not at all
involved in the activities of daily management and day-to-day affairs of the
said school. He also did not have any administrative or financial control
over the affairs of the said school. Merely by putting countersignature on
the correspondences made on behalf of the school, the petitioner cannot
be termed as "employer" in terms with Section 2(e) of the Act, 1952. It is
further submitted that after resignation of the former Principal, the
petitioner did not take charge of the Principal, rather the Vice Principal of
the said school took charge of the Principal and as such the respondent-
EPFO should not have taken coercive step against the petitioner.
6. On the contrary, Mr. Prashant Pallav, learned counsel for the
respondent-EPFO, submits that the said school is run and controlled by a
Managing Committee of which the petitioner is the Chairman and all
important decisions to run and manage the affairs of this establishment is
taken by the managing committee under his chairmanship. It is evident
that the petitioner has countersigned on the several correspondences and
letters of the school which suggests that the petitioner is well within the
purview of the Act, 1952. The recent dissolution of managing committee of
the said school is intentional in order to evade and avoid a legal action. The
proceeding for recovery of amount of Rs.17,56,072/- has already been
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initiated against the respondent no. 7 vide RRC No. 6108 dated
16.04.2020. The notice of CP-1 dated 11.06.2020 was issued to the
respondent no. 7 which requested for time to deposit the due amount. The
petitioner was given opportunity to appear before the respondent no. 4 on
13.10.2020 vide notice dated 01.10.2020 issued under section 8B of the
Act, 1952 read with notification no. S.O. 796 dated 04.03.1997 issued by
the Government of India. However, no satisfactory response was received
from the petitioner regarding liquidation of dues and therefore warrant of
arrest dated 28.10.2020 was issued under Section 8B(1)(b) of the Act,
1952 read with said notification dated 04.03.1997. The petitioner is an
"employer" under Section 2(e) of the Act, 1952 and the respondent no. 4
issued warrant of arrest following dues process of law providing the
petitioner an opportunity to show cause as to why the warrant of arrest
should not be issued against him. It is also submitted that the respondent-
EPFO had written a letter to the school to take EPF registration and to avail
the benefit of Employees Enrolment Scheme, 2017 (in short, "the Scheme,
2017") which was launched by the EPFO to provide one time relaxation to
those establishments which were mandatorily required to get themselves
registered as per the Act, 1952 having employees strength more than 19 at
any point of time previously. However, the school failed to get itself
registered within the stipulated period fixed in the Scheme, 2017. The
School however got itself registered on 12.07.2017 i.e. after the due date
fixed in the Scheme, 2017, as such it was not eligible for any benefit under
the said Scheme. It is further submitted that the school in the online
registration had itself declared that its employees' strength had crossed 19
on 02.08.2010 and as such admittedly, the establishment (school) was
under the purview of the Act, 1952 since 02.08.2010 but the establishment
intentionally failed to take EPFO registration from the said date. The
management of the petitioner failed to ensure regular compliance even
after issuance of show cause notices by the respondent-EPFO. It was only
when the employees of the establishment filed a complaint in the office of
the respondent-EPFO on 01.06.2018 and a proceeding under Section 7A of
the Act, 1952 was initiated against the school for the period from 05/2011
to 04/2018, the petitioner started depositing the provident fund and its
allied dues. The proceeding under Section 7A of the Act, 1952 was
concluded on 30.10.2018 making total assessment of Rs. 35,82,943/- out
of which the petitioner' establishment deposited Rs.29,42,890/- in course
of proceeding and a balance amount of Rs.6,40,053/- was due to be paid
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by it. The proceedings under Section 14B and 7Q of the Act, 1952 were
also initiated against the petitioner's establishment for belated deposit of
provident fund and allied dues as well as for payment of interest
respectively. A summon dated 31.12.2018 was issued to the petitioner's
establishment along with complete details of statement of belated payment
of dues for the period from 02.08.2010 to 28.12.2018. In course of the
proceeding, the establishment itself deposited Rs.7,32,252/- under Section
14B of the Act, 1952 and Rs.3,65,805/- under Section 7Q of the said Act.
The proceeding under Section 14B was concluded on 11.12.2019 assessing
Rs.19,44,373/- as dues out of which payment of Rs.7,32,252/- was
adjusted and thus the outstanding dues under Section 14B was of
Rs.12,12,121/-. The total dues under Section 7Q of the Act, 1952 was
Rs.11,12,478/- out of which payment of Rs.3,65,805/- was adjusted and
thus the outstanding dues under section 7Q of the Act, 1952 was
Rs.7,46,673/-. A sum of Rs.2,02,722/- was later on recovered from the
bank account of the establishment through an order issued under Section
8F of the Act, 1952 and the same was adjusted against dues under Section
14B. Further, after the end of the financial year, revenue recovery
certificate was issued to the recovery officer for further action in relation to
the outstanding amount of Rs.10,09,399/- under Section 14B and
Rs.7,46,673/- under section 7Q of the Act, 1952. A letter dated 24.04.2019
was also issued to the Principal of the said school for depositing the dues
of the establishment under section 14B and 7Q of the Act, 1952.
Thereafter, a demand notice dated 11.12.2019 was issued to the said
school by the respondent no. 5 for depositing the balance payable amount.
It is further submitted that the request made by the respondent no. 7 for
closure of PF account cannot be accepted as the school is not permanently
closed, rather it is just a temporary closure. The petitioner was earlier not
made the party as the Principal of the school was representing the
establishment but subsequently the Principal of the said school resigned
addressing to the Chairman of the said school i.e the petitioner. Having no
recourse left with the respondent-EPFO, a show cause notice was issued to
the petitioner but having received no satisfactory response from him
regarding liquidation of outstanding dues, a warrant of arrest was also
issued against him. The entire management of the establishment is jointly
and severally liable for recovery of the due amount of EPF. Section 7-I of
the Act, 1952 provides a forum for appeal against the order passed under
7-A of the said Act. The defaulter is the establishment and every person,
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who is representing the establishment, is jointly and severally liable in
terms with the provisions of the Act, 1952. The warrant of arrest has been
issued to the petitioner being the Chairman of the managing committee
having overall control over the affairs of the school. The petitioner had
though filed appeal on 12.11.2020 before the Central Government
Industrial Tribunal No.-II, Dhanbad against the order of the respondent no.
4, however the said appeal was dismissed as withdrawn vide order dated
04.02.2021.
7. Heard learned counsel for the parties and perused the materials
available on record. The petitioner has saught intervention of this Court in
connection with the warrant of arrest issued by the respondent no. 4
against him on the ground that he cannot be termed as an "employer"
under Section 2(e) of the Act, 1952 since he did not have any
administrative or financial control over the affairs of the said school.
8. On the contrary, learned counsel for the respondent-EPFO has
submitted that at the relevant point of time, the petitioner was the
Chairman of the managing committee of the said school and it would be
evident from several correspondences made by the school that the
petitioner had the control of the management of the school. It has further
been contended that the liability is against the school i.e. the
"establishment" and every person who is representing the school or
competent to represent the school is jointly and severally liable in terms
with the Act, 1952.
9. For better appreciation of the contention of the learned counsel for
the parties, Section 2(e) of the Act, 1952 which defines the term
"employer" and Section 8B of the said Act by which the impugned warrant
of arrest has been issued against the petitioner, are necessary to be
referred, which read as under:-
"2. Definitions.--In this Act, unless the context otherwise requires,--
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(e) "employer" means--
(i) in relation to an establishment which is a factory, the owner or occupier of the factory, including the agent of such owner or occupier, the legal representative of a deceased owner or occupier and, where a person has been named as a manager of the factory under clause
(f) of sub-section (1) of section 7 of the Factories Act, 1948 (63 of 1948), the person so named; and
(ii) in relation to any other establishment, the person who, or the authority which, has the ultimate control over the affairs of the establishment, and where the said affairs are entrusted to a manager, managing director or managing agent, such manager, managing 7 director or managing agent 8B. Issue of certificate to the Recovery Officer.--
(1) Where any amount is in arrear under section section 8, the authorised officer may issue, to the Recovery Officer, a certificate under his signature specifying the amount of arrears and the Recovery Officer, on receipt of such certificate, shall proceed to recover the amount specified therein from the establishment or, as the case may be, the employer by one or more of the modes mentioned below:--
(a) attachment and sale of the movable or immovable property of the establishment or, as the case may be, the employer;
(b) arrest of the employer and his detention in prison;
(c) appointing a receiver for the management of the movable or immovable properties of the establishment or, as the case may be, the employer:
Provided that the attachment and sale of any property under this section shall first be effected against the proportion of the establishment and where such attachment and sale is insufficient for recovering the whole of the amount of arrears specified in the certificate, the Recovery Officer may take such proceedings against the property of the employer for recovery of the whole or any part of such arrears.
(2) The authorised officer may issue a certificate under sub-section (1), notwithstanding that proceedings for recovery of the arrears by any other mode have been taken."
10. As per the definition of "employer" given under Section 2(e) of the Act, 1952, a person, for any establishment other than factory, who has the ultimate control over the affairs of the establishment and where the said affairs are entrusted to a manager, managing director or managing agent, such manager, managing director or managing agent would be regarded as the "employer". Section 8B of the Act, 1952 provides the modes of recovery of the amount specified in the certificate issued by the authorized officer. One of the modes of recovery is the arrest of the employer and his detention in the prison. The warrant of arrest has been issued against the petitioner by the Recovery Officer in exercise of the power conferred under Section 8B of the Act, 1952. The petitioner has not disputed the amount of certificate nor has challenged the legality of the said order before this Court. The only grievance of the petitioner is that the warrant of arrest should not have been issued against him as he is not the "employer" within the meaning of Section 2(e) of the Act, 1952.
11. I have gone through some of the letters relied upon by the respondent-EPFO suggesting that the petitioner being the Chairman of the managing committee of the school was having the ultimate control of the affairs of the school in question. Resolution dated 05.08.2020 annexed as 8 Annexure-A to the counter affidavit filed on behalf of the respondent-EPFO reflects that a meeting was convened under the chairmanship of the petitioner wherein it was resolved to close the PF Account of the school due to financial crisis owing to Covid-19 pandemic. Thereafter, a letter was written by the Principal of the school (countersigned by the petitioner) to the Regional Provident Fund Commissioner-II, EPFO Dhanbad to close the PF account of the school. Letter dated 09.10.2020 was written by the Principal as well as the petitioner to the respondent no.5 undertaking inter alia that due amount would be deposited soon and thus requested to stay further penal action. The petitioner after issuance of warrant of arrest against him, wrote letter dated 05.11.2020 to the respondent no.5 stating that due to Covid-19 pandemic, the school was closed and as soon as the school opens, the dues amount would be deposited. The petitioner did not claim in the said letter that he was not the employer of the said school within the meaning of Section 2(e) of the Act, 1952, rather assured to make payment of the dues immediately after opening of the school. Again on 12.11.2020, the petitioner wrote letter to the respondent no.5 informing him that a draft of Rs.10,000/- was being sent against the due amount and rest amount would be deposited as soon as the same was available to the school. The respondent-EPFO has also brought on record a copy of resolution of the meeting dated 08.06.2018 whereby the petitioner was nominated as the Chairman of the managing committee of the School and he being the Chairman was authorized to operate the bank account along with the Principal and the Treasurer of the said school with specific instruction that for withdrawal of any amount from the account of the school, the signature of the Chairman/Secretary or Treasurer and the Principal is necessary.
12. In view of the aforesaid facts, this Court finds that the petitioner being the Chairman of the managing committee of the school was having the ultimate control of the business of the school and he was fully aware of the default committed by the school. The petitioner repeatedly assured the respondent-EPFO that the dues amount would be deposited as soon as possible without objecting the amount in question or his involvement as an employer to pay the said due amount.
13. One of the contentions of the learned counsel for the petitioner is that initially the respondent-EPFO proceeded to take penal action against the then Principal and after her resignation, it did not proceed against the newly appointed Principal, rather issued warrant of arrest against the 9 petitioner which shows arbitrariness in the said action. I do not find any substance in the argument of the learned counsel for the petitioner. The letters annexed by the respondent-EPFO clearly reveal that both, the Chairman and the Principal were having control over the affairs of the school and as such no error has been committed in taking penal/coercive action against the petitioner. The argument of the learned counsel for the petitioner that the petitioner has only made countersignature on the correspondences also cannot be accepted since the content of the said correspondences clearly reveals that the petitioner has not only countersigned the same, rather has actively participated in the affairs of the school alongwith the Principal.
14. The further argument of the learned counsel for the petitioner is that the petitioner was not given ample opportunity of hearing before issuance of warrant of arrest against him. It transpires from the record that a show cause notice was issued to the petitioner on 01.10.2020 to appear before the Recovery Officer on 13.10.2020 explaining as to why he should not be arrested and committed to the civil prison in execution of the certificate issued by the authorized officer against the alleged dues of EPF. The contention of the learned counsel for the petitioner is that on 13.10.2020, the Recovery Officer was not present on the said date but another opportunity of hearing was not given to him. Even if the said argument is accepted, the same does not make any material difference on the merit of the case as the petitioner has failed to show sufficient reason before this Court to avoid payment of the due amount under certificate, particularly considering that appeal filed by the establishment before the Central Government Industrial Tribunal-II, Dhanbad against the order of assessment has already been dismissed as withdrawn on 04.02.2021.
15. In view of aforesaid discussion, this Court does not find any valid reason to interfere with the warrants of arrest dated 28.10.2020 and 19.03.2021 issued against the petitioner for recovery of due amount of EPF under the certificate of the Assistant Provident Fund Commissioner, Ranchi being the Authorized Officer.
16. The writ petition being devoid of merit is, accordingly, dismissed.
17. Consequently, I.A. No. 2082 of 2021 also stands dismissed.
Ritesh/AFR (Rajesh Shankar, J.)