Karnataka High Court
The District Health And Family Welfare ... vs The Regional Provident Fund ... on 21 September, 2020
Bench: Aravind Kumar, Pradeep Singh Yerur
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 21ST DAY OF SEPTEMBER, 2020
PRESENT
THE HON'BLE MR. JUSTICE ARAVIND KUMAR
AND
THE HON'BLE MR. JUSTICE PRADEEP SINGH YERUR
WRIT PETITION NO. 9321 OF 2020 (L-PF)
BETWEEN:
THE DISTRICT HEALTH AND
FAMILY WELFARE OFFICER,
DISTRICT HEALTH AND
FAMILY WELFARE SOCIETY
B. D. ROAD, CHITRADURGA - 577 501.
REPRESENTED BY ITS
DISTRICT HEALTH AND
FAMILY WELFARE OFFICER
DR C. L. PALAKSHA.
...PETITIONER
(BY SRI. ANAND K. R., ADVOCATE)
AND:
THE REGIONAL PROVIDENT
FUND COMMISSIONER-I
EMPLOYEE'S PROVIDENT FUND ORGANISATION
MINISTRY OF LABOUR
GOVERNMENT OF INDIA
REGIONAL OFFICE,
3RD FLOOR, SL V TOWERS
PARVATHI NAGAR,
BALLARI - 583 103.
...RESPONDENT
(BY SRI. SARAVANA.P., ADVOCATE)
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THIS WRIT PETITION IS FILED UNDER ARTICLES 226
AND 227 OF CONSTITUTION OF INDIA PRAYING TO CALL
FOR RECORDS OF EPF/ITB NO.138/2019 FROM THE
RESPONDENT EPF APPELLATE TRIBUNAL-CUM-CGIT,
BENGALURU AND QUASH THE IMPUGNED ORDERS AT
ANNEXURE-E DATED 19.11.2019 AND ANNEXURE-G
11.12.2019 IN EPF/ITB.138/2019 PASSED BY THE
RESPONDENT EPF APPELLATE TRIBUNAL-CUM-CGIT
BENGALURU.
THIS WRIT PETITION COMING ON FOR ORDERS THIS DAY,
ARAVIND KUMAR J., MADE THE FOLLOWING:-
ORDER
[Through Video Conference] Though matter is listed for Preliminary Hearing, the matter is taken up for final disposal by consent of learned advocates appearing for the parties. As the dispute centers around a short point with regard to the order passed by the Employees Provident Fund Appellate tribunal Cum Central Government Industrial tribunal, Bengaluru (for short 'appellate tribunal') whereunder tribunal has dismissed the appeal filed by the petitioner as not maintainable has been questioned in this writ petition.
2. Short facts which have given rise to the filing of the present writ petition can be crystallized as under:
Petitioner is a District Level Society registered under the Karnataka Societies Registration Act, 1960 and is -3- working under the Department of Health and Family Welfare (DOH & FW), Government of Karnataka, which is said to have come into existence for the purposes of implementation of the Government of India sponsored Programmes and the guidelines issued by the Government of India from time to time. It is said to be engaged in providing accessible, affordable and quality health care to the rural and urban population especially to the people of vulnerable sections in the society. The activities of the petitioner - organization are fully financed by the Government of India by way of programme advance to be utilized for implementation of National Health care activities in accordance with the programme implementation plan approved annually by the Government of India with component/sub-component- wise fund allocations.
3. It is the specific case of the petitioner that notwithstanding the above objects of the petitioner, and the provisions of Employees Provident Fund Act not being applicable still the State Health Society (Head Office) -4- voluntarily covered its establishment under the Employees Provident Fund and Miscellaneous Provisions Act,1952 (For short 'EPF & MP Act') to provide benefits of the EPF Act to those working at the Arogya Raksha Samithis. The petitioner also claims that it was exempted from the provisions of the Act until 31.3.2015 by a Gazette Notification dated 14.5.2010. Subsequently by a Notification dated 7.9.2015, the exemption granted was not extended to the petitioner establishment and as such, the provisions of the EPF and MP Act was extended to all eligible employees with effect from 1.4.2015.
4. The Provident Fund Authorities initiated proceedings against the petitioner by issuing notices and called upon petitioner to make remittances of its employees for the period April 2016 to March 2018. On issuance of show cause notice and considering the reply issued by the petitioner thereto, the competent authority namely, the Regional Provident Fund Commissioner passed an order on 29.7.2019 under section 7A of the EPF and MP Act and held that petitioner is liable to pay a sum Rs.2,50,60,341/- and also directed the petitioner to remit -5- interest as contemplated under section 7Q of the Act @ 12% per annum. Being aggrieved by the said order petitioner filed an appeal before the Appellate tribunal on 15.10.2019. On a motion, the matter was preponed from 17.10.2019 to 16.10.2019 and after hearing the learned advocates appearing for both parties, the tribunal condoned the delay of 18 days in filing the appeal. On the application filed under Section 7O of EPF and MP Act for waiver of the mandatory deposit of 75% of the amount, the appellate tribunal ordered that respondent should maintain status quo regarding recovery of the contribution amount till the next date of hearing and adjourned the matter to 19.12.2019. By the same order dated 16.10.2019, tribunal also observed the submissions made by the learned counsel appearing for the Provident Fund authorities which was to the effect that the entire amount of Rs.2,50,60,341/- has been recovered by attaching the bank account of the appellant. Subsequently, on 11.11.2019 when the matter was preponed by the appellant, an application came to be filed by the appellant under Rule 7(2) of the Employees Provident Fund -6- Appellate Tribunal (Procedures) Rules, 1997 (For short 'EPFAT (P) Rules') for a direction to the respondent to refund the amount recovered from the appellant's bank accounts. The said application came to be considered on the next date of hearing that is on 19.11.2019 and by impugned order, tribunal dismissed the appeal on the ground that right to prefer appeal had ceased for the appellant on the day they came before the appellate authority namely if appeal was filed beyond 60 days or in other words it had been filed on 78th day. It was held that appeal was not maintainable since amount determined by the Provident Fund authorities had already been recovered. An application filed seeking review of the order dated 19.11.2019 filed by the appellant also ended in its dismissal on the ground that appellant could not have invoked Rule 15(2) of the EPF Rules and said provision is available only to recall an order whereunder the appeal had been dismissed for default. Hence, this writ petition.
5. We have heard the arguments of Sri K.R.Anand, learned counsel appearing for petitioner and -7- Sri P. Sharavana, learned Standing Counsel appearing for the respondent.
6. It is the contention of Sri K.R.Anand, learned counsel appearing for petitioner that tribunal committed a serious error in dismissing the appeal itself ignoring the fact that entire amount had been recovered during the appeal period and even otherwise the appeal was maintainable. As such, tribunal could not have dismissed the appeal only on the ground that respondent had recovered the amount which was the subject matter of the appeal. He would also contend that petitioner is not a private organization and it is a Society which is funded by the Government of India for the project and its functioning totally depends upon the function which is based on the budget and as such the order of the tribunal is liable to be set aside. He would also contend that very issue of determination of the provident fund as quantified under Section 7A Order was the subject matter of that appeal and as such, appeal could not have been dismissed without going into the merits of the case. -8-
7. Per contra, Sri Sharavana would support the impugned order and contends that petitioner being fully aware of the fact that amount determined under Section 7A having been recovered, yet by suppressing these facts had misrepresented before the tribunal and obtained an order of status quo by which time the respondent- authorities had already recovered the amount and as such, appeal itself was not maintainable before the tribunal. Hence, he seeks for dismissal of the writ petition.
8. Having heard the learned advocates appearing for the parties, and on perusal of the records, it would clearly indicate that petitioner herein had suffered an order passed by the respondent dated 29.7.2019 under section 7A of the EPF and MP Act. Undisputedly, an appeal came to be filed against the said order on 15.10.2019 vide Annexure C. Since appeal was belated, namely, there was a delay of 15 days in filing the appeal, an interlocutory application under Rule 7(2) of the EPFAT (P) Rules 1987 was filed seeking condonation of delay. When appeal came up for consideration before the -9- tribunal as evident from the order sheet/proceedings at Annexure- E, it would disclose that matter came to be adjourned to 16.10.2019 and on the said date, both the advocates appearing for the parties had appeared and on the said date, i.e., 16.10.2019, delay was condoned. However, on the application filed for waiver under Section 7O by the appellant, the tribunal passed an order that the respondent should maintain status quo with regard to the recovery. In fact, learned counsel appearing for the respondent before the appellate tribunal had made a categorical statement to the effect that amount of Rs.2,50,60,341/- had already been recovered by attaching the Bank Account of the appellant. Probably it is because of this reason and there being no material with regard to the order of attachment having been produced, appellate tribunal passed an order of status quo. However, on 19.11.2019 while considering the application for refund of the amount which had been attached tribunal noticed that pursuant to the impugned order passed under section 7A on 29.7.2019, the respondent - authorities had attached the bank accounts of the petitioner to recover the amount
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determined under Section 7A and on the ground that appeal had been filed after the prescribed period of 60 days and the right to prefer the appeal had ceased on the day the appellant came before the said authority, the appeal came to be dismissed as not maintainable.
Section 7-I of the EPF Act provides appeal to the appellate tribunal which reads:
"7-I. Appeals to Tribunal. - (1) Any person aggrieved by a notification issued by the Central Government, or an order passed by the Central Government or any authority, under the proviso to sub-section (3), or sub-section (4), of Section 1, or Section 3, or sub-section (1) of Section 7-A, or Section 7-B(except an order rejecting an application for review referred to in sub-section (5) thereof), or Section 7-C, or Section 14-B, may prefer an appeal to a Tribunal against such notification or order.
(2) Every appeal under sub-section (1) shall be filed in such form and manner, within such time and be accompanied by such fees, as may be prescribed."
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9. Section 7-O of the EPF Act is with regard to the deposit of amount due on filing the appeal which reads as under:
"7-O. Deposit of amount due, on filing appeal. - No appeal by the employer shall be entertained by a Tribunal unless he has deposited with it seventy-five per cent of the amount due from him as determined by an officer referred to in section 7A:
Provided that the Tribunal may, for reasons to be recorded in writing, waive or reduce the amount to be deposited under this section."
10. Section 8 of the Act provides for mode of recovery of money due from employer. A plain reading of the entire Scheme of the Act, it would emerge therefrom that any person aggrieved by a Notification issued by the Central Government or an order passed by the Central Government or any authority under the proviso to sub- section (3) or sub-section (4) of Section 1 or Section 3 or sub-section (1) of section 7A or Section 7B or section 7C or Section 14B may prefer an appeal to the tribunal against such Notification or Order as per mandate of Section 7 I Sub-section (2) mandates that appeal under
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sub-section (1) should be filed in such form and manner and within such time and accompanied by such fees as may be prescribed. Section 7O makes it explicitly clear that it is a condition precedent before entertaining the appeal preferred by the employer that 75% of the amount due from the employer as determined by the Officer referred to in Section 7A has to be deposited.
11. Sub-Rule (2) of Rule 7 is the procedural law which mandates or which prescribes the time limit for entertaining the appeal which reads as follows:
"7.Fee, time for filing appeal, deposit of amount due on filing appeal.--
(1) Every appeal filed with the Registrar shall be accompanied by a fee of two thousand rupees to be remitted in the form of crossed demand draft on a nationalized bank in favour of the Registrar of the Tribunal and payable at the main branch of that Bank at the station where the seat of the said Tribunal situates.
(2) Any person aggrieved by a notification issued by the Central Government or an order passed by the Central Government or any other authority under the Act, may within 60 days
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from the date of issue of the notification/order prefer an appeal to the Tribunal:
Provided that the Tribunal may, if it is satisfied that the appellant was prevented by sufficient cause from preferring the appeal within the prescribed period, extend the said period by a further period of 60 days:
Provided further that no appeal by the employer shall be entertained by a Tribunal unless he has deposited with the Tribunal a Demand Draft payable in the Fund and bearing 75 per cent of the amount due from him as determined under Section 7-A:
Provided also that the Tribunal may for reasons to be recorded in writing, waive or reduce the amount to be deposited under Section 7-O."
12. Sub-rule (2) provides that the appeal is required to be preferred within 60 days from the date of issue of Notification or order and first proviso to sub-rule (2) on power and the appellate tribunal to condone the delay, in the event of appeal being filed beyond the period of 60 days if it is satisfied that appellant was prevented by sufficient cause from preferring the appeal by extending
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the laid period by a further period of 60 days. In other words, if the appellant satisfies that he had sufficient cause for not preferring the appeal within 60 days, he can seek for condonation of delay by presenting the appeal beyond 60 days and within the period of 120 days by explaining the cause for such delay. Then tribunal is empowered to condone the delay in the facts and circumstances of each case where appeal is filed beyond 60 days and within 120 days. In the instant case, undisputedly on the day the order of attachment came to be passed i.e., 3.10.2019, appeal had not been filed by the petitioner. There was no embargo placed on the respondent - authorities to initiate recovery proceedings. It is rule of prudence that authorities would refrain from executing an order or in other words recovering the amounts due under the order of determination till the appeal period prescribed under the Act expires. In the instant case, as noticed hereinabove, the impugned order under Section 7A came to be passed on 29.7.2019 and 60 days period prescribed under Rule 7(2) expired on 26.9.2019 and order of attachment came to be passed on
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3.10.2019, and the amount lying in the said bank account was recovered on 9.10.2019 or in other words, the amount was credited to the account of the respondent authorities on 9.10.2019. Even as on that date, no appeal had been filed or there was no appeal pending. It is only on 15.10.2019 appeal came to be filed by the writ petitioner herein along with an application condoning the delay. In other words, in the first proviso to sub-rule (2), petitioner sought for condoning the delay by contending that appeal could not have been filed within sixty days period but same has been preferred within period of 120 days and the cause for such delay was explained in the affidavit supporting the application.
13. Learned Advocates namely advocates appearing for both the parties were heard on the issue of delay and it was condoned by the tribunal by order dated 16.10.2019. Till this stage, there is no quarrel between the parties.
14. Writ petitioner filed an application under Rule 7(2) of the EPFAT (P) Rules seeking refund of amount
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recovered by respondent on the ground of hardship, by which time, the amount had already been recovered. In other words amount determined under Section 7A had already been recovered by respondent. At the most, tribunal could have held that the application for stay which was then pending before it or the application filed by appellant for waiver of 75% of the amount determined had become infructuous or in other words, it had got spent itself by virtue of recovery having already been made on 9.10.2019. Instead of taking this recourse, appellate tribunal has proceeded to dismiss the appeal as not maintainable on the ground that appeal was filed beyond 60 days and respondent authority had already recovered the amount after the period of 60 days was over and as such, appeal has become infructuous or not maintainable. In fact, tribunal ought to have noticed that mandate of section 7O and second proviso to Rule 7(2) is to the effect that no appeal filed by an employer shall be entertained by the tribunal unless 75% of the amount due as determined under section 7A is deposited. In the instant case, it is not only 75% but 100% amount had been recovered and
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as such, on that short score, it ought to have held that appeal was automatically liable to be admitted. In fact, the application filed under Rule 7(2) seeking waiver was also pending which could have been held as having become infructuous. Neither of these courses which was left open to the tribunal was resorted to by the tribunal for reasons best known. On this short ground itself, petitioner has to succeed.
15. The fact that amount has been recovered is not even in dispute. Hence, relief requires to be moulded in the present petition. The petitioner is a Society registered under the Societies Registration Act, and is fully funded by the Government of India and it is implementing Government of India sponsored Health Programmes namely, providing accessible, affordable, quality health care to rural and urban population. It is a need of the hour particularly in the background of global pandemic COVID-19 prevalent. The respondent is an organisation protecting the social welfare of the Labour sector and the interests of the employees whose amount is in the custody
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of the respondent also requires to be protected. As such, we are of the considered view that the it would be apt and appropriate to mould the relief keeping the interests of both the parties.
For reasons aforesaid, we proceed to pass the following:
ORDER
(i) Writ Petition is allowed. Order dated 19.11.2019 (Annexure-E) and Order dated 11.12.2019 (Annexure-G) passed by Central Government Industrial Tribunal Cum Labour Court, Bengaluru, are set aside.
(ii) Appeal in No.EPF/ITB/138/2019 is restored to the file of appellate tribunal for being disposed of on merits and in accordance with law.
(iii) The amount as determined under Section 7A of the EPF Act which has since been recovered by the respondent shall be kept in separate account and tribunal would be at liberty to
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pass necessary and consequential order regulating payment of the said amount to successful party.
(iv) The appellate tribunal shall make all
endeavours to dispose of the appeal
expeditiously and at any rate, within an outer limit of two months from the date of receipt of copy of this order.
(v) No order as to costs.
The Registry is directed to communicate the
operative portion of this order to the appellate tribunal by email forthwith.
Sd/-
JUDGE Sd/-
JUDGE nv