Gujarat High Court
Shree Ganesh Trading Company vs Gujarat State Financial Corporation & on 24 March, 2015
Author: K.M.Thaker
Bench: K.M.Thaker
C/SCA/3230/2014 CAV JUDGMENT
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
SPECIAL CIVIL APPLICATION NO. 3230 of 2014
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR.JUSTICE K.M.THAKER Sd/-
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01. Whether Reporters of Local Papers may be allowed to see the Yes
judgment?
02. To be referred to the Reporter or not? Yes
03. Whether their Lordships wish to see the fair copy of the No
judgment?
04. Whether this case involves a substantial question of law as to the No
interpretation of the constitution of India, 1950 or any order made
thereunder?
05. Whether it is to be circulated to the civil judge? No
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SHREE GANESH TRADING COMPANY....Petitioner(s)
Versus
GUJARAT STATE FINANCIAL CORPORATION & 1....Respondent(s)
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Appearance:
MR DILIP L KANOJIYA, ADVOCATE for the Petitioner(s) No. 1
MR SHASHIKANT S GADE, ADVOCATE for the Respondent(s) No. 2
MR. S. M. GOHIL, ADVOCATE for the Respondent(s) No. 1
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CORAM: HONOURABLE MR.JUSTICE K.M.THAKER
Date : 24/03/2015
CAV JUDGMENT
1. In present petition, the petitioner, a proprietary concern, has prayed, inter alia, that:
Page 1 C/SCA/3230/2014 CAV JUDGMENT "17(a) YOUR LORDSHIPS may be pleased to issue a writ of mandamus and/or any other appropriate writ, order or direction quashing and setting aside the communication dated 14.11.2013 and 20.11.2013 issued by the respondents directing the petitioner to make payment of an amount of Rs.1,41,88,446/- plus further interest and damages to the Employees State Insurance Corporation and further be pleased to hold that the petitioner is not liable to pay any amount towards the dues of the respondent No.2;
(b) Pending admission and final hearing of this petition, YOUR LORDSHIPS may be pleased to stay and implementation, operation and execution of the impugned communications dated 14.11.2013 and 20.11.2013 issued by the respondents."
2. The petitioner is aggrieved by communications dated 14.11.2013 and 20.11.2013. So as to appreciate and decide the petitioner's grievance and the dispute raised by present petitioner, it is necessary to take into account relevant facts. In this context, the petitioner has averred and stated that:
"4. The petitioner is an entrepreneur and the respondent No.1 Corporation has issued a public notice dated 24.5.2011 in the Gujarat Samachar daily for sale of Plot No.2103/A, GIDC Estate, Halol admeasuring 30335 Sq.Mts. leasehold land along with plant and machineries and the construction standing thereon which was belonging to loanee of respondent Corporation M/s Ezy Slide Fastners Limited, under the power of the Corporation under Section 29 of the State Financial Corporation Act, 1951 (for short 'SFC Act'). The Corporation called for the tenders from the purchasers who intend to take part in the tender procedure. The petitioner was interested in purchase of the above property.
5. It is respectfully submitted that the petitioner took part in the public auction held on 23.6.2011 and he offered his price of Rs.1,11,11,111/- for purchase of the said assets. The offer of the petitioner being highest was accepted by the Recovery Committee of the respondent No.1 Corporation in its meeting dated 14.7.2011 and Sale Letter dated 22.7.2011 was issued in favour of the petitioner.
6. It is further submitted that as per the terms of the sanction Page 2 C/SCA/3230/2014 CAV JUDGMENT letter, the petitioner paid the sale consideration of Rs.1,11,11,111/- to the respondent No.1 Corporation and, therefore, possession of the assets in question was given by the respondent No.1 Corporation to the petitioner. It is submitted that the respondent No.1 Corporation entered into registered Sale Deed-cum-assignment of leasehold right with the petitioner dated 14.12.2012.
7. It is submitted that sale of the assets were on AS IS WHERE IS BASIS. It is submitted that, however, to the shock and surprise of the petitioner, the respondent No.2 addressed a letter to the respondent No.1 Corporation dated 14.11.2013 demanding dues of Rs.1,41,88,446/- + interest and damages from the petitioner. In pursuance of the said letter of the respondent No.2, the respondent No.1 Corporation addressed communication to the petitioner dated 20.11.2013 asking the petitioner to pay an amount of Rs.1,41,88,446/- being the dues of ESIC of the previous owner i.e. Ezy Slide Fasteners Limited. Furthermore, the Corporation also requested the ESIC to communicate directly with the petitioner in this regard.
8. It is submitted that on receipt of the said letter, the petitioner approached the respondent No.1 Corporation making grievances about the liability to pay the said amount. However, instead, the respondent No.1 Corporation informed the petitioner that as per the conditions of the Sale letter and Sale Deed executed between the petitioner and the Corporation, it is the duty of the petitioner to pay the said dues of ESIC."
3. It emerges from the facts stated by the petitioner that a company which carried on business in the name and style of "Eazy Slide Fastners Limited" (hereinafter referred to as "the loanee company") had availed loan from respondent No.1 Corporation.
3.1 It also appears that the said loanee company, for the purpose of availing from respondent No.1 Corporation, had mortgaged, in favour of respondent No.1 corporation certain properties / its leasehold rights in respect of the Page 3 C/SCA/3230/2014 CAV JUDGMENT property, i.e. Plot No.2103/A, GIDC Estate, Halol which included the property which the petitioner purchased in auction (hereinafter referred to as "the property in question").
3.2 It appears that the said loanee company committed defaults in repayment of the loan availed by it and failed to discharge its obligation (i.e. of repayment of the loan availed from respondent No.1 Corporation). 3.3 Therefore, respondent No.1 Corporation invoked provisions under Section 29 of the State Financial Corporation Act, 1951 ("SFC Act" for short) and by exercising powers conferred on it under the said provisions, attached the property in question and took over possession of the mortgaged property. 3.4 Subsequently, respondent No.1 Corporation put up the property in question for sale by way of auction by publishing a Public Notice dated 24.5.2011 and invited applications/tenders for auction sale of the property in question.
Page 4 C/SCA/3230/2014 CAV JUDGMENT 3.5 In pursuance of the said Public Notice dated 24.5.2011, the respondent No.1 Corporation conducted public auction on 23.6.2011.
3.6 The petitioner participated in the said auction process and offered Rs.1,11,11,111/-. The petitioner's offer turned out to be highest offer and therefore, it was accepted by respondent No.1 Corporation.
3.7 Consequently, the petitioner was declared successful bidder and the auction sale came to be confirmed in favour of the petitioner by respondent No.1 Corporation in its meeting held on 14.7.2011.
3.8 Subsequently, respondent No.1 Corporation issued Sale Letter dated 22.7.2011.
3.9 Thereafter sale deed was executed on 14.10.2012 by and between the petitioner and respondent No.2 GSFC.
Page 5 C/SCA/3230/2014 CAV JUDGMENT 3.10 It is not in dispute that the petitioner has paid entire sale consideration, i.e. price offered by it as well as other charges/fees which were payable by the petitioner as per the terms of the auction sale.
3.11 According to the petitioner, despite such facts, respondent No.1 Corporation has issued the impugned communication dated 20.11.2013.
3.12 According to the petitioner, respondent No.1 Corporation has issued the impugned communication in view of the letter dated 14.11.2013 received by it from respondent No.2 Employees' State Insurance Corporation. The respondent No.2 ESI Corporation is constituted under provisions of the Employees' State Insurance Act, 1948 (hereinafter referred to as 'the ESI Act'). 3.13 On the claim that provisions under the ESI Act were applicable to the above-mentioned loanee company, i.e. Eazy Slide Fastners Limited and that the said loanee company had committed defaults in discharging its Page 6 C/SCA/3230/2014 CAV JUDGMENT obligation to pay the contribution under provisions of the ESI Act.
3.14 About two years after the respondent No.1 GSFC, in exercise of power under section 29 of the SFC Act, sold (by wayo f auction) the mortgaged assets (factory/establishment) of the loanee company, the respondent No.2 ESI Corporation addressed impugned letter dated 14.11.2013 to respondent No.1 Corporation. On receiving the letter dated 14.11.2013, the respondent No.1 Corporation addressed the impugned letter dated 20.11.2013 to the petitioner.
3.15 It appears that after receipt of the impugned letter dated 20.11.2013 from respondent No.1 Corporation, the petitioner requested respondent No.1 Corporation to execute a rectification deed with regard to the sale deed dated 14.10.2012, however, respondent No.1 Corporation did not accept the petitioner's request.
4. In this background, the petitioner has taken out Page 7 C/SCA/3230/2014 CAV JUDGMENT present petition.
5. The respondent No.2 ESI Corporation has opposed the petition by filing affidavit dated 9.7.2014. In its affidavit, respondent No.2 ESI Corporation has averred and stated that:
"3) It is to be stated that present applicant purchased subject matter property from Ezy Slide, as per his say from GSFC (Respo.No.1) and present opponent (ESIC) has to recover his dues from Ezy Slid and as such present petitioner has come with his case that he is not liable to pay the dues as per certain legal pronouncement on the subject.
4) It is to be stated that as per provision of ESI Act, 1948, Section 93A, present petitioner is certainly liable to pay the dues, @ Rs.1,44,88,446/- + further interest and damages. This is settled position of law.
5) It is also to be noted that present petitioner has filed E.I. Appli. No.13/2013 in Ld. ESI Court, Vadodara, in which ESI Corporation has filed our detailed reply. The matter is listed for production of applicant evidence since long and no one is appearing on behalf of the applicant Ganesh Trading Company in the matter & now present petitioner has directly filed present writ petition."
5.1 After considering the grievance made by the petitioner in present petition, respondent No.1 Corporation has filed reply affidavit and it has declared that it is not the intention of respondent No.1 Corporation to saddle the auction purchaser (i.e. the petitioner) with liability to pay the dues of the loanee company (i.e. claim of respondent No.2 ESI Corporation). In its affidavit dated 12.11.2014, Page 8 C/SCA/3230/2014 CAV JUDGMENT respondent No.1 Corporation has stated that:
"2. At the outset, I deny all the allegations made in the reply by respondent No.2.
3. I submit that though on one hand respondent No.2 says that no notice for recovery is issued to petitioner and on the other hand he says that petitioner is certainly liable to pay the dues and interest and damage as per Sec 93A of the ESI Act, 1948, therefore, the petition cannot be said to be premature and is maintainable.
4. Even otherwise, due to the present dues, the petitioner is unable to get the clear title of the property and is not in position to enjoy the property."
5.2 Learned senior counsel for the petitioner submitted that respondent No.2 ESI Corporation does not have any right in law to ask/compel the petitioner (purchaser of the property in question) to pay the dues payable by the erstwhile owner of the property in question, i.e. Eazy Slide Fastners Limited. Learned senior counsel for the petitioner submitted that the petitioner has purchased the property in question in auction sale and that, therefore, the petitioner is merely 'auction purchaser' and that, therefore, cannot be made liable to pay the dues of the erstwhile owner of the property in question. Learned advocate for the petitioner also contended that the auction sale of the property in question cannot be said to be transfer of the property as contemplated under Section Page 9 C/SCA/3230/2014 CAV JUDGMENT 93A of the ESI Act and the sale would not come within the purview of section 93A of ESI Act. The said section 93A will apply in case of transfer by sale or gift or lease but not auction sale. Learned senior counsel for the petitioner also tried to assail the clause in the sale deed which obliges the petitioner to pay the dues payable by the erstwhile establishment, i.e. the said loanee company to the Excise Department and ESI Corporation. The learned senior counsel for the petitioner alleged that until the registered sale deed was executed, respondent No.1 Corporation had not informed the petitioner regarding the dues of Excise Department or respondent No.2 ESI Corporation.
6. Learned advocate for respondent No.1 Corporation relied on the terms and conditions of the sale deed and the sale letter dated 22.7.2011. Learned advocate for respondent No.1 Corporation also submitted that the sale was effected on 'as is where is basis' and that, therefore, whatever statutory liabilities existed at the time of sale of the property in question shall have to be, subject to the Page 10 C/SCA/3230/2014 CAV JUDGMENT provisions under the relevant statute, borne by the petitioner and not by respondent No.1 Corporation. At the same time, learned advocate for respondent No.1 Corporation also relied on the clarification mentioned in its affidavit dated 12.11.2014.
7. Learned advocate for respondent No.2 ESI Corporation relied on the provisions under Section 93A of the ESI Act. He submitted that the petitioner, who has purchased the property of the covered establishment, is liable to pay the dues of the corporation and that, therefore, the action of the ESI Corporation is legal and proper and in accordance with the provisions of the ESI Act and the petitioner cannot be allowed to escape the liability.
8. I have heard learned senior counsel for the petitioner and learned advocate for respondent No.1 Corporation as well as learned advocate for respondent No.2 ESI Corporation. I have also examined the material available on record.
Page 11 C/SCA/3230/2014 CAV JUDGMENT
9. It is not in dispute that -
(a) so far as respondent No.2 ESI Corporation is concerned, actually, the said loanee company was in default in discharging its obligation under the ESI Act and that the claim of respondent No.2 is outstanding against the above-mentioned loanee company viz.
Eazy Slide Fastners Limited;
(b) the property in question which the petitioner purchased during the auction sale conducted by respondent No.1 Corporation was originally owned by the said loanee company;
(c) the said loanee company was also in default in discharging its obligation of repayment of amount in respect of the loan availed by it from respondent No.1 Corporation;
(d) in view of the defaults by the said loanee company, respondent No.1 Corporation had taken over possession of the property in question and attached the same in exercise of powers conferred Page 12 C/SCA/3230/2014 CAV JUDGMENT on it under Section 29 of the SFCT Act;
(e) so far as the petitioner is concerned, it has purchased the property in question in auction sale;
(f) it is also not in dispute that any transaction between the petitioner and the said loanee company named Eazy Slide Fastners Limited is not executed and there has not been any exchange and/or any transaction between the petitioner and the said loanee company. There is no privity of contract between the petitioner and the said loanee company;
(g) section 93A of ESI Act makes both, the employer and the transferee, jointly and severally liable to pay the dues and sub-section (2) of section 29 of SFC Act creates deeming fiction.
10. Respondent No.1 GSFC has claimed that it addressed a communication dated 20.11.2013 (which is challenged by the petitioner in present petition) in light of the letter dated 14.11.2013 forwarded by respondent No.2 ESIC asking it (i.e. respondent GSFC) to direct M/s. Ganesh Page 13 C/SCA/3230/2014 CAV JUDGMENT Trading Company, i.e. present petitioner to make payment of ESIC's dues to the tune of Rs.1,41,88,446/-. 10.1 Thus, according to the respondent No.1 GSFC, it has acted at the instance of respondent No.2 ESIC, whereas respondent No.2 ESIC has taken shelter under the provisions of Section 93A of the ESIC Act, to justify its action and the demand. The said Section 93A of ESIC Act reads thus:
"93-A. Liability in case of transfer of establishment. -- Where an employer, in relation to a factory or establishment, transfers that factory or establishment in whole or in part, by sale, gift, lease or license or in any other manner whatsoever, the employer and the person to whom the factory or establishment is so transferred shall jointly and severally be liable to pay the amount due in respect of any contribution or any other amount payable under this Act in respect of the periods up to the date of such transfer:
Provided that the liability of the transferee shall be limited to the value of the assets obtained by him by such transfer."
11. The petitioner claims that action by respondent No.2 ESI Corporation under section 93A of he ESI Act is not justified or competent.
12. The said Section 93A of ESI Act, which came to be inserted with effect from 1.9.1975 by section 6 of Amendment Act No.38 of 1975, empowers ESI Corporation Page 14 C/SCA/3230/2014 CAV JUDGMENT to demand and recover from the employer and/or the transferee, the contribution due in respect of the factory or establishment which is transferred by the employer. 12.1 The said section 93A comes into operation when "employer" in relation to factory or establishment transfers such factory or establishment (in respect of which contribution is due) either wholly or in part and when such transfer is effected by way of sale or gift or lease or licence or "in any other manner" and in such cases both (i.e. the transferee and the employer) are, by virtue of the said section 93A, made jointly and severally liable to pay the dues of ESIC.
12.2 The prominent features of said section 93A can be summarised thus:
(a) There should be "transfer" of factory or establishment either in whole or in part;
(b) such "transfer" of the factory or establishment should have been made by 'employer' in relation to Page 15 C/SCA/3230/2014 CAV JUDGMENT such factory or establishment;
(c) the factory / establishment which is transferred must be such factory / establishment in respect of which the contribution payable under ESI Act is outstanding;
(d) the "transfer" of the factory or establishment
should have been made or effected by the
"employer" by way of "sale" or "gift" or "lease" or "licence" or "in any other manner whatsoever";
(e) in such circumstances, the employer of such factory / establishment (which is transferred) and the transferee shall be jointly and severally liable to pay the amount due in respect of the contribution payable to ESI Corporation under the Act;
(f) however, liability of the transferee shall be restricted to the value of the assets purchased by him.
13. In present case, it is not in dispute that the factory / establishment which the petitioner purchased is a Page 16 C/SCA/3230/2014 CAV JUDGMENT factory/establishment in respect of which the contribution is outstanding.
13.1 It is nowhere disputed or denied that the petitioner to use the same plant and machinery 13.2 Therefore, one of the conditions necessary for attracting Section 93A of ESI Act (i.e. there should be existing and outstanding liability of payment of contribution under the Act) in respect of the factory / establishment which is transferred, exists in this case.
14. In light of the provisions under the ESI Act the liability and obligation to pay the unpaid contribution travels along with the factory / establishment. This aspect becomes clear from reading section 39 of ESI Act with sections 45B, 45C, 93A and 94 of the said Act.
15. Consequence of such transfer (by the employer of the factory / establishment) of factory or establishment in respect of which contribution is due and payable would be Page 17 C/SCA/3230/2014 CAV JUDGMENT that the transferee will become liable, jointly and severally, with the employer of the factory / establishment for payment of the outstanding contribution. Of course, the liability of the transferee would be restricted to the value of assets / property purchased by him.
16. In this view of the matter, the questions which arise in present case are:
(i) whether the transfer of property in question by respondent GSFC can be said to be transfer made and effected by "employer" of factory/establishment;
and
(ii) whether it can be said to be by way of "sale, gift, lease or licence" or "in any other manner whatsoever".
17. On the first count, it is pertinent that the expression 'employer' is not defined under the Act. However, Section 2(13) defines expression 'immediate employer' and Section 2(17) defines term 'principal employer'. The term 'principal employer' is defined with reference to and in Page 18 C/SCA/3230/2014 CAV JUDGMENT relation to the ownership of the factory, i.e. with reference to the owner or occupier of the factory and it includes any person responsible for supervision and control of the factory / establishment. Whereas the expression 'immediate employer' is defined with reference to and in relation to the employees of such factory / establishment. 17.1 Thus, in the cases where the "owner" or "occupier" of the factory or establishment or the "person in control of" the factory or establishment transfers the factory / establishment, then such transfer will come within the purview of the expression "by employer".
18. It is at this stage and in this context that the petitioner claims that the factory / establishment is not transferred in its favour either by way of sale or gift or lease or licence, by the said Eazy Slide Fastners Ltd. (the loanee company) but it is sold by way of auction by respondent No.1 GSFC under section 29(1) of the SFC Act and that, therefore, the action by the respondent ESI, which is initiated under section 93A of ESI Act is not Page 19 C/SCA/3230/2014 CAV JUDGMENT tenable.
19. Since in present case the sale of the factory / establishment is made by way of auction by the SFC (respondent No.1) it is necessary to take into account the provision under section 29, more particularly sub-section (2) of section 29 of SFC Act. The said provision reads thus:
"29. Rights of Financial Corporation in case of default.--
(1) Where any industrial concern, which is under a liability to the Financial Corporation under an agreement, makes any default in repayment of any loan or advance or any instalment thereof [or in meeting its obligations in relation to any guarantee given by the Corporation] or otherwise fails to comply with the terms of its agreement with the Financial Corporation, the Financial Corpo-
ration shall have the [right to take over the management or pos- session or both of the industrial concerns], as well as the [right to transfer by way of lease or sale] and realise the property pledged, mortgaged, hypothecated or assigned to the Financial Corporation.
(2) Any transfer of property made by the Financial Corporation, in exercise of its powers [***] under sub-section (1), shall vest in the transferee all rights in or to the property transferred [as if the transfer] had been made by the owner of the property. (3) The Financial Corporation shall have the same rights and powers with respect to goods manufactured or produced wholly or partly from goods forming part of the security held by it as it had with respect to the original goods.
[(4) ... ... ... ... ...
(5) ... ... ... ... ..."
19.1 Sub-section (2) of section 29 provides, inter alia, that when any transfer of property is made by the finance corporation in exercise of powers under sub-section (1) of Page 20 C/SCA/3230/2014 CAV JUDGMENT section 29, such property shall vest in the transferee with all rights in the property "as if the transfer had been made by the owner of the property".
19.2 Thus, the sale (and consequential transfer) of the factory / establishment though made and effected by the finance corporation (in exercise of powers under sub- section (1) of section 29 of the State Financial Corporations Act), the said transfer will be deemed to have been made by the "owner" of the factory/establishment.
19.3 But, will it embrace section 93A of ESI Act and more paritcularly the term "employer".
19.4 In the opinion of this Court, the answer is in negative. 19.5 The said section 29 has its place in the SFC Act for different reason and object.
19.6 The main object is to provide that on such sale and Page 21 C/SCA/3230/2014 CAV JUDGMENT transfer for all rights and title in the property and the ownership of the property stands transferred to and vests in the transferee and the object is to protect the interest of the purchaser of the property in auction sale. The said provision protects the interest of the purchaser of the property in question by virtue of the deeming fiction which is provided for under sub-section (2) of section 29 of SFC Act.
19.7 Thus, the said sub-section (2) of section 29 can come to rescue of the purchaser and can be taken recourse of or can be invoked by the purchaser so as to assert and establish his right, title and interest in the property after purchasing it in auction proceeding. 19.8 Whereas so far as the ESI Act is concerned, the said Act is a complete code in itself and it contains and provides for, by way of sections 45B to 45D and 45G and 93A, sufficient and effective machinery and procedure for enforcing recovery of the dues of the ESI Corporation from the employer as well as the transferee.
Page 22 C/SCA/3230/2014 CAV JUDGMENT 19.9 Moreover the term "sale" and its scope are not restricted only to sale by operation of law. Besides this even the auction sale (by operation of law) may be conducted under some other Act which may not contain a provision similar to sub-section (2) of section 29 of SFC Act.
20. Thus, there is neither justification nor avenue to import and apply the provision under sub-section (2) of section 29 of SFC Act in the matter of applicability and operation of section 93A of ESI Act and the ESI Corporation cannot take recourse to the said provision to support or strengthen its action.
20.1 In this view of the matter, the said deeming fiction under different / separate statute cannot be invoked by and cannot be taken recourse of by ESI Corporation so as to claim that the "transfer" of the factory/establishment made/effected by SFC in exercise of power under sub- section (1) of section 29 of SFC Act as if the said transfer Page 23 C/SCA/3230/2014 CAV JUDGMENT is made and effected by the "employer".
20.2 It is pertinent that in cases where 'sale' of factory/establishment is made and effected by SFC under section 29 of SFC Act (after it is attached by SFC and possession is taken over under section 29(1) of SFC Act) the "employer" / "principal employer" has no say and no discretion in any aspect related to auction and the employer has no choice to prescribe - even suggest - terms and conditions as to the sale of the factory/establishment (mortgaged property) or in the matter of finalization of purchaser or as to the sale price. 20.3 Therefore, it is difficult to hold that sale of factory/establishment by SFC under section 29 of SFC Act can be said to be by "employer" and that it would fall within the purview of section 93A and comes within the boundary of "sale by employer" as contemplated under section 93A of ESI Act.
21. Whereas section 93A of ESI Act contemplates Page 24 C/SCA/3230/2014 CAV JUDGMENT transfer of factory or establishment by way of sale or gift or lease or licence "by employer". There is no indication in the said Section 93A that sale by any one other than "employer" is covered under and contemplated by the said provision.
21.1 True it is that transfer of factory or establishment by way of sale, gift, lease, or licence and in any manner whatsoever are included within the purview of Section 93A of ESI Act.
21.2 However, what is pertinent is the fact that the transfer of the factory or establishment (by way of sale, gift, lease, or licence and in any manner whatsoever) should be such which is made and effected by an "employer" and not by any other person. The term "employer" is, as mentioned earlier not defined under ESI Act. Therefore, its meaning and scope has to be derived from the expression "principal employer" and "immediate employer" employed in Sections 2(13) and 2(17) of the Act. In present case the sale of factory and establishment Page 25 C/SCA/3230/2014 CAV JUDGMENT of the loanee company i.e. Eazy Slide Fastners Limited is made and effected by respondent No. 1 GSFC and not by the said Eazy Slide Fastners Limited. The sale of factory and establishment whereby the said property came to be sold and transferred to present petitioner is not made and effected by the "employer" as contemplated under Section 93A of the Act. Thus, in present case the provision under Section 93A is not applicable and it will not be attracted.
21.3 It is true that the respondent No. 1 GSFC had, in exercise of powers under Section 93A of SFC Act, taken over the possession of the factory and establishment of the loanee company. It is also true that the said factory and establishment are transferred to the petitioner and the petitioner has put to use the said factory and establishment. However, merely because the respondent No.1 GSFC had taken over the possession of the factory and establishment and thereafter sold the factory and establishment of the loanee company to the petitioner in an auction proceedings it cannot be said that the factory Page 26 C/SCA/3230/2014 CAV JUDGMENT and establishment are sold by the "employer".
22. On this count, it is appropriate to refer to decision in the case of Employees Provident Fund Organization vs. Jai Corporation Limited [2009 (1) GLR 123], wherein the Court considered pari materia provision under the Employees Provident Funds and Miscellaneous Provisions Act, 1952. While considering similar provision, i.e. section 17B under the said other Act, the Court observed, inter alia, that:
"25. So as to appreciate the aforesaid submission, it is necessary to examine the provision under Section 17-B which reads thus :-
Where an employer in relation to an establishment, transfers that establishment in whole or in part, by sale, gift, lease or license or in any other manner whatsoever, the employer and the person to whom the establishment is to transferred shall jointly and severally be liable to pay the contribution and other sums due from the employer under any provision of this Act or the Scheme or [the Pension] Scheme or the Insurance Scheme], as the case may be, in respect of the period up to the date of such transfer :
Provided that the liability of the transferee shall be limited to the value of assets obtained by him by such transfer.
27. At first blush, plain reading of said Section may suggest the meaning such as the one canvassed by the petitioner, however a closer look brings out the different and real meaning and scope.
No doubt that the said provision comes in play when there is transfer of an establishment, but it is pertinent to note that under this provision, the words transfers that establishment in whole or in part are qualified and pre-fixed by the words where an employer. Thus, the obligation of joint and several liability cast by this provision will come in play when an establishment is transferred by employer of that establishment, by sale, gift, lease or licence or in other manner.
29. Thus, this provision would come in play and can be invoked by the department when the transfer is effected by the employer.
Page 27 C/SCA/3230/2014 CAV JUDGMENT Hence, in present case the department must show, to take shelter under the said provision, that the transfer of Erstwhile Establishment was effected by its employer.
30. In present case there is no dispute about the fact that prior to the auction, the employer was Santogen Spinning Mills and there is also no dispute about the fact that said Santogen Spinning Mills and/or its employer has not transfered in any manner whatsoever the erstwhile establishment or any of its assets to present respondent No.1. Thus present case would not come within the purview of said Section.
38. It is obvious that the object behind the said provision under Section 17-B is to ensure that the defaulter may not escape its liability merely by transferring assets and also to check fraudulent transfers to dummy transferee.
40. Now, so far as the other submission is concerned, it has to be mentioned that the said submission ignores the provision of SARFAESI Act and misreads the Section 2(e) and misconstrues or conveniently reads Section 2(k) also.
It is pertinent that ARCIL is a reconstruction Company as defined under Section 2(v) of the SARFAESI Act, and thus it is a special purpose vehicle which is incorporated for specified purpose viz purpose of asset reconstruction as specified in Section 2(v) which is clear from the words formed... for the purpose of asset reconstruction. The term asset reconstruction is also defined under Section 2(b) of the SARFAESI Act. In view of Section 5 of SARFAESI Act, the said ARCIL becomes lender on acquisition of rights or interest in financial assets. The said ARCIL has to take measures only as per Section 9 of SARFAESI Act which include providing proper management by taking over management or sale or lease of business or re-scheduling the schedule of payment and such other measures, for the purpose of reconstruction of assets. Thus, the measures mentioned in Section 9 can be taken by reconstruction Company (in present case ARCIL) only for the said specified purpose of reconstruction of assets and not for any other purpose. Hence, the power of reconstruction company and the object of its actions are circumscribed. Likewise under Section 10 also, it can take steps for the purpose of recovering dues. ... Besides, Section 13 also circumscribes the decisions and actions and manner of take over of management and sub-Section 4 of Section 15 provides that if the management was taken over then the reconstruction Company shall on realization of debt restore the management of the borrower to him. The other provisions of the SARFAESI Act go to suggest, on conjoint reading, that such reconstruction Company could take over only Secured Assets of the defaulter and that too for specific purpose and can act only in prescribed manner and can exercise only prescribed authority. Thus the said ARCIL can not be considered or can not be said to be occupier of the factory as defined and contemplated under Section 2(k) of the Act.
Page 28 C/SCA/3230/2014 CAV JUDGMENT
41. The submission of the petitioner regarding Section 17-B acknowledges that transfer of establishment has to be by employer as defined under Section 2(e) of the Act. The petitioner therefore submits that since ARCIL had taken over assets of Erstwhile Establishment, it is to be considered employer under Section 2(e) which defines the term employer and provides, in first place, that in respect of a factory, it's owner is the employer. It is clear that ARCIL is not the owner of erstwhile establishment, hence, the submission would fail on this ground. The petitioner therefore shifted the gear to claim that ARCIL would be the occupier of the factory upon taking over the possession of the Assets of Erstwhile Establishment. However, such submission overlooks that ARCIL can take-over only secured assets and that too only for specific purpose and could act only in permitted and prescribed manner and in view of various limitations prescribed qua the discretion, actions, decisions and power of a reconstruction company (e.g. by virtue of Sections 9, 10, 13 and 15 etc.) ARCIL would not qualify to be occupier of factory since as per Section 2(k), which provides that the person who has ultimate control over the affairs of the factory is the occupier of factory or where the affairs are entrusted to managing agent the agent shall be the occupier of the factory. In view of the provisions of SARFAESI Act, ARCIL (or any reconstruction Company acting under and as per SARFAESI Act) would not fall under either category and when only affairs are entrusted, the entrustment of affairs would not include the entrustment of the title of the factory/establishment or it would not include the right or authority to sale or transfer the title/ownership of the factory/establishment.
42. Hence, the said ARCIL cannot be said to be employer for the purpose of Section 17-B and the auction sale effected by ARCIL is not transfer by an employer as envisaged by the said section. Further, as discussed earlier, Section 17-B does not take in its sweep auction sale and/or enforced sale and/or sale by operation of law and/or involuntary sale. Hence, recourse to Section 17-B does not help the petitioner and is not of any avail in the facts of present case. The demand and action of petitioner against respondent No.1, therefore, fails on this count." 22.1 In light of the above discussion and for the foregoing reasons the requirement under Section 93A of the Act (required for the purpose of application and applicability of the Act) viz. that the transfer of the factory Page 29 C/SCA/3230/2014 CAV JUDGMENT and establishment should have been made by employer, is not complied in present case and that therefore Section 93A of the Act is not attracted. Consequently, while the respondent No. 2 ESI Corporation can take action under any other provisions of the ESI Act for recovering its dues in accordance with law, in the facts and circumstances of the case, the provision under Section 93A of the Act is not attracted and cannot be invoked by ESI Corporation.
23. At this stage, it is appropriate to also take into account some of the relevant provisions under ESI Act. Section 40 of ESI Act is the charging section. The said section reads thus:
"40. Principal employer to pay contribution in the first instance.
(1) The principal employer shall pay in respect of every employee, whether directly employed by him or by or through an immediate employer, both the employers contribution and the employees contribution.
(2) ... ... ... ... ...
(3) ... ... ... ... ...
(4) Any sum deducted by the principal employer from wages under this Act shall be deemed to have been entrusted to him by the employee for the purpose of paying the contribution in respect of which it was deducted.
(5) The principal employer shall bear the expenses of remitting the contributions to the Corporation."
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24. Other relevant provisions are sections 39, 45-B, 45-C and 94. The said provisions read thus:
"39. Contributions.
(1) ...............
(2) ...............
(3) ...............
(4) ...............
(5) (a) If any contribution payable under this Act is not paid by the principal employer on the date on which such contribution has become due, he shall be liable to pay simple interest at the rate of twelve per cent. per annum or at such higher rate as may be specified in the regulations till the date of its actual payment:
Provided that higher interest specified in the regulations shall not exceed the lending rate of interest charged by any scheduled bank.
(b) Any interest recoverable under clause (a) may be recovered as an arrear of land revenue or under section 45C to section 45-I. Explanation. In this sub-section, scheduled bank means a bank for the time being included in the Second Schedule to the Reserve Bank of India Act, 1934 (2 of 1934).] 45B. Recovery of contributions.-- Any contribution payable under this Act may be recovered as an arrears of land revenue.
45C. Issue of certificate to the Recovery Officer.(1) Where any amount is in arrear under this Act, 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 factory or establishment or, as the case may be, the principal or immediate employer by one or more of the modes mentioned below :-
(a) attachment and sale of the movable or immovable property of the factory or establishment or, as the case may be, the principal or immediate 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 factory or establishment or, as the case may be, the employer :
Provided that the attachment and sale of any property under this Page 31 C/SCA/3230/2014 CAV JUDGMENT sections shall first be effected against the properties of the factory or 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. (Emphasis supplied) 45 (D) Recovery Office to whom certificate is to be forwarded - (1) The authorised officer may forward the certificate referred to in section 45C to the Recovery Officer within whose jurisdiction the employer-
(a) carries on his business or profession or within whose jurisdiction the principal place of his factory or establishment is situate; or
(b) resides or any movable or immovable property of the factory or establishment or the principal or immediate employer is situate.
(2)........
45G. Other modes of recovery.- (1) Notwithstanding the issue of a certificate to the Recovery Officer under section 45C, the Director General or any other officer authorised by the Corporation may recover the amount by any one or more of the modes provided in this section.
(2)..........
(3) (i) to (x).................
(4)..........
(5).........
94. CONTRIBUTIONS, ETC., DUE TO CORPORATION TO HAVE PRIORITY OVER OTHER DEBTS. -
There shall be deemed to be included among the debts which, under section 49 of the Presidency-towns Insolvency Act, 1909 (3 of 1909),or under section 61 of the Provincial Insolvency Act, 1920 (5 of 1920), or under any law relating to insolvency in force in the territories which, immediately before the 1st November, 1956, were comprised in a Part B State, 3or under section 530 of the Companies Act, 1956 (1 of 1956), are in the distribution of the property of the insolvent or in the distribution of the assets of a company being wound up, to be paid in priority to all other debts, the amount due in respect of any contribution or any other amount payable under this Act the liability wherefore accrued before the date of the order of adjudication of the insolvent or the date of the winding up, as the case may be."
25. It is pertinent to note that on conjoint reading of Page 32 C/SCA/3230/2014 CAV JUDGMENT sections 39, 40, 45B, 45C and 94 of ESI Act, it emerges that detailed provision are made for recovery of unpaid contribution and separate machinery is provided which enable the ESI Corporation to recover the due amounts through diverse modes and the remedy under Section 93A is only one of the modes available under the Act. It also emerges that the recovery of dues and the liability to pay contribution are attached to the factory / establishment and the contribution to be paid under the Act is recoverable (by way of land revenue) by attaching the factory or establishment. Therefore, the said liability and obligation will travel along with the factory / establishment.
26. Section 93A of ESI Act postulates another requirement, i.e. over and above the requirement that the "transfer" of the factory / establishment should be made and effected by the "employer" viz. that the transfer of the factory by employer should be by way of sale, gift, lease or licence or in any other manner.
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27. It is pertinent that so as to achieve its object, section 93A of the ESI Act takes in its sweep even those "transfer" (of factory / establishment) which are made and effected by the employer not only by way of 'sale' but also by way of gift, lease, licence and by employing the expression "in any other manner", the horizon of section 93A is widened. This element in the provision gives out that the expressions employed int eh section are used with all grammatical connotation and variation so that the object of the provision can be achieved.
27.1 The object for, and the principle behind the insertion of said provision is that the employer, who is liable to pay the contribution and other sums, may not escape the liability by resorting to unfair method viz. transferring the factory/establishment to avoid such liability and so as to arrest such mischief said provision, which holds the employer as well as the transferee jointly and severally liable to pay the contribution up to the date of transfer, is introduced in the Act. The object is to arrest fraudulent and dummy transfer. For the said purpose, the provision Page 34 C/SCA/3230/2014 CAV JUDGMENT prescribes that by act of transferring the factory/establishment, the employer's liability would not cease, but would continue to exist and shall also be fastened upon the transferee, of course to the extent of the value of the assets obtained by the transferee by such transfer.
27.2 So as to achieve the said object legislature has included the transfer of factory and/or establishment by way of sale as well as gift and lease and licence and the legislature has further clarified that the transfer made and effected "in any other manner whatsoever" also comes within the scope of the section 93A. The expression "in any other manner" is of wide amplitude. The expressions and terms used in the section are indicative of legislature's intention to cover all types of acts by the employer whereby he may transfer and dispose of the factory / establishment.
27.3 The said section 93A of ESI Act employs the term "gift", "lease" and "licence". The expressions gift, lease Page 35 C/SCA/3230/2014 CAV JUDGMENT and licence will, by implication mean voluntary action. However, section 93A of ESI Act uses the term "sale" and the expression "in any other manner whatsoever" as well. 27.4 The petitioner would however suggest and claim that the provision under Section 93A of ESI Act would cover voluntary action by the employer and not the sale / transfer which is per force.
27.5 The "transfer" of factory/establishment by way of "sale" could be voluntary and out of free will or it could be involuntary and per force. When sale of property (factory / establishment in present case) takes place by way of auction then such sale/transfer would, ordinarily, take place by operation of law or by way of coercive action by creditor/s. On the other hand voluntary sale may be bona fide or it may be caused with ill-intention of frustrating the recovery of dues payable to statutory or other creditors.
28. However, in light of the facts of present case it is not necessary to enter into the issue as to whether the Page 36 C/SCA/3230/2014 CAV JUDGMENT provision under Section 93A of ESI Act contemplates only voluntary action or it would also take in its fold involuntary action like auction sale etc., more particularly in view of the fact that the expression "in any manner whatsoever is used by legislature" and the expression "sale" is not restricted or qualified.
28.1 In present case it is noticed that the sale is made and effected by respondent No. 1 GSFC and that therefore the said sale and consequent transfer of the factory and premises in question to the petitioner does not fall within the purview of one of the requirements of the said Section 93A viz. transfer of factory / establishment by employer and consequently it will not attract Section 93A of the ESI Act and that therefore it is not necessary to examine, in present case, as to whether the said second requirement prescribed under the said Section 93A exists or not.
29. Actually, in view of the facts of present case, more particularly clause / paragraph No. 4 in the sale letter dated 22.7.2011 and clause 7 of the sale deed dated Page 37 C/SCA/3230/2014 CAV JUDGMENT 10.12.2012 even the said fact i.e. the fact that the sale of factory and establishment in question and consequent transfer thereof cannot be said to have been made by the employer, also does not assist the petitioner in seeking the relief prayed for in the petition and / or to justify the relief prayed for in the petition.
29.1 In view of sale letter and the sale deed, more particularly clause / paragraph No. 4 and clause No. 7 in the said respective documents, present case stands on different footing and the issue as to whether the petitioner is entitled for the relief prayed for in the petition or not, is required to be considered in light of the said documents and not merely on the basis of Section 93A of the Act.
30. The fact that the sale in question is made and effected by respondent No. 1 GSFC, brings in picture clause / paragraph No. 4 of the sale letter dated 22.7.2011 and clause 7 of the sale deed dated 10.12.2012.
31. In present case, the sale of the factory is made and Page 38 C/SCA/3230/2014 CAV JUDGMENT effected by Finance Corporation by way of auction. The said auction sale was subject to the prescribed terms and conditions. Therefore, the sale of the property in question which the petitioner purchased will be governed by the terms and conditions subject to which it was made and effected and the terms and conditions which the petitioner accepted. This position brings clause 7 of the sale deed dated 10/12.12.2012 and the communication dated 22.7.2011 in picture.
32. In the communication dated 22.7.2011, the respondent GPSC informed the petitioner that:
"Ref. No.GSFC/ARO/Sale/557 Date: 22/07/2011 BY R.P.A.D. To:
M/s. Shri Ganesh Trading Co.
C-1-34, GIDC Estate Kadi Dist. Mehsana.
Dear Sir, Re: Sale for assignment of right under leasehold land admeasuring 3035 sq. mtrs. and sale of assets viz., building thereon & machinery of M/s. Ezy Slide Fastners Ltd., Plot No.2103/A, GIDC Estate, Halol, Dist. Pms, in exercise of powers conferred under Section 29 of State Financial Corporations Act, 1951 (A/c. No. C/E/237/00, 50 &
71):
Pursuant to your final bid in the auction relation to our Page 39 C/SCA/3230/2014 CAV JUDGMENT advertisement for auction of aforesaid asset in daily Gujarati Newspapers viz., Gujarat Samachar, & Sandesh on 24.05.2011, and same was considered by Regional Tender Committee in its meeting held on 23.06.2011 and subsequently it was approved by Recovery Committee in its Meeting held on 14.07.2011 for Rs.1,11,11,111/- (Rupees One crore eleven lacs eleven thousand one hundred eleven only). The sale, hereafter, subject to the following terms and conditions:-
1. The assets are sold by the Corporation on "As Is Where Is Basis" in exercise of statutory right under Section 29 of the Financial Corporations Act (SFCs Act), 1954.
2. The purchaser will pay 10000 of the sale price i.e. Rs.1,11,11,111/- (inclusive of EMD of Rs.10,00,000/-_ as under from the date of sale letter.
50% within 30 days from the date of communication & balance 50% in two equal monthly installments beginning from the end of 1st 30 days after the expiry of time period allowed for the 1st 50%.
4. Liability of Excise and ESIC (Employees State Insurance Corporation) is to be borne by the purchaser. However, GSFC shall not be liable to pay these liabilities. ... ... ... ... ..."
32.1 According to the clause - paragraph number 4 of the said sale letter dated 22.7.2011, it is explicitly mentioned, clarified and emphasized that the purchaser will be liable to bear the liability of Excise and ESI Corporation. 32.2 It is pertinent that the petitioner consciously accepted the said condition and now, i.e. until he faced the claim and demand by ESI Corporation, he had never disputed and disowned the said term.
Page 40 C/SCA/3230/2014 CAV JUDGMENT 32.3 It is also pertinent that subsequently the said condition - obligation came to be mentioned int eh sale deed dated 10/12.12.2012 as well.
32.4 At that stage also the the petitioner consciously accepted said condition and obligation and though it had opportunity to oppose - if there is any substance in petitioner's claim and allegations on this count, the petitioner did not raise any objection and he consciously accepted the said condition which until now he never opposed. The said Clause 7 of the sale deed dated 10/12.12.2012 reads thus:
28. "7. The liability of excise and ESIC (Employees State Insurance Corporation) is to be borne by the purchaser. GSFC shall not be liable to pay these liabilities."
32.5 From the above-mentioned documents and details, it emerges that the petitioner consciously accepted the said conditions.
33. The said conditions oblige the petitioner to pay Excise duty and ESI contribution. The above-mentioned condition, which the petitioner consciously accepted, is Page 41 C/SCA/3230/2014 CAV JUDGMENT incorporated not only in sale letter dated 22.7.2011 but also in the sale deed dated 10/12.12.2012 and that, therefore, the petitioner cannot escape the said obligation which he consciously accepted.
34. In this view of the matter, present case stands on completely different platform and it cannot be decided only in light of the meaning and scope of the terms used in section 93A of the Act. In present case, the obligation of the petitioner will be governed by the terms and conditions of the sale - letter and the sale deed and other provisions of the ESI Act.
35. On this count, a question which would arise - more particularly in light of the relief prayed for by the petitioner is - whether ESI Corporation can invoke the said clause 7 in the sale deed and/or clause - paragraph No.4 of the letter dated 22.7.2011 against the petitioner.
35.1 The said issue, in turn, gives rise to another question i.e. about ESI Corporation's locus and authority to invoke Page 42 C/SCA/3230/2014 CAV JUDGMENT the said condition of the sale deed (which is a contract between the petitioner and the respondent GSFC) and/or the letter dated 22.7.2011 (which also is a matter between the petitioner and the respondent GSFC), more particularly in light of the fact that the ESI Corporation is not a party to the said agreements/communication and there is no privity of contract between it and the petitioner.
36. The right of the ESI Corporation to recover the unpaid contribution is available even independently i.e. independent of the sale letter dated 22.7.2011 and the sale deed dated 10.12.2012 as well as the provision under section 93A of ESI Act inasmuch as the said provision and the remedy thereunder is only one of the remedies or modes available to ESI Corporation to recover the unpaid contribution whereas the obligation to pay the contribution and the right to recover unpaid contribution (with interest) and the remedy / mode of recovery are provided for and available under the diverse provisions under ESI Act.
Page 43 C/SCA/3230/2014 CAV JUDGMENT 36.1 As mentioned earlier, complete machinery and various modes of recovery are available to the corporation for enforcing the recovery, e.g. sections 39, 40, 45B, 45C, etc. The ESI corporation can invoke any other provision under the Act to enforce the recovery of unpaid contribution.
36.2 In this view of the matter, the right of the ESI Corporation to recover the dues of unpaid contribution exists and is available irrespective of and even in independent of the sale letter dated 22.7.2011 and/or the sale deed dated 14.10.2012. Actually the right of the ESI Corporation is created under and has come into existence by virtue of charging section and connected provisions under the ESI Act and the said right exists and will survive until the contribution is paid and obligation is discharged and the ESI Corporation can enforce its right in accordance with law.
37. Besides this, the letter dated 14.11.2013 is a communication between respondent No.2 ESI Corporation Page 44 C/SCA/3230/2014 CAV JUDGMENT and respondent No.1 GSFC. The petitioner is not privy to the said communication dated 14.11.2013 and it is, as mentioned above, communication between respondent No.1 and respondent No.2.
38. Moreover, while considering the relief prayed for by the petitioner, it is relevant and necessary to also keep in focus the fact that there is no dispute as to the fact that the contribution payable to the ESI Corporation is due and outstanding and that, therefore, the claim of the respondent No.2 ESI Corporation is alive and existing and that the said claim is enforceable, of course in accordance with law and before appropriate forum and by taking recourse to the remedies provided for and made available under the ESI Act, against the factory and/or establishment and assets of the said Easy Slide Fastners and it can not be negated by making the declaration as prayed for or granting other relief as prayed for.
39. Therefore, merely because the remedy under section 93A of the Act is not available in view of the fact that in Page 45 C/SCA/3230/2014 CAV JUDGMENT present case the sale and consequential transfer of the factory / establishment in question is, made by SFC and not by the employer, it cannot be said that the ESI Corporation's right to recover the unpaid contribution is lost.
39.1 Besides this, the ESI Corporation has addressed the letter dated 14.11.2013 to respondent No.1 GSFC. It is for respondent No.1 GSFC to give appropriate reply and to deal with the said letter. However the petitioner has no justification to seek quashment of said letter dated 14.11.2013 from ESI Corporation to GSFC. In this view of the matter, the relief prayed for by the petitioner to quash and set aside the said communication dated 14.11.2013 is not maintainable and does not deserve to be entertained.
40. Now, so far as the relief prayed for by the petitioner that it may be held and declared that it is not liable to pay any amount towards the dues of respondent No.2, is concerned, the said relief, in facts of this case, does not deserve to be and cannot be granted.
Page 46 C/SCA/3230/2014 CAV JUDGMENT 40.1 It is pertinent that there is no dispute about the fact that the respondent No.2 corporation has an outstanding claim to the tune of Rs.1,44,88,446/- plus running interest and that the said quantification is also not in dispute. 40.2 Besides this, it has emerged from the foregoing discussion that by virtue of clause / paragraph No.4 in the sale letter dated 22.7.2011 and clause No.7 in the sale deed dated 14.10.2012, the petitioner consciously accepted the obligation to pay the dues towards Excise duty and dues of ESI Corporation. The petitioner is, therefore, bound by the said conditions and is obliged to discharge the said obligation.
40.3 Therefore, the relief prayed for, for the declaration that the petitioner is not liable to pay the amount towards dues of respondent No.2, cannot be granted.
41. Likewise, the relief prayed for with regard to the communication dated 20.11.2013, which is addressed to Page 47 C/SCA/3230/2014 CAV JUDGMENT the petitioner by respondent No.1 GSFC, also does not deserve to be granted, more particularly in view of the above-mentioned clause / paragraph No.4 in the sale letter dated 22.7.2011 and clause No.7 in the sale deed dated 14.10.2012.
41.1 In this context, it is relevant to take into account the statement and stipulation made by the respondent No.1 GSFC in its affidavit dated 12.11.2014 wherein, it is declared and stated that:-
"2. I state that the condition No. 4 in the sale letter dated 22/07/2011 at Annexure-C to the petition and the condition No. 7 of the Sale deed dated 10/12/2012 at Annexure D to the present petition, were inserted only by way of abundant caution, with the intention that should be liability of the payment of ESIC dues befall on the Respondent no.1 corporation, the same were intended to be passed on to the Auction Purchaser, the petitioner herein.
3. IT IS NOT THE INTENTION OF THE RESPONDENT No.1 TO SADDLE THE AUCTION PURCHASER, PETITIONER HEREIN, WITH LIABILITY TO PAY ESIC THE DUES WHICH ARE OTHERWISE PAYABLE BY THE BORROWER, OR TO PUT ANY ONEROUS CONDITION ON THE SALE."
41.2 Thus, according to the said statement and submission by respondent No.1 GSFC, it would enforce the right flowing from the clause / paragraph No.4 of sale Page 48 C/SCA/3230/2014 CAV JUDGMENT letter dated 22.7.2011 and/or clause No.7 of sale deed dated 14.10.2012, if and when it is made to and/or called upon to make the payment towards the dues of ESI Corporation and if the said liability falls on it. 41.3 In this view of the matter and taking overall view of the case, more particularly the condition mentioned in sale letter and the sale deed (which are consciously accepted by the petitioner), there is no justification to set aside and quash the communication dated 20.11.2013 by respondent No.1 GSFC.
41.4 On this count, it would suffice if it is clarified that the respondent No.1 GSFC will, with reference to its letter dated 20.11.2013, act in accordance with the statement and stipulation made in its affidavit dated 12.11.2014 filed in present petition.
42. For the foregoing reasons and in light of above discussion, it emerges that the relief prayed for by the petitioner to quash and set aside the letter dated Page 49 C/SCA/3230/2014 CAV JUDGMENT 14.11.2013 and/or letter dated 20.11.2013 and the relief for the declaration that it is not liable to pay any amount towards the dues and claim of respondent No.2 ESI Corporation does not deserve to be granted in light of the facts of the case. Consequently, the relief prayed for is declined and the petition is disposed of with the aforesaid limited clarification. Rule is discharged.
Sd/-
(K.M.THAKER, J.) Bharat Page 50