Gujarat High Court
Amit Suresh Bhatnagar vs Recovery Officer - Employees Provident ... on 5 October, 2018
Author: K.M.Thaker
Bench: K.M.Thaker
C/SCA/11484/2012 IA ORDER
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
MISC. CIVIL APPLICATION NO. 1 of 2018
IN R/SPECIAL CIVIL APPLICATION NO. 11484 of 2012
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RECOVERY OFFICER - EMPLOYEES PROVIDENT FUND ORGANIZATION Versus AMIT SURESH BHATNAGAR ========================================================== Appearance:
MR NK MAJMUDAR for the PETITIONER(s) No. RULE SERVED for the RESPONDENT(s) No. ========================================================== CORAM: HONOURABLE MR.JUSTICE K.M.THAKER Date : 05/10/2018 IA ORDER
1. Heard Mr. Majmudar, learned advocate for the applicant. The cause list reflects that process of Rule is served to the opponent.
2. Though served the opponent has not entered appearance. No one is present for and on behalf opponent no.1.
3. In present application, the applicant has prayed, inter alia, that:
"11(ii) Pass appropriate order and be pleased to direct the Registry to refund bank/ remit back/ to pay the amount of Rs.96,93,379/ along with interest accrued thereon and / or be pleased to direct the Registry of 1 Downloaded on : Sun Aug 29 01:08:33 IST 2021 C/SCA/11484/2012 IA ORDER this Hon'ble Court to pay/remit/refund back the Fixed Deposit created by the Registry of this Hon'ble Court in respect of the principal amount of Rs.96,93,379/ (along with final maturity amount inclusive of interest accrued thereon) and the said amount/ fixed deposit may kindly be ordered to be refunded back/ paid back/ remitted to the applicants as per the operative portion of the order dated 2/8/2016 passed by the Hon'ble High Court (Coram: Mr. Justice K.M.Thaker) in Special Civil Application No.12237/2012 with Special Civil Application No.11484/2012."
4. The factual backdrop in light of which above quoted direction is prayed for is mentioned by the applicant in Para2 to 8 of present application, which read thus:
"2. The applicants state that the recovery proceedings came to be initiated by the applicants to recover the amount determined under provisions of Section 14B of the Act and the present opponent was served with the summons dated 13.7.2012 to enable him to remain present in the recovery proceedings i.e. to secure the present of the opponent the said summons dated 13.7.2012 came to be issued. The applicants state that two Writ Petitions came to be filed viz. Special Civil Application No.12237/2012 came to be preferred by Diamond Power Infrastructure Ltd. who had entered into Lease Agreement with Apex Electricals and the opponent was the Director of the said Apex Electricals. Another Writ petition came to be filed by the opponent i.e. Special Civil Application No.11484/2012. Annexed hereto and marked ANNEXUREA (Collectively) to this petition are the prayer clauses of both the writ petitions.
3. It is submitted that the applicant authorities had issued Recovery Certificate No.7 dated 6.7.2020 seeking recovery for the sum of Rs.99,93,379/ being the levy of damages for the period between January, 2000 to July, 2003 under Sec.14B of the Act from M/s. Apex Electricals. The applicant stated that the opponent had preferred a Civil Application No.9858/2012 in Special Civil Application No.11484/2012 and apropos to order dated 30.8.2012 passed by the learned Single Judge, the applicant no.3 original respondent no.3 in the main petition was directed to deposit the amount fo Rs.96,93,379/ in the Registry of the Hon'ble High Court on or before 5.9.2012 and accordingly as per the observations made in para11 of the order dated 30.8.2012 2 Downloaded on : Sun Aug 29 01:08:33 IST 2021 C/SCA/11484/2012 IA ORDER the aforesaid amount came to be deposited with the Registry of this Hon'ble Court and the same continued to be remained as deposited. Annexed hereto and marked ANNEXUREB to this application is a copy of the said order dated 38.8.202 passed in Civil Application No.9858/2012.
4. The applicants stated that after hearing the concerned advocates for the parties, the learned Single Judge was pleased to dispose of both the writ petitioner viz. Special Civil Application No.12237/2012 as well as Special Civil Application No. 1484/2012 along with Civil Application No.9858/2012 preferred in Special Civil Application No.11484/2012, by the judgment and order dated 2.8.2016. A copy of the said order dated 2.8.2016 is annexed at ANNEXUREC to this petition.
5. The applicants state that in the said order the Hon'ble Court was pleased to observe that the orders passed under Section 7A as well as Section 14B have already attained the finality. It is submitted that the observations made by the Hon'ble High Court in para8.6 and 8.7 are very much relevant for the subject matter of the present applicant and, therefore they are reproduced hereunder:
"8.6 It is on the strength of the lease deed and the provision under Section 14B read with Section 17B of the Act that the department is competent to recover the damages from lessee and therefore there is no cause or justification to interject the said proceedings."
8.7. It is not in dispute that the recovery proceedings initiated pursuant to order under Section 14B are pending. In light or the provisions under Section 8 and section 14 read with Section 17 the department is competent to effect recovery of the amount due from any assessee ( in present case, said Apex Electricals) and the said power include power to recover the amount from lessee unless the lessee or other person against whom demand is made, may make out a case before the provident fund authority that the amount is not recoverable from it or it has not to pay any amount to original debtor."
6. It is submitted that even in Para 10.1 the Hon'ble Court was pleased to observe that "The department in present case, is justified in invoking provisions under Section 8 and Section 17B for recovery of dues/ damages (which has attained finality)....". Even in Para12 the Hon'ble Court was pleased to observe that the amount of Rs.96,93,379/ shall remain deposited till the final order has been passed by the competent authorities in respect of recovery of dues. It is submitted that the concerned authorities have already undertaken further proceedings in the nature of recovery proceedings and the order dated 13.10.2017 is already passed in respect of 3 Downloaded on : Sun Aug 29 01:08:33 IST 2021 C/SCA/11484/2012 IA ORDER the proceedings under Sec. 8B to 8G of the Employees Provident Fund and Miscellaneous Provision Act, 1952 and that too in respect of Recovery Certificate dated 6.4.2010. A copy fo te order dated 13.10.2017 is annexed hereto and marked as ANNEXURED to this application,.
7. It is submitted that in view of the aforesaid order passed by the concerned authorities, as the liability/ levy of damages under Sec.14B are already assessed and even in respect of recovery proceedings a details order has been passed in recovery proceedings, the said order dated 13.10.2017 has also attained the finality as the period fo limitation is already expired long back for preferring further proceedings against the said order and the present applicants have not received any notice or summons from any of the Hon'ble Court or Hon'ble Tribunal till today and, therefore, the order has deemed to have attained the finality.
8. The applicants state that in view of the directions issued by the Hon'ble Court in the operative portion of the order dated 2.8.2016, it is submitted that the present application is filed by the applicants and it is prayed that the Hon'ble Court may kindly pass appropriate order directing the Registry of the Hon'ble Court to return back/ remit back the principal amount of Rs.96,93,379/ ( with interest accrued upon the said amount while remained as deposit with the Registry) and, therefore, the present application is preferred and it is prayed that the Hon'ble Court may kindly pass appropriate order for refunding back/ remitting back the amount which ha remained deposited with the Registry on the basis of directions issued in Para11 the amount of Rs.96,93,379/ may kindly be ordered to be remitted back to the applicants with interest accrued thereon or with Fixed Deposit being created by the Registry on the main principal amount of Rs.96,93,379/ which has remained deposit as per directions issued by order dated 2.8.2012 passed in Civil Application No.9858/2012 may be ordered to be returned back/ refunded back/ remitted to the applicants and, therefore, the present application is filed."
5. It is necessary to mention that the applicant Provident Fund Organization has come forward with request for permission to withdraw the amount (Rs.96,93,379/) which is deposited with Registry. It is claimed that said amount came to 4 Downloaded on : Sun Aug 29 01:08:33 IST 2021 C/SCA/11484/2012 IA ORDER be deposited in light of and in compliance of the order and direction by this Court (Coram: Hon'ble Smt. Abhilasha Kumari, as her Ladyship then was) vide order dated 30.8.2012 in Civil Application No.9858/2012. The relevant part of the said order dated 30.8.2012 reads thus:
11. As the issue is still at large before this Court,the interest of justice would be met, if the following order is passed:
Issue notice, returnable on 592012.In the meanwhile, respondent No.3 shall deposit the amount of Rs.96,93,379/ in the Registry of this Court on, or before, 05092012. The Registry shall then invest the amount in a Fixed Deposit which shall be renewed from time to time, till the final decision of the petition. The Court shall take a decision regarding the said amount, at the time of final decision of the petition. In addition to the normal mode of service, direct service is also permitted.
6. The factual backdrop can be summarised thus:
the PF department raised certain demand ( for default/ delay in payment of PF Contribution) against an establishment M/s. Apex Electricals Ltd. The department initiated proceedings under Section 7A. The said proceedings culminated into order whereby the PF department quantified the amount required to be paid/ deposited by the employer towards PF contribution, other heads and 5 Downloaded on : Sun Aug 29 01:08:33 IST 2021 C/SCA/11484/2012 IA ORDER interest.
7. It also appears that subsequently the PF Department also commenced proceedings under Section 14B of the Act and quantified damages at Rs.96,93,379/.
8. It appears that during the said proceeding it also came on record that another establishment namely Diamond Power Infrastructure Ltd. had acquired interest in the debtor's company M/s.
Apex Electricals Ltd. and that therefore after conducting proceedings in accordance with provision under the Provident Fund Act., the PF Department called upon the said Diamond Power Infrastructure Ltd./ its Director to pay the dues of M/s. Apex Electricals Ltd.
9. The said demand by the PF Department was opposed by the said M/s. Diamond Power Infrastructure Ltd. and its Director ( i.e. present opponent No.1) 6 Downloaded on : Sun Aug 29 01:08:33 IST 2021 C/SCA/11484/2012 IA ORDER
10. The said demand gave rise to dispute initiated by the said Diamond Power Infrastructure Ltd. and the Director i.e. present opponent No.1.
11. The said dispute reached this Court in different proceedings. Two petitions (amongst other petitions) which came to be filed are SCA No.12237/2012 and SCA No.11484/2012.
12. During pendency of SCA No.11484/2012, present opponent No.1 had taken out an application with a request for direction to restrain PF Department from taking any coercive action for recovery of damages.
13. It was in the said Civil Application No.9858/2012 that this Court passed above mentioned order dated 30.8.2012.
14. The Court, in the said order, observed that 7 Downloaded on : Sun Aug 29 01:08:33 IST 2021 C/SCA/11484/2012 IA ORDER the applicant had indulged into shadow litigation and actually M/s. Apex Electricals Ltd was creating hurdle and obstacle in recovery of amount and payment of PF contribution, through the said Diamond Power Infrastructure Ltd and the Director. The relevant observation by the Court in the said order dated 30.8.2012 need to be undertaken at this stage. In the said order the Court observed and recorded, inter alia, that:
"2. The applicant has preferred the main petition with a prayer to set aside Summons dated 1372012 that have been served upon the applicant/petitioner, on 2472012, issued under the provisions of the Employees Provident Fund and Misc. provisions Act, 1952 ("the Act" for short) whereby the present applicant has been summoned to appear in connection with the recovery proceedings pending before the opponent in respect of Recovery Certificate No.7, dated 642010, for a sum of Rs.99,93,379/ towards damages for the period with effect from January 2000 to July 2003, in the case of M/s. Apex Electricals Ltd.
3. The main petition was heard on 2782012. The case of the petitioner therein is that M/s. Apex Electricals Ltd. was a Company that went into financial losses in the year 20012002. Due to the said reason, the Provident Fund dues for the year 20022003 were not paid by the said Company. The Company was, thereafter, registered as a Sick Unit. The petitioner is a Director in another Company,that is, M/s.Diamond Power Infrastructure Ltd. which entered as a Strategic Investor in M/s. Apex Electricals Ltd. for a limited period. The petitioner remained as a Director in M/s. Apex Electricals Ltd. only with effect from 2382010 to 25112011, which does not include the period for which the dues were outstanding against M/s. Apex Electricals Ltd. It is stated in the petition that M/s. Apex Electricals Ltd. has already made the payment of the outstanding Provident Fund dues along with interest. However,an order under Section 14(B) of the Act was passed against M/s. Apex Electricals Ltd. for payment of damages. This order has been challenged by M/s. Apex Electricals Ltd. before the Board of Trustees 8 Downloaded on : Sun Aug 29 01:08:33 IST 2021 C/SCA/11484/2012 IA ORDER and the Appeal/Representation is still pending. The petitioner has come before this Court on the ground that in spite of the fact that M/s. Apex Electricals Ltd. has already paid the amount of Provident Fund dues, with interest and its Appeal/Representation against the order under Section 14(B) is pending, the respondents are harassing the petitioner personally and his Company, that is, M/s.Diamond Power Infrastructure Ltd. for payment of damages imposed upon M/s. Apex Electricals Ltd. under Section 14(B) of the Act, which is the subject matter of the pending Appeal/Representation.
4. In this background notice was issued in the petition on 2782012, making it returnable on 592012. It is noted in the order dated 2782012 that the petitioner apprehends that some coercive action may be taken against him by the respondents. Before the returnable date, the applicant (original petitioner) has been constrained to file the present application as, it is stated in the application that a sum of Rs.96,93,379/ has been recovered from the debtors/creditors of the petitioner Company by respondent No.3, in spite of service of notice upon him on 2982012. It is further the case of the applicant that on the morning of 2982012 the applicant has served a letter dated 2882012 upon respondent No.3 alongwith a copy of the order dated 2782012 of this Court, while raising the issue regarding recovery from the debtors/creditors of the applicant by respondent No.3 and asking for a patient and fair opportunity.
5. In spite of the same, it is stated before this Court by Mr.R.R.Marshal, learned Senior Advocate for the applicant and not denied by Mr.Niral R.Mehta, learned advocate for the respondents that on 3082012, that is, today, respondent No.3 has taken a cheque for the amount of Rs.96,93,379/ from a customer/debtor of the applicant and has already deposited it in the Bank towards the damages imposed upon M/s. Apex Electricals Ltd.
6. In the above circumstances, the applicant has filed the present application.
7. Mr.R.R.Marshal, learned Senior Advocate for the applicant has submitted that in spite of the fact that the respondents are in the knowledge of the fact that the petition is pending and notice has been issued on 278 2012, which has been served on 2982012, respondent No.3 has encashed the cheque taken from a customer/debtor of the applicant on 3082012 and already deposited it in the Bank. It is submitted that damages of Rs.99,93,379/ has been imposed upon M/s. Apex Electricals Ltd. by the respondentsauthorities under Section 14(B) of the Act. Even while the Appeal/Representation against the said order by the said Company is pending before the Board of Trustees, which fact is known to the respondents as they are parties thereto, the recovery has been made from the applicant, who is disputing his very liability to pay the same, for reasons stated in the petition. It is submitted 9 Downloaded on : Sun Aug 29 01:08:33 IST 2021 C/SCA/11484/2012 IA ORDER that recovery of the damages from the debtors/customers of the applicant, has been done with a view to render the writ petition infructuous so as to escape adjudication by this Court.
8. Mr.Niral R.Mehta, learned advocate for the respondents has submitted that the order dated 2782012 of this Court was served upon the respondents on 2982012, and in the meanwhile recovery proceedings had already been initiated under Section 8F of the Act, on 2882012. However, the learned advocate for the respondents cannot satisfactorily explain why, after receipt of the notice of this Court, the cheque towards recovery was taken and deposited on 3082012.
9. From the sequence of events, the averments made by the learned counsel for the respective parties and the material on record, it prima facie transpires that pursuant to an order of damages made against M/s. Apex Electricals Ltd., which is Appealed/Represented against before the Board of Trustees, the amount has been recovered from the monies due to the applicant from his customers/debtors without granting him an opportunity of hearing, even to the extent whether he is liable to pay the same, or not. This is relevant in view of the submission that M/s.Diamond Power Infrastructure Ltd., the Company of the applicant had never taken over M/s. Apex Electricals Ltd. and that the applicant was a Director in the said Company only for a limited period, with effect from 2382010 to 25112011, which is not the period for which the Provident Fund dues were to be paid by M/s. Apex Electricals Ltd. Further, it has come on record that M/s. Apex Electricals Ltd. has already paid the said dues with interest and the question remaining is only regarding the payment of damages that is to be concluded.
9. On the facts and in the circumstances, it appears that the apprehension raised by the learned Senior Advocate for the petitioner before this court, as is recorded in order dated 2782012, has now become a reality. This Court had not granted any stay against recovery from the applicant/petitioner for the reason that no notice for recovery had been issued to the petitioner and only Summons had been issued to appear and produce certain documents."
15. Thereafter, the SCA No.11484/2012 and SCA No.12237/2012 came to be disposed of vide common judgment dated 2.8.2016. In the said proceedings this Court took note of the factual backdrop, 10 Downloaded on : Sun Aug 29 01:08:33 IST 2021 C/SCA/11484/2012 IA ORDER relevant part whereof is found in Para5 to 13.2.
of the common judgment dated 2.8.2016. As the said observation are relevant to consider the request made by the applicant in present application, the same are quoted below:
"5. Before proceeding further it is relevant to mention that on earlier occasion abovementioned company i.e. Diamond Power Infrastructure Limited (wherein Mr. Bhatnagar is Managing Director) had filed petition being Special Civil Application No. 9730 of 2008. The said petition was filed against order dated 30.5.2008 and 10.6.2008 by recovery officer of provident fund department. The said petition came to be dismissed by the Court vide order dated 21.10.2008.
5.1 The observation by the Court in the said order dated 21.10.2008 are also relevant. Therefore, the said order is quoted below: "The petitioner has preferred this petition under Articles 226 and 227 of the Constitution of India, challenging the order dated 30/05/2008 and 10/06/2008 issued by the Recovery Officer, Regional Office, Vadodara and Assistant P.F. CommissionercumRecovery Officer, Regional Office, Vadodara respectively on the ground that, the order impugns have been issued though they have no nexus with the organization and / or industrial unit / employer against whom the recovery is pending.
2. The facts leading to the filing of the present petition deserves to be set out as under:
3. The employer called as ? M/s. Apex ElectricalsLtd., Padra, whose Managing Director happened to be one Shri Amit Bhatnagar faced proceedings, as the provident fund under the law had not been deposited.The proceedings were undertaken which culminated into the order against M/s.
Apex Electricals. The said order was challenged by said M/s. Apex Electricals and its Joint Managing Director, Mr.Amit Bhatnagar by preferring Special Civil Application No.3990 of 2007 wherein initially the interimrelief was granted which came to be vacated and the vacation of the interimrelief was challenged by way of preferring Letters Patent Appeal being Letters Patent Appeal No.1968 of 2007 which came to be disposed of by Division Bench of this Court (Coram: A.L.Dave and S.D.Dave, JJ.) vide order dated 25/10/2007 observing that the remaining amount would be paid only once the seals are removed, as the properties were under attachment. It deserves to be noted that while taking recourse to the LPA, the said petitioner also made application before BIFR wherein they 11 Downloaded on : Sun Aug 29 01:08:33 IST 2021 C/SCA/11484/2012 IA ORDER obtained stay which was subject matter of challenge by PF Department and which came to be vacated. The outstanding were still not paid and therefore the impugned order came to be issued. Now, it deserves to be noted that at the relevant time, the present petitioner addressed a letter on behalf of Diamond Cables Ltd., whose Joint Managing Director was Amit Bhatnagar, who also happens to be the Joint Managing Director of M/s. Apex Electrical stating therein unequivocally that, 4.1 Accordingly, as per their say they are parting with the amount of Rs.38 Lacs, as they were taking over the possession of the assets of the company i.e. M/s. Apex Electrical s Ltd. At this stage, as the dues were not paid, the respondent No.1 issued the aforesaid two orders dated 30/05/2008 and 10/06/2008 which are impugned in this matter.
5. Shri P B Khambholia, learned Advocate for the petitioner submitted that petitioner have no nexus with the employer i.e. M/s. Apex Electricals Ltd., and as they are merely successor to the organization calling Apex Electricals Ltd. They cannot be fastened with liability and there cannot be any order passed against them. He submitted that though Amit Bhatnagar is a common man between the two, that in itself would not make him liable to meet with the liability of M/s. Apex Electricals Ltd., which is an independent entity. He also submitted that the M/s. Apex Electricals Ltd., as well as, Diamond Cables Ltd., i.e. present petitioner are two separate entities. They having two common Joint Managing Director in itself would not be sufficient to garnish the order passed by the PF Commissioner and impugned in this petition.
6. Mr.Niral Mehta, learned Advocate for the respondent No.1 has submitted that it is infact a fraud upon the authorities, as it could be seen clearly that the entire dispute is raised which has tried to be justified on account of thin technicalities which would not stand the scrutiny of the Court. He further submitted that letter head at Page No.40 go to show that they are successor to the company ? employer and by virtue of operation of Section 17 ? B of the Employees PF Act, the authorities have right to recover the amount from them as stated therein. In view of this, he submitted that the petition deserves to be dismissed as there is suppression of fact and the petitioner has not come with clean hands to this Court. He submitted that it was the duty cast upon the petitioner to clearly state in the memo of petition itself as to what was the nexus between the two companies especially when there is a common Joint Managing Director, who had filed the earlier petition being Special Civil Application No.3990 of 2007 and the present petition is filed by the Legal Officer of Diamond Power Infrastructure Limited, whose Joint Managing Director 12 Downloaded on : Sun Aug 29 01:08:33 IST 2021 C/SCA/11484/2012 IA ORDER happens to be the same person again escaping from the liability of suppressing the fact and stating truth to the Court. Thus, on this count also the petition deserves to be dismissed.
7. Heard learned Advocates for the respective parties. This Court is of the considered view that the letter produced at Page Nos.39 and 40 clearly go to show that the undertaking of the petitioner successor, as even learned Counsel for the petitioner as stated herein above, merely on a technical ground of saying that two are different entities and M/s. Apex Electricals Ltd., and present petitioner in itself would not make the petition maintainable especially in view of the fact that chequered history of the litigation go to show that there is a consistent attempt on the part of the petitioner to evade illegally the legitimate dues payable by petitioner.
8. Moreover, in light of the language employed by the legislature in Section 17 (B) of the Employees Provident Fund Act, it becomes clear that the petitioner cannot be permitted to evade its liability towards PF dues for which the impugned orders have been issued. The petition also can be said to be suffering from patent illegality of suppression of fact, as these facts with regard to having a common Joint Managing Director and the nexus is suspicious, absent in the entire memo of petition. The petitioner can be said to have approached the Court only with a view to evade the legal dues in the name of ostensible difference between the two companies but even that also have been obliterated in view of the provision of Section 17B as well as the letters addressed by them which is annexed at page no.39. Obliterate
9. The petition being bereft of any merit and is dismissed in limine. Notice discharged."
5.2 Abovementioned facts bring out that the orders under Section 7A and Section 14B of the Act assessing and quantifying the dues against M/s. Apex Electricals have attained finality.
5.3 In response to the querry by the Court, learned advocate for the petitioner in Special Civil Application No. 12237 of 2012 informed the Court that according to his information the said Diamond Power Infrastructure Limited has not challenged orders under Section 7A of the Act and / or order under Section 14B of the Act. He clarified that he has no information as to whether Apex Electricals has challenged said order or not.
6. Mr.Majmudar, learned advocate for the provident fund department declared that so far as Apex Electricals is concerned any application by Apex Electricals or any notice by the tribunal in respect of Apex Electrical against order under Section 7A and / or 14B is not received and according to their record any appeal against said orders are not filed by Apex Electricals.
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7. The said facts bring out that the amounts quantifying by the provident fund department are required to be paid.
8. At this stage it is pertinent to note that Mr.Shah, learned advocate for the petitioner Mr.Bhatnagar and Diamond Power Infrastructure Limited submitted that so far as principal amount quantified by the provident fund department is concerned the same is paid by said M/s. Apex Electricals whereas the amount towards interest i.e. about Rs.59 lakhs is paid by present petitioner i.e. Diamond Power Infrastructure Limited. 8.1 The amount towards damages remain unpaid and the provident fund department has initiated proceedings to recover the said amount from present petitioner i.e. Diamond Power Infrastructure Limited. 8.2 The Court is informed that the purpose of progress of recovery proceedings that the impugned summons dated 13.7.2012 came to be issued by provident fund authority with a view to securing presence of the petitioner Mr. Bhatnagar.
8.3 The Court is also informed that Diamond Power Infrastructure Limited / Mr. Bhatnagar had submitted reply in response to the summons dated 13.7.2012 however at the relevant time he did not remain present before the authority in response to the summons dated 13.7.2012 and since the followup by the department continued Special Civil Application No.11484 of 2012 came to be filed. 8.4 In the petition the summons dated 13.7.2012 is challenged on diverse ground. It is also claimed by the petitioner that the department has no jurisdiction to summon and enforce his attendance before the provident fund authority in respect of recovery certificate no.7 issued against M/s. Apex Electricals. The petitioner has also prayed that the department shall be restrained from initiating any proceedings under Section 32 of the Code of Civil Procedure.
8.5 At this stage it is relevant to take into account the fact that a wholly owned subsidiary of Diamond Power Infrastructure Limited has taken the said company Apex Electrical Limited and the factory etc. of Apex Electricals, on lease for 30 years.
8.6 It is on strength of the lease deed and the provision under section 14 B read with section 17B of the Act that the department is competent to recover the damages from lessee and therefore there is no cause or justification to interject the said proceedings.
8.7 It is not in dispute that the recovery proceedings initiated pursuant to order under Section 14B are pending. In light of the provision under Section 8 and section 14B read with Section 17B the department is competent to effect recovery of the amount due from any assessee (in present case, said Apex Electricals) and the said power include power to recover the amount from lessee unless the lessee or other person against whom demand is made, may make out a case before the provident 14 Downloaded on : Sun Aug 29 01:08:33 IST 2021 C/SCA/11484/2012 IA ORDER fund authority that the amount is not recoverable from it or it has not to pay any amount to original debtor.
9. Mr.Shah, learned advocate for the petitioner would contend that Mr.Bhatnagar was Director in Apex Electricals only for period of about 1 year and he would also submit that actually the company i.e. Diamond Power Infrastructure Limited intended to make investment in Apex Electricals and for that purpose the petitioner Diamond Power Infrastructure Limited had also purchased certain shares of Apex Electricals and as part of said transaction for sometime he was director of the said Apex Electricals however he has nothing to do with the Apex Electricals.
10. The contentions which are raised by the petitioner Mr. Bhatnagar and Diamond Power Infrastructure Limited give rise to dispute which can be determined by the competent authority under the Act.
10.1 The department, in present case, is justified in invoking provisions under Section 8 and Section 17B for recovery of dues / damages (which has attained finality) and at this stage the relief prayed for in this petition does not deserve to be granted i.e. at this stage it would not be proper to disturb the summons. It cannot be said at this stage that the department has no jurisdiction to issue summons to the petitioner. 10.2 The petitioner is called before the competent authority where the petitioner will get opportunity to satisfy the competent authority that it is not liable to pay amount and that neither he (i.e. Mr. Bhatnagar) nor the company i.e. Diamond Power Infrastructure Limited is liable to pay dues of Apex Electricals. 10.3 The petitioner should not shy away from nor avoid the summons and / or appearance before the authority.
11. However, at this stage the relief prayed for in these petitions and declaration made in this petitions cannot be granted.
11.1 It would not be out of place to recall at this stage the observations by the Court in Special Civil Application No. 27236 of 2007 and the observation made in order dated 21.10.2008 in Special Civil Application No. 9730 of 2008
12. This Court has in the said orders noticed that attempts have been made to frustrate recovery of the provident fund dues.
12.1 In this view of the matter it would not be just and proper to interject at this stage when the proceedings for recovery of the amount are in progress, more particularly when the orders under section 7A and 14B have attained finality.
13. Mr. Shah, learned advocate for the petitioner submitted that before issuing summons dated 13.7.2012 the authority has not dealt with the procedure prescribed under Section 8F of the Act and without issuing any notice or without giving any opportunity the authority 15 Downloaded on : Sun Aug 29 01:08:33 IST 2021 C/SCA/11484/2012 IA ORDER has resorted to summons for enforcing presence and therefore said summons is illegal and arbitrary. 13.1 As mentioned earlier, the petitioner Mr.Bhatnagar did not remain present before the authority on the date when he was called to remain present by virtue of summons dated 13.7.2012 and that therefore the petitioner's own conduct flies in their / his face and convinces the Court to refuse the relief prayed for in this petition. Further, the said summons has lived its life inasmuch as the date for which the summons was issued has expired and now the said summons is not alive and therefore on its expiry, the said cannot be enforced by the authority.
13.2 Nonetheless, to remove any doubts withregard to summons dated 13.7.2012 following order is passed: With the clarification that it will be open to the authority to take necessary steps in accordance with law and after following procedure prescribed under Section 8F or other provisions, the department may issue fresh notice or summons, the summons dated 13.7.2012 is set aside.
It is further clarified that the proceedings initiated by the provident fund department for recovery of the amount are not interfered with and any direction with regard to the said observation are not passed except the clarification and the observation that the authority will conduct the procedure in accordance with the provisions under the Act. The procedure prescribed under the Act shall be diligently followed.It is further clarified that in view of the provisions under Section 17B it cannot be said at this stage that the authority has no jurisdiction to summon the petitioner Mr. Bhatngar or Diamond Power Infrastructure Limited. It would be open to the petitioner Diamond Power Infrastructure Limited and / or Mr.Bhatnagar to submit appropriate reply clarifying factual aspects to support their claim that they are not liable to pay dues of Apex Electricals. It will be open to the company or Mr.Bhatngar to submit such documents on which they want to rely in support of their claim and if they want to lead any oral evidence, the authority will grant such opportunity. It is clarified that after giving sufficient and effective opportunity of hearing and defence to the petitioner Diamond Power Infrastructure Limited and Mr. Bhatnagar and after conducting the procedure in accordance with law the authority may pass appropriate order and take necessary steps in accordance with law as may be required for recovery of the dues determined by previous proceeding. From material on record it has emerged that any declaration as prayed for by the petitioner company cannot be passed at this stage and therefore the relief prayed for in paragraph no. 8(B) to (D) of the petitions is not granted at this stage. Any cause or justification to issue writ of 16 Downloaded on : Sun Aug 29 01:08:33 IST 2021 C/SCA/11484/2012 IA ORDER prohibition against authority with regard to proceedings initiated by it is not made out. So far as Civil Application No.9858 of 2012 is concerned in view of the fact that the main petitions being Special Civil Application No. 12237 of 2012 and Special Civil Application No. 11484 of 2012 are disposed of, the Civil Application No.9858 of 2012 does not survive however, it is clarified that the amount which is deposited in the Court pursuant to order dated 30.8.2012 passed in Civil Application No. 9858 of 2012 shall remain deposited until final order by the competent authority in respect of recovery of the dues is passed after hearing the petitioner company Diamond Power Infrastructure Limited and Mr. Bhatnagar. After final order is passed it will be open to the provident fund department and / or the petitioner Diamond Power Infrastructure Limited and Mr. Bhatnagar to take out appropriate application seeking necessary direction with regard to the amount which is deposited. With the aforesaid clarification the petitions as well as the Civil Applications are disposed of. Orders accordingly."
16. Having regard to the observation by the Court in Order dated 30.8.2012 namely This order has been challenged by M/s. Apex Electricals Ltd. before the Board of Trustees and the Appeal/Representation is still pending, this Court inquired from Mr. Majmudar, learned advocate for the applicant about the status of the application/ representation submitted by M/s.
Apex Electricals Ltd. to Board of Trustees.
17. Mr. Majmudar, learned advocate for the PF Department declared that any proceedings filed by M/s. Apex Electricals Ltd. or any Director or 17 Downloaded on : Sun Aug 29 01:08:33 IST 2021 C/SCA/11484/2012 IA ORDER Officer of M/s. Apex Electricals Ltd. or any proceedings filed by Diamond Power Infrastructure Ltd. or present opponent No.1 are not pending before any authority including Board of Trustees.
18. Mr. Majmudar, after taking specific instruction from the concerned officer reiterated the said submissions and declared that any proceedings are not pending before any authority.
He submitted that actually when the said application/ representation was submitted by M/s Apex Electricals Ltd. before the Board of Trustees, the Head Office of PF Department had, on behalf of Board of Trustees, conveyed the instruction and reference thereof is found in the order dated 13.10.2017. He relied on below quoted observation and order dated 13.10.2017:
"Meanwhile vide letter No.RRCII/6(15)03/GJ/pt./60396 dated 06.01.201, EPFO HO communicated to M/s. Apex Electricals Ltd. to apply afresh for waiver of damages after approval of revival scheme by BIFR."
19. In this backdrop the applicant has come forward with the request that amount which is 18 Downloaded on : Sun Aug 29 01:08:33 IST 2021 C/SCA/11484/2012 IA ORDER deposited in pursuance of and in compliance of order dated 30.8.2012, may be allowed to be withdrawn. The said request is made on strength of and in light of order dated 13.10.2017.
20. The applicant would submit that after the Court disposed the SCA No.11484/2012 and SCA No.12237/2012 by common judgment dated 2.8.2016, the department conducted fresh proceedings and after granting opportunity of hearing to M/s.
Apex Electricals Ltd, Diamond Power Infrastructure Ltd. and present Opponent No.1, competent authority passed final order dated 13.10.2017 whereby the said establishment/
Director are held liable to pay the amount in question towards PF contribution, interest and damages.
21. At this stage it is necessary to mention that in SCA No.11484/2012 and SCA No. 12237/2012 the legality and propriety of the order passed by PF Department under Section 7A and/ or under Section 19 Downloaded on : Sun Aug 29 01:08:33 IST 2021 C/SCA/11484/2012 IA ORDER 14B were not under consideration. The said orders were not subject matter of the said 2 petitions and the Court was not required to decide/ had not decided the legality and propriety of the orders under Section 7A and Section 14B of the Act.
22. However during hearing of the said 2petitions, it was emphasised that the said orders i.e. order under Section 7A and/ or Section 14(B) have not been challenged and the said orders have attained finality.
23. Today also same factual statement is reiterated by learned advocate for PF Department and it is emphasised that the order under Section 14B and Order under Section 7A of the Act have attained finality and the said orders have not been challenged by Diamond Power Infrastructure Ltd., M/s. Apex Electricals Ltd and or by present opponent No.1.
24. According to the department any appeal before 20 Downloaded on : Sun Aug 29 01:08:33 IST 2021 C/SCA/11484/2012 IA ORDER learned Tribunal or any other proceedings before other Court or even in High Court are not instituted against the order under Section 7A or Section 14B of the Act.
25. It is also claimed that now the PF Department is only taking consequential measures viz. to recover the amount determined and quantified by the authority in accordance with law under Section 7A and Section 14B of the Act in light of and on strength of the order passed under Section 14B and Section 7A which have attained finality.
26. In this context, it would be appropriate to take into account the relief which were prayed for in SCA No.11484/2012 (which is reproduced in the common judgment dated 2.8.2012) which read thus:
"2. The first petition i.e. Special Civil Application No. 11484 of 2012 is filed by one Mr.Bhatnagar who claims to be Managing Director of Diamond Power Infrastructure Limited (and he was Director in another company i.e. M/s Apex Electricals for some period) and prayed, inter alia, that: "8 (b) That this Hon'ble Court be pleased to issue a writ of mandamus and / or a writ in the nature of mandamus or 21 Downloaded on : Sun Aug 29 01:08:33 IST 2021 C/SCA/11484/2012 IA ORDER any other appropriate writ, order or direction to quash and set aside the summons dated 13.7.2012 serve upon the petitioner on 24.07.2012, issued by the respondent No. 1 (AnnexureA);
(c) That this Hon'ble Court be pleased to issue an appropriate writ, order or direction, declaring that the respondents have no jurisdiction to summon and / or enforce the attendance of the present petitioner in respect of Recovery Certificate No.7 in case of M/s. Apex Electricals.
(d) That this Hon'ble Court be pleased to issue a writ of prohibition and/or a writ in the nature of prohibition and any other appropriate writ, order or direction restraining the respondents from initiating proceedings U/s. 32 of the Code of Civil Procedure, 1908, (for short "the Code"), against the present petitioner in respect of Recovery Certificate No.7 dated 6.4.2010 in case of M/s.
Apex Electricals."
27. Whereas in SCA No.12237/2012 the petitioner company M/s. Diamond Power Infrastructure Ltd.
prayed inter alia that:
"2.2 The second petition i.e. Special Civil Application No. 12237 of 2012 is filed by a company named Diamond Power Infrastructure Limited wherein said petitioner company has prayed, inter alia, that: "8(b) That this Hon'ble Court be pleased to declare that the action of the respondents to sought to recover the amount of damages of M/s. Apex Electricals in respect of Recovery Certificate No.7 dated 6.4.2010 for a sum of Rs.99,93,379/ towards damages for the period from 01/2000 to 07/2003, from the petitioner is thoroughly outside the jurisdiction of the respondents and in blatant violation of provisions of Section14 B and 17B of the Act and without determination of liability towards damages of erstwhile owner and the mode and method of recovery is against the Scheme of the Act and against all the cannons of Rule of nature justice;
(c) That this Hon'ble Court may be pleased to issue a writ mandamus or a writ in the nature of mandamus or writ of prohibition or a writ in the nature of prohibition or any other writ or direction to restrain the respondents from initiating proceedings U/s. 14B of the Employees Provident and Miscellaneous Provisions Act, 1952 and / or U/s. 32 of Code of Civil Procedure, 1908 against the petitioner in respect of Recovery Certificate No.7 dated 6.4.2010 for a sum of Rs.99,93,379/ towards damages for 22 Downloaded on : Sun Aug 29 01:08:33 IST 2021 C/SCA/11484/2012 IA ORDER the period from 01/2000 to 07/2003.
(d) That this Hon'ble Court may be pleased to declare that the action of the respondents to initiate Recovery Proceedings against the petitioner Company by demanding amount of damages from various customers of the petitioner by issuing communication / order U/s. 8F of the Act is bad, illegal, improper and unjust and against the provisions of the E.P.F. Act, 1952 and be pleased to direct the respondents to repay the amount of Rs.96,93,379/ with 18% interest per annum till the realization, recovered by the respondents unauthorizedly and illegally on 29.8.2012 from GETCO, the debtor of the petitioner."
28. From the relief which were prayed for in the said 2 petitions it becomes clear that the said proceedings under Section 7A and/ or Section 14B were not challenged. The Company Diamond Power Infrastructure Ltd. and the Director/ present opponent, claimed that the said amount are dues of M/s.Apex Electricals Ltd and therefore it cannot be recovered from them i.e. from Diamond Power Infrastructure Ltd and/ or from present opponent No.1.
29. The said dispute reached this Court in the said 2 petitions in light of the fact that PF Department instituted recovery proceedings against the Diamond Power Infrastructure Ltd. and present Opponent No.1.
23 Downloaded on : Sun Aug 29 01:08:33 IST 2021C/SCA/11484/2012 IA ORDER 30. This Court, vide common judgment dated
2.8.2016 directed the department to conduct the recovery proceedings in accordance with principles of natural justice and after following procedure prescribed under the Act.
31. Now it is claimed that the PF Department conducted fresh proceedings in compliance of the judgment dated 2.8.2016 and the competent authority passed order dated 13.10.2017.
32. On reading the said order dated 13.10.2017 it emerges that concerned authority has observed and held that:
"In view of the above mentioned facts, as submitted by the departmental representative and submissions made by authorised representative on behalf of Shri Amit Bhatnagar, Managing Director, I find that the requirement of determination of liability u/s. 14B against in this case is devoid of merit and the same has been confirmed by the Hon'ble High Court of Gujarat in its order that the orders under Section 7A and Section 14B of the Act assessing and quantifying the dues against against M/s. Apex Electricals have attained finality. As far as the liability of dues assessed u/s. 14B against M/s. Apex Electricals on M/s. DPTL or its subsidiary M/s. DPTL is concerned, I find that both the establishments have elements of commonality in view of the arguments put forth by the department and the order dated 21.10.2008 of Hon'ble High Court of Gujarat in SCA No. 9730/2008.24 Downloaded on : Sun Aug 29 01:08:33 IST 2021
C/SCA/11484/2012 IA ORDER Moreover, since the possessions of the unit was handed over to M/s. DPTL/ DPIL, provisions of Section 17B would also be attracted based on the ratio in the Dalgaon Agro Industries Ltd. v. Union of India and others {2004(5) LLN.288 (Cal.H.C.)] "A legal fiction has been created in respect of the liabilities arising under any provision of 1952 Act to continue the liability for the purpose of facilitating recovery even in respect of the dues that had accrued prior to the date of transfer making both the transferor and the transferee liable jointly and severally. It is difficult to accept the proposition that the provisions of Section 17B would not extend to Section 14B despite the damages imposable thereunder being other sum due under the provisions of the Act."
Moreover, Shri Amit Bhatnagar is the common link between the transferor and transferee and as such has been in the shoes of employer. Merely on a technical ground of saying that two are different entities, evasion of statutory dues cannot be allowed.
Hon'ble Supreme Court of India in Regional Provident Fund...vs Shibu Metal Works vide order dated 9 November, 1964 [1965 AIR 1076], 1965 SCR (1) 72] held that "The object which the Act purports to achieve is to require that appropriate provision should be made for the employees employed in the establishments to which the Act applies; and that means that in construing the material provisions of such Act, if two views are reasonably possible, the Courts should prefer the view which helps the achievement of the object. If the words used in the entry are capable of a narrow or broad construction, each construction being reasonably possible, and it appears that the broad construction would help the furtherance of the object, then it would be necessary to prefer the said construction."
Thus, I Jai Shankar Prasad, Recovery Officer, R.O. Vadodara therefore, in exercise of the powers conferred on me u/s. 8B to 8G of the Act and in accordance with direction dated 02.08.2016 of Hon'ble High Court of Gujarat in SCA No.12237/2012 with SCA No.11484 of 2012 with CA No.9858 of 2012 after giving sufficient and effective opportunity of hearing and defence to the M/s. Diamond Power Infrastructure Limited and Shri Bhatnagar and after conducting the procedure in accordance with law find that M/s. Diamond Power Infrastructure Limited and Shri Bhatnagar is liable to pay the pending statutory dues for the reasons given in above paras. Both the department and the M/s Diamond Power Infrastructure Limited or Shri Bhatnagar are free to take out appropriate application before Hon'ble High Court of Gujarat, seeking necessary direction with regard to the amount which is deposited as per the Order dated 2.8.2016 of Hon'ble High Court of Gujarat in SCA No.12237 of 2012 25 Downloaded on : Sun Aug 29 01:08:33 IST 2021 C/SCA/11484/2012 IA ORDER with SCA No.11484 of 2012 with CA No. 9858 of 2012."
33. Mr. Majmudar, learned advocate for the applicant submitted that even the said order dated 13.10.2017 is not challenged by M/s.
Diamond Power Infrastructure Ltd. and/ or by M/s.
Apex Electricals Ltd. and/ or by the Director i.e. Mr. Bhatnagar/ present opponent No.1.
34. He also read over the statement in Para7 of present application, which reads thus:
7. It is submitted that in view of the aforesaid order passed by the concerned authorities, as the liability/ levy of damages under Sec.14B are already assessed and even in respect of recovery proceedings a details order has been passed in recovery proceedings, the said order dated 13.10.2017 has also attained the finality as the period fo limitation is already expired long back for preferring further proceedings against the said order and the present applicants have not received any notice or summons from any of the Hon'ble Court or Hon'ble Tribunal till today and, therefore, the order has deemed to have attained the finality.
35. As mentioned above, according to the declaration by learned advocate for PF Department, the orders under Section 14B and Section 7A have attained finality. Now, in this application, the PF Department has also declared 26 Downloaded on : Sun Aug 29 01:08:33 IST 2021 C/SCA/11484/2012 IA ORDER that even the order dated 13.10.2017 has also attained finality. The said assertion and declaration by the PF Department is not disputed by any one.
36. Therefore, Court would proceed on the basis of the said declaration by learned advocate for PF Department.
37. However, the fact cannot be ignored that the order which this Court passed on 2.8.2016 is a common order in the petition filed by the Director (present opponent No.1) as well as the petition filed by the Company M/s. Diamond Power Infrastructure Ltd. The amount claimed by the PF Department is payable by M/s. Apex Electricals Ltd. However, in view of the findings recorded by the Authority in the order the said other company i.e. M/s. Diamond Power Infrastructure Ltd (having commonality of interest, ownership, etc, as found by the competent authority) is also equally / jointly and severally liable to pay the 27 Downloaded on : Sun Aug 29 01:08:33 IST 2021 C/SCA/11484/2012 IA ORDER amount in question.
38. From the order dated 13.10.2017 it comes out that competent authority has clarified that either PF Department and/ or M/s. Diamond Power Infrastructure Ltd and/ or Mr. Bhatnagar i.e. present Opponent No.1 may take out appropriate application with regard to the amount which is deposited in the Court.
39. In this view of the matter, the PF Department could not have taken out application only against present opponent No.1.
40. The PF Department can seek such permission of withdrawal of amount in the proceedings wherein both i.e. Director Mr. Bhatnagar as well as the Company M/s. Diamond Power Infrastructure Ltd.
should be impleaded as party opponent/ should be before the Court. However, in present application the said Company M/s. Diamond Power Infrastructure Ltd is not impleaded as party 28 Downloaded on : Sun Aug 29 01:08:33 IST 2021 C/SCA/11484/2012 IA ORDER opponent. Therefore the request made by the applicant in present application cannot be entertained/ granted. In light of the observation in the order dated 13.10.l2017 such direction cannot be passed in absence of the Company Diamond Power Infrastructure Limited. Therefore with following clarification the application is disposed of.
41. In light of the fact that instead of taking out application in SCA No.12237 of 2012 and SCA No.11484 of 2012 by impleading both the Company M/s. Diamond Power Infrastructure Limited and the director as party opponent the department has taken out application (only in SCA No.11484/2012) without impleading the company M/s. Diamond Power Infrastructure Ltd. the application is not entertained at this stage. However, it is clarified that it is open and permissible to the department to take out appropriate fresh application in SCA No. 12237 of 2012 and SCA No.11484 of 2012 by impleading Ms/ Diamond Power 29 Downloaded on : Sun Aug 29 01:08:33 IST 2021 C/SCA/11484/2012 IA ORDER Infrastructure Ltd., Ms. Apex Electricals Ltd, and present opponent No.1 Director. Such request can be considered only after all the opponents are before this Court.
The application, thus, stands disposed of.
Orders accordingly.
(K.M.THAKER, J) saj 30 Downloaded on : Sun Aug 29 01:08:33 IST 2021