The recovery proceedings against the Municipal Corporation were unsustainable as there was no notice issued to the Municipal Corporation while determining the liability under section 7-A of the Employees Provident Funds and Miscellaneous Provisions Act, 1952.

JUDGMENT :

A. S. CHANDURKAR, J.

The challenge raised in this Letters Patent Appeal is to the judgment of learned Single Judge dated 29-3-2012 in Writ Petition No. 1071/2007. By that judgment, the writ petition preferred by the appellant challenging the order dated 26-2-2007 passed by the Assistant Provident Fund Commissioner seeking deposit of dues towards provident fund by treating it to be the principal employer was dismissed.

2. The facts in brief are that the respondent No. 2 herein-Security Services Agency has been registered as an establishment under the Employees Provident Funds and Miscellaneous Provisions Act, 1952 (for short “the said Act”). The services of the Security Agency were contractually engaged by the Municipal Corporation for providing security guards. As the dues of the employees of the Security Agency were not paid, proceedings under section 7-A of the said Act were initiated against the Security Agency. An order under section 7-A was passed on 5-5-2006, determining the amount of liability towards dues at Rs. 30,01,866/-. Since the aforesaid dues were not paid by the Security Agency, the Assistant Provident Fund Commissioner sought to recover that amount from the Municipal Corporation treating it to be the principal employer by resorting to the provisions of section 8 of the said Act. This was resisted by the Municipal Corporation and pursuant to the notice issued under section 8-F of the said Act on 20-2-2007, an order dated 26-2-2007 came to be passed. By the said order, the Assistant Provident Fund Commissioner called upon the Municipal Corporation as the principal employer to remit the aforesaid amount failing which penal action against the Municipal Corporation was to follow.

3. Being aggrieved, the aforesaid order was challenged by the Municipal Corporation in Writ Petition No. 1071/2007. By the impugned judgment, it was held that in the light of provisions of section 2(f) of the said Act, it was the responsibility of the Municipal Corporation to pay the contribution of the employees of the Security Agency. Reference was also made to Paragraph No. 30(3) of the Employees’ Provident Funds Scheme, 1952 (for short, the Scheme). The Writ Petition was accordingly dismissed. Hence, the present Letters Patent Appeal.

4. Shri C. S. Kaptan, learned Senior Advocate for the appellant submitted that Municipal Corporation could not have been held to be the principal employer for the purposes of recovering the dues of the Security Agency. That agency was independently registered with the provident fund authorities and it was also given a separate code number. The notice under section 7-A of the said Act was issued only to the Security Agency and not to the Municipal Corporation. It was only when the Assistant Provident Fund Commissioner sought to recover the dues that were already determined that the provisions of section 8-F of the said Act came to be invoked against the Municipal Corporation. He submitted that the liability as principal employer could not have been determined for the first time in recovery proceedings under section 8-F of the said Act. He then urged that considering the terms of contract, it was the sole responsibility of the Security Agency to pay the dues of its employees. The Municipal Corporation had no control or power of supervision over the employees of the Security Agency. By no stretch of imagination, could it be said that the Municipal Corporation was the principal employer for being held liable to pay the dues of the Security Agency. In that regard, he placed reliance on the decisions in Panther Security Service Private Limited vs. Employees Provident Fund Organization, reported in (2021) 1 SCC 193, Managing Director, Hassan Co-operative Milk Producer’s Society Union Limited vs. Assistant Regional Director, Employees State Insurance Corporation, reported in (2010) 11 SCC 537 and Bharat Heavy Electricals Limited vs. Mahendra Prasad Jakhmola and others, (2019) 13 SCC 82 and thus, submitted t