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2001 Supreme(Cal) 594

High Court Of Calcutta
D. K. SETH
PRADIP KUMAR BASU - Appellant
Versus
REGIONAL PROVIDENT FUND COMMISSIONER - Respondent
W. P.  7963 (W)  Of  2001
Decided On : 09/12/2001

Advocates Appeared:
PARTHO BHANJA CHAUDHARY, VINAY MISHRA

A manager of a factory can be held liable as an employer under Section 2(e) of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 only if he is entrusted with the management of the establishment and his name is notified as the occupier under Section 7 of the Factories Act, 1948.

Headnote:

EMPLOYEES' PROVIDENT FUNDS AND MISCELLANEOUS PROVISIONS ACT, 1952 - MANAGER'S LIABILITY - SECTIONS 2(E), 2(K), 7, 8-F - A manager of a factory can be held liable as an employer under Section 2(e) of the Act only if he is entrusted with the management of the establishment and his name is notified as the occupier under Section 7 of the Factories Act, 1948. In the absence of such entrustment or notification, the manager cannot be held liable for the dues of the establishment.

Fact of the Case:

The petitioner, a manager of a partnership firm, was issued a warrant of arrest for non-payment of dues under the Employees' Provident Funds and Miscellaneous Provisions Act, 1952. He appeared in the proceedings and gave an undertaking to pay the amount in installments. Some installments were paid, but the petitioner later filed a writ petition challenging the recovery proceedings against him.

Finding of the Court:

The court held that the petitioner could not be held liable as an employer under Section 2(e) of the Act because there was no evidence that he was entrusted with the management of the establishment or that his name was notified as the occupier under Section 7 of the Factories Act, 1948. The court also held that the undertaking given by the petitioner under constraint could not bind him unless he was legally liable for the dues.

Issues: 1. Whether a manager of a factory can be held liable as an employer under Section 2(e) of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 without being entrusted with the management of the establishment or being notified as the occupier under Section 7 of the Factories Act, 1948? 2. Whether an undertaking given by a person under constraint can bind him unless he is legally liable for the dues?

Ratio Decidendi: 1. A manager of a factory can be held liable as an employer under Section 2(e) of the Act only if he is entrusted with the management of the establishment and his name is notified as the occupier under Section 7 of the Factories Act, 1948. In the absence of such entrustment or notification, the manager cannot be held liable for the dues of the establishment. 2. An undertaking given by a person under constraint cannot bind him unless he is legally liable for the dues.

Final Decision: The court allowed the writ petition and quashed the recovery proceedings against the petitioner. The court directed the respondent authority to determine the petitioner's liability as a manager after giving him an opportunity of hearing. The court also allowed the respondent authority to proceed against the erstwhile partners or their properties for recovery of the dues.

D. K. SETH, J.

( 1 ) IN a recovery proceeding under the employees' Provident Funds and Miscellaneous provisions Act, 1952 (1952 Act for short), a warrant of arrest having been issued, the petitioner had appeared in the proceedings and gave an undertaking to pay the amount in instalments. Pursuant to such undertaking some instalment was paid. Thereafter, this writ petition has been moved on the ground that the petitioner was a Manager of the Partnership firm, against which the liability is being sought to be enforced and that the said Partnership firm has since been dissolved. Submissions:

( 2 ) MR. Mishra, learned Counsel for the authority, contends that after the recovery proceedings is initiated, in view of Section 8-D of the 1952 Act, the certificate cannot be questioned before the Recovery Officer. This court cannot go behind the certificate. He further contends that the petitioner had never raised the dispute, which is now being raised in this writ petition. On the other hand, the petitioner had appeared and had given an undertaking. Now he cannot go back on his undertaking. Therefore, this writ petition should fail.

( 3 ) LEARNED Counsel for the petitioner, on the other hand, contended that such undertaking was given under constraint. Inasmuch as, the petitioner had appeared pursuant to a warrant of arrest and had to give an undertaking, in order to save himself from being arrested and sent to prison. Therefore, such undertaking having been given under constraint and not out of his free volition, cannot be enforced against him, unless he is liable in law, to pay the same. According to him, he was a Manager of the Partnership firm, since dissolved. But as regards the liability that have been fixed upon him, in view of the definition of employer, contained in section 2 (e) of the said Act, the question is dependent on the entrustment of the management. Unless the management is entrusted, the Manager shall not be an employer, within the meaning of the said Act. He further contends that the Manager could not be treated to be an occupier, as defined in section 2 (k) of the said Act, until and unless he is so nominated by submitting the appropriate forms, within the meaning of the Factories Act, 1948, (1948 Act for short ). In the present case, the establishment was a factory and as such the factories Act is applicable in such case and therefore, without the petitioner's name being notified, in terms of Section 7 of the Factories act, the petitioner cannot be held liable. According to him, unless the petitioner is liable in law, no amount of admission can make him liable, particularly, when such admission is under constraint. Therefore, the proceedings for recovery against the petitioner should be quashed and may be proceeded against the owners and occupiers, as the case may be. He had also relied on various decisions, to which reference would be made at appropriate stage.

( 4 ) MR. Mishra had also relied on certain decisions, in support of his contention to show that the Manager is liable and cannot escape his liability, apart from the fact that the petitioner had admitted his liability.

( 5 ) I have heard the learned Counsel for the respective parties at length. Admitted facts:

( 6 ) IN order to appreciate the question, it is necessary to keep in mind the facts behind the question of admission, to which the authority had been banking upon. Admittedly the petitioner was a Manager. Admittedly, the partnership Firm has since been dissolved and the factory is closed. In this background the question is to be looked into. Employer: Occupier:

( 7 ) IN terms of Section 8 of the 1952 Act, the dues can be recovered from the employer. Employer is defined in Section 2 (e) of the 1952 act. The definition in relation to factory means the owner or occupier; and in relation to other establishment, the person in ultimate control of the affairs, or the Manager etc. , where the affairs are entrusted to such Manager etc. Occupier is defined










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