2002 Supreme(Cal) 182

High Court Of Calcutta
D. K. Seth
KRISHNA KUMAR AGARWALA - Appellant
Versus
KELVIN JUTE COMPANY LIMITED WORKERS PROVIDENT FUND TRUST - Respondent
G. A.  3489  Of  2000
Decided On : 03/15/2002

An exempted PF Trust is not a private Trust. Its activities are controlled and guided by the condition or scheme approved while granting exemption under Section 17. The conditions or scheme has the approval of and is governed by statute. The liability of such Trust arises under the statute. Such Trust discharges statutory liability. While dealing with Provident Fund, the Trustees deal with the fund, which otherwise would have been dealt with by the authorities under the P. F. Act. Trustees of an exempted fund are also authorities recognised under the P. F. Act. Therefore, such Trust cannot claim itself a character of private trust. It is a statutory Trust with statutory characteristic, having statutory liability under Section 17 (1-A) (b) (d) and (1-B).

Headnote:

The Petitioner, a Waverly Trust, filed a writ petition for the transfer of Provident Fund (PF) accumulation from Kelvin Trust to Waverly Trust. The PF account of Kelvin Trust included the PF account of all the workers employed under Kelvin in its both the units, Kelvin and Waverly, respectively. Kelvin Trust was exempted under Section 17 of the Employees' Provident Funds And Miscellaneous Provisions Act, 1952 (1952 Act). The said fund was managed by Kelvin Trust, as per the Scheme approved. After Waverly was taken over by Hooghly Mills Company Limited, Hooghly Mills paid the PF Authorities the dues of the workers of Waverly unit, though the amount was not actually transferred to Waverly Trust. Kelvin Trust refused to transfer the PF accumulation of the workers of Waverly unit, as maintained by Kelvin Trust, on the ground that it was a money claim by Waverly Trust, to reimburse Hooghly Mills. Kelvin Trust also contended that the transfer would affect the workers of Kelvin, who are not parties to the proceedings.

Fact of the Case:

The Petitioner, a Waverly Trust, filed a writ petition for the transfer of Provident Fund (PF) accumulation from Kelvin Trust to Waverly Trust. The PF account of Kelvin Trust included the PF account of all the workers employed under Kelvin in its both the units, Kelvin and Waverly, respectively. Kelvin Trust was exempted under Section 17 of the Employees' Provident Funds And Miscellaneous Provisions Act, 1952 (1952 Act). The said fund was managed by Kelvin Trust, as per the Scheme approved. After Waverly was taken over by Hooghly Mills Company Limited, Hooghly Mills paid the PF Authorities the dues of the workers of Waverly unit, though the amount was not actually transferred to Waverly Trust. Kelvin Trust refused to transfer the PF accumulation of the workers of Waverly unit, as maintained by Kelvin Trust, on the ground that it was a money claim by Waverly Trust, to reimburse Hooghly Mills. Kelvin Trust also contended that the transfer would affect the workers of Kelvin, who are not parties to the proceedings.

Finding of the Court:

The Court held that Kelvin Trust is liable to transfer the PF accumulation for the period till June 30, 1986 of the employees of Broadloom Division, who were transferred to Waverly along with the transfer of the unit and had become members of the Waverly Trust. The Court also held that the Kelvin Trust is a private Trust with statutory characteristic, having statutory liability under Section 17 (1-A) (b) (d) and (1-B). The Court further held that the liability of Kelvin Trust is a statutory liability and the Trust is bound by the statute to discharge such liability. The Court also held that the Kelvin Trust cannot withhold the amount and is liable to transfer the same together with interest accumulated in the respective account.

Issues: 1. Whether Kelvin Trust is liable to transfer the PF accumulation for the period till June 30, 1986 of the employees of Broadloom Division, who were transferred to Waverly along with the transfer of the unit and had become members of the Waverly Trust? 2. Whether Kelvin Trust is a private Trust with statutory characteristic, having statutory liability under Section 17 (1-A) (b) (d) and (1-B)? 3. Whether the liability of Kelvin Trust is a statutory liability and the Trust is bound by the statute to discharge such liability? 4. Whether Kelvin Trust can withhold the amount and is liable to transfer the same together with interest accumulated in the respective account?

Ratio Decidendi: 1. The Court held that Kelvin Trust is liable to transfer the PF accumulation for the period till June 30, 1986 of the employees of Broadloom Division, who were transferred to Waverly along with the transfer of the unit and had become members of the Waverly Trust. The Court relied on Section 17 (1-A) (d) read with Sections 17 (3) (c) and 17-B of the 1952 Act, which impose a statutory liability on Kelvin Trust to transfer the PF accumulation. 2. The Court held that Kelvin Trust is a private Trust with statutory characteristic, having statutory liability under Section 17 (1-A) (b) (d) and (1-B). The Court relied on the provisions of the 1952 Act and the Scheme framed thereunder, which provide for the establishment and administration of exempted PF Trusts. The Court also relied on the decision in Anadi Mukta Sadguru MVS Trust v. V. R. Rudani, where it was held that a Trust, which is vested with statutory liability, is bound by the statute to discharge such liability. 3. The Court held that the liability of Kelvin Trust is a statutory liability and the Trust is bound by the statute to discharge such liability. The Court relied on the provisions of the 1952 Act and the Scheme framed thereunder, which impose a statutory liability on Kelvin Trust to transfer the PF accumulation. 4. The Court held that Kelvin Trust cannot withhold the amount and is liable to transfer the same together with interest accumulated in the respective account. The Court relied on Section 17 (1-A) (d) read with Section 14 (2-A) of the 1952 Act, which provides that an infraction of Clause (d) of Section 17 (1-A) is an offence under Section 14 (2-A).

Final Decision: The Court allowed the writ petition and directed Kelvin Trust to transfer the PF accumulation of the workers of Waverly unit, as maintained by Kelvin Trust, to Waverly Trust. The Court also restrained Kelvin Trust and Kelvin from dealing with or disposing of its funds, assets and securities and from withdrawing any money from their respective Bank Account except in usual course of business and in discharge and payment of its statutory liabilities and wages payable to its workers, without leaving a balance of a sum of Rs. 3 crores.