The EPF Act does not authorize the authorities to adjudicate disputes between parties over liability to pay provident fund dues.

JUDGMENT :

Rekha Palli, J.

The present writ petition seeks quashing of the letter dated 18.03.2013, the order dated 10.07.2013 and the subsequent show cause notices dated 06.08.2013 and 09.10.2013 issued by the respondent No.1/Employees' Provident Fund Organisation for recovery of provident fund dues of the respondent no.2.

2. The petitioner is a pharmaceutical company which, pursuant to an agreement dated 15.05.2009, purchased certain trademarks, product dossiers and marketing rights of dermatological and life style products from respondent no.2. The agreement set down the inter-se liability of the parties and the manner in which the sale consideration was to be paid. On 31.12.2009 the parties entered into an addendum agreement stipulating that, in order to conclude the transactions carried out in accordance with the agreement dated 15.05.2009, the petitioner would retain an amount of Rs. 9 crore to meet any trade claims and other claims or to make adjustments against any unfulfilled obligations of the respondent no.2 as set out in Annexure I of the agreement.

3. On 18.03.2013, the petitioner received a letter from the respondent no.1/Employees' Provident Fund Organization stating that it had learnt of the petitioner's arrangement with the respondent no.2, which company was in default of its provident fund dues totaling a sum of Rs.34,82,267/- and that, consequently, the petitioner was liable to pay all the dues of the respondent no.2. The petitioner, thus, was directed by the respondent no.1 to pay the provident fund dues of the respondent no.2. In its reply dated 01.04.2013 to this demand letter, the petitioner informed the respondent no.1 that while it had only acquired certain specific trademarks from respondent no.2, the said respondent/Ochoa Laboratories continued to carry on its independent business with which the petitioner had no connection and, therefore, it could not be held liable, in any manner, for paying the provident fund dues of the respondent no.2. The petitioner also informed the respondent no.1 that the entire consideration towards the purchase of the brands/trademarks already stood paid to the respondent no.2 and no further amount was payable by the petitioner to the respondent no.2. The respondent no.1, on 10.07.2013 issued another recovery notice to the petitioner, this time with a prohibitory order of the same date inter-alia reiterating that as per the information provided by the respondent no.2, the petitioner had purchased its brand for a total sale consideration of Rs. 24 crore, out of which the petitioner was still withholding a sum of Rs. 3 crore under the retention fund. This retention amount of Rs.3 crore, the notice claimed, was now payable to the respondent no.2 and, therefore, the petitioner was liable to transfer the amount of Rs.34,99,987/- to the respondent no.1 as provident fund dues of the respondent no.2. The petitioner replied to this letter on 02.08.2013 seeking time till 14.08.2013 to make a detailed representation on its behalf and requested the respondent no.1 to give them an opportunity to make their submissions. Without even waiting for the petitioner's detailed response, respondent no.1 issued a notice dated 06.08.2013 addressed to two officers of the petitioner company asking them to show cause as to why they should not be committed to civil prison in execution of the certificate of arrears of provident fund dues of Rs. 34,99,987/- drawn up against respondent no.2. In response thereto, the petitioner submitted its reply dated 14.08.2013 reiterating that the amount of Rs.3 crore alleged by the respondent no.2 as having been retained by the petitioner was incorrect as only a balance amount of Rs.2,93,808/- was lying with the petitioner in the retention account. The petitioner thereafter transferred this amount of Rs. 2,93,808/- to the respondent no.1 and urged that, in these circumstances, it was not liable to make any further payment or settle any liabilities of the respondent no.2