2008 Supreme(Guj) 272

GLR 2009 (1) 123
Hon 'ble Mr. Justice K. M. Thaker
EMPLOYEES PROVIDENT FUND ORGANIZATION - Appellant
Vs
JAI CORPORATION LTD. - Respondent
Special Civil Application No. 3843 of 2008, challenging order dated 26-7-2007 passed by the Presiding Officer, Employees Provident Fund Appellate Tribunal in Case No. A.T.A./400(5)/2006. Decided on 21-8-2008.

Whether the petitioner Asst. Provident Fund Commissioner is justified in ordering to recover the damages and interest for default in paying of contribution by the Erstwhile Establishment from the auction purchaser ?

Headnote:(a) Employees Provident Fund and Miscellaneous Provisions Act, 1952 — Section 7-Q — 14(B), 2(E), 2(K), Sick Industrial Companies(Special Provisions) Act, 1985 — SARFAEST Act Section 2(2) and ARCIL — Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 — Section 2(2-C), 3, 9, 13(2), 13(4), 13(7), 13(8), 13(9), 15 — Recovery of Interest and damages for delayed payment of contribution — From the auction purchaser — Order of A.P.F. Commissioner for recovery set aside by the P.F. Tribunal — In Civil Application department(the petitioner) was allowed to take actions in accordance with law against the erstwhile establishment and the present respondent No. 1 — Petitioner submitted that since ARCIL had taken over assets of Erstwhile Establishment, it is to be considered “employer” under Section 2(E) which defines the term “employer” and provides that in respect of factory, it is “owner”, the employer — Held that ARCIL is not the “owner” of erstwhile establishment.

       Held :

       The submission of the petitioner regarding Section 17-B acknowledges that transfer of establishment has to be by “employer” as defined under Section 2(e) of the Act. The petitioner therefore submits that since ARCIL had taken over assets of Erstwhile Establishment, it is to be considered “employer” under Section 2(e) which defines the term “employer” and provides, in first place, that in respect of a factory, it’s “owner” is the employer. It is clear that ARCIL is not the “owner” of erstwhile establishment [Para 41]

       Head Note :

       (b) Employees Provident Fund and Miscellaneous Provisions Act, 1952 — Section 7(Q), 14(B), 2(E), 2(K) — Submitted that ARCIL would be the “occupier of the factory” because it had taken the possession of the Assets of Erstwhile Establishment — Held, that as per Section 2(K) the person who has ultimate control over the affairs of the factory is the occupier of factory or where the affairs are entrusted to managing agent the agent shall be the occupier of the factory” — Held that in view of the provisions of SARFAEST Act, ARCIL is not falling under either category — So ARCIL is not liable to pay damages or interest.

       Held :

       The petitioner therefore shifted the gear to claim that ARCIL would be the “occupier of the factory” upon taking over the possession of the Assets of Erstwhile Establishment. However, such submission overlooks that ARCIL can take-over only “secured assets” and that too only for specific purpose and could act only in permitted and prescribed manner and in view of various limitations prescribed qua the discretion, actions, decisions and power of a reconstruction company(e.g. by virtue of Sections 9, 10, 13 and 15 etc.) ARCIL would not qualify to be “occupier of factory” since as per Section 2(k), which provides that “the person who has ultimate control over the affairs of the factory” is the occupier of factory or where the affairs are entrusted to managing agent the agent shall be the “occupier of the factory”. In view of the provisions of SARFAESI Act, ARCIL(or any reconstruction Company acting under and as per SARFAESI Act) would not fall under either category and when only “affairs are entrusted”, the entrustment of affairs would not include the entrustment of the title of the factory/establishment or it would not include the right or authority to sale or transfer the title/ownership of the factory/establishment. [Para 41]

       Head Note :

       (c) Employees Provident Fund and Miscellaneous Provisions Act, 1952 — Section 7(Q), 14(B), 2(E), 2(K), 17(B) — Recovery of damages and Interest — Submitted that protection of Section 17(B) is available to their action of demanding the dues of erstwhile establishment from respondents — The documents allegedly executed between ARCIL and present respondent, though not referred to or relied upon by the petitioner tried to refer the said document to justify its action and demand for damages and interest — Held that ARCIL cannot be said to be employer “for the purpose of Section 17(B) and the auction sale effected by ARCIL is not “transfer by an employer” — Further held that the respondent has not been afforded opportunity to lead evidence to explain the said document and / or plead its non applicability in the facts of the case since it was not raised at any earlier stage, petition rejected.

       Held :

       The order of the P.F. Tribunal reveals that the document allegedly executed between ARCIL and present respondent was not referred to or relied upon by the petitioner before P.F. Tribunal and yet the petitioner tried to refer to the said document to justify its action and demand. It is pertinent that the said document and its reference does not find place even in the order of the A.P.F. Commissioner. Thus, it was not the subject matter before the P.F. Tribunal also and the respondent was not given any opportunity to deal with the same either before the A.P.F. Commissioner or before the P.F. Tribunal. [Para 47]

       As per the petitioner, the said document gives right and authority to it de-hors the Act to recover the amount from the respondent and/or gives it right and authority under the Act also to claim and recover the amount. Assuming that the petitioner is right in its said contention, then also the same cannot be made a ground to assail the order of P.F. Tribunal more so because the respondent has not been afforded opportunity to lead evidence to explain the said document and/or plead its non-applicability in the facts of the case since it was not raised at any earlier stage and the P.F. Tribunal’s order can not be faulted by this Court on ground based on said document. [Para 47]

       Law Laid Down :

       A party to a petition under Art. 227 of Constitution of India would not be allowed to raised a contention which is not urged at the trial stage and more so when it is not raised even at the appeal stage.