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2011 Supreme(Guj) 487
High Court Of Gujarat
S.J.Mukhopadhaya, J.B.Pardiwala J.
Harish F.Shah -Appellant
Versus
Employees Provident Fund Organization -Respondent
LETTERS PATENT APPEAL No. 1746 of 2010 In SPECIAL CIVIL APPLICATION No. 885 of 2010
Decided On : Aug 30, 2011
Advocate Appeared:
Mihir Joshi, Manav A.Mehta, Niral R.Mehta
Headnote:
Employees Provident Funds and Miscellaneous Provisions Act, 1952, Sections 8(b) and 2(e) - appellant original petitioner seeks to challenge judgment and order passed by rejected petition confirming arrest warrant issued against appellant petitioner of Employees - Provident Funds and Miscellaneous Provisions - Recovery of Provident Fund dues - Issue of arrest warrant - Applicant is CMD of a company against whom recovery proceedings were initiated and who was also in default to tune - Agreement with a third party who would purchase auctioned property by bank and would discharge his liabilities - - Plea of appellant that he does not come term employer where affairs of establishment are entrusted to Agent such person falls within the definition of employer - provides for recovery of dues from employer and also empowers Recovery Authority to resort to arrest - Held, Action of respondent authority in issuing tarrest warrant against appellant original petitioner of powers and jurisdiction of authority and tenable in law -Agreement with third party would not absolve him of his liabilities - Warrant of arrest rightly issued - Alternative modes of recovery of arrears on basis of certificate issued by authorised officer - Attachment on sale of movable or immovable property of establishment arrest of employer and his detention in prison are two and three modes which can be adopted by recovery Officer - Proviso appearing below clause of lays down that attachment and sale of any property of employer can be taken only if amount due cannot Recovered properties of establishment - Nothing in said proviso from which can be inferred that respondent no.2 is not entitled to have recourse to mode prescribed in before taking recourse to sale of property and in absence of embargo possible to agree - Appeal dismissed
J.B.PARDIWALA, J.
( 1. ) IN this Appeal, the appellant original petitioner seeks to challenge the judgment and order dated 23rd July 2010 passed by the learned Single Judge, whereby the learned Single Judge rejected the petition confirming the arrest warrant issued against the appellant petitioner under Section 8B(b) of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 (for short, 'the EPF Act').
( 2. ) FACTS relevant for the purpose of deciding this Appeal can be summarised as under :- The appellant is the erstwhile Chief Managing Director of Dairy Den Limited, a company incorporated under the provisions of the Companies Act, 1956. The Company was engaged in the business of dairy equipments/products. The Company stopped functioning in the year 2003 and was declared as non-performing assets. The authorized officer of the Bank of India took over the possession of the properties, more particularly, the premises situated at A/29, GIDC, Electronic Estate, Sector 25, Gandhinagar under the provisions of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short, 'SARFAESI Act') some time in the month of August 2004. Record reveals that at the time when the Bank took over the possession of the secured assets, provident fund dues to the tune of Rs.20,09,683=00 remained unpaid by the Company. Therefore, by a letter dated 14th February 2006, the Employees' Provident Fund Organization respondent no.1 informed the Bank about its outstanding dues and requested the Organization not to proceed further with the sale of the properties of the Company.
The Bank was further informed that if it wants to proceed with the sale of the properties of the Company then in that case the outstanding amount of provident fund dues would be recovered from the sale proceeds of the secured assets. Record reveals that the Bank, on 10th March 2006, gave a public notice under the SARFAESI Act for holding public auction of the secured assets of the Company. In the said notice, the Bank acknowledged the outstanding provident fund dues of the Company to the tune of Rs.20,09,683=00. As the offers received by the Bank were below the reserve price, the secured assets could not be sold. Therefore, public auction. One Shri Anil P.Jain showed interest in purchasing the secured assets and, therefore, vide letter dated 28th September 2006 he gave an offer to the Bank to purchase the properties for Rs.117 lakhs. Shri Jain acknowledged the provident fund dues and agreed to discharge the same.
( 3. ) IT appears that some complications cropped up regarding the payment of provident fund dues and, therefore, the appellant herein, on behalf of the Company, wrote a letter on 28th September 2006 to the authorized officer giving consent for sale of the properties under a private arrangement. IT appears that the appellant agreed to discharge the liability of provident fund dues along with Shri Anil Jain. Thereafter, on 10th October 2006 the appellant requested the respondent authority to grant installments for payment of outstanding provident fund dues, to which the respondent authority acceded and granted 24 installments. As per the arrangement, Shri Jain was to make payment to Dairy Den Limited and Dairy Den Limited, in turn, was to make the payment of provident fund dues in installments. However, eventually, Shri Jain did not make any payment. As a result of which, the installment of provident fund amount was not paid. Ultimately, the respondent authority issued an arrest warrant against the appellant under Section 8B(b) of the EPF Act. IT is at this stage that the appellant thought fit to challenge the action of the respondent authority of issuing the arrest warrant, by filing Special Civil Application No.885/2010. The principal contention before the learned Single Judge was that the authority should have resorted to attachment and sale of the movable or immovable properties of Dairy Den Limited and
