Provident fund dues under EPF Act are not covered by Section 22(1) of SICA.

(Appeal filed under Clause 15 of the Letters Patent against the order passed in W.P.M.P.No. 44206 of 2005 in W.P.No.41166 of 2005 dated 23.12.2005.)

The Hon’ble Chief Justice

The short but important issue which falls for our consideration in the present appeals is whether the action to recover the dues payable under the provisions of the Employees Provident Fund and Miscellaneous Provisions Act, 1952, is maintainable when the employer, who is sought to be proceeded against is an Industrial Company in respect of whom a proceeding is pending under the Sick Industrial Companies (Special Provisions) Act, 1985.

2. The appellants in the aforesaid writ appeals are sick companies within the meaning of Section 3(1)(o) of the Sick Industrial Companies (Special Provisions) Act, 1985 (for short ‘the SICA’).

The facts leading to these appeals are undisputed and need to be noted in brief.

Writ Appeal No.230 of 2006

The admitted facts are that the appellant company had committed defaults in remitting the amounts due to the Employees Provident Fund Scheme to the tune of Rs.10,96,676/- during the period from September 2000 to December 2000. Therefore, notice dated 10.11.2005 has been issued by the Regional Provident Fund Commissioner (C & R) Madurai calling upon the appellant to remit the amount of Rs.10,96,676/- within 10 days of receipt of the notice, failing which action will be taken under Section 8B to 8G of the Employees Provident Fund and Miscellaneous Provisions Act, 1952 (for short ‘the EPF Act’) to recover the dues. In the meanwhile the appellant made a reference before the Board for Industrial & Financial Reconstruction (BIFR) under Section 15(1) of the SICA. The said application of the appellant is registered as Case No.401/2001. The application was rejected by the BIFR by order dated 01.05.2002 against which an appeal was preferred to the Appellate Authority for Industrial and Financial Reconstruction (AAIFR). The appeal was allowed by the AAIFR vide order dated 07.11.2005 and the matter has been remitted back to the BIFR and consequently the matter is now with the BIFR. The appellant has challenged the notice under the EPF Act in W.P.No.1662 of 2006. The sole basis of the challenge is that having regard to the provisions of Section 22(1) of the SICA, the recovery proceedings without the consent of the BIFR are not maintainable. In W.P.M.P.No.1906 of 2006 the learned single Judge granted interim stay on condition of deposit of 50% of the total amount of dues within a period of four weeks, failing which the stay granted shall stand automatically vacated. Aggrieved by the order of the learned single Judge, the appellant has preferred the aforesaid writ appeal.

W.A.No.173 of 2006

The appellant company has become sick having accumulated losses exceeding its entire net worth within the meaning of Section 3(1)(o) of the SICA. The appellant has filed Form-A before the BIFR on 15.12.2004 and the reference is registered as Case No. 35/2005. The scheme for revival is not yet framed. In the meantime, the Assistant Provident Fund Commissioner determined the provident fund contribution by the appellant under Section 7A of the EPF Act for the period from 01.08.2003 to 30.06.2004 in TN/SL/ENF-III/21284/KR1/II/2004 dated 06.08.2004. The appellant has filed W.P. No.41166 of 2005 contending inter alia that as its reference is pending before the BIFR, the respondents are not empowered to take any coercive steps in view of Section 22 of the SICA. The grievance of the appellant is that even though the respondents are informed about the BIFR proceedings, they have initiated recovery proceedings without the consent from the BIFR and therefore, the said proceedings are liable to be quashed and set aside. In W.P.M.P.No.44206 of 2005, the learned single Judge granted interim injunction on payment of 50% of the amount to the authority concerned within a period of four weeks from the date of receipt of the order, failing which the order of interim st