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2013 Supreme(Mad) 1409
High Court of Judicature at Madras
VINOD K. SHARMA, J.
The Recovery Officer, Employees Provident Fund Organisation, Salem
Versus
The Official Liquidator, High Court, Madras & Another
Comp. A.No. 493 of 2011 in C.P.No. 173 of 2001
Decided On : 26-03-2013
The court emphasized the priority of provident fund dues over other debts and the distribution of recovered amounts as per the priority under Section 529 A of the Companies Act.
Headnote:
Employees Provident Fund - Recovery of Dues - Employees Provident Fund and Miscellaneous Provisions Act, 1952 - Sections 8B to 8G, 11(2), 530(1), 529-A, 529(1), 529(3) - Summary of key legal provisions and interpretations provided by the court.
Fact of the Case:
The applicant sought to direct the respondents to release provident fund dues amounting to Rs.8,20,91,568 to the Recovery Officer, Employees Provident Fund Organisation.
Finding of the Court:
The court dismissed the application for want of jurisdiction to entertain the claim.
Issues: Jurisdiction of the court to entertain the application.
Ratio Decidendi: The court held that the application was not competent before the company Court and that the dispute regarding the claim was pending on the writ side where a stay had been granted.
Final Decision: The application was dismissed for want of jurisdiction of the Court to entertain the claim. No costs were awarded.
Vinod K. Sharma, J.
1. This application under Order XIV Rule 8 of the Original Side Rules read with Rule 9, 11(b) and 19 of the Companies (Court) Rules, 1959, has been filed to direct the respondents to release the provident fund dues to the tune of Rs.8,20,91,568/- (Rupees eight crores twenty lakhs ninety one thousand five hundred and sixty eight only), on priority to the Recovery Officer, Employees Provident Fund Organisation.
2. In the affidavit, it is pleaded that M/s. Uma Maheswari Spinning Mills Ltd., Plot No.85-89, SIPCOT Industrial Estate, Hosur, was establishment covered under the Employees Provident Fund and Miscellaneous Provisions Act, 1952. The establishment defaulted in payment of provident fund dues and the provident fund contribution inclusive of interest and damages amounting to Rs.8,20,91,568/-(Rupees eight crores twenty lakhs ninety one thousand five hundred and sixty eight only).
3. The case of the applicant is, that immovable properties of the establishment were attached by the Recovery Officer under Section 8B to 8G of the Employees Provident Fund and Miscellaneous Provisions Act, 1952, read with 2nd schedule of the Income-Tax Act, 1961, vide order dated 07.06.2001.
4. In response to the notice of the recovery officer, the applicant was informed that Indian Overseas Bank had filed a petition before the learned Debts Recovery Tribunal, Chennai, for recovery from the company.
5. The recovery proceedings were delayed, as the company was registered with B.I.F.R. and there was also an order of injunction by this Court in writ petitions and Crl.O.Ps. The writ petitions, however, were subsequently dismissed or disposed of.
6. This Court, in C.P.No.178 of 2001, ordered winding up of M/s.Uma Maheswari Spinning Mills Ltd. Thereafter, in response to the notice issued by the Official Liquidator, the Provident Fund Organisation filed a claim for recovery, which stands adjudicated by the Official Liquidator.
7. It is admitted case of the applicant, that in Company Application No.1453 of 2010, the bank was allowed to go out of the liquidation proceedings and permitted to sell the movable and immovable properties of the company in liquidation being secured creditor under the SARFAESI Act, by associating the Official Liquidator, so as to enable him to settle the priority under Section 529 A of the Companies Act, 1956.
8. It is not disputed that auction was conducted under the SARFAESI Act, and property was sold for a total sale consideration of Rs.12,57,00,000/- (Rupees twelve crores fifty seven lakhs only) and the sale amount has been paid to the bank.
9. It is the submission of the learned counsel for the applicant, that the applicant is entitled to recover Rs.8,20,91,568/- (Rupees eight crores twenty lakhs ninety one thousand five hundred and sixty eight only), out of the sale proceeds, as provident fund dues are to be paid before the dues of the workmen or secured creditors of the company are settled, as the provident fund dues are paramount charge on the properties of the establishment, in preference to all debts, whether secured or unsecured, in view of Section 11(2) of the Employees Provident Fund and Miscellaneous Provisions Act, 1952.
10. It is submitted that the Authorised Officer of the Indian Overseas Bank failed to pay the demanded amount to the applicant, therefore, proceedings have been initiated by the Recovery Officer to recover the amount from the bank.
11. The learned counsel for the applicant admits that the action of the Recovery Officer in declaring the bank to be defaulter, to effect recovery has been stayed by this Court on the writ side. In spite of the fact that the recovery has been stayed by this Court, this application has been pressed for directing the Authorised Officer and the Official Liquidator to pay the money to the applicant. It is not understood how an application can be filed before a company Judge, without getting the stay vacated. The practice to have two parallel procee
