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2019 Supreme(Mad) 3070
IN THE HIGH COURT OF MADRAS
S.M. SUBRAMANIAM, J.
Oriental Bank of Commerce and Ors. - Appellants
Versus
The Assistant PF Commissioner, Employees Provident Fund Organization, Coimbatore and Ors. - Respondents
W.P. Nos. 22826, 29129 of 2019 and W.M.P. No. 22421 of 2019
Decided On : 01-11-2019
For the Appellant : S.K. Srinivasan and K. Kannan for S. Sugendran.
For the Respondents: J. Sathyanarayana Prasad, P.P. Purushothaman, GA and K. Srinivasan.
Headnote:
Provisions of the Employees Provident Fund Act – Declaring the writ petitioner Bank as a deemed defaulter – Show cause notice issued by the Assistant Provident Fund Commissioner and Recovery Officer in proceedings under the provisions of the Employees Provident Fund Act is under challenge in the present writ petition –Writ petitioner is the Oriental Bank of Commerce First respondent Assistant PF Commissioner declared the writ petitioner Bank as a deemed defaulter with reference to the dues paid under the provisions of the Employees Provident Fund Act – Challenging the said show cause notice declaring the writ petitioner Bank as a deemed defaulter, the present writ petition is filed –Held, Applying the said principles, this Court is of an opinion that the writ petitioner Nationalised Bank is in a safe position – Company in liquidation is not worried about the plight of the labourers – Shareholders and the higher officials of the company, who all are well off and they are leading a safe, secured and luxurious life – However, the poor labourers, who served in the company for many number of years are left on the streets and they are struggling even for livelihood – If the Constitutional Courts are not prepared to protect the plight of these class, then the Constitutional Courts are also failing in its duty to upheld the Constitutional perspectives, Philosophies and Ethos – Under these circumstances, which Act will prevail, may not be a relevant question as the prevalence of the statute is to be read along with the Constitutional principles, so as to ensure that the weaker section is protected and the people in the safer zone are given an opportunity to enter into the legal battle for the purpose of resolving the issues – Writ petition and accordingly stands dismissed.
ORDER :
S.M. Subramaniam, J.
1. The show cause notice issued by the Assistant Provident Fund Commissioner and Recovery Officer in proceedings dated 25.04.2019 under the provisions of the Employees Provident Fund Act is under challenge in the present writ petition.
2. The writ petitioner is the Oriental Bank of Commerce. The first respondent Assistant PF Commissioner declared the writ petitioner Bank as a deemed defaulter with reference to the dues paid under the provisions of the Employees Provident Fund Act. Challenging the said show cause notice declaring the writ petitioner Bank as a deemed defaulter, the present writ petition is filed.
3. The learned counsel appearing on behalf of the writ petitioner bank vehemently contended that the Bank holds the first charge in respect of properties belonging to the defaulted company and therefore, they are not directly liable to pay the dues to the PF Commissioner. Contrarily, all these claims are to be raised by the PF Organization by way of claim petition before the competent authorities under the provisions of SARFAESI Act or under the relevant statute. He further states that credit facility to one M/s. Nivaa Casting Pvt. Ltd., to the tune of Rs. 6 Crores was granted and the Company has mortgaged their property with the petitioner Bank. The mortgaged property has been purchased by M/s. Sanees Alloys Pvt. Ltd., and committed default in clearing the loan liability availed by them to State Bank of Hyderabad (now merged with State Bank of India).
4. The Encumbrance obtained by M/s. Nivaa Casting Pvt. Ltd., and the petitioner/Bank do not reveal any encumbrances/attachment over the property. The borrower defaulted in payment of the loan liability and therefore, the petitioner Bank has taken action under the SARFAESI Act and Rules and issued first E-auction sale notice dated 17.05.2017. On seeing the above action, the Sales Tax Department has written a letter dated 06.06.2017 to M/s. Nivaa Casting India Limited and letter dated 20.06.2017 to the petitioner branch with reference to the property pertaining to the factory land and building in SF No. 155/155-1. The writ petitioner Bank sent a reply on 05.08.2017 stating that the Bank holds the first charge over the property and by invoking Section 31B of Recovery of Debts and Bankruptcy Act, 1993. The petitioner Bank has sold the property which is mortgaged to the Bank for a sum of Rs. 93.50 Lakhs under E-auction on 30.03.2019.
5. In these circumstances, the first respondent Assistant PF Commissioner issued a notice to the petitioner Bank for payment of dues for a sum of Rs. 12,05,810/- vide their letter dated 03.04.2019. In this regard, the order of attachment has been made by the first respondent on 13.05.2014, which is admittedly subsequent to the charge dated 25.05.2010 created by the State Bank of Hyderabad in Doc. No. 4096/2010.
6. The learned counsel appearing on behalf of the petitioner Bank submitted that the petitioner derived title from the above charge created by State Bank of Hyderabad and it is pertinent to mention that the Encumbrance Certificate taken by the borrowers and the petitioner Bank did not reveal any subsisting encumbrance and the charge over the property was not sold by M/s. Sanees Alloys Pvt. Ltd., and the sale was done by a financial institution as part of a process for recovery of money due to them and the borrower is an innocent Auction purchaser, who is not aware of any existing assets. It is contended that the borrower created a charge over the property in favour of the Bank, neither the petitioner nor the Auction purchaser were aware of any pre-existing charge over the property.
7. Narrating the said facts, the learned counsel appearing on behalf of the writ petitioner contended that the impugned show cause notice is without jurisdiction and the first respondent cannot have any authority to issue such a show cause notice to the writ petitioner Bank, as the writ petitioner has proceeded against the mortgaged property
