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IN THE HIGH COURT OF JUDICATURE AT MADRAS
G.K. ILANTHIRAIYAN, J.
Raj Kumar Khemka – Appellant
Versus
The Employees Provident Fund Organisation, Rep. by its Regional Provident Fund Commissioner Sub Regional Office, Ambattur & Others – Respondents
W.P. Nos. 28490 to 28493 of 2013 & MP.Nos.1,1,1 & 1 of 2013 & WP. No. 28490 of 2013
Decided On : 24-07-2023
EPF - Recovery of Arrears from Directors - Section 2(e), Section 8-B of EPF and MP Act - The court dismissed the writ petitions challenging the attachment of immovable properties of the petitioners, who were directors of the defaulting companies, for recovery of EPF arrears. The court held that the definition of 'employer' under Section 2(e) of EPF and MP Act includes persons having ultimate control over the affairs of the establishment, such as directors, and empowers the Recovery Officer to attach and sell the properties of the employer for recovery of arrears under Section 8-B. The court also cited precedents to support the liability of directors for attachment of their properties.
Fact of the Case:
The writ petitions were filed to challenge the attachment of immovable properties of the petitioners, who were directors of the defaulting companies, for recovery of EPF arrears. The petitioners argued that they were not personally liable for the dues of the company and that the properties attached did not belong to them.
Finding of the Court:
The court found that the petitioners, as directors of the defaulting companies, were responsible for the affairs of the establishments and liable for the EPF arrears. The court upheld the attachment of their properties for recovery of the dues.
Issues: The main issue was whether the arrears of provident fund and other amounts payable by the establishment under EPF and MP Act could be recovered from its directors.
Ratio Decidendi: The court held that the definition of 'employer' under Section 2(e) of EPF and MP Act includes persons having ultimate control over the affairs of the establishment, such as directors, and empowers the Recovery Officer to attach and sell the properties of the employer for recovery of arrears under Section 8-B. The court also cited precedents to support the liability of directors for attachment of their properties.
Final Decision: The court dismissed the writ petitions and upheld the attachment of the petitioners' properties for recovery of EPF arrears.
JUDGMENT
(Prayer: Writ Petition is filed under Article 226 of Constitution of India praying to issue Writ of Certiorarified Mandamus calling for the records of the second respondent and quash the order dated 13.09.2013 in reference No.TN/SRO/AMB/3173/RRC/2013 and thereby forbear the respondents from initiating any proceedings for recovery against the petitioner towards alleged arrears payable by M/s.NEPC Agro Foods Ltd. in respect of Certificate Nos.TN/SAO-AMB/3173/RRC/CC-II(2) dated 15.04.2002.)
1. The writ petition in WP.No.28490 of 2013 is filed to issue Writ of Certiorarified Mandamus calling for the records of the second respondent and quash the order dated 13.09.2013 in reference No.TN/SRO/AMB/26481/RRC-3223/2013 and thereby forbear the respondents from initiating any proceedings for recovery against the petitioner towards alleged arrears payable by M/s.NEPC India Ltd. in respect of Certificate Nos.TN/SAO-AMB/26481/RRC/2002 & 2008 dated 22.04.2002 & 04.04.2008. The writ petition in WP.No.28491 of 2023 is filed to issue Writ of Certiorarified Mandamus calling for the records of the second respondent and quash the order dated 13.09.2013 in reference No.TN/SRO/AMB/3173/RRC/2013 and thereby forbear the respondents from initiating any proceedings for recovery against the petitioner towards alleged arrears payable by M/s.NEPC Agro Foods Ltd. in respect of Certificate Nos.TN/SAO-AMB/3173/RRC/CC-II(2) dated 15.04.2002. The writ petition in WP.No.28492 of 2013 is filed to issue Writ of Certiorarified Mandamus calling for the records of the second respondent and quash the order dated 13.09.2013 in reference No.TN/SRO/AMB/26481/RRC-3223/2013 and thereby forbear the respondents from initiating any proceedings for recovery against the petitioner towards alleged arrears payable by M/s.NEPC India Ltd. in respect of Certificate Nos.TN/SAO-AMB/26481/RRC/2002 & 2008 dated 22.04.2002 & 04.04.2008. The writ petition in WP.No.28493 of 2013 is filed to issue Writ of Certiorarified Mandamus calling for the records of the second respondent and quash the order dated 13.09.2013 in reference No.TN/SRO/AMB/3173/RRC/2013 and thereby forbear the respondents from initiating any proceedings for recovery against the petitioner towards alleged arrears payable by M/s.NEPC Agro Foods Ltd. in respect of Certificate Nos.TN/SAO-AMB/3173/RRC/CC-II(2) dated 15.04.2002.
2. These writ petitions have been filed challenging the certificate issued for attachment of immovable properties. The petitioners are one of the directors of the Company M/s.NEPC India Limited and M/s.NEPC Agro Food Ltd. It is covered under the provisions of Employees Provident Fund Act. It was facing a temporary financial crisis during the year 2000 and as such there was liability by the company. While being so, the first respondent has forwarded the certificate to recover the money due from the company and thereafter the second respondent issued communication thereby attached the immovable property under Rule 48 of Second Schedule to the Income Tax Act, 1961 in respect of the property situated at V101 Anna Nagar, Madras and V11, 12th street, Anna Nagar, Chennai thereby restrained the company from transferring or charging the said properties and all persons from taking any benefit.
3. The learned counsel for the petitioners would submit that the properties neither belong to the petitioners nor the company. The impugned notices were pasted in the said properties in the presence of Ms.Lakshmi who is in charge of the building. He further submitted that the properties which were attached by the second respondent do not belong to the petitioners. The petitioners are not the employer as defined under Section 2(e) of Employees'' Provident Funds and Miscellaneous Provisions Act (hereinafter called as ''EPF and MP Act''). In any event, as Directors, the petitioners cannot be made personally liable in respect of the dues of the company, that too without affording any opportunity to the petitioners. Due of th
The Employees' Provident Fund dues have priority over other claims, including mortgages, as confirmed by law, which the court upheld when dismissing the writ petition.
The EPF Act prioritizes workers' dues over all other liabilities, and prohibitory orders must comply with statutory inquiry procedures to protect employees' rights.
The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 prevails over the Employees Provident Fund and Miscellaneous Provisions Act, 1952, allowing se....
The Mathadi Act does not make Managing Director or Directors personally liable to pay the dues which the Board is empowered to recover from the employer.
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