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M/s. Blue Mount Paper & Boards Limited, Tirunelveli District, through its Director, A.M. Ashraf v/s The Assistant Provident Fund Commissioner, Employees' Provident Fund Organization & Others

    W.P(MD) No. 3153 of 2011 & M.P(MD) No. 1 of 2011

    Decided On, 03 July 2014

    At, Before the Madurai Bench of Madras High Court


    For the Petitioner: P. Chandrabose, Advocate. For the Respondents: R1 & R2, K. Murali Shankar, Advocate, R3, Tribunal.

Judgment Text

(Prayer: Petition filed under Article 226 of the Constitution of India, to issue a writ of Certiorari to call for the records from the file of the third respondent in ATA 12(13) 2010, dated 28.01.2011 and quash the same.)

1. This writ petition has been filed seeking a writ of Certiorari to call for the records from the file of the third respondent in ATA 12(13) 2010, dated 28.01.2011 and quash the same.

2. The petitioner is an establishment covered under the provisions of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952. The first respondent has passed an order under Section 7A of the said Act on 16.12.2008, determining the contribution payable in respect of some employees who were alleged to have been left out from the coverage by the petitioner and the contribution was determined in the said order in a sum of Rs.18,23,908.40. According to the petitioner, those employees were not employees of the petitioner and they were employed in the petitioner's farm lands situated nearby the factory and the first respondent by his proceedings dated 16.12.2008, wanted to cover those employees working in the farm who had nothing to do with the petitioner's factory and hence, no contribution was payable. Aggrieved by the same, the petitioner filed an appeal before the appellate Tribunal at New Delhi. Pending the said appeal, the petitioner filed a writ petition in W.P(MD)No.1753 of 2010, challenging the recovery proceedings initiated by the first respondent dated 22.01.2010. By order dated 16.02.2010 passed in M.P(MD)No.1 of 2010 in W.P(MD)No.1753 of 2010, this Court directed the petitioner to deposit 50% of the demand amount made in the impugned proceedings dated 25.01.2010 of the Recovery Officer, Employees' Provident Fund Organization, Tirunelveli. Aggrieved over the same, he also filed a writ appeal in W.A.(MD)No.196 of 2010 and this Court, by a common order dated 22.03.2010, has passed the following order:

"10. The Writ Petition as well as the Writ Appeal therefore stands disposed of directing the appellant to deposit a sum of Rs.4,50,000/- (Rupees four lakh and fifty thousand only) with the first respondent within a period of four weeks from the date of receipt of a copy of this order and on such deposit being made within the time stipulated in this order, the respondents 1 and 2 are directed not to enforce the order dated 22.01.2010 or the one dated 16.12.2008 pending any orders to be passed by the appellate Tribunal before which ATA No.12(13) of 2010 which is pending along with the applications for waiver and stay. If the appellant fails to deposit the sum of Rs.4,50,000/- (Rupees four lakh and fifty thousand only) within the time stipulated in this order, the benefit granted in this order will automatically cease to operate."

The appeal said to have filed by the petitioner in ATA No.12(13) 2010, was dismissed, stating that the petitioner never applied to examine the contractor and such non-examination of the contractor would in no way affect the case of the petitioner and found that there was no infirmity in the order impugned therein. Hence, the present writ petition.

3. Whereas the respondents 1 and 2 filed their counter affidavit stating that the petitioner was given sufficient opportunity of hearing under Section 7A of the case to put forth his case and after considering the same, the first respondent has passed the order dated 16.12.2008 and the Tribunal also after analysing the issue in detail, upheld the order of the third respondent and therefore, no interference is warranted in exercise of the powers of this Court under Article 226 of the Constitution of India and ultimately, he prayed for the dismissal of the writ petition.

4. The learned Counsel for the petitioner submitted that the disputed amount has already been recovered from the petitioner and if the matter is remanded to the first respondent, all necessary testimonials can be produced by the petitioner after availing the opportunity of being heard and there cannot be any impediment for the authority to provide an opportunity to establish the case of the petitioner.

5. The main contention of the petitioner is that the impugned order is vitiated on the sole ground of violation of principles of natural justice, as the first respondent failed to afford due opportunity to the petitioner to produce the relevant materials and a personal hearing as well.

6. In support of the contention regarding violation of principles of natural justice, the learned Counsel for the petitioner placed reliance on the decision of the Honourable Apex Court in Fertilizers and Chemicals Travancore, Ltd., v. Regional Director, Employees' State Insurance Corporation and others reported in 2009 (4) L.L.N. 621, wherein it is held that 'the rules of natural justice require that if any adverse order is made against any party, he/she must be heard. Thus, if a determination is given by the Employees' Insurance Court that the concerned persons are not the employees of the petitioner, and that determination is given even without hearing the concerned persons, it will be clearly against the rules of natural justice.'

7. The learned Counsel for the petitioner also relied on the following decisions:

(i) Food Corporation of India v. Provident Fund Commissioner and others reported in 1990 Supreme Court Cases (L & S), 1,wherein the powers of the Commissioner have been elaborately dealt with.

(ii) Chennai Petroleum Corporation Ltd., v. Assistant Provident Fund Commissioner (Exemp.) Chennai reported in 2006 II CLR 1036, wherein this Court held that 'when it is brought to the notice o the respondent the available details of the contractors, the respondent should have impleaded the contractors and proceeded against them for determining the quantum of provident fund contribution payable by them as per the provisions of the Act.'

(iii) Bharat Heavy Electricals Ltd. v. ESI Corporation reported in 2008 II CLR 309, wherein the Honourable Apex Court held as follows:

"20. ..... The purpose of the proceedings, both under the Act as also the Employees Provident Fund Act, is to determine the amount due from any employer in respect of the employees under the statutory schemes. Both Acts envisage compliance of principles of natural justice. The proviso appended to Section 45A of the Act provides for a statutory mandate of giving a reasonable opportunity of being heard."

(emphasis added.)

(iv) Himachal Pradesh State Forest Corporation v. Regional Provident Fund Commissioner reported in 2008 III CLR 82, wherein the Honourable Apex Court laid down thus:

"5. ..... We accordingly dismiss the appeals but reiterate the recommendation that the amounts due from the Corporation will be determined only with respect to those employees who are identifiable and whose entitlement can be proved on the evidence and that in the event the record is not available with the Corporation (at this belated stage), it would not be obliged to explain its loss, or that any adverse inference be drawn on this score. With this very small modification, we dismiss the appeals."

(v) Faze Three Ltd., v. Employees Provident Fund Organisation reported in 2014 1 C.L.R. 188.

(vi) Rallis India Ltd., Akola v. Assistant Provident Fund Commissioner, Nagpur & another reported in 2014 1 CLR 233.

8. Per contra, the learned Counsel for the respondents 1 and 2 contended that the plea of non-affording of hearing to the petitioner is not sustainable, since he was given due opportunity to establish his case and the Tribunal, on going through the entire materials available on record and on the basis of the statements recorded, came to the conclusion that the appeal filed by the petitioner was not tenable and therefore, he prayed for rejecting this writ petition as not maintainable.

9. I have considered the submissions made on either side and scrutinized the materials available on record.

10. At the outset, this Court has to see as to whether the provisions of the Employees' Provident Fund and Miscellaneous Provisions Act, 1952, are complied with by the authorities before directing the petitioner to deposit the alleged dues.

11. It is admitted that the petitioner was engaging in the business of manufacturing of craft paper and the petitioner has been making contributions for the eligible employees. The first respondent initiated the proceedings under Section 7A of the Act at the instance of the Union of the employees and thereafter, the inquiry was conducted for determination of the dues payable by the petitioner. According to the petitioner, the failure on the part of the first respondent to implead the contractors would prejudice the interest of the petitioner.

12. Section 7-A of the Act, empowers the Commissioner to enforce the attendance in person and to examine any person on oath. He has the power requiring the discovery and production of documents, in order to determine the actual concrete differences in payment of contribution and other dues by identifying the workmen. The Commissioner should exercise all his powers to collect all evidence and collate all materials before coming to proper conclusion, which is the legal duty of the Commissioner.

13. In the case on hand, the main grievance of the petitioner is that no opportunity of personal hearing was given to the petitioner before arriving at such a conclusion. Also, the petitioner pleads violation of principles of natural justice. The third respondent, in his impugned order, has de

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alt with the issue and decided as against the petitioner, in confirming the order of the first respondent, which lacks to deal with the material evidence as contemplated under the Act. Accordingly, this Court is of the firm view that the impugned order passed by the third respondent is vitiated for the reason that it is in violation of principles of natural justice. Neither the petitioner was allowed to produce all necessary material documents, nor an opportunity of personal hearing was afforded before passing such order. 14. In fine, this writ petition is allowed and the order passed by the third respondent is set aside. The matter is remitted to the third respondent for fresh consideration. Accordingly, the third respondent is directed to provide adequate opportunity of hearing to the petitioner by furnishing all the documents and thereafter, pass appropriate orders on merits and in accordance with law, within a period of three months from the date of receipt of a copy of this order. Consequently, the connected miscellaneous petition is closed. No costs.