Employees' Provident Fund Organisation v. Indian Bank & Harijan Girijan Motor Co-operative Society Ltd & Special Tahsildar (Revenue Recovery), Kanayannur Taluk

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** **PRESENT :** **THE HONOURABLE MR. JUSTICE C.T.RAVIKUMAR** **THURSDAY, THE 23RD SEPTEMBER 2010 / 1ST ASWINA 1932** **WP(C).No. 17877 of 2010(H)** **-------------------------------------** **PETITIONER(S):** **-----------------------** **EMPLOYEES PROVIDENT FUND ORGANISATION, REPRESENTED BY ASSISTING PROVIDENT FUND COMMISSIONER, SUB REGIONAL OFFICE, BHAVISHYANIDHI BHAVAN, P.B. NO. 1895, KALOOR, KOCHI - 682 017.** **BY SRI.S.GOPAKUMARAN NAIR, SENIOR ADVOCATE BY ADV. SRI.M.CHANDRA BOSE** ## **RESPONDENT(S):** **--------------------------** **1. INDIAN BANK, M.G. ROAD, ERNAKULAM, REPRESENTED BY CHIEF MANAGER.** ## **2. M/S.HARIJAN GIRIJAN MOTOR** **CO-OPERATIVE SOCIETY LTD., KADAVANTHRA, KOCHI -20.** **3. SPECIAL TAHSILDAR (REVENUE RECOVERY) KANAYANNUR TALUK.** **R1 BY ADV. SRI.S.EASWARAN R3 BY GOVT. PLEADER SRI.M.A.ASIF** **THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 23/09/2010, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** ## **W.P.(C) NO.17877/2010** ## **APPENDIX** ## **PETITIONER'S EXHIBITS** **P1:- COPY OF THE ASSESSMENT ORDER DTD. 12.8.1992.** **P2:- COPY OF THE ASSESSMENT ORDER DTD. 9.10.1996.** **P3:- COPY OF THE ORDER DTD. 22.5.1997 IN OP.7216/1997.** **P4:- COPY OF THE ORDER DTD. 13.6.1997.** **P5:- COPY OF THE JUDGMENT DTD. 23.8.2004 IN OP. 7216/1997.** **P6:- COPY OF THE CLAIM PETITION DTD. 30.9.2004.** **P7:- COPY OF THE REPLY DTD. 28.10.2004 FROM THE IST RESPONDENT.** **P8:- COPY OF THE LETTER DTD. 23.11.2005 FROM PETITIONER.** **P9:- COPY OF THE REPLY DTD. 2.3.2006 FROM THE IST RESPONDENT.** **P10:- COPY OF THE COMPLAINT FROM SASI K.K** **P11:- COPY OF THE COMPLAINT FROM DHARMARAJ C.B.** **P12:- COPY OF THE COMPLAINT FROM SHRI. C.K.SUKUMARAN.** **P13:- COPY OF THE FIXED DEPOSIT RECEIPT DTD. 6.10.2009.** **RESPONDENT'S EXHIBITS** **R1(a):- COPY OF THE AGREEMENT OF HYPOTHECATION DTD. 22.8.1984 EXECUTED BY THE 2ND RESPONDENT IN FAVOUR OF INDIAN BANK.** **R1(b):- COPY OF THE AGREEMENT OF HYPOTHECATION EXECUTED BY THE OFFICE BEARERS OF THE 2ND RESPONDENT IN FAVOUR OF INDIAN BANK.** **TRUE COPY** **P.A. TO JUDGE** **tss** ## **C.T.RAVIKUMAR, J.** ## **----------------------------------------W.P. (C) NO. 17877 OF 2010 ---------------------------------------Dated this the 23[rd] day of September, 2010.** ## **JUDGMENT** The Employees Provident Fund Organization is the petitioner in this writ petition. The 2[nd] respondent Society committed default in payment of contribution under the Employees Provident Fund and Miscellaneous Provisions Act, 1952 towards the claims from August, 1988 to May, 1992 and for the subsequent period from May, 1994 to May, 1996. The statutory dues for the aforesaid period were subsequently assessed and the amount of penal damages under Section 14B of the Act for belated remittance of the Employment Provident Fund dues was also subsequently assessed. According to the petitioner, the penal damages under Section 14B of the Act for the aforesaid periods comes to Rs.3,24,818/- and as the establishment failed to remit the said amount, 8 buses belonging to the 2[nd] respondent were attached on 24.1.1996. Out of the 8 buses 6 buses were sold in auction on 15.4.1997 for a sum of Rs.1,90,500/-. It is to be noted in this context that the aforesaid buses sold in auction were actually hypothecated to the first respondent. The 3[rd] respondent ## **W.P. (C) NO. 17877 OF 2010** 2 thereafter, issued sale notices in respect of the movables belonging to the Society at the instance of the first respondent bank. At that point of time the successful bidders in the auction moved this Court by filing O.P.No. 7216 of 1997 and the same was disposed of as per Ext.P5 judgment. As per order dated 13-6-1997 in the said writ petition the first respondent therein viz, the Regional Provident Fund Commissioner (recovery) was directed to deposit the sale proceeds of the buses in question in a fixed deposit with Indian Bank, M.G.Road, Ernakulam. Later, the writ petition was disposed of by Ext.P5. The operative portion of said judgment reads thus:- ## _**“Therefore the Original Petition is disposed of with the following directions:**_ _**(1) The interim order passed by this Court in CMP.No.12924/97 releasing the custody of the buses to the petitioners is made absolute.**_ _**(2) The amount in deposit with M/s. Indian Bank shall remain in the Bank till the question of entitlement as between the Employees Provident Fund Organisation and M/s. Indian Bank Ltd. is decided through process of law. Respondent No.2 or/and 4 may take appropriate steps for a proper adjudication in this regard in accordance with law.”**_ 2. This writ petition has been filed by the Employees' Provident Fund Organisation mainly with a prayer to declare ## **W.P. (C) NO. 17877 OF 2010** 3 that the petitioner is entitled to get the entire amount together with the interest accrued thereon, realized through public auction of 6 buses belonging to the 2[nd] respondent establishment and kept as fixed deposit as vide Ext.P13 based on Ext.P4 order. 3. A counter affidavit has been filed in this writ petition by the first respondent. It is stated therein that as per Ext.P5 this Court directed that the amount in deposit with M/s.Indian Bank shall remain in the Bank till the question of entitlement as between the Employees' Provident Fund Organization and M/s.Indian Bank Ltd, is decided through process of law. Respondent No.2 or/and 4 may take appropriate steps for a proper adjudication in this regard in accordance with the law, it was further held as per Ext.P5. It is further stated thereunder that subsequent to Ext.P5 judgment first respondent has approached the Debt Recovery Tribunal by filing O.A No. 60 of 2007. In short, the contention of the first respondent is that since Debt Recovery Tribunal is in seizin of the matter the Debt Recovery Tribunal may be directed to consider the matters including the claim of the respondent over the assets of the 2[nd] respondent. However, the learned **W.P. (C) NO. 17877 OF 2010** 4 counsel appearing for the petitioner submitted that in the light of the decision of this Court in _**Bank of India v. Asst. Provident Fund Commissioner, (2006 (2) KLT 553)**_ and the Apex Court in _**Maharashtra Co-operative Bank Limited v. Asst. Provident Fund Commissioner, (2009 (10) SCC 123)**_ the position with respect to the first charge and priority under Section 11(2) of the Employees Provident Fund & Miscellaneous Provisions Act(for short the Act) has already been settled. Having gone through the judgments referred above, I am of the view that the position has been settled and there cannot be any dispute with respect to the position in regard to the first charge and priority in terms of Section 11(2) of the Act. Going by the decision referred supra the provisions under the Securitisation and Reconstruction of Financial Assets and Enforcements of Security interest Act, 2002 does not have an over riding effect on the provision of the Employees Provident Fund Act. In this case, the first respondent has preferred an application under Section 19 of Recovery of Debts due to Banks and Financial Institutions Act, 1993 before the Debts Recovery Tribunal. I am of the view that in the light of the decisions referred above the first 5 ## **W.P. (C) NO. 17877 OF 2010** respondent cannot be heard to contend that the provisions under the said act got an overriding effect on the provisions of the 'Act'. Since the provisions under the Act 2002 and the aforesaid Act 1993 are in pari materia. Consideration of the question in view of the decision referred above and Section 11(2) of the act would reveal that the entitlement of the petitioner to have the first charge and priority as provided under Section 11(2) of the Act cannot be disputed at all. Section 11(2) of the Act reads thus:- - _**“(2) without prejudice to the provisions of subsection (1), if any amount is due from an employer whether in respect of the employee's contribution (deducted from the wages of the employee) or the employer's contribution, the amount so due shall be deemed to be the first charge on the assets of the establishment, and shall, notwithstanding anything contained in any other law or the time being force, be paid in priority to all other debts.”**_ If that be so, the petitioner is entitled to realise the amount of penal damages due and also the dues under Section 7A. As already noticed the amount under the aforesaid heads come to Rs.3,24,818/-. Ext.P13 would reveal that on the date of maturity dated 6.10.08 the amount deposited in terms of Ext.P4 order of this Court would be Rs.5,21,635/-. In view of 6 **W.P. (C) NO. 17877 OF 2010** the conclusion arrived at based on the decisions referred above, the petitioner is entitled to appropriate amount of Rs.3,24,818/-out of the total amount of Rs.5,21,635/-. Consequently there will be a direction to the first respondent to close the account in respect of the amount deposited pursuant to Ext.P4 order and draw a Demand Draft for an amount of Rs.3,24,818/- in favour of the petitioner in the address furnished in Ext.P13 so as to enable the petitioner to receive amount mentioned above. Needless to say that the first respondent would be entitled to appropriate the amount towards the amount due to the Bank from the second respondent. This judgment will not stand in the way of the first respondent in taking/pursuing action to realize the balance amount, if any, due from the 2[nd] respondent, in accordance with law. ## **C.T.RAVIKUMAR, JUDGE.** mns