MITHRA CENTRAL SCHOOL v. EMPLOYEES PROVIDENT FUND ORGANIZATION

**IN THE HIGH COURT OF KERALA AT ERNAKULAM** **PRESENT:** **THE HONOURABLE MR. JUSTICE DEVAN RAMACHANDRAN** **WEDNESDAY, THE 7TH DAY OF MARCH 2018 / 16TH PHALGUNA, 1939** **WP(C).No. 25959 of 2011 -----------------------** ## **PETITIONER** **-----------** **M/S. MITHRA CENTRAL SCHOOL, MITHRA NAGAR, PATHARAM.P.O., SOORANAD SOUTH VILLAG, KOLLAM, DISTRICT REPRESENTED BY ITS SECRETARY GIRIJA DEVI.M., W/O.UNNIKRISHNAN MITHRA NIKETHAN, PATHARAM.P.O, SOORANAD NORTH VILLAGE, KOLLAM DISTRICT.** **BY ADVS.SRI.B.MOHANLAL SMT.P.S.PREETHA SRI.T.PRASAD SRI.SAIJU S.** **RESPONDENT(S):** - **--------------** **1. THE EMPLOYEES PROVIDENT FUND ORGANIZATION REPRESENTED BY THE REGIONAL PROVIDENT** **FUND COMMISSIONER, REGIONAL OFFICE 'BHAVISHYANIDHI BHAVAN', PATTOM PALACE.P.O., THIRUVANANTHAUPRAM-4.** **2. THE ASSISTANT PROVIDENT FUND COMMISSIONER, THE EMPLOYEES PROVIDENT FUND ORGANIZATION, SUB REGIONAL OFFICE PONNAMMA CHAMBERS-1, PARAMESWAR NAGAR, KOLLAM-691001.** **3. THE ENFORCEMENT OFFICER, EMPLOYEES PROVIDENT FUND ORGANIZATION, SUB REGIONAL OFFICE,** **PONNAMMA CHAMBERS-1, PARAMESWAR NAGAR, KOLLAM.,PIN-691001.** **BY ADV.SRI V.V.SURESH,SC** **THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 07-03-2018, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** ## **K.V.** **WP(C).No. 25959 of 2011 -----------------------** ## **APPENDIX** ## **PETITIONERS EXHIBITS:** ## **--------------------** - **P1: THE TRUE COPY OF THE REGISTRATION CERTIFICATE NO.Q-486 DATED 12.7.2000 ISSUED BY THE REGISTRAR OF SOCIETIES.** - **P2: THE TRUE COPY OF THE NO OBJECTION CERTIFICATE NO 18895/N3/2004/G.EDN DATED 10.6.2004 ISSUED BY THE GOVERNMENT TO THE SOCIETY.** - **P3; THE TRUE COPY OF THE ORDER NO CBSE/AFF/930779/(SL-01104/089)/2008/121460 DATED 14.3.2008 ISSUED BY THE CENTRAL BOARD OF SECONDARY EDUCATION.** - **P4; THE TRUE COPY OF THE ORDER NO KR/KLM/22426/ENF.11(3)/07/9976 DATED 15.2.2007 ISSUED BY THE 2ND RESPONDENT.** - **P5: THE TRUE COPY OF THE ACQUAINTANCE ROLL FROM THE PERIOD AUGUEST 2003 TO OCTOBER 2003.** - **P6: THE TRUE COPY OF THE APPLICATION DATED 14.6.2007 FILED BY THE PETITIONER BEFORE THE 2ND RESPONDENT.** - **P7: THE TRUE COPY OF THE ORDER UNDER SECTION 7A OF THE ACT ISSUED BY THE 2ND RESPONDENT TO THE PETITIONER.** - **P8: THE TRUE COPY OF THE APPLICATION DATED 10.8.2007 FILED BY THE PETITIONER.** - **P9: THE TRUE COPY OF THE APPLICATION DATED 14.9.2009 AND THE INCOME AND EXPENDITURE STATEMENT OF THE ESTABLISHMENT FOR THE PERIOD 2003 TO 2007 SUBMITTED BY THE PETITIONER.** - **P10: THE TRUE COPY OF THE ORDER KR/2426/ENF (3)/07/17767 DATED 17.12.2007 ISSUED BY THE 2ND RESPONDENT TO THE PETITIONER.** - **P11: THE TRUE COPY OF THE ORDER NO KR/22426/ENF.1(3)/2010/1870 DATED 6.1.2011 ISSUED BY THE 3RD RESPONDENT TO THE PETITIONER.** - **P12: THE TRUE COPY OF THE ORDER NO KR/KLM/22426/ENF.1(1)2011/1687 DATED 11.3.2011 ISSUED BY THE 2ND RESPONDENT TO THE PETITIONER.** - **P13: THE TRUE COPY OF THE ORDER NO.KR/KLM/22426/PD/2011-12/498 DATED 25.5.2011 ISSUED BY THE 2ND RESPONDENT TO THE PETITIONER.** - **P14; THE TRUE COPY OF THE ORDER NO KR/KLM/22426/PD/2010-11 DATED 25.8.2011 ISSUED BY THE 2ND RESPONDENT.** - **P15: THE TRUE COPY OF THE STATEMENT GIVEN BY THE RESPONDENT EVIDENCING THE PAYMENT OF THE AMOUNT.** - **P16: THE TRUE COPY OF THE COMPLAINT FILED BY THE 3RD RESPONDENT BEFORE THE SUB INSPECTOR OF POLICE, SOORANAD.** ## **RESPONDENTS EXHIBITS: NIL** **---------------------** **/TRUE COPY/** **K.V. P.S.TO JUDGE 21.03.2018** ## **DEVAN RAMACHANDRAN, J.** **.............................................** ## **W.P.(C) No. 25959 of 2011** **..................................................** ## **Dated this the 7[th] day of March, 2018** ## **JUDGMENT** The petitioner is stated to be a school run by an Educational Society, registered under the Travancore Cochin Charitable, Scientific, Literacy Registration Act, 1955 and they have produced on record Ext.P1, which is the copy of the registration certificate issued under the aforementioned Act, in evidence of this assertion. 2.According to the petitioner, in the year 2004 they approached the Government of Kerala for permission to establish and run a school and that the Government gave them Ext.P2 No Objection Certificate, on the strength of which they approached the Central Board of Secondary Education (CBSE), which gave them a Provisional affiliation with effect from 01.04.2008, and a copy of the affiliation certificate issued by the CBSE has been appended to this writ petition as Ext.P3. - 3.The petitioner says that, while so, the Enforcement W.P.(C) No. 25959 of 2011 2 Officer/3[rd] respondent herein initiated proceedings under the Employees Provident Fund and Miscellaneous Provisions Act, 1952 (hereinafter referred to as “the Act” for short) in the year 2007, which according to them is even before they obtained affiliation from the CBSE, on the ground that the school is employing more than 20 persons and, therefore, that they are liable to pay arrears of the employer share of provident fund for the period from August 2005 onwards. 4.On the basis of this report, the competent Authority appears to have initiated proceedings holding that the petitioner is liable to be covered by the Act retrospectively from the year 2003 and thus granted them an Establishment Code from that year. When the petitioner challenged this, Section 7A proceedings was initiated by the Assistant Provident Fund Commissioner, which led to Ext.P7 order holding that the petitioner's contention that they have not engaged 20 employees cannot be found true and thus directed them to pay an amount of Rs.6,03,676.40 as their share of Provident Fund for the period from 8/2003 to 3/2007. This order was issued on 16.07.2007 and, against which, the petitioner 3 W.P.(C) No. 25959 of 2011 preferred statutory review under Section 7D of the Act, namely Exts.P8 and P9. These proceedings led to Ext.P10 order of the Assistant Provident Fund Commissioner/2[nd] respondent herein recording that the competent Authority has been pleased to waive the employee share of Provident Fund for the period from 8/2003 to 12/2006 on certain conditions. The petitioner says that subsequently the competent Authority issued Ext.P11 order covering the school for the period from 11/2007 till 7/2010, which was paid by them. - 5.The petitioner's grievance, as evident from the above narration of facts, thus appears to be against Ext.P7 order for the period from 8/2003 to 3/2007 and against Ext.P13 order imposing interest under Section 7Q and damages under Section 14B of the Act. - 6.After Ext.P13 order was issued, it also transpires that a subsequent order, dated 25.08.2011, a copy of which is on record as Ext.P14, was issued by the Authority confirming the order imposing damages for the period from 8/2003 to W.P.(C) No. 25959 of 2011 4 3/2007. Subsequently, in order to enforce these demands the Enforcement Officer of the Provident Fund department issued Ext.P16 request of the Sub Inspector of Police to initiate action against the petitioner and the petitioner, faced with such constraining position, say that they have paid certain amounts as demanded against them, but under protest. - 7.The petitioner, thus challenges Exts.P4, P7, P13 and P14 orders as being illegal and unlawful on several grounds, but primarily on the ground that these proceedings have been issued against the petitioner without giving them an opportunity of testing the validity of Ext.P4 report of the Enforcement Officer and without giving them an opportunity of cross examining the said officer. - 8.I have heard Sri.B.Mohan Lal, learned counsel for the petitioner and Sri.V.V.Suresh, learned Standing Counsel for respondents. - 9.This writ petition has been filed by the petitioner challenging W.P.(C) No. 25959 of 2011 5 orders issued by the competent Authority of the Provident Fund department under Section 7A, 7Q and 14B of the Act. It is conceded by Sri.B.Mohan Lal, learned counsel for the petitioner that they have not filed an appeal, under the provisions of the Act, against these orders. Therefore, a question arose as to whether this writ petition could be maintained, so as to challenge these orders. Sri.B.Mohan Lal, learned counsel submits that the orders impugned herein are _per se_ unsustainable and, therefore, virtually null and void for the reason that it has been issued in violation of the directions of the Hon'ble Supreme Court in _**Natwar Singh v. Director of Enforcement and another**_ **[(2012) 13 SCC 255].** According to him, the declaration of law by the Hon'ble Supreme Court, though not under the Act in question but under the Foreign Exchange Management Act, is that the petitioner is enjoined to have an opportunity to contest the enquiry report of the Enforcement Officer as also to cross examine him to test its validity, being explicit and inviolable, its violation at the hands of the Authorities, while issuing the orders impugned herein would render it void. Sri.B.Mohan Lal, submits with great vehemence that it is virtually W.P.(C) No. 25959 of 2011 6 admitted in these proceedings by the respondents that no such opportunity was ever afforded to the petitioner and that none of the contentions of the petitioner on this issue was even taken note of. He, therefore, asserts that this writ petition is maintainable and that relief can be granted by this Court, since the challenge against the orders, according to him, is founded on the violation of the directions of the Hon'ble Supreme Court. 10.Sri.V.V.Suresh, learned Standing Counsel appearing for the Provident Fund department, however, refutes these submissions and says that since the petitioner has not challenged the relevant orders by invoking the statutory remedy of an appeal that is available to them, they should be seen to have forfeited their rights to maintain such challenge. He contends that the writ petition is thus not maintainable and, therefore, that no relief can be granted therein. However, he concedes that the petitioner may be justified in saying that they were not given an opportunity to contest the correctness or otherwise of the report of the Enforcement Officer and that the Enforcement Officer was W.P.(C) No. 25959 of 2011 7 not allowed to be cross examined. 11.I have considered the submissions of the counsel as above and I have intently read the judgment of the Hon'ble Supreme Court in Natwar Singh (supra). Since the declaration of law by the Hon'ble Supreme Court is explicitly available from paragraph Nos.25, 26, 31 & 34, I deem it appropriate to extract it, so as to enable a full reading, as under: ## _**Principles of natural justice: statutory requirement and fair hearing**_ _25. It is true that Rule 4 does not require the adjudicating authority to supply copies of any documents along with the show-cause notice. The Rule does not require the adjudicating authority even to furnish any list of documents upon which reliance has been placed by it to set the law in motion. Does it mean that the adjudicating authority is not required to furnish the list of documents and copies thereof upon which reliance has been placed by it to issue of show-cause to a person against whom a complaint has been made by the authorised officer? Whether the principles of natural justice and doctrine of fairness require supply of documents upon which reliance has been placed at the stage of show-cause notice?_ _“It is not possible to lay down rigid rules as to when the principles of natural justice are to apply: nor as to there scope and extent. Everything depends on the subject-_ W.P.(C) No. 25959 of 2011 8 _matter.” [see R.v.Gaming Board for Great Britain, ex p Benaim and Khaida[1] at QB p.430C], observed Lord Denning.M.R._ _“....Their application, resting as it does upon statutory implication, must always be in conformity with the scheme of the Act and with the subject matter of the case.”_ _26. Even in the application of the doctrine of fair play there must be real flexibility. There must also have (sic been caused) some real prejudice to the complainant; there is no such thing as a merely technical infringement of natural justice. The requirements of natural justice must depend on the circumstances of the case, the nature of the inquiry, the rules under which the tribunal is acting, the subject-matter to be dealt with and so forth. Can the courts supplement the statutory procedures with requirements over and above those specified? In order to ensure a fair hearing, courts can insist and require additional steps as long as such steps would not frustrate the apparent purpose of the legislation._ _31. The concept of fairness may require the adjudicating authority to furnish copies of those documents upon which reliance has been placed by_ _him to issue show-cause notice requiring the noticee to explain as to why an inquiry under Section 16 of the Act should not be initiated. To this extent, the principles of natural justice and concept of fairness are required to be read into Rule 4(1) of the Rules. Fair procedure and the principles of natural justice are in-built into the Rules. A noticee is always entitled to satisfy the adjudicating authority that those very documents upon which reliance has been placed do not make out even a prima facie case requiring any further inquiry. In such view of the matter,_ W.P.(C) No. 25959 of 2011 9 _we hold that all such documents relied on by the authority are required to be furnished to the noticee enabling him to show a proper cause as to why an inquiry should not be held against him though the Rules do not provide for the same. Such a fair reading of the provision would not amount to supplanting the procedure laid down and would in no manner frustrate the apparent purpose of the statute._ _34. As noticed, a reasonable opportunity of being heard is to be provided by the adjudicating authority in the manner prescribed for the purpose of imposing any penalty as provided for in the Act and not at the stage where the adjudicating authority is required merely to decide as to whether an inquiry at all be held into the matter. Imposing of penalty after the adjudication is fraught with grave and serious consequences and therefore, the requirement of providing a reasonable opportunity of being heard before imposition of any such penalty is to be met. In contradistinction, the opinion formed by the adjudicating authority whether an inquiry should be held into the allegations made in the complaint are not fraught with such grave consequences and therefore the minimum requirement of a show-cause notice and consideration of cause shown would meet the ends of justice. A proper hearing always include, no doubt, a fair opportunity to those who are parties in the controversy for correcting or contradicting anything prejudicial to their view._ ## 12.I am, from a reading of the emphatic view of the Supreme Court afore, of the view that notwithstanding the objections raised by Sri.V.V.Suresh, that this writ petition is not W.P.(C) No. 25959 of 2011 10 maintainable, since it is virtually conceded before me that no such opportunity was given to the petitioner, either to test the validity of the report of the Enforcement Officer, it becomes obvious that the orders impugned therein become vitiated for that reason alone and, therefore, notwithstanding the fact that the petitioner did not file a statutory appeal against these orders, a collateral challenge to the same on it being in violation of the directions of the Supreme Court will lie. 13.In any event of the matter these are issues in the realm of facts and it will only be in the interest of the parties to resolve these facts, as to whether there are 20 employees at the relevant time and whether the persons shown in the attendance register are in fact employees or persons working gratuitously, be considered by the competent Authority before proceedings are confirmed against them. - 14.In such view of the matter and in the result, I quash Exts.P7, P13, and P14 orders so as to pave way for a fresh consideration of these issues at the hands of the Assistant W.P.(C) No. 25959 of 2011 11 Provident Fund Commissioner/2[nd] respondent herein, after affording an opportunity to the petitioner of contesting Ext.P4 enquiry report, in terms of the judgment of the Hon'ble Supreme Court in _Natwar Singh' case_ (supra). It is so ordered. - 15.Consequently, the 2[nd] respondent shall re-consider the issue and pass an appropriate order, after affording the above mentioned opportunity to the petitioner, as expeditiously as possible, but not later that six months from the date of receipt of a copy of this judgment. - 16.Needless to say, if after a fresh enquiry, it is found any amounts already remitted by the petitioner would require to inure back to them, it will be up to the Authorities to consider, how it can be adjusted in future. ## Sd/- **DEVAN RAMACHANDRAN JUDGE** AMV/19/03/2018