S.A. Cashew Factory, Mutakkavu, Nedumpana P.O., Kollam District (represented by its proprietor M. Basheerkutty) v. Employees Provident Fund Appellate Tribunal, New Delhi; Assistant Provident Fund Commissioner, EPFO, Mannaniya Complex, Andamukkam, Kollam; Enforcement Officer, EPFO, Mannaniya Complex, Andamukkam, Kollam

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE P.N.RAVINDRAN WEDNESDAY, THE 10TH AUGUST 2011 / 19TH SRAVANA 1933 WP(C).No. 5857 of 2011(F) ------------------------- PETITIONER(S): --------------- S.A. CASHEW FACTORY, MUTTAKKAVU, NEDUMPANA.P.O, KOLLAM DISTRICT, REPRESENTED BY ITS PROPRIETOR, M. BASHEERKUTTY. BY ADV. SRI.B.SURESH KUMAR RESPONDENT(S): --------------- 1. THE EMPLOYEES PROVIDENT FUND APPELLATE TRIBUNAL, NEW DELHI - 110001. 2. THE ASSISTANT PROVIDENT FUND COMMISSIONER, EMPLOYEES PROVIDENT FUND ORGANISATION, MANNANIYA COMPLEX, ANDAMUKKAM, KOLLAM - 691 001. 3. THE ENFORCEMENT OFFICER, EMPLOYEES PROVIDENT FUND ORGANISATION, MANNANIYA COMPLEX, ANDAMUKKAM, KOLLAM -691 001. ADV. SRI.V.V.SURESH,SC,EPF.ORGANISATION FOR R2,3 THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 05/08/2011, THE COURT ON 10/08/2011 DELIVERED THE FOLLOWING: ## W.P(C)No.5857/2011 ## APPENDIX ## PETITIONER'S EXHIBITS: EXT.P1. TRUE COPY OF THE ORDER DATED 2/12/2008PASSED BY THE 2ND RESPONDENT EXT.P2. TRUE COPY OF THE ORDER DATED 9.2.2009 PASSED BY THE 2ND RESPONDENT. EXT.P3. TRUE COPY OF THE APPEAL MEMORANDUM DATED 16.3.2009 FILED BY THE PETITIONER BEFORE THE 1ST RESPONDENT. EXT.P4. TRUE COPY OF THE ORDER DATED 13.1.2011 PASSED BY THE TRIBUNAL. EXT.P5. TRUE COPY OF THE INSPECTION REPORT DATED 25.10.2007 OF THE ESI CORPORATION. EXT.P6. TRUE COPY OF THE NOTICE DATED 28.8.2008 ISSUED BY THE ESI CORPORATION ALONG WITH THE INSPECTION REPORT DATED 29.7.2008 SUBMITTED ON THE BASIS OF A JOINT INSPECTION CONDUCTED BY THE PF ENFORCEMENT OFFICER, INSURANCE INSPECTOR, ESI. EXT.P7. TRUE COPY OF THE RETURN SUBMITTED BY THE PETITIONER FOR THE PERIOD 1.4.2007 TO 30.9.2007 EXT.P8. TRUE COPY OF THE RETURN SUBMITTED BY THE PETITIONER FOR THE PERIOD 1.10.2007 TO 31.3.2008 EXT.P9. TRUE COPY OF THE RETURN SUBMITTED BY THE PETITIONER FOR THE PERIOD 1.4.2008 TO 30.9.2008. / TRUE COPY / P.S.TO JUDGE ## **P.N.RAVINDRAN, J.** **----------------------------------------W.P(C).No.5857 of 2011 ----------------------------------------Dated this the 10[th] August, 2011** ## **JUDGMENT** The petitioner is the proprietor of a cashew factory, an establishment covered under the provisions of the Employees Provident Funds and Miscellaneous Provisions Act, 1952 (hereinafter referred to as the Act for short). In this writ petition the petitioner challenges Ext.P1 order passed by the second respondent under section 7A of the Act, Ext.P2 order passed by the second respondent rejecting the application filed by the petitioner under section 7-B of the Act for a review of Ext.P1 order and Ext.P4 order passed by the Employees Provident Fund Appellate Tribunal upholding Exts.P1 and P2. The brief facts of the case are as follows. 2. Based on a report submitted by the third respondent Enforcement Officer that though the petitioner was remitting the contribution to the Employees Provident Fund in respect of 60 employees, 200 employees were working in the petitioner's establishment when the third respondent visited the factory, the ## **W.P(C).No.5857 of 2011** -:2:- Assistant Provident Fund Commissioner issued a notice dated 28.5.2008 under section 7-A of the Act proposing to hold an enquiry on 11.6.2008. The enquiry was thereafter adjourned and ultimately Ext.P1 order was passed on 2.12.2008 whereby the second respondent directed the petitioner to pay the sum of Rs.10,41,338/- being the provident fund contribution and other charges payable in respect of the period from February 2007 to April 2008. Aggrieved thereby, the petitioner filed an application for review under section 7-B of the Act. By Ext.P2 order passed on 9.2.2009 the review petition was rejected. Aggrieved thereby, the petitioner filed an appeal under section 7-I of the Act before the Employees Provident Fund Appellate Tribunal. By Ext.P4 order passed on 13.1.2011 the Appellate Tribunal dismissed the appeal. Hence this writ petition challenging Exts.P1, P2 and P4 orders. 3. The main contention raised by the petitioner is that the Appellate Tribunal erred in holding that the enquiry under section 7A of the Act is not vitiated for not furnishing a copy of the Enforcement Officers report to the petitioner in view of the fact that in the course of the enquiry under section 7A the petitioner did not ask for a copy of the report submitted by the Enforcement ## **W.P(C).No.5857 of 2011** ## -:3:- Officer, that he did not ask for an opportunity to cross-examine the Enforcement Officer and therefore, the failure to supply a copy of the Enforcement Officer's report has not caused any prejudice to him. The petitioner contends that the said finding is perverse and is liable to be set aside. The petitioner also challenges the Appellate Tribunal's order on various other grounds. 4. I heard Sri.B.Suresh Kumar, learned counsel appearing for the petitioner and Sri.V.V.Suresh, learned standing counsel appearing for respondents 2 and 3. Though the first respondent has not been served, in view of the fact that no allegations of bias have been levelled against the Employees Provident Fund Appellate Tribunal, it is not necessary to await service of notice on the first respondent or to hear the first respondent. Ext.P1 order passed by the second respondent under section 7A of the Act discloses that the Enforcement Officer had visited the petitioner's establishment and submitted a report to the effect that around 200 employees were working in the establishment, but the petitioner was remitting the provident fund contribution only in respect of 60 employees. The order also proceeds to state that inspite of repeated adjournments, the employer failed to produce ## **W.P(C).No.5857 of 2011** -:4:- records containing correct and complete details of the persons employed in his factory and the wages paid to them. It appears during the course of the section 7A enquiry, the Enforcement Officer had submitted a report on 14.10.2008 to the effect that the records produced by the employer during the enquiry did not take in any of the records verified by the Enforcement Officer at the time of his inspection. A copy of the report dated 14.10.2008 was furnished to the petitioner, but a copy of the inspection report which was the basis for the report dated 14.10.2008 was not furnished to the petitioner. The petitioner pointed out this as a reason for seeking a review of Ext.P1 in the application for review filed by him. However, on the ground that during the course of the section 7A enquiry, the employer did not put forward a complaint that a copy of the enquiry report has not been furnished to him and did not also request for an opportunity to cross-examine the Enforcement Officer, the second respondent held that no such request can be entertained at a later stage. By Ext.P2 order the review petition was dismissed. In Ext.P3 appeal memorandum the petitioner had specifically alleged that a copy of the report submitted by the Enforcement Officer was not furnished **W.P(C).No.5857 of 2011** -:5:- to him and that he was also not afforded an opportunity to crossexamine the Enforcement Officer. The Appellate Tribunal specifically took note of this contention when it passed Ext.P4 order in paragraph 12 thereof but declined to interfere on the ground that the petitioner did not ask for a copy of the Enforcement Officer's report or for an opportunity to crossexamine the Enforcement Officer and from the petitioner's conduct it is evident that no prejudice has been caused to him. 5. From the observations made by the second respondent himself in Ext.P2 order rejecting the application for review and by the Appellate Tribunal in paragraph 12 of Ext.P4 order, it is evident that a copy of the Enforcement Officer's report, which was the basis for initiating the section 7A enquiry, which led to Ext.P1 order being passed was not furnished to the petitioner. The materials on record also disclose that the petitioner was also not afforded an opportunity to cross-examine the Enforcement Officer after furnishing him a copy of the report. The Apex Court has in _**Natwar Singh v. Director of Enforcement and another**_ , (2010) 13 SCC 255, held that the right to fair hearing is a guaranteed right and that nothing should be used against a ## **W.P(C).No.5857 of 2011** -:6:- person which has not been brought to his notice. It was held that the concept of fairness requires the adjudicating authority to furnish those documents upon which reliance has been placed and that it is only in cases where disclosure of evidential material might inflict serious harm on the person directly concerned or other persons or where disclosure would be in breach of confidence or might be injurious to public interest that an exception to the said rule can be taken. 6. In the instant case it is evident from the orders under challenge that the second respondent accepted the report submitted by the Enforcement Officer without furnishing a copy thereof to the petitioner or affording him an opportunity to crossexamine the Enforcement Officer. In the light of the principles laid down by the Apex Court in _**Natwar Singh v. Director of Enforcement and another**_ (supra) it cannot be said that a fair procedure was followed by the second respondent before passing Exts.P1 and P2 orders. The Appellate Tribunal also erred in holding that no prejudice will be caused to the party for the reason that he did not ask for a copy of the report when the report contained adverse findings and a copy thereof had not been ## **W.P(C).No.5857 of 2011** -:7:- furnished to him. I am therefore satisfied that the petitioner was not afforded a fair hearing before Ext.P1 order was passed. Though a review was attempted, even at the stage of the review the second respondent did not furnish a copy of the report to the petitioner. I am therefore, of the opinion that the impugned orders are liable to be set aside. I accordingly allow the writ petition, quash Exts.P1, P2 and P4 and direct the first respondent to pass revised orders in the matter after furnishing the petitioner a copy of the report submitted by the Enforcement Officer and the accompanying papers. Needless to say, the petitioner should be afforded an opportunity to cross examine the Enforcement Officer who prepared and submitted the report. Revised orders in the matter shall be passed expeditiously and in any event within three months from the date on which a copy of the report is furnished to the petitioner. ## **P.N.RAVINDRAN, Judge.** ## **ahg.** ## **W.P(C).No.5857 of 2011** -:8:- **The words “first respondent” occurring in line 2 of the last paragraph of the judgment dated 10/08/2011 in W.P (C) 5857/2011 are corrected and substituted as “second respondent”, vide order dated 02/09/2011 in I.A.13670/2011.** **Sd/Registrar (Judicial)** **P.N.RAVINDRAN, J. --------------------------W.P(C).No.5857 of 2011 ----------------------------** ## **JUDGMENT** **10[th] August, 2011**