Dismissed

Ex-Servicemen Industrial Guards Pvt.Ltd v. the Employees Provident Fund Organisation

Kerala HC7 Sept 2018WP(C)/7770/2015

Case brief

AI extract

What is this about?

High Court of Kerala dismissed the writ petition challenging an ex-parte order under Section 7A of the EPF Act and a subsequent demand notice. The court held the petitioner sought to circumvent statutory appeal remedies and found the employer had sufficient opportunity to contest the case based on seized records.

What did the court decide?

Petitioner free to invoke statutory remedies or seek permission for remittance in instalments.

Ex-Servicemen Industrial Guards Pvt.Ltd Vs… — Pension and Retirement Benefits | Kerala HC (2018)

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IN THE HIGH COURT OF KERALA AT ERNAKULAM

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PRESENT

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THE HONOURABLE SMT. JUSTICE P.V.ASHA

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FRIDAY ,THE 07TH DAY OF SEPTEMBER 2018 / 16TH BHADRA, 1940

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WP(C).No. 7770 of 2015

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PETITIONER/S:

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EX-SERVICEMEN INDUSTRIAL GUARDS PVT.LTD CARMEL BUILDING, BANERJI ROAD, KOCHI-682018, REPRESENTED BY ITS MANAGING DIRECTOR, EDWARD STEPHEN.

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ADV. SRI. SANJITH .R

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RESPONDENT/S:

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1 THE EMPLOYEES PROVIDENT FUND ORGANISATION REPRESENTED BY THE CHIEF PROVIDENT COMMISSIONER, BHAVISHYA NIDHI BHAVAN, 14, BHIKAJI CAMA PALACE, NEW DELHI-110066.

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2 REGIONAL PROVIDENT FUND COMMISSIONER THE EMPLOYEES PROVIDENT FUND ORGANISATION, KALOOR, ERNAKULAM-682017.

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3 RECOVERY OFFICER AND ASSISTANT P.F.COMMISSIONER THE EMPLOYEES PROVIDENT FUND ORGANISATION, KALOOR, ERNAKULAM-682017.

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BY ADV. DR.S.GOPAKUMARAN NAIR (SR.)

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SC SRI.S.PRASANTH

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THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 07.09.2018, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

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WP(C).No. 7770 of 2015

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JUDGMENT

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Ext.P1 order passed by the 2^nd respondent under Section 7A of Employees Provident Fund and Miscellaneous Provisions Act, 1952 (hereinafter referred to as 'the Act') and Ext.P3 order rejecting application for setting aside Ext.P1 order and Ext.P7 demand notice issued pursuant to Ext.P1 order are under challenge in this writ petition.

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– 2. The petitioner M/s.Ex-servicemen

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Industrial Guards Private limited is a Private Company covered by the Act. The Enforcement Officers under the 2^nd respondent conducted an inspection in the petitioner company and filed a report on 01.09.2011 according to which there was shortage in remittance of contribution by the petitioner company, for the period from 04/2006 to 06/2011. Pursuant to that report the 2^nd respondent issued notice directing the petitioner to appear for an enquiry under Section

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7A of the Act, fixed on 29.9.2011. On that day, Managing Director of the petitioner company, along with the Manager appeared before the 2^nd respondent.

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WP(C).No. 7770 of 2015

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Thereafter the enquiry was posted on various dates in 2011 and 2012. Ext.P1 order was passed on 3.8.2012 stating that nobody appeared for the enquiry on that day and therefore the 2^nd respondent was constrained to determine the contribution in respect of the establishment for the period from 4/2006 to 2/2011 on the strength of the records obtained from the establishment.

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3. The 2^nd respondent stated that the Managing Director and the Manager of the petitioner, when they appeared before him on 29.09.2011, had, on perusal of the records seized by the squad from the premises of their establishment, confirmed that those records were that of the petitioner establishment. Based on these records, the 2^nd respondent determined the amount due from the employer for the period from 04/2006 to 02/2011 and directed the petitioner to remit a sum of Rs.78,77,687/- in the respective heads of account and to forward the challans along with respective Provident Fund returns, failing which, proceedings would be initiated under Section 8B to 8G

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WP(C).No. 7770 of 2015

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apart from prosecution under Section 14/14A. It was stated that the said amount is exclusive of the penal damages leviable under Section 14 B.

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4. Petitioner submits that Ext.P1 order dated

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03.08.2012 was signed only on 17.01.2013 and was received on 25.01.2013. Thereupon petitioner submitted Ext.P2 application for setting aside the exparte order, under Section 7A(4) of the Act stating that Ext.P1 order was passed without conducting proper enquiry and without issuing a notice before fixing the quantum. It was stated that the Managing Director and the Manager had appeared before the 2^nd respondent on 29.9.2011 and requested for time for filing objections; but it was not allowed and the enquiry was adjourned to 25.10.2011. It was stated that on 25.10.2011 certain staff of petitioner's clients had appeared before the 2^nd respondent for verification; the case was adjourned to 27.10.11 and it was thereafter adjourned to 8.11.2011 and thereafter to 13.6.12. The petitioner submitted that there was no notice regarding the posting of the case

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WP(C).No. 7770 of 2015

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on 13.6.2012 and therefore there was no appearance either for the management or the employees. On 05.07.2012, the Accountant of the petitioner had produced a tabular statement of payment as sample for one month. According to the petitioner, the Accountant was informed that the salary can be worked out on the basis of the tabular statement and the amount thus arrived at would be the correct disbursed salary. It was stated that thereafter a tabular statement for one year was produced. Thereafter

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though the enquiry was adjourned to 27.7.12 for a direct enquiry with some of the employees who worked in the petitioner company and some of the security guards working in different establishments had appeared, no personal enquiry was conducted and the case was adjourned to 03.08.2012. According to the petitioner there was no notice regarding the adjournment of the case to 03.08.2012 and therefore no one could appear before the 2^nd respondent on behalf of the establishment. According to the

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petitioner none of the employees also appeared before

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WP(C).No. 7770 of 2015

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the 2^nd respondent on that day. It is stated that in case direct evidence was taken from the employees, the real salary they received from the establishment could have been ascertained but the enquiry officer proceeded without taking any steps to take direct evidence from the employees, even though they had personally appeared before him. It was stated that Ext.P1 order was issued without considering the documents produced or without taking direct evidence from the employees or the employer. It was stated that no show cause was served before arriving at the amount shown in Ext.P1 and that the amount arrived at was excessive and did not have nexus with the actual salary paid.

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5. The 2^nd respondent rejected Ext.P2 petition as per Ext.P3 order issued on 25.09.2014. Referring to the provisions contained in Section 7A(4) the 2^nd respondent stated that petitioner was afforded an opportunity of hearing on 16.3.2014 and petitioner did not make any pleading even in that petition. Therefore Ext.P1 order was confirmed saying that it

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WP(C).No. 7770 of 2015

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was not an exparte order and there was no reason to set aside Ext.P1.

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6. The petitioner thereupon filed another

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application Ext.P4 again under Section 7A(4) for setting aside Ext.P3 order stating that Ext.P3 order was passed without issuing any notice and that no hearing was held on 16.03.2014 and that in case notice was issued petitioner could have adduced evidence. Petitioner has stated that though hearing was fixed on that petition on 15.12.2014, petitioner had sought adjournment as per Ext.P6 letter. While the said petition is pending, petitioner received Ext.P7 demand notice dated 10.02.2015 directing it to remit a sum of Rs.77,56,309/- failing which further proceedings would be initiated for its recovery.

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7. This writ petition was filed at this stage alleging that the demand notice is premature as Ext.P4 application is pending consideration. It is alleged that Exts.P1 and P7 are violative of principles of natural justice.

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8. The respondents have filed a statement

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WP(C).No. 7770 of 2015

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according to which petitioner did not resort to the statutory remedy of appeal in case he was aggrieved by Exts.P1 or P3 orders. It is stated that petitioner was filing returns showing only a fraction of the wages of the employees, which is far below minimum wages. As per the report submitted by the squad of Enforcement Officers who inspected the petitioner establishment there was under reporting of basic wages and evasion of statutory contribution towards EPF to the detriment of employees. It is stated that sufficient opportunity was given to petitioner and the enquiry was posted on several days and the officers of petitioner had appeared before it on several occassions and finally it was determined in Ext.P1 order directing petitioner to remit the amount. It is stated that Ext.P3 order was passed after hearing the petitioner in accordance with law.

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9. Heard the learned Counsel on either side. No reason is seen stated as to what prevented the petitioner from filing an appeal against the order Exts.P1 or P3. Petitioner chose to file another

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WP(C).No. 7770 of 2015

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petition for setting aside ex-parte order, apparently to circumvent the statutory provisions.

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10. What is stipulated in Section 7A is that orders shall not be passed under Section 7A of the Act without giving a reasonable opportunity to represent his case to the employer. The enquiry was posted on several dates from 29.09.2011 onwards and petitioner and his representatives have appeared on several occasions. Petitioner has not even filed any objection before the 1^st respondent. Though it is stated that time was not granted for filing objection on the date of first posting, nothing is stated as to why the petitioner chose not to file any objection when the case came up on several occassions. No request is also seen to have been made on behalf of petitioner to adduce evidence. The first respondent stated that the determination is made on the basis of the records seized from petitioner. Therefore it cannot be said that the Employer was not given sufficient opportunity to contest the case.

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11. After the petition was filed for setting aside the exparte, petitioner claims that it was not heard

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WP(C).No. 7770 of 2015

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before issuing Ext.P3 order. However, the case of the 2^nd respondent is that the petitioner was heard, as stated in Ext.P3 order itself. Even assuming that petitioner was not heard, the finding of the 2^nd respondent is that the order was issued on the basis of the records seized from the petitioner. Petitioner has not produced any material even before this Court in order to assert that the order issued under Section 7A was incorrect or not based on the materials available.

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12. At any rate, the dispute raised are all with respect to factual circumstances, which the petitioner could have very well agitated by filing appeal instead of filing repeated petitions for setting aside ex-parte even in the absence of any provision for the same.

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On consideration of the pleadings and

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contentions on both sides, it would appear that the petitioner wanted to circumvent the statutory provisions. Therefore I do not find any circumstances to interfere with the orders impugned. Accordingly the writ petition is dismissed.

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It is made clear that petitioner would be free to invoke the statutory remedies, if any, available to

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WP(C).No. 7770 of 2015

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it or to seek permission for remittance of the amount

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due in instalments.

Sd/-

P.V.ASHA

JUDGE

APPENDIX

PETITIONER'S/S EXHIBITS:

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EXHIBIT P1 TRUE COPY OF THE ORDER DATED 03-08-12 OF THE 2ND RESPONDENT. EXHIBIT P2 TRUE COPY OF THE APPLICATION UNDER SECTION 7(A)(4) ACT DATED 01-02-2013.

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*** EXHIBIT P3 TRUE COPY OF THE ORDER ISSUED BY THE 2ND RESPONDENT.**

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*** DELETED VIDE ORDER DATED 11.03.2015 IN I.A.No.3707/2015 AND NEW EXHIBIT P3 SUBSTITUTED.**

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EXHIBIT P3 TRUE COPY OF THE PROCEEDINGS OF THE 2ND RESPONDENT DATED 25.09.2014. EXHIBIT P4 TRUE COPY OF THE APPLICATION UNDER SECTION 7(A)(4)ACT. EXHIBIT P5 TRUE COPY OF THE NOTICE DATED 01-12-14 ISSUED BY RESPONDENT. EXHIBIT P6 TRUE COPY OF THE LETTER DATED 15-12-14 ISSUED BY THE PETITIONER. EXHIBIT P7 TRUE COPY OF THE NOTICE DATED 10-022015. EXHIBIT P8 TRUE COPY OF THE LETTER DATED 20.04.2015 SUBMITTED BY ITS OFFICIALS.

Ex-Servicemen Industrial Guards Pvt.Ltd v. the Employees Provident Fund Organisation

Case brief

What is this about?

What did the court decide?

Ex-Servicemen Industrial Guards Pvt.Ltd v. the Employees Provident Fund Organisation

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Parties & counsel

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Case details

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