Allowed

Steel Industrials Kerala Ltd. v. the Enforcement Officer

Kerala HC16 Nov 2022WP(C)/569/2022

Case brief

AI extract

What is this about?

In a writ petition, the High Court of Kerala quashed garnishee notices issued by EPFO officers to a steel manufacturing establishment's bank account. The court held that the notices were issued without prior compliance of mandatory notice provisions under Section 8F(3) of the EPF Act, rendering the recovery proceedings unsustainable.

What did the court decide?

Orders Exts.P6 and P7 issuing garnishee notices were quashed; the writ petition was allowed with liberty to respondents to proceed under the Act after complying with strict statutory provisions.

Steel Industrials Kerala Ltd. Vs the Enforcement Officer — Banking and Recovery | Kerala HC (2022)

¶1

IN THE HIGH COURT OF KERALA AT ERNAKULAM

¶2

PRESENT

¶3

THE HONOURABLE MR. JUSTICE AMIT RAWAL

¶4

WEDNESDAY, THE 16^TH DAY OF NOVEMBER 2022 / 25TH KARTHIKA, 1944

¶5

WP(C) NO. 569 OF 2022

¶6

PETITIONER:

¶7

STEEL INDUSTRIALS KERALA LTD.

¶8

SHIP BREAKING UNIT, BEYPORE P.O, KOZHIKODE 673 015
REPRESENTED BY DEPUTY OFFICER, HRD

¶9

BY ADVS.
THUSHARA JAMES
M.S.AMAL DHARSAN

¶10

RESPONDENTS:

¶11

1 THE ENFORCEMENT OFFICER EMPLOYEES PROVIDENT FUND ORGANISATION, REGIONAL OFFICE, BHAVISHYANIDHI BHAVAN, ERANJIPALAM, KOZHIKODE 673 006

¶12

2 THE REGIONAL PROVIDENT FUND COMMISSIONER EMPLOYEES PROVIDENT FUND ORGANISATION, REGIONAL OFFICE, BHAVISHYANIDHI BHAVAN, ERANJIPALAM, KOZHIKODE 673 006

¶13

3THE ASSISTANT PROVIDENT FUND COMMISSIONER
EMPLOYEES PROVIDENT FUND ORGANISATION, SUB REGIONAL OFFICE,
BHAVISHYANIDHI BHAVAN, ERNAJIPALAM,
KOZHIKODE 673 006

¶14

4THE RECOVERY OFFICER,
EMPLOYEES PROVIDENT FUND ORGANISATION,
SUB REGIONAL OFFICE, BHAVISHYANIDHI BHAVAN,
ERANJIPALAM, KOZHIKODE 673 006

¶15

5 THE BRANCH MANAGER DHANALAXMI BANK, ATHANI BRANCH, 168, TRICHUR-SHORNUR ROAD, ATHANI, THRISSUR 680 581

¶16

BY ADV ABRAHAM P.MEACHINKARA

¶17

THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON
16.11.2022, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

¶18

¶19

WP(C) NO. 569 OF 2022

¶20

JUDGMENT

¶21

Orders Exts.P6 and P7 dated 30.12.2021 issuing garnishee notices to the bank of the petitioner under Section 8 of the Employees Provident Fund and Miscellaneous Provisions Act, 1952 for recovery of the alleged amount assessed under Sections 14B and 7Q of the Act pertaining to different periods is under challenge on behalf of the petitioner-establishment which is carrying on the business of steel manufacturing in the State of Kerala. For the assessment year April, 2015 to March, 2016, according to the petitioner there was a default in making the contribution resulting into proceedings under the Act and consequential proceedings under Sections 14B and 7Q. Having failed to achieve any success in the proceedings, petitioner filed a writ petition bearing No.32578/2019 wherein this Court vide interim order dated 02.12.2019 protected the interest of the petitioner subject to deposit of Rs.50,000/- within a period of four weeks from the date of the order, which is stated to have been drawn.

¶22

Adv.Thushara James along with Adv.Amar Darshan

¶23

WP(C) NO. 569 OF 2022

¶24

¶25

submits that petitioner is totally flabbergasted to receive the garnishee notices as have never been confronted or supplied with the orders purported to have been passed under Section 14B or 7Q of 1952 Act. Alleged amount reflected in Exts.P6 and P7 as per the stand taken by the respondent in the counter affidavit is pertaining to different period than the one arrived at but there has to be a compliance of Section 8(F)(3) of the Act ie., prior notice at the given address of the all the co-owners or account holders. In the absence of such compliance the garnishee notices straight away commanding the bank to attach the account of the petitioner is wholly unsustainable and without jurisdiction. This categoric averment regarding non-supply of orders have not been denied in the counter affidavit.

¶26

On the other hand, learned counsel for the respondent submits that the petitioners have been perpetual defaulter of noncontribution of the EPF entailing into proceeding under Section 14B and 7Q. The amount of Rs.76,05,442/- and Rs.8,68,724/reflected in Exts.P6 and P7 is in respect of damages and interests of different period referred to paragraphs 9, 20 and 25 of t he

¶27

WP(C) NO. 569 OF 2022

¶28

¶29

counter affidavit. I n case an establishment registered under the Act commits faults in making contribution, proceedings under Sections 14B and 7Q are inevitable.

¶30

I have heard the learned counsel for the parties and appraised the paper book. It would be expedient to extract the provisions of Section 8F of the Act:

¶31

“ 8F. Other modes of recovery. —(1) Notwithstanding the issue of a certificate to the Recovery Officer under section 8B, the Central Provident Fund Commissioner or any other officer authorised by the Central Board may recover the amount by any one or more of the modes provided in this section.

¶32

(2) If any amount is due from any person to any employer who is in arrears, the Central Provident Fund Commissioner or any other officer authorised by the Central Board in this behalf may require such person to deduct from the said amount the arrears due from such employer under this Act and such person shall comply with any such requisition and shall pay the sum so deducted to the credit of the Central Provident Fund Commissioner or the officer so authorised, as the case may be:

¶33

Provided that nothing in this sub-section shall apply to any part of the amount exempt from attachment in execution of a decree of a civil court under section 60 of the Code of Civil Procedure, 1908 (5 of 1908).

¶34

(3)(i) The Central Provident Fund Commissioner or any other officer authorised by the Central Board in this behalf

¶35

WP(C) NO. 569 OF 2022

¶36

¶37

may, at any time or from time to time, by notice in writing, require any person from whom money is due or may become due to the employer or, as the case may be, the establishment or any person who holds or may subsequently hold money for or on account of the employer or as the case may be, the establishment, to pay to the Central Provident Fund Commissioner either forthwith upon the money becoming due or being held or at or within the time specified in the notice (not being before the money becomes due or is held) so much of the money as is sufficient to pay the amount due from the employer in respect of arrears or the whole of the money when it is equal to or less than that amount.

¶38

(ii) A notice under this sub-section may be issued to any person who holds or may subsequently hold any money for or an account of the employer jointly with any other person and for the purposes of this sub-section, the shares of the joint-holders in such account shall be presumed, until the contrary is proved, to be equal.

¶39

(iii) A copy of the notice shall be forwarded to the employer at his last address known to the Central Provident Fund Commissioner or, as the case may be, the officer so authorised and in the case of a joint account to all the jointholders at their last addresses known to the Central Provident Fund Commissioner or the officer so authorised.

¶40

(iv) Save as otherwise provided in this sub-section, every person to whom a notice is issued under this subsection shall be bound to comply with such notice, and, in particular, where any such notice is issued to a post office, bank or an insurer, it shall not be necessary for any pass

¶41

WP(C) NO. 569 OF 2022

¶42

¶43

book, deposit receipt, policy or any other document to be produced for the purpose of any entry, endorsement or the like being made before payment is made notwithstanding any rule, practice or requirement to the contrary.

¶44

(v) Any claim respecting any property in relation to which a notice under this sub-section has been issued arising after the date of the notice shall be void as against any demand contained in the notice.

¶45

(vi) Where a person to whom a notice under this subsection is sent objects to it by a statement on oath that the sum demanded or any part thereof is not due to the employer or that he does not hold any money for or on account of the employer, then, nothing contained in this subsection shall be deemed to require such person to pay any such sum or part thereof, as the case may be, but if it is discovered that such statement was false in any material particular, such person shall be personally liable to the Central Provident Fund Commissioner or the officer so authorised to the extent of his own liability to the employer on the date of the notice, or to the extent of the employer’s liability for any sum due under this Act, whichever is less.

¶46

(vii) The Central Provident Fund Commissioner or the officer so authorisedmay, at any time or from time to time, amend or revoke any notice issued under this sub-section or extend the time for making any payment in pursuance of such notice.

¶47

(viii) The Central Provident Fund Commissioner or the officer so authorised shall grant a receipt for any amount paid in compliance with a notice issued under this subsection, and the person so paying shall be fully discharged

¶48

WP(C) NO. 569 OF 2022

¶49

¶50

from his liability to the employer to the extent of the amount so paid.

¶51

(ix) Any person discharging any liability to the employer after the receipt of a notice under this sub-section shall be personally liable to the Central Provident Fund Commissioner or the officer so authorised to the extent of his own liability to the employer so discharged or to the extent of the employer’s liability for any sum due under this Act, whichever is less.

¶52

(x) If the person to whom a notice under this subsection is sent fails to make payment in pursuance thereof to the Central Provident Fund Commissioner or the officer so authorised he shall be deemed to be an employer in default in respect of the amount specified in the notice and further proceedings may be taken against him for the realisation of the amount as if it were an arrear due from him, in the manner provided in sections 8B to 8E and the notice shall have the same effect as an attachment of a debt by the Recovery Officer in exercise of his powers under section 8B.

¶53

(4) The Central Provident Fund Commissioner or the officer authorised by the Central Board in this behalf may apply to the court in whose custody there is money belonging to the employer for payment to him of the entire amount of such money, or if it is more than the amount due, an amount sufficient to discharge the amount due.

¶54

(5) The Central Provident Fund Commissioner or any officer not below the rank of Assistant Provident Fund Commissioner may, if so authorised by the Central Government by general or special order, recover any arrears of amount due from an employer or, as the case may be,

¶55

WP(C) NO. 569 OF 2022

¶56

¶57

from the establishment 20 by distraint and sale of his or its movable property in the manner laid down in the Third Schedule to the Income- tax Act, 1961 (43 of 1961).

¶58

5. On perusal of the provisions of sub sections (iii) and (iv)

¶59

of section 3 of the Act, it is evident that prior to issuance of proceedings under Section 8F to a Bank holding the account of affected party, notice is required to be sent to all the interested persons. There has not been such compliance in the absence of any pleadings in the counter affidavit. No doubt the recovery is being sought for periods referred to in paragraphs 9, 20 and 25 of interest and damages but the fact remains, there has not been compliance. Had there been pleadings in the counter affidavit regarding the supply of the orders purported to have been passed under Sections 7Q and 14B, perhaps the petitioner would have availed the statutory remedy as prescribed under the Act.

¶60

Without commenting further on this aspect, I quash the orders Exts.P6 and P7, allow the writ petition with liberty to respondents to proceed under the provisions of the Act by taking resort to the strict provisions under the Act in accordance with law.

¶61

¶62

WP(C) NO. 569 OF 2022

¶63

Petitioner shall be at liberty to seek the information from the respondents regarding the passing of the orders under Sections 7Q and 14B in respect of the period referred to in paragraph 9, 20 and 25 within a period of one month. As and when such information is requested by the petitioner respondents shall supply the same in accordance with law in another 15 days.

Sd/-

AMIT RAWAL

JUDGE

nak

WP(C) NO. 569 OF 2022

¶69

¶70

APPENDIX OF WP(C) 569/2022

¶71

PETITIONER EXHIBITS

¶72

Exhibit P1TRUE COPY OF THE NOTICE DATED 20-03-2018
ISSUED VIA EMAIL BY THE 1ST RESPONDENT TO
THE PETITIONER.

¶73

Exhibit P2TRUE COPY OF THE DD NO 072655 DATED 28-
03-2019

¶74

Exhibit P3TRUE COPY OF THE ORDER DATED 18-10-2019
IN APPEAL NO. 87/2018

¶75

Exhibit P4TRUE COPY OF THE INTERIM ORDER DATED 02-
12-2019 IN W.P9C0 NO. 32578/2019

¶76

Exhibit P5TRUE COPY OF THE LETTER DATED 26-12-2019
ISSUED BY THE PETITIONER TO THE 3RD
RESPONDENT

¶77

Exhibit P6TRUE COPY OF THE ORDER NO 177/4125 DATED
30-12-2021

¶78

Exhibit P7TRUE COPY OF THE ORDER NO. 178/4126 DATED
30-12-2021

Steel Industrials Kerala Ltd. v. the Enforcement Officer

Case brief

What is this about?

What did the court decide?

Steel Industrials Kerala Ltd. v. the Enforcement Officer

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Statutes considered

Parties & counsel

Coram

Case details

Similar cases

Rema K.V Vs Andrews

Surendradas Vs State of Kerala

Antony. a. J Vs Union of India

K.S.Distillery, Vs State of Kerala

Devicolam Distilleries Ltd. Vs State of Kerala

Sarovar Hotels Private Limited Vs the Authority Under Minimum Wages Act, 1948