Dismissed

S.Vadivel v. the Regional Director

Madras HC7 Jun 2011WP/10495/2008

Case brief

AI extract

What is this about?

The High Court of Judicature at Madras dismissed a writ petition filed by former directors challenging the Recovery Officer's orders for dues. The Court held that since the liability was fixed on the company and remedies under the ESI Act are available, the petition was an inappropriate forum for personal execution.

What did the court decide?

Writ petition dismissed; connected miscellaneous petition closed.

S.Vadivel Vs the Regional Director — Pension and Retirement Benefits | Madras HC (2011)

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IN THE HIGH COURT OF JUDICATURE AT MADRAS

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DATED: 07.06.2011

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CORAM:

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THE HON’BLE MR. JUSTICE K.CHANDRU

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W.P.No.10495 of 2008 & M.P.No.1 of 2008

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S.Vadivel
2. K.Palaniappan .. Petitioners
Vs.
1. The Regional Director
Employees State Insurance Corporation
Coimbatore
2. The Deputy Director
Employees State Insurance Corporation
Sub Regional Office
Coimbatore
3. The Recovery Officer
Employees State Insurance Corporation
Sub Regional Office
Coimbatore .. Respondents
Prayer : Petition under Article 226 of the Constitution of India
praying for a Writ of Declaration declaring the action of the
respondents against the petitioners in respect of the dues of
M/s.Sarguna Textiles Private Limited, Pollachi as evident from the
summons of the 3 rd respondent dated 15.2.2008 bearing Ref:56/7086-
II/RRC and 31.3.2008 bearing ref: 56/7086-II/RRC as illegal and
consequently forbear the respondents from in any manner proceedings
against the petitioners or their personal properties in respect of
the dues of M/s.Sarguna Textile Private Limited.

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For Petitioners :: Mr.D.Bharatha Chakravarthy for

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M/s.Sai, Bharath & Ilan

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For Respondents :: Ms.S.Jayakumari

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The petitioners, who claim to be a Director of M/s.Sarguna Textiles Private Limited are before this Court. In this Writ

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https://hcservices.ecourts.gov.in/hcservices/

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Petition, they have challenged the orders passed by the 3^rd respondent Recovery Officer dated 15.2.2008 and 31.3.2008 and after setting aside the same seeks for a consequential direction to forbear the respondents from proceeding against the petitioners or their personal properties in respect of the dues payable by M/s.Sarguna Textile Private Limited.

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It is curious to note that the petitioners have not made the company as party to the Writ Petition. On the contrary, their allegations are that they are no longer Directors of the Company and in any event, their personal properties cannot be proceeded against the dues payable by the company. In the absence of company being party to the Writ Petition, the roll played by each of the petitioner as Directors of the Company, cannot be gone into in the Writ Petition.

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Secondly, if the petitioners' properties are sought to be attached and brought to sale by the Recovery Officer, it is not as if the Act do not have any remedy. Chapter IV of the ESI Act provides a recovery mechanism to be adopted by the ESI Corporation in case of any default by the employer. Under Section 45-H of the Act, the proceedings to the II and III Schedule of Income Tax Act, 1961 has been incorporated and by the said provision, if any property does not liable for any attachment and is brought under sale, the Recovery Officer has power to determine the claims made by the authorities and he has also got powers to grant interim stay under Section 45-F of the ESI Act. Therefore, if the petitioner has any objection regarding the property which is sought to be attached, he can always have a remedy of appeal to avail.

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Thirdly, in the present case, in the order passed under Section 45-A of the Act, the liability including levy of damages was fixed on the company. It is not stated by the petitioners whether the company has questioned the said order passed by the ESI Authorities either in the forum provided under the Act or in any other court.

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The Supreme Court vide its judgment in ESI Corpn. v. C.C. Santhakumar reported in (2007) 1 SCC 584 has held that if the order under Section 45-A is not under challenge, the ESI authorities are at liberty to execute the order in the manner known to law. In the present case, the order under Section 45-A was not under challenge but the petitioner has come to this Court at the stage of summons issued to the petitioner and also a show cause notice asking the petitioner to show cause as to why they should not be prosecuted by issuance of warrant. Therefore, the petitioners are well advised to give reply to such notice. It must be noted, by introduction of Section 86-A by Central Act 29 of 1989, not only the company or other persons who are incharge or responsible to the company in the conduct of business of the company are liable for prosecution for any offence committed under the Act. These are the matters which require

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https://hcservices.ecourts.gov.in/hcservices/

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evidence and appropriate proof before the petitioners are absolved of individual right in running the company.

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In the light of the above, this Court is not inclined to entertain the Writ Petition. It is for the petitioners to work out the remedy in the manner known to law under the provisions of the Act. The Writ Petition is dismissed. No costs. The connected Miscellaneous Petition is closed.

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Sd/
Asst.Registrar
/true copy/
Sub Asst.Registrar
ajr
To
1. The Regional Director
Employees State Insurance Corporation
Coimbatore
2. The Deputy Director
Employees State Insurance Corporation
Sub Regional Office
Coimbatore
3. The Recovery Officer
Employees State Insurance Corporation
Sub Regional Office
Coimbatore
+1 CC to Mr.Sai Bharath Ilan, Advocate, S.R.No.32337
W.P.No.10495 of 2008
jp(co)
SRA(16/6/2011)

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https://hcservices.ecourts.gov.in/hcservices/

S.Vadivel v. the Regional Director

Case brief

What is this about?

What did the court decide?

S.Vadivel v. the Regional Director

Case brief

What is this about?

What did the court decide?

What the court decided

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