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W.P.No.8773 of 2016
THE HONOURABLE SMT JUSTICE P.MADHAVI DEVI
W.P.No. 8773 OF 2016
ORDER:
This Writ Petition is filed by the petitioner seeking a writ of mandamus for the following relief:-
(a) to call for the records pertaining to proceedings dated 15.07.2015 and the consequential proceedings, dated 16.07.2015, issued by the respondent bank and to declare them as bad, illegal and arbitrary and as without jurisdiction and violative of Sec.10 of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 and Rule 36 of employees Provident Fund (trust) rules of the respondent bank and consequently, to direct the respondent bank to release the amount to the account of the petitioner and to allow him to withdraw the same.
(b) hold the action of the Managing Trustee of the Trust as well as the Regional Provident Fund Commissioner, Hyderabad in not arresting the 2 W.P.No.8773 of 2016 above said illegality and being a mute spectator as bad, illegal, arbitrary, discriminatory and unconstitutional.
2. Heard the learned counsel for the petitioner Sri.J.Sudheer and the Senior Counsel Sri.V.Srinivas, representing the learned Standing counsel, Sri.Ravi Mudra, appearing for respondent No.3.
3. The brief facts leading to the filing of this writ petition are that the petitioner had joined the respondent bank as a clerk cum cashier in the year 1984 and was promoted to various cadres. While he was working as a Manager in-charge of Khammam Branch, certain allegations were made against the petitioner and a charge sheet dated 08.08.2014 was also issued. The charge sheet eventually led to dismissal of the petitioner from service vide proceedings dated 13.02.2015. The appeal filed against the said order was also dismissed vide proceedings dated 25.04.2015 and the writ petitioner contemplated to challenge the same. In the meantime, the 3 W.P.No.8773 of 2016 respondent No.2 credited an amount of Rs.14,01,525/- in ODOS account of the petitioner in full and final settlement of his Provident Fund account by specifically mentioning in the letter dated 14.07.2015 that the employee's contribution is Rs.7,75,099/- and the employer's contribution is Rs.6,26,426/- and vide letter dated 15.07.2015, the petitioner was informed that the petitioner was dismissed from services of the bank due to serious irregularities committed by him while he was working as Manager in-charge of Khammam Branch and that there was a huge financial loss to the tune of Rs.164.86 lakhs to the bank and in view thereof, the respondent bank has recovered an amount of Rs.6,26,426/- from the petitioner ODOS account by exercising the Banker's General Lien, towards the financial loss suffered by the bank. Thereafter, they have also freezed the account so that the petitioner could not withdraw the employee's contribution of Provident Fund. The petitioner made representation to all the respondents and since there 4 W.P.No.8773 of 2016 was no response to his representation, the present writ petition is filed.
4. The learned counsel for the petitioner submitted that under Rule 10 of the Employees' Provident Funds and Miscellaneous Provisions of the Act, 1952, the amount credited to the Provident Fund account shall not, in any way, be capable of being assigned, changed or shall be liable for attachment under any decree or order of any Court in respect of the debt or liability incurred by the member or the employee and that no one will have any claim in such amount. He has drawn the attention of this Court to the impugned order of respondent bank, wherein it is stated that by virtue of the General lien on the accounts of the petitioner, the employer's contribution of Rs.6,26,426/- has been recovered. However, according to the learned counsel for the petitioner, the General lien can only be in respect of the accounts of a customer and not on the amounts held in Public Provident Fund account of the petitioner on account of his being an employee of the 5 W.P.No.8773 of 2016 respondent bank. He therefore sought a direction to the respondent bank to release the amount to the petitioner.
5. The learned standing counsel for the respondent bank, on the other hand, has raised a preliminary objection as to the maintainability of the writ petition itself. According to him, this writ petition is not maintainable as the respondent bank is a private bank and the inaction on the part of the respondent bank is not on account of any statutory duty to be performed by it. In support of his contention that the writ petition against the respondent bank is not maintainable, he placed reliance upon the following judgments:
(i) Sri.Konaseema Co-operative Central Bank Ltd., Amalapuram and Another Vs.N.Seetharama Raju1;
(ii) B.S.K.Madhavi Vs. Kotak Mahindra Bank Limited and Others2;
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AIR 1990 AP (FB) 171 2 2012 (6) ALT 51 (DB) 6 W.P.No.8773 of 2016
(iii) Phoenix ARC Private Limited Vs. Vishwa Bharati Vidya Mandir and Others3;
(iv) Federal Bank Limited Vs. Sagar Thomas and Others4.
Further even on merits, the learned counsel for the respondent bank submitted that the petitioner has not come to this Court with clean hands and since it has been proven that the petitioner had committed a fraud of Rs.164.86 lakhs, the writ petition filed by the petitioner should not be entertained.
6. In rebuttal, learned counsel for the petitioner has brought to the notice of this Court that the respondent bank had credited to the ODOS Account of the petitioner, both the Bank's as well as the petitioner's contribution to the Provident Fund account, but it has withheld only the employer's share of contribution. It is submitted that Section 10 of the Public Provident Fund Rules, prohibits attachment of any provident fund by 3 2022 AIR SC 1045 4 (2003) 10 SCC 733 7 W.P.No.8773 of 2016 virtue of even a Court order and that even the service rules adopted by the bank also prohibit any such attachment and therefore, the general lien as claimed by the respondent bank for attachment of PPF is not available to the respondent bank. Further, the learned counsel for the petitioner submitted that this Writ Petition filed by the petitioner is not against any bank activity carried on by the respondent bank, but that it is against the failure of the respondent bank in fulfilling its statutory obligation in making payment of the Bank's contribution of Provident Fund to the petitioner on his removal from service and failure to make the said payment is an illegality, which can be challenged under the Article 226 of Constitution of India.
7. Having regard to the rival contentions and material on record, this Court finds that in this writ petition for a writ of mandamus, the challenge made by the petitioner is not with regard to any commercial activity carried on by the bank, but it is for non- 8
W.P.No.8773 of 2016 fulfilment of its obligation as an employer in paying the Provident Fund to its retired employee. As regards the preliminary objection on the maintainability of this writ petition, it is pertinent to examine the nature of dispute. The dispute is with regard to non-compliance or in fact violation of the provisions of the Employees'' Provident Funds and Miscellaneous Provision Act, 1952. The respondents 1 and 2 are governed by the provisions of the said Act and in accordance therewith, the bank has deducted the Employees' Contribution to the Provident Fund from the salary of the petitioner and has also contributed its share to the fund. The Act is a social Security Legislation to protect the interest of the workers employed in the factories and the other establishments to which this Act applies. In the case of Maharashtra State Co-operative Bank Limited Vs. Provident Fund Commissioner5, the Hon'ble Supreme Court has observed that in view of it being a social welfare legislation, it is imperative for the courts to give a purposive interpretation to the provisions 5 (209) 10 SCC 123 9 W.P.No.8773 of 2016 contained therein keeping in view the directive principles of State Policy embodied in Article 38 and 43 of the Constitution of India. Therefore, non compliance or violation of the provisions of this Act would definitely attract the provisions of Article 226 of the Constitution of India. The Learned counsel for the respondent bank has relied upon the following judgments in support of his arguments that this writ petition is not maintainable.
8. In the case of Sri.Konaseema Co-operative Central Bank Ltd., (cited supra), the full bench of AP High Court was considering the case of an employee of the Bank being terminated form the service of the bank and the dispute was where it was in accordance with the bye-laws of the bank. At para 51 of the judgment, the full Bench has culled out the principles governing the maintainability of a writ petition against a co- operative Bank registered under A.P.Co-operative societies Act. For the sake of ready reference, the relevant para is reproduced hereunder:- 10
W.P.No.8773 of 2016
51. "Even if a Society cannot be characterised as a 'State' within the meaning of Art.12, even so a writ would lie against it to enforce a statutory public duty which an employee is entitled to enforce against the Society. In such a case, it is unnecessary to go into the question whether the Society is being treated as a 'person', or an 'authority', within the meaning of Art.226 of the Constitution. What is material is the nature of the statutory duty placed upon it, and the Court will enforce such, statutory public duty".
9. In the case of Kadali Saroja Vs. ICICI Bank Limited, Mumbai and others [2012 (6) ALT 51 (D.B.)], this Court held as under :-
32. The Counsel for petitioners made a desperate effort to distinguish Federal Bank's (2 supra). They rely on observations in Mardia Chemical's (3 supra), A.Umarani v. Co-operative Societies, 2005 (19) (2004) 7 SCC 112, K.C.Sharma v. Delhi Stock Exchange (20), (2005) (3) SCJ 552 = (2005) 4 SCC 4 = AIR 2005 SC 2884, Zee Telefilms Limited v. Union of India (21) 2005 (2) scj 121 = (2005) 4 SCC 649 = AIR 2005 SC 2677 Binny Limited v. V. Sadasivan (22) 2005 (6) SCJ 156 = (2005) 6 SCC 657, Transcore v. Union of India (23) 2007 (3) SCJ 201 = (2008) 1 SCC 125 and M.P.State Cooperative Dairy's (8 supra) and to 11 W.P.No.8773 of 2016 contend that Federal Bank is not an authority for proposition. We are afraid the submission is unacceptable. There is direct decision of the Supreme Court on the question whether a private scheduled bank is a State within the meaning of Article 12 and/or whether such private bank performs public functions by providing banking service is considered. The High Court cannot ignore the decision of the High Court and take a different view. Any such contra view of the High Court deviating from the ratio laid down by the Supreme Court would be a judgment per incuriam (State of U.P. v. Synthetics and Chemicals Limited (24) (1991) 4 SCC 139). We do not intend to take such adventurous path. Further, the following observations in MardiaChemicals's case (supra), which was also delivered by the same learned Judge who authored Federal Bank's case (supra), also supports the petitioners. (Para 68 of SCC).
The main thrust of the petitioners as indicated in the earlier part of this judgment to challenge the validity of the impugned enactment is that no adjudicatory mechanism is available to the borrower to ventilate his grievance through an independent adjudicatory authority. Access to justice, it is submitted, is the hallmark of our system. .... So far as remedy under Article 226 of the Constitution of India is concerned, the submission is that it may not always be available since the dispute may be only 12 W.P.No.8773 of 2016 between two private parties, the banking companies, cooperative banks or financial institutions, foreign banks, some of them may not be authorities within the meaning of Article 12 of the Constitution of India against whom a writ petition could be maintainable. Thus the position that emerges is that a borrower is virtually left with no remedy. Where access to the Court is prohibited and no proper adjudicatory mechanism is provided such a law is unconstitutional and cannot survive. In support of the aforesaid contentions besides others, reliance has particularly been placed upon the case L.Chandra Kumar v. Union of India, (1997) 3 SCC 261 and Surya Dev Rai v. Ram Chander Rai, ((2003) 6 SCC 675). A reference has also been made to the decision of Kihoto Hollohan v. Zachillhu, (1992 Supp (2) SCC 651). In the case of L.Chandra Kumar, it is held, some adjudicatory process through an independent agency is essential for determining the rights of the parties, more particularly when the consequences which flow from the offending Act defeat the civil rights of a party.
33. After saying so, in Paragraph 80(5) (of SCC) which contains the propositions, the Supreme Court held that:
As discussed earlier in this judgment, we find that it will be open to maintain a civil suit in civil Court, within the narrow scope and on the limited grounds on which they are permissible, 13 W.P.No.8773 of 2016 in the matters relating to an English mortgage enforceable without intervention of the Court.
34. Thus, in a narrow scope on limited grounds, if a suit is still maintainable if the conclusion with regard to the breach of contract by the bank is reached de hors the contract or in an arbitrary manner, a writ petition as observed by Mardia Chemicals's (3 supra), certainly bars against private bank.
35. The Counsel brought to the notice of this Court an unreported decision of the Division Bench in W.P.No.200 of 2006, dated 27.2.2006, and an unreported judgment of another Division Bench in W.A.No.412 of 2008, dated 24.9.2009 in support of the contention that a writ would still lie against a private bank. We are afraid we need not deal with this matter in view of the conclusion as above, which are based on binding decisions of the Supreme Court. We accordingly hold that the writ petitions filed against SRCs which are private bodies are not maintainable.
10. In the case of Federal Bank Ltd., (cited supra), the Hon'ble Supreme Court has held as under :-
33. "For the discussion held above, in our view, a private company carrying on banking business as a scheduled bank, cannot be termed as an institution or company carrying on any statutory or public duty. A private body or a person may be 14 W.P.No.8773 of 2016 amenable to writ jurisdiction only where it may become necessary to compel such body or association to enforce any statutory obligations or such obligations of public nature casting positive obligation upon it. We don't find such conditions are fulfilled in respect of a private company carrying on a commercial activity of banking. Merely regulatory provisions to ensure such activity carried on by private bodies work within a discipline, do not confer any such status upon the company nor puts any such obligation upon it which may be enforced through issue of a writ under Article 226 of the Constitution. Present is a case of disciplinary action being taken against its employee by the appellant Bank. The respondent's service with the bank stands terminated. The action of the Bank was challenged by the respondent by filing a writ petition under Article 226 of the Constitution of India. The respondent is not trying to enforce any statutory duty on the part of the Bank. That being the position, the appeal deserves to be allowed".
11. Even from the above judgments, it is clear that in case of the violation of a statutory duty, a writ petition under Article 226 of the Constitution of India is maintainable. Therefore, the objection of the respondent bank are rejected.
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W.P.No.8773 of 2016
12. On merits of the petition, it is seen that the Writ Petition is against recovery of the alleged pecuniary loss caused to the bank from the Employer's Contribution to the Provident Fund Account to the tune of Rs.6,26,426/-.
13. The learned counsel for the Writ Petitioner has relied on Section 10 of the Act and also Rule 36 of the A.P.Mahesh Co-operative Urban Bank Employees Provident Fund Rules. For the purpose of ready reference, they are reproduced hereunder:
RULE 10 of the Act:
(1) The amount standing to the credit of any member in the Fund [or of any exempted employee in a provident fund] shall not in any way be capable of being assigned or charged and shall not be liable to attachment under any decree or order of any court in respect of any debt or liability incurred by the member [or the exempted employee], and neither the official assignee appointed under the Presidency-towns Insolvency Act, 1909 (3 of 1909), nor any receiver appointed under the Provincial Insolvency Act, 1920 (5 of 1920), shall be entitled to, or have any claim on, any such amount.
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W.P.No.8773 of 2016 (2) Any amount standing to the credit of a member in the Fund or of an exempted employee in a provident fund at the time of his death and payable to his nominee under the Scheme or the rules of the provident fund shall, subject to any deduction authorised by the said Scheme or rules, vest in the nominee and shall be free from any debt or other liability incurred by the deceased or the nominee before the death of the member of the exempted employee [and shall also not be liable to attachment under any decree or order of any court].
(3) The provisions of sub-section (1) and sub-section (2) shall, so far as may be, apply in relation to the family pension or any other amount payable under the [Pension] Scheme [and also in relation to any amount payable under the Insurance Scheme] as they apply in relation to any amount payable out of the Fund.
RULE 36 OF Bank Rules:
The amount standing the credit of any member in the Fund (or) of any exempted employee in a Provident Fund Shall not in any way by capable of being assigned or charged and shall not be liable to attachment under any decree or order of any court in respect of any debt or liability incurred by the member (or the exempted employee), and neither the official assignee appointed 17 W.P.No.8773 of 2016 under the Presidency Towns Insolvency Act, 1909 (3 of 1909) nor any receiver appointed under the Provincial Insolvency Act, 1920 (5 of 1920) shall be entitled to, or have any claim, any such amount.
14. From a reading of both the above rules, it is clear that even under an order of Court, the Provident Fund Account of the Writ Petitioner cannot be attached and appropriated. The general lien of the bank can be applied only in respect of banking transactions and not in respect of service conditions of an employee. Therefore, the respondent bank is directed to refund the sum of Rs.6,26,426/- and also the employee's contribution of Rs.7,75,099/- with interest @ 6% per annum from the date of recovery till the date of payment.
15. This Writ Petition is accordingly allowed. No order as to Costs.
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W.P.No.8773 of 2016 Pending miscellaneous petitions, if any, in this Writ Petition shall stand closed.
______________________________ JUSTICE P. MADHAVI DEVI Date: 23.08.2022 bak 19 W.P.No.8773 of 2016 THE HONOURABLE SMT JUSTICE P.MADHAVI DEVI W.P.No. 8773 OF 2016 Dated: .08.2022 bak