M/S Ashmit Motors Private Ltd ... vs The Assistant Provident Fund ...
2016 Latest Caselaw 5368 Bom

                                                                      WP/9676/2016
                                            1

                    IN THE HIGH COURT OF JUDICATURE OF BOMBAY
                               BENCH AT AURANGABAD




                                                                              
                              WRIT PETITION NO. 9676 OF 2016




                                                      
     M/s Ashmit Motors Private Limited,
     145/2A, Near Hotel Chaitanya Classic,
     Bolhegaon Phata, Manmad Road,
     Nagapur, Ahmednagar through its




                                                     
     Director Harish Lalchand Nayyar
     age 30 years, Occ. Business.                      ..Petitioner

     Versus




                                          
     The Assistant Provident Fund
     Commissioner, Sub Regional Office,
                             
     P-II, Bhavishya Nidhi Bhavan,
     MIDC Area, Satpur, Nashik.                        ..Respondent

                                          ...
                            
                 Advocates for Petitioner : Shri R.N.Dhorde, Sr. Adv.
                                i/b Shri V.R.Dhorde
                   Advocate for Respondents : Shri K.B.Chaudhary
                                          ...
      

                         CORAM : RAVINDRA V. GHUGE, J.

Dated: September 19, 2016 ...

ORAL JUDGMENT :-

1. Heard learned Advocates for the respective parties.

2. Rule.

3. By consent, Rule is made returnable forthwith and the petition

is taken up for final disposal.

4. The petitioner is aggrieved by the order dated 14.7.2010, by

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which, the respondent allotted the Subscriber Code Number under

the Employees' Provident Funds and Miscellaneous Provisions Act,

1952 ("1952 Act"). The petitioner is also challenging the order dated

13.8.2015, by which, the Review Application filed by the petitioner

under Section 7B of 1952 Act, seeking review of the order passed on

10.6.2015 under Section 7A of 1952 Act, has been rejected.

5. The petitioner submits that an ancestral property in the form

of a land / plot was inherited by the two real brothers i.e. the

petitioner / Director and his real brother. Since both of them

acquired a right, title and interest to equal shares in the same plot,

the petitioner started the business of selling cars upon having

acquired the agency through a Car Manufacturer. The brother of the

petitioner started a Proprietary Firm, by which, the After Sales

Service of the Cars was being handled in the said proprietary

concern. Grievance is that the respondent authority has presumed

that the Car Agency as well as the Workshop amount to one and the

same establishment and the two brothers are attempting to create a

false picture that these are two independent business

establishments.

6. It is further submitted that the impugned order dated

14.7.2010 granting Subscriber Code Number and making the 1952 Act

applicable to the petitioner, was passed without hearing the

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petitioner. Similarly, the order under Section 7A, dated 10.6.2015,

does not deal with the grievance of the petitioner that the 1952 Act

is not applicable to it. Hence the Review Petition at issue was filed

under Section 7B and the same has been rejected, without even

issuing a notice of hearing.

7. The petitioner has relied upon the orders passed by this Court

in the following cases:-

(i)

Writ Petition No.1002/2008 - Shri Gajanan Maharaj Sansthan Vs. Regional Provident Fund Commissioner, dated

27.8.2008 and

(ii) Writ Petition No.3389 of 2011 - Lokvikas Sahakari Bank

Ltd. Vs. The Assistant Provident Fund Commissioner, dated

2.5.2011.

8. Shri Chaudhary, learned Advocate for the respondent / PF

authorities submits that the law does not contemplate any hearing of

the Review Applicant on the Review Application. He submits that

unlike a hearing on a Review Application as is contemplated under

Order XLVII Rules 1 to 4 of the Civil Procedure Code, the 1952 Act

makes no provision for causing any hearing on the Review Petition, if

the same is to be rejected. Only when a Review Application is likely

to be allowed, that a hearing is contemplated, so as to ensure that

the beneficiaries of the order under Section 7A have no grievance of

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having not being heard.

9. Shri Chaudhary has placed reliance upon the following

judgments:-

(i) Mansa Nagrik Sahakari Bank Ltd. Vs. Regional Provident Fund Commissioner [2003 (3) G..H. 500], and

(ii) Writ Petition (C) 2856 of 2008 - Bharat Polychem Ltd. Vs. Regional Provident Fund Commissioner (Delhi High Court),

dated 20.7.2011.

10. I have considered the submissions of the learned Advocates, as

have been recorded herein above and have gone through the record

available.

11. Order XLVII Rules 1, 3 & 4 of the CPC reads as under:-

"1 . Application for review of judgment-- (1) Any person considering himself aggrieved--

(a) by a decree or order from which an appeal is

allowed, but from which no appeal has been preferred,

(b) by a decree or order from which no appeal is allowed, or

(c) by a decision on a reference from a Court of Small Causes, and who, from the discovery of new and important matter or evidence which, after the exercise of due diligence was not

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within his knowledge or could not be produced by him at the

time when the decree was passed or order made, or on account of some mistake or error apparent on the face of the

record of for any other sufficient reason, desires to obtain a review of the decree passed or order made against him, may apply for a review of judgment to the Court which passed the

decree or made the order.

(2) A party who is not appealing from a decree or order may

apply for a review of judgment notwithstanding the pendency of an appeal by some other party except where the ground of

such appeal is common to the applicant and the appellant, or when, being respondent, he can present to the Appellate

Court the case on which he applies for the review.

Explanation -- The fact that the decision on a question of law on which the judgment of the Court is based has been

reversed or modified by the subsequent decision of a superior Court in any other case, shall not be a ground for the review of

such judgment.

2. ........... (Repealed) ............

3. Form of applications for review-- The provisions as to the form of preferring appeals shall apply mutatis mutandis, to applications for review.

4. Application where rejected-- (1) Where it appear to the Court that there is not sufficient ground for a review, it shall reject the application.

(2) Application where granted--Where the Court is of

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opinion that the application for review should be granted, it

shall grant the same:

Provided that--

(a) no such application shall be granted without

previous notice to the opposite party, to enable him to appear and be heard in support of the decree or order, a review of which is applied for; and

(b) no such application shall be granted on the ground of discovery of new matter or evidence which the

applicant alleges was not within his knowledge, or could not be adduced by him when the decree or order was

passed or made, without strict proof of such allegation.

5. ............"

12. Section 7B of the 1952 Act reads as under:-

"7B. Review of orders passed under section 7A.-

(1) Any person aggrieved by an order made under sub- section (1) of section 7A, but from which no appeal has been

preferred under this Act, and who, from the discovery of new and important matter or evidence which, after the exercise of due diligence was not within his knowledge or could not be produced by him at the time when the order was made, or on account of some mistake or error apparent on the face of the record or for any other sufficient reason, desires to obtain a review of such order may apply for a review of that order to

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the officer who passed the order:

Provided that such officer may also on his own motion review his order if he is satisfied that it is necessary so to do

on any such ground.

(2) Every application for review under sub-section (1) shall

be filed in such form and manner and within such time as may be specified in the Scheme.

(3) Where it appears to the officer receiving an application for review that there is no sufficient ground for a review, he

shall reject the application.

(4) Where the officer is of opinion that the application for review should be granted, he shall grant the same:

Provided that,--

(a) no such application shall be granted without previous notice to all the parties before him to enable

them to appear and be heard in support of the order in respect of which a review is applied for, and

(b) no such application shall be granted on the ground

of discovery of new matter or evidence which the applicant alleges was not within his knowledge or could not be produced by him when the order was made, without proof of such allegation.

(5) No appeal shall lie against the order of the officer rejecting an application for review, but an appeal under this Act shall lie against an order passed under review as if the order passed under review were the original order passed by him under section 7A."

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13. Even though there is no specific provision under Order XLVII

Rules 1, 3 and 4, a hearing has been contemplated as is the settled

position in law. If the language of Section 7B is compared with Order

XLVII, it is practically the same.

14. The thrust of Shri Chaudhary's submissions is that the officer

receiving an application for review is only required to scrutinize the

application and find out whether there is any ground for review and

that no hearing is required. I do not find that the said submission

could be entertained for the reason that the whole purpose of filing a

review application is by way of an opportunity to the aggrieved party

to make out a case that some material is discovered or an important

document or piece of evidence, which could not be placed before the

authority under Section 7A proceeding, despite due diligence, is now

available and needs to be canvassed. Section 7B(1) makes it

abundantly clear that such material or evidence will have to be

produced inasmuch as the review applicant will have to make out a

mistake or error, apparent on the face of the record or for any other

sufficient reason owing to which, the order at issue needs to be

reviewed.

15. If the submissions of Shri Chaudhary are to be accepted, it

would mean that it will have to be left to the reviewing authority to

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scrutinize the application, refer to the record placed along with the

review application and then pass an order rejecting an application

for the reason that the reviewing authority is not satisfied. I find the

said submissions to be unsustainable for the reason that the reasons

for seeking review and the material placed will have to be canvassed

by the parties so as to make out a sufficient ground or reason or

cause for reviewing the order under Section 7A. This cannot be left

to the reviewing authority alone to consider the application on the

basis of the pleadings. A review applicant may not always be able to

set out grounds for review in a manner so that a mere reading of the

grounds would convince the reviewing authority. An opportunity to

address the mind of the reviewing authority and canvass the

importance and significance of the grounds for review and documents

placed on record within the ambit of Section 7B(1), could be

available only through a hearing of the party by the reviewing

authority.

16. This Court in the matter of Shri Gajanan Maharaj Sansthan

(supra), has observed in paragraph Nos.2 and 3 as under:-

"2. It is not in dispute that the petitioner filed review petition under Section 7-B of the Employees' Provident Fund Act. The review petition was required to be decided by Assistant Provident Fund Commissioner, Sub-Division Office, Akola. There is no dispute before me that the said review

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petition was decided without hearing the petitioner or without

issuing notice of hearing to the petitioner and the learned Counsel for the respondent - organization states that the same

was decided with a well reasoned order, and therefore, there is no need to remand the proceedings. It is not possible to accept the contention raised by learned Counsel for the

organization because the provisions of Section 7-B of the Act specifically provides for review and the same will have to be decided after issuing notice to review petitioner and all

concerned parties, and obviously after hearing them. There has to be adjudication of the review petition. Therefore,

whether the authority gave a reasoned order or not will not make any difference. In view of the above discussion, I make

the following order.

3. Writ Petition is partly allowed. The impugned order is

quashed and set aside. The review petition is remitted to the Assistant Commissioner of Provident Fund, Akola, who shall

hear the review petitioner and concerned parties and decide the same afresh in accordance with law as expeditiously as possible and in any case within a period of two months from

the date of receipt of writ from this Court."

17. This Court has also considered a similar issue in the matter of

Lokvikas Sahakari Bank Limited (supra), in which it was held in

paragraph Nos. 3 and 4 as under:-

"3. With the assistance of both learned counsel I have perused the relevant provision. It is not in dispute that powers to be exercised either under section 7A or

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under section 7B of 1952 Act are quasi judicial in

nature. The review can be sought by a person aggrieved by an order passed under section 7A. The grounds on

which review can be sought are not very relevant at this stage but then it is important to note that the proviso to section 7B (1) also permits competent

authority which has passed order under section 7A to have a review of its own order if it is satisfied that it is necessary to do so on the valid grounds. Sub-section (2)

then stipulates filing of application for review within limitation and the mode and manner in which same can

be filed. Sub-section (3) enables authority receiving that application to reject the same if it "appears" to

him that there is no "sufficient ground" for review.

4. The grounds on which review can be sought

become relevant for the purpose of subsection (3). Those grounds as given in subsection (1) are discovery

of new and important matter or evidence not within knowledge despite due diligence, some mistake or error apparent on fact of record or any other sufficient

reason. Thus, an aggrieved person like present petitioner can seek review on any of these three grounds before the respondent. The Respondent is also competent to review its own order if it finds that a

case for review in favour of department on these grounds is made out. Words "appears" and "no sufficient ground" employed in subsection (3) of section 7B cast an obligation upon that authority to record finding atleast prima facie about availability or nonavailability of such grounds. Subsection (4) permits that authority to grant the review. Proviso to subsection (4) then

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stipulates that such review shall not be granted

without previous notice to all parties before the authority. It is, therefore, obvious that at the stage

when review application is being considered under subsection (3) the aggrieved party alone needs to be given a hearing to find out whether a case for review is

made out or not. If, according to the authority, no such case is made out there is no question of proceeding further to hear all other parties, as contemplated by

proviso (1) of subsection (4) thereof."

18.

In the instant case, issue of functional integrality in between

the petitioner - Ashmit Motors, of which, Shri Harish Lalchand Nayyar

is a Director and M/s Jai Malhar Hyundai, which is a proprietary firm

owned by the brother of the petitioner namely, Shri Manish Lalchand

Nayyar. Both are said to be registered under the Bombay Shops and

Establishments Act. This issue can be considered by the respondent /

authority and since the grievance of the petitioner is that this issue

has not been properly considered and on the basis of which the

number of employees are held to be 20 or more, needs to be

considered by the respondent / authority only after hearing the

petitioner in it's review application.

19. Shri Chaudhary has placed reliance upon paragraph Nos. 7 and

8 of Mansa Nagarik Sahakari Bank Case (supra), which read as under:-

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"7. The establishment has come forward with a dishonest plea

that the establishment was not heard at the time of 7A inquiry. It is clear from the order dated 29-5-2001 that not

one, but two officers of the establishment were heard and it was only after hearing these two officers and after taking into consideration the material produced by the establishment,

like month wise statements that the authorities passed the order under Section 7A of the Act. From the record it clearly transpires that the establishment was bent upon to avoid

payment of the amount ordered by the authorities, that is why knowing well that an appeal is maintainable against the

order passed under Section 7A of the Act, a review application was filed. It can be inferred that this was with a view to delay

the payment. After the review application is rejected, the present petition is filed seeking intervention of this Court in a matter where a statutory appeal is provided.

8. Mr. Shah, the learned Advocate for the petitioner

establishment with a view to explain the filing of the present petition instead of statutory appeal, pointed out a decision of 'the appellate authority' under the Act, wherein it is stated

that the appellate authority is not having full infrastructure and other facilities. However, a copy of the said decision is not produced by Mr. Shah. Even if it is so, then also the decision reflects the position which prevailed at the relevant

time. That cannot be ground for not filing a statutory appeal. Mr. B. T. Rao, the learned Advocate makes a statement that the appellate authority is functioning full-fledged, the said observations are not applicable as on date."

20. In the above-said case, the Court was dealing with the issue of

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a dishonest plea being put forth by the establishment as a ground for

delaying the recovery of the amount under Section 7. In the instant

case, the amount assessed under Section 7A is about Rs. Nine Lakhs

and odd. An amount of Rs. Eight Lakhs and odd have already been

recovered by the respondent by adopting coercive steps as permitted

under the 1952 Act. I am, therefore, unable to accept the submission

of Shri Chaudhary that the petitioner is attempting to delay the

matter so as to avoid the payment of assessed dues, when an amount

equal to almost 90% has already been recovered.

21. In the matter of Bharat Polychem Ltd. (supra), Shri Chaudhary

relies upon paragraph No.4 of the judgment, which reads as under:-

"4. The petitioner preferred a review of the aforesaid order

and which as aforesaid has been dismissed vide order dated 16 th March, 2007 impugned in this writ petition.

The counsel for the respondents has contended that the order under Section 7A was appealable and the petitioner having not preferred appeal there against, the same has attained

finality. A perusal of Section 7B and particularly sub-section (5) thereof also shows that though no appeal lies against an order rejecting an application for review but appeal is permitted against an order passed under review as if the order passed under review were the original order under Section 7A.

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A perusal of the order dated 16 th March, 2007 shows that

APFC literally reviewed the order dated 17th May, 2006 and reached a conclusion that there was no error as pointed out in

the order dated 17th May, 2006. An appeal against such an order would lie under Section 7B(5) (supra). This writ petition is not maintainable for said reason."

22. Considering the above, it needs mention that an order under

Section 7B rejecting the application is not an appealable order. Sub-

section (5) clearly indicates that no appeal would lie against an order

rejecting the application under Section 7B. An appeal would lie only

against the order under Section 7A which is the subject matter of

review under Section 7B. So also, Section 7-I indicates that an order

under Section 7B allowing the review application is appealable under

Section 7-I. This Court is, therefore, required to consider this

petition as the impugned order dated 13.8.2015 rejecting the

application under Section 7B is not an appealable order and the

petitioner has raised a grievance that the same has been passed

without hearing the petitioner.

23. It is informed that the record of the petitioner has been seized

by the respondent / authority and the same is in the custody of the

respondent. Consequentially, if the petitioner is to address the mind

of the respondent by it's review application, the said record would be

relevant. It is further pointed out that the review application was

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filed by the petitioner after the learned Division Bench of this Court

granted the liberty to do so by it's order dated 28.7.2016, passed in

Writ Petition No. 8110 of 2016 that was filed by the petitioner since

it was not aware as to the fate of it's review application.

24. In the light of the above, this petition is partly allowed. The

impugned order dated 13.8.2015, passed by the respondent /

authority under Section 7B, without issuing notice and without

hearing the petitioner is quashed and set aside. The review

application No. MH/55857/PF/C-II/SRO/NSK/EF/894 is restored to the

file of the respondent under the following conditions:-

(A) The petitioner shall appear before the respondent /

authority on 3.10.2016 at 11.00 A.M. and shall tender such

documents / applications, as it may deem proper.

(B) The record seized by the respondent shall be returned

to the petitioner so as to allow the petitioner to prepare a

Photostat set of all the said documents in the said file and

subject to scrutiny by the respondent, shall tender the

Photostat copies to the respondent authority within one week

from the date of appearance.

(C) The respondent would be at liberty to direct the

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petitioner to produce such documents as it may deem

appropriate.

(D) The respondent shall hear the authorized representative

of the petitioner on such dates as it may think appropriate and

after completing the hearing on the review application shall

proceed to decide the same within 30 days from the date of

concluding the hearing.

(E)

The issue of coverage of the 1952 Act and the issue of

functional integrality shall be considered by the respondents /

authorities and if need to be and in order to ensure a proper

hearing, the other proprietary firm namely, M/s Jai Malhar

Hyundai may also be served with a notice of hearing and the

said establishment may be granted a hearing in the said

matter.

(F) Needless to state, the order dated 14.7.2010 allotting a

Subscriber Code Number to the petitioner and the order dated

10.6.2015, passed under Section 7A shall be subject to the

result of the proceedings under Section 7B.

(G) Consequentially the order under Section 8F, attaching

the Bank account of the petitioner held with the State Bank of

India, Industrial Area Branch, Ahmednagar and ICICI Bank,

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Ahmednagar Branch, is set aside as 90% of the assessed dues

have already been deposited.

(H) The order under Section 7B, which shall be a reasoned

order, shall be supplied to the petitioner, expeditiously.

25. Rule is made partly absolute in the above terms.

                              ig                ( RAVINDRA V. GHUGE, J. )

                                          ...

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