Gajmukh Vinimay Pvt. Ltd. & Anr vs Employees' State Insurance ...
2023 Latest Caselaw 1610 Cal

   24
13.03.2023
  sb.
Ct.550
                          IN THE HIGH COURT AT CALCUTTA
                          CONSTITUTIONAL WRIT JURICTION
                                  APPELLATE SIDE

                                       WPA 5802 of 2023

                        Gajmukh Vinimay Pvt. Ltd. & Anr.
                                        Vs.
                   Employees' State Insurance Corporation & Ors.



                        Mr. Soumya Majumder
                        Mr. Rishav Dutt
                                   .... For the petitioners.


                        Mr. Tilak Mitra
                                    ... For the ESI Corporation.


                        Mr. Victor Chatterjee
                                    ... For the respondent nos. 3 to 9.

Mr. Rotnanko Banerjee, Sr. Advocate, Mr. Rohit Bhattacharjee ... For the respondent no.10.

Affidavit of service filed in Court today is taken on

record.

This writ application has been filed challenging a

notice dated 7th February, 2023, issued by the Recovery

Officer, being the respondent no.2, whereby the

petitioners' bank account maintained with the ICICI Bank,

has been attached.

The petitioners say that Nuddea Jute Mills

Company Limited had been declared sick under the

provisions of Sick Industrial Companies (Special

Provisions) Act, 1985. Subsequently, the Board for

Industrial and Financial Reconstruction (hereinafter

referred to as "BIFR") had sanctioned a scheme for revival

of the respondent no.8. The petitioners say that the

respondent no.8 in terms of the scheme sanction by BIFR,

was taken over by M/s Baahubali traders Private Limited

in short 'BTPL', the name of the respondent no.8 has since

changed and is now represented by the respondent no.10.

He says that the petitioners have since entered into a leave

and license agreement on 13th November, 2020 with the

respondent no.10. In terms of the aforesaid leave and

license agreement the petitioners have been provided

exclusive usage, rights to run and operate the facilities of

the jute mill of the company situated at Kanthalpara,

Naihati, PIN - 743165 and also at Bhatpara, both in the

District North 24 Parganas, for manufacturing, selling and

trading of jute and other allied products.

Mr. Majumder, learned advocate representing the

petitioners by drawing attention of this Court to the

scheme sanctioned by BIFR, in particular, Clause 14.1.2

thereof, submits that the scheme envisages inter alia as

follows:

"14.1.2 Employees State Insurance Corporation

(ESIC)

(i) To waive penal interest levied u/s 39(5) charged and/or chargeable and damages u/s 85B charged and/or chargeable by the authorities.

           (ii)    To accept the contribution of un-paid amount
                   of    Rs.12.14    cr.   In   28   equal    quarterly
                   installments      commending      from     the    first





                quarter of 2008 and that the company be

granted immunity from imposition of interest, penalty and other statutory charges for making payments in installments.

(iii) To exempt from any coercive action against the company, promoters, guarantors, directors, employees etc and/or to exempt the new promoters from penal and prosecution provisions of the ESI Act, 1948, during the period of rehabilitation.

(iv) The company would pay the current dues of ESIC regularly and ESIC would continue to extend the benefits of ESIC to the company's employees".

It is submitted that the petitioners cannot be made

liable in respect of the liability determined by the BIFR

concerning the ESI contributions. The liability of the

petitioners, if at all arises, subsequent to execution of the

agreement dated 13th November, 2020. By referring to the

minutes of the meeting held on 22nd February, 2023

between the petitioners, the respondent no.10 and the

operating unions, he says that the petitioners' liability is at

best limited to Rs.35,48,407/-. He says that as agreed in

the aforesaid meeting, the petitioners are ready and willing

to make payment of the aforesaid amount to the ESI

authorities. He, however, submits that the respondent

no.2 under no circumstances could have purported to

attach the petitioners' bank account which is a cash credit

account. He says, ordinarily, a cash credit account cannot

be attached even for realization of statutory dues. In

support of his aforesaid contention, he relies on an

unreported judgment delivered by the Hon'ble High Court

of Gujarat at Ahmedabad in the case of M/s. Formative

Tex Fab vs. State of Gujarat & 3 others.

Mr. Banerjee, learned senior advocate,

representing the respondent no.10 submits that the

respondent no.10 was all along ready and willing to

comply with the direction issued by the BIFR.

Unfortunately, it is the Employees' State Insurance

Corporation (hereinafter referred to as "ESIC) who has not

resolved the said issue. By referring to page 96 of the writ

application he says that issue with regard to granting

concession to the respondent no.10, in terms of the

direction issued by the BIFR is still pending with the ESIC.

He says that the ESIC under no circumstances could have

attached the petitioners' bank account for realization of

the dues, which are otherwise payable by the respondent

no.10. In any event, he submits that from the aforesaid

notice of attachment, the particulars of the certificate and

the period for which the order of attachment has been

passed is not clear.

Mr. Mitra, learned advocate representing the ESIC

submits that ESIC authorities are only interested to realize

the admitted dues. He says that the respondent no.10 has

till date not made payment of the 28 instalments in terms

of the direction passed by the BIFR. By referring to Section

93A Employees' State Insurance Act, 1948 (in short said

Act), he says that ESIC authorities have the authority to

proceed against the petitioner.

Heard the learned advocates appearing for the

respective parties and considered the materials on record.

I find that the BIFR has already sanctioned a scheme and

in terms of Clause 14.1.2 thereof, had directed waiver of

penal interest levied under Section 39(5) charged and/or

chargeable and damages under Section 85B charged

and/or chargeable by the authorities. It would further

appear from the aforesaid Clause that BIFR directed the

ESIC to accept the unpaid amount of Rs.12.14 crores in

28 equal quarterly instalments commencing from the first

quarter of 2008. There are other directions, which would

appear from the aforesaid Clause. I, however, find from the

submissions made by and on behalf of ESIC authorities

that the aforesaid 28 instalments are yet to be paid. It

would appear from the representations made by the

respondent no.10 which appears at pages 84 and 94, and

from communication at page 96 of the writ application

that the ESIC authorities are yet to resolve the issue as

regards the grant of exemption to the respondent no.10.

The present writ application, however, concerns an

order of attachment issued by the respondent no.2. I find

that Mr. Majumder, despite claiming the petitioners to

have entered into a leave and license agreement with the

respondent no.10, has candidly submitted that the

petitioners are willing to pay Rs.35,48,407/-, which

according to him constitutes the current ESIC dues. Mr.

Mitra, learned advocate representing the ESIC authorities,

however, disputed such figure. According to Mr. Mitra, no

assessment, till date, has been made in respect of the

current dues.

Without going into any controversy, it would,

however, appear that the order of attachment dated 7th

February, 2023, which is appearing at page 83 of the writ

application, is in respect of account maintained by the

petitioners with the respondent no.11. From the aforesaid

letter of attachment, it does not appear the period for

which such attachment has been made. No particulars are

also available. This apart, Mr Majumdar, on instructions

has submitted that the petitioners maintain a cash credit

account with ICICI bank. Prima facie it would appear that

a cash credit account cannot be attached even for

realisation of statutory dues as a cash credit account is an

overdraft facility. The unutilized overdraft account does

not render the banker a debtor and the banker is not a

person from whom money is due to the customer. In

respect of such accounts the banker does not hold the

customer's money. Section 45G and 45H of the said Act

also does not authorize attachment of a cash credit

account.

I find that the petitioners have been able to make

out a prima facie case. At the same time, I am also of the

view since the petitioners are in fact managing and

running the mill, the petitioners should be directed to

secure at least a portion of the amount, which was

directed to be paid in terms of the direction passed by

BIFR.

In view thereof, there shall be an unconditional

order of stay of operation of the order of attachment dated

7th February, 2023 for a period of four weeks from date

and the respondent no.11, is directed forthwith de-freeze

the cash credit account of the petitioners maintained with

them.

The petitioners are directed to make payment of

Rs.35,48,407/- to the ESIC authorities and to deposit an

amount of Rs. 2 crores with the learned Registrar General

of this Court, within a period of four weeks from date.

If the aforesaid sum of Rs.35,48,407/- is paid to

the respondent no.1 and a sum of Rs.2 crores as directed

above, is deposited with the learned Registrar General of

this Court within a period of four weeks from date, the

learned Registrar General, shall invest the same in an

interest bearing fix deposit account, in any nationalized

bank of his/her choice, and shall keep the same renewed

untill further orders of this court, and in such event the

interim order passed hereinabove, shall continue till the

disposal of the present writ application.

If the payment and deposit, as directed above is

not made, the interim order passed herein shall stand

automatically vacated.

Let affidavit-in-opposition to the present writ

application be filed within a period of six weeks from date.

Reply, if any, thereto, be filed within a period of two weeks

thereafter.

Liberty to mention for inclusion in the list after

expiry of the period for exchange of affidavits.

Urgent photostat certified copy of this order, if

applied for, be given to the parties upon compliance of

necessary formalities.

(Raja Basu Chowdhury, J.)