Maharani Smt. Pramoda Devi ... vs The Employees Provident Fund ...
2021 Latest Caselaw 384 Kant

                           1



       IN THE HIGH COURT OF KARNATAKA AT BENGALURU

          DATED THIS THE 07TH DAY OF JANUARY, 2021

                          BEFORE

         THE HON'BLE MR. JUSTICE M. NAGAPRASANNA

            WRIT PETITION No.25374/2016 (L - PF)

BETWEEN

MAHARANI SMT. PRAMODA DEVI WADIYAR
W/O LATE SRI. SRIKANTA DATTA RAJA WADIYAR,
THE ROYAL PALACE-MYSURU - 570 002
MYSURU, KARNATAKA.
                                               ... PETITIONER

(BY SRI K.KASTURI, SENIOR COUNSEL ALONG WITH
  SMT.SRIBHOOMI YESASWINI., ADVOCATE (VIDEO
  CONFERENCING))

AND

1.    THE EMPLOYEES PROVIDENT FUND ORGANISATION
      C & R DEPARTMENT,
      SUB-REGIONAL OFFICE
      BHAVISHYA NIDHI BHAVAN,
      2ND STAGE, GAYATHRIPURAM,
      MYSURU - 570 019
      BY THE ASST.P F COMMISSIONER (C & R)

2.    THE OFFICIAL LIQUIDATOR OF
      M/S IDEAL JAWA (INDIA) LTD
      MINISTRY OF LAW, JUSTICE & COMPANY AFFAIRS
      DEPARTMENT OF COMPANY AFFAIRS,
      GOVERNMENT OF INDIA,
      OFFICE OF THE OFFICIAL LIQUIDATOR
                               2



     HIGH COURT OF KARNATAKA
     BENGALURU - 560 001.
                                                 ... RESPONDENTS

(BY SRI M.PRADEEP, ADVOCATE FOR R1 (VIDEO
  CONFERENCING);
   SRI K.S.MAHADEVAN, ADVOCATE FOR R2 (VIDEO
   CONFERENCING))

    THIS WRIT PETITION IS FILED UNDER ARTICLE 226 OF THE
CONSTITUTION OF INDIA PRAYING TO QUASH THE ORDER BY THE
RESPONDENT DTD 21.8.2015 AT ANNEXURE-F ETC.

     THIS WRIT PETITION COMING ON FOR PRELIMINARY
HEARING IN 'B' GROUP THIS DAY, THE COURT MADE THE
FOLLOWING:
                       ORDER

The petitioner in this writ petition has called in question

the order passed by the first respondent - Employees

Provident Fund Organisation (hereinafter referred to as 'the

EPFO' for short) dated 21.08.2015, by which, the EPFO

initiated proceedings under Section 8B of the Employees

Provident Funds And Miscellaneous Provisions Act, 1952

(hereinafter referred to as 'the said Act' for short) for effecting

recovery of the assets movable and immovable of M/s.Ideal

Jawa (India) Limited on the ground that the husband of the

petitioner was once a Director of the Company.

2. Heard Sri K. Kasturi, learned senior counsel appearing

for the petitioner along with Smt. Sribhoomi Yesaswini and

Sri M.Pradeep, learned counsel appearing for first respondent

and Sri K.S.Mahadevan, learned counsel for second

respondent.

3. Brief facts of the case leading to the filing of the writ

petition are that, Sri Srikantadatta Narasimha Raja Wadiyar

during his lifetime was one of the directors of the M/s.Ideal

Jawa (India) Limited. On 05.10.1994, he tendered his

resignation to the post of director and ceased to function in

the said post on and from 05.10.1994.

4. M/s.Ideal Jawa (India) Limited was wound up by a

proceedings before this Court in the year 2001 and on

10.12.2013, Sri Srikantadatta Narasimha Raja Wadiyar died.

After the death of Srikantadatta Narasimha Raja Wadiyar,

proceedings appeared to have been instituted by the EPFO

against the petitioner who is the wife of the late Sri

Srikantadatta Narasimha Raja Wadiyar, invoking Section 8B of

the said Act for provident fund dues, with interest of

Rs.1,71,77,273/- and penal damages of Rs.4,09,30,773/-,

totaling to, Rs.9,90,76,906/- (Rupees Nine Crores Ninety

Lakhs Seventy Six Thousand and Nine Hundred and Six only),

against the petitioner on the ground that she is the wife of Sri

Srikantadatta Narasimha Raja Wadiyar, who once used to be a

director of M/s.Ideal Jawa (India) Limited.

5. In order to appreciate the dispute, it is germane to

notice Section 2(e) of the said Act, which defines 'employer'

and is extracted for ready reference.

"Section (e) - "employer" means -- (i) in relation to an establishment which is a factory, the owner or occupier of the factory, including the agent of such owner or occupier, the legal representative of a deceased owner or occupier and, where a person has been named as a manager of the factory under clause (f) of sub-

section (1) of section 7 of the Factories Act, 1948 (63 of 1948), the person so named; and

(ii) in relation to any other establishment, the person who, or the authority which, has the ultimate control over the affairs of the establishment, and where the said affairs are entrusted to a manager, managing director or managing agent, such manager, managing director or managing agent."

A perusal of the afore-extracted Section 2(c) of the said

Act can by no stretch of imagination include the petitioner,

more so, in the light of the fact that the husband of the

petitioner, Sri Srikantadatta Narasimha Raja Wadiyar tendered

his resignation to the directorship on 05.10.1994, and ceased

to be one of the directors on and from 05.10.1994, a Director

would not come within the definition of 'employer'.

6. If the petitioner does not come under definition of

'employer', the proceedings under Section 8B of the said Act

would be without jurisdiction. Section 8B of the said Act reads

as follows:

"SECTION 8B - ISSUE OF CERTIFICATE TO THE RECOVERY OFFICER -- (1) Where any amount is in arrears under section section 8, the authorised Officer may issue, to the Recovery Officer, a certificate under his signature specifying the amount of arrears and the Recovery Officer, on receipt of such Certificate, shall proceed to recover the amount specified therein from the establishment or, as the case may be, the employer by one or more of the modes mentioned below:--

(a) attachment and sale of the movable or immovable property of the establishment or, as the case may be, the employer;

(b) arrest of the employer and his detention in prison;

              (c)   appointing           a     receiver     for     the
     management          of   the       movable     or    immovable

properties of the establishment or, as the case may be, the employer:

Provided that the attachment and sale of any property under this section shall first be effected against the proportion of the establishment and where such attachment and sale is insufficient for recovering the whole of the amount of arrears specified in the certificate, the Recovery Officer may take such proceedings against the property of the employer for recovery of the whole or any part of such arrears.

(2) The Authorised Officer may issue a certificate under sub-section (1), notwithstanding that proceedings for recovery of the arrears by any other mode have been taken."

(emphasis supplied)

In terms of Section 8B of the said Act, the proceedings

can be initiated only against an employer. Petitioner or her

late husband, who once upon a time was a Director, would not

come within the definition of 'employer'. When the

proceedings were instituted by the EPFO, detailed statement

of objections were filed before the first respondent contending

that the liability that is now fastened upon is without

jurisdiction as the husband of the petitioner had himself

ceased to be a director of M/s.Ideal Jawa (India) Limited on

05.10.1994 and the fact, M/s.Ideal Jawa (India) Limited was

closed in the year 1996 and was ultimately wound up before

the Court in the year 2012. Even in terms of the definition of

'employer' as is observed in the impugned order, cannot

include the petitioner.

7. It is apposite to refer to the judgment of the learned

Division Bench in the case of THE ASSISTANT PROVIDENT

FUND COMMISSIONER AND RECOVERY OFFICER VS. MR.

VIJAYAKRISHNA K.T. in WRIT APPEAL NO.642 TO 643

OF 2014 (D.D. ON 30.03.2016), held as follows:

"2. The Hon'ble Single Judge relied upon a decision of the Apex Court in 'SRIKANTA DATTA NARASIMHARAJA WADIYAR versus ENFORCEMENT OFFICER, MYSORE' reported in AIR 1993 SC 1656.

3. In order to appreciate the dispute, we are required to consider certain provisions of the Employees' Provident Funds and Miscellaneous

Provisions Act, 1952 ('said Act of 1952', in short) in relation to the facts and circumstances of the case.

4. Section 2(e) of the said Act of 1952, defines the 'employer', in relation to any other establishment than a factory as a person who, or the authority which, has the ultimate control over the affairs of the establishment, and where the said affairs are entrusted to a manager, managing director or managing agent, such manager, managing director or managing agent.

5. Thus, in relation to an establishment other than a factory, the expression 'employer' would mean either the person or the authority having ultimate control over the affairs of the establishment or the person, who is in charge of the management of that establishment irrespective of his designation.

6. Section 5 of the said Act of 1952, contemplates framing of a scheme by notification in the Official Gazette of the Central Government for the employees. It is obligatory under the

provisions of the said Act of 1952, for the employer to deposit the monthly contribution to the said scheme.

7. Section 7A of the said Act of 1952, speaks of determination of money due from the employer.

8. Section 14 of the said Act of 1952, speaks of the penalty to be imposed if the payments are avoided. Section 14A contemplates that if the person committing an offence under the said Act of 1952, is a company, every person, who at the time the offence was committed was in charge of, and was responsible to, the company for the conduct of the business of the company, as well as the company, shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly.

9. Under the scheme of the Act, it is incumbent on the employer to submit Form 5A. In the Form 5A, there are two important columns. Column 10 speaks of particulars of a Manager / occupier and column 11 speaks of particulars of

the persons, who are in charge of, and responsible for, the conduct of the business of the establishment.

10. In these cases, the writ petitioners contend that their names were not mentioned in the column 11 and that they were not responsible for the day-to-day functioning of the company.

11. It is settled law that a Director of a private company, who is neither an occupier nor a manager, cannot be prosecuted for the violation of the requirements of the said Act of 1952.

12. As admittedly the names of these writ petitioners were not mentioned in column 11 of Form 5A, the Hon'ble Single Judge, in our view, rightly held that they could not be made liable."

In the light of the law laid down in the afore-extracted

judgment and in terms of the definition of 'employer' under

the said Act, the petitioner cannot be termed to be an

'employer'. If the petitioner cannot be termed as an

'employer', impugned proceedings are without authority of

law.

8. For the aforesaid reasons, the following:

ORDER

a. The writ petition is allowed.

b. The impugned order dated 21.08.2015, in case

No.KN/PF/SRO/MYS/RECY/518/2015-16, passed by

the respondent is quashed.

Sd/-

JUDGE

nvj CT:MJ