Madras High Court
M.Saravanakumar vs The Recovery Officer on 13 December, 2021
W.P(MD)No.21218 of 2021
BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT
DATED: 13.12.2021
CORAM:
THE HONOURABLE MR.JUSTICE B.PUGALENDHI
W.P(MD)No.21218 of 2021 and
WMP(MD) No.17800 of 2021
M.Saravanakumar ...Petitioner
vs.
The Recovery Officer,
Office of the Recovery Officer,
Employees State Insurance Corporation,
Sub Regional Office (Madurai),
Second West Street,
K.K.Nagar,
Madurai 625 020. ...Respondent
PRAYER: Writ Petition filed under Article 226 of the Constitution of
India, praying this Court to issue a Writ of Certiorari, calling for the
records relating tot he impugned recovery order of the respondent in
Ref.No.57/RRC/00/047411/000/0101/SRO/MDU, dated 07.10.2021 for a
sum of Rs.5,03,862/- for the period from October 2010 to March 2012;
and impugned recovery order Ref.No.57/ RRC/ 00/ 047411/ 000/ 0101/
SRO/ MDU, dated 07.10.2021, for a sum of Rs.40,53,218/-, for the
period from June 2005 to September 2009 and quash the same insofar as
the petitioner is concerned.
For Petitioner : Mr.K.Muthu Ganesa Pandian
For Respondent : Mr.C.Karthick
1/13
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W.P(MD)No.21218 of 2021
ORDER
This writ petition is filed as against the orders of recovery
issued by the respondents in reference Ref.No.
57/RRC/00/047411/000/0101/SRO/MDU, dated 07.10.2021, for a sum
of Rs.5,03,862/- for the period from October 2010 to March 2012; and
impugned recovery order Ref.No.57/ RRC/ 00/ 047411/ 000/ 0101/ SRO/
MDU, dated 07.10.2021, for a sum of Rs.40,53,218/-, for the period from
June 2005 to September 2009.
2.According to the petitioner, the orders impugned in this
writ petition are the liability of the petitioner's vendor and the petitioner
purchased M/s.Thomas Spinning Mills India Pvt Ltd only in the year
2014. The order impugned is also by way of attachment, even without
providing any opportunity to this petitioner.
3.The learned counsel for the petitioner relied on Section 45
(A) of ESI Act,which reads as follows:-
“45A.Determination of contributions in certain cases.
(1) Where in respect of a factory or establishment no
returns, particulars, registers or records are submitted,
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W.P(MD)No.21218 of 2021
furnished or maintained in accordance with the
provisions of section 44 or any (Social Security
officer) or other official of the Corporation referred to
in sub-section (2) of section 45 is [prevented in any
manner] by the principal or immediate employer or
any other person, in exercising his functions or
discharging his duties under section 45, the
Corporation may, on the basis of information
available to it, by order, determine the amount of
contributions payable in respect of the employees of
that factory or establishment.
[Provided that no such order shall be passed by the
Corporation unless the principal or immediate
employer or the person in charge of the factory or
establishment has been given a reasonable
opportunity of being heard:]
[Provided further that no such order shall be passed
by the Corporation in respect of the period beyond
five years from the date on which the contribution
shall become payable.]
4.The learned counsel also relied upon the judgment of this
Court in batch of writ petitions in W.P.Nos.3590 of 2021 etc., dated
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W.P(MD)No.21218 of 2021
16.02.2021, wherein, this Court in similar circumstances, by referring to
the orders of the Honourable Apex Court, in Hafeez Motor Transport
Vs.Deputy Regional Director, reported in 2000 SCC Online Mad 1123,
has set aside the order, on the ground of violation of principles of natural
justice and remitted the matter back to the authority, with a direction to
provide an opportunity of personal hearing to the petitioner and decide
the matter afresh, within a period of six weeks from the date of receipt of
a copy of that order.
5.The learned counsel also relied upon the judgment of this
Court in W.P. No.18776 of 2004, wherein, in similar such circumstances,
the matter was remitted back to the authority for fresh consideration.
6.Mr.C.Karthick, learned counsel appearing for the
respondents takes notice and submits that vendor of this petitioner was
already issued with notice under Section 45(A) of ESI Act and he has
also challenged the same before the ESI Court, in ESI Case No.58 of
2010 and the same was dismissed for default on 02.08.2018 and order
under Section 45(A) of ESI Act was passed on 29.06.2010 itself. More
over, notice under Section 45(A) of ESI Act, has already been issued to
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W.P(MD)No.21218 of 2021
the subsequent purchaser for the subsequent period and therefore, there is
no error in the impugned orders of recovery.
7.The learned counsel also relied on the judgment of this
Court in W.P.(MD) No.11208 of 2005, wherein, this Court has held as
follows:-
13.Subsequently, the respondents ESI Corporation had
filed a counter affidavit dated 29.01.2010. It was
stated that under Section 93 of the ESI Act, any
transfer made, the transferee is jointly and severally
liable to pay the amount due to the corporation. The
contentions raised in these writ petition are no
longer res integra.
14.The Supreme Court very recently while analysing
the scope of the EPF vide its decision in
Maharashtra State Co-operative Bank Ltd. v.
Assistant Provident Fund Commissioner and others
reported in (2009) 10 SCC 123 has held in
paragraphs 66 to 69 which is as follows:-
"66. Section 11 gives statutory priority to
the amount due from the employer vis-`-vis
all other debts. Clause (a) of sub-section
(1) of Section 11 is applicable to cases
where an employer is adjudicated insolvent
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W.P(MD)No.21218 of 2021
or, being a company, an order of its
winding up is made. In that situation, the
amount due from the employer in relation
to an establishment to which any scheme or
the Insurance Scheme applies in respect of
any contribution payable to the Fund or, as
the case may be, the Insurance Fund,
damages recoverable under Section 14-B,
accumulations required to be transferred
under Section 15(2) or any other charges
payable by him under any other provision
of this Act or of any provision of the
Scheme or the Insurance Scheme. Clause
(b) is applicable to cases where the amount
is due from the employer in relation to
exempted establishment in respect of any
contribution to the provident fund or any
insurance fund insofar it relates to
exempted employees under the rules of
provident fund or any insurance fund, any
contribution payable by him towards the
Pension Fund under Section 17(6),
damages recoverable under Section 14-B
or any charges payable by him to the
appropriate Government under the Act or
under any of the conditions specified in
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W.P(MD)No.21218 of 2021
Section 17. This sub-section then lays down
that such amount shall be paid in priority
to all other debts in the distribution of the
property of the insolvent or the assets of
the company being wound up. Sub-section
(2) lays down that any amount due from the
employer whether in respect of the
employees# contribution deducted from the
wages of the employee or the employer#s
contribution shall be deemed to be the first
charge on the assets of the establishment,
and shall be paid in priority to all other
debts.
67. The expression #any amount due from
an employer# appearing in sub-section (2)
of Section 11 has to be interpreted keeping
in view the object of the Act and other
provisions contained therein including sub-
section (1) of Section 11 and Sections 7-A,
7-Q, 14-B and 15(2) which provide for
determination of the dues payable by the
employer, liability of the employer to pay
interest in case the payment of the amount
due is delayed and also pay damages, if
there is default in making contribution to
the Fund. If any amount payable by the
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W.P(MD)No.21218 of 2021
employer becomes due and the same is not
paid within the stipulated time, then the
employer is required to pay interest in
terms of the mandate of Section 7-Q.
Likewise, default on the employer#s part to
pay any contribution to the Fund can visit
him with the consequence of levy of
damages.
68. As mentioned earlier, sub-section (2)
was inserted in Section 11 by Amendment
Act 40 of 1973 with a view to ensure that
payment of provident fund dues of the
workers are not defeated by the prior
claims of the secured and/or of the
unsecured creditors. While enacting sub-
section (2), the legislature was conscious of
the fact that in terms of existing Section 11
priority has been given to the amount due
from an employer in relation to an
establishment to which any scheme or fund
is applicable including damages
recoverable under Section 14-B and
accumulations required to be transferred
under Section 15(2). The legislature was
also aware that in case of delay the
employer is statutorily responsible to pay
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W.P(MD)No.21218 of 2021
interest in terms of Section 17. Therefore,
there is no plausible reason to give a
restricted meaning to the expression #any
amount due from the employer# and
confine it to the amount determined under
Section 7-A or the contribution payable
under Section 8.
69. If interest payable by the employer
under Section 7-Q and damages leviable
under Section 14 (sic Section 14-B) are
excluded from the ambit of expression #any
amount due from an employer#, every
employer will conveniently refrain from
paying contribution to the Fund and other
dues and resist the efforts of the authorities
concerned to recover the dues as arrears of
land revenue by contending that the
movable or immovable property of the
establishment is subject to other debts. Any
such interpretation would frustrate the
object of introducing the deeming provision
and non obstante clause in Section 11(2).
Therefore, it is not possible to agree with
the learned Senior Counsel for the
appellant Bank that the amount of interest
payable under Section 7-Q and damages
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W.P(MD)No.21218 of 2021
leviable under Section 14-B do not form
part of the amount due from an employer
for the purpose of Section 11(2) of the Act."
15.Therefore, this Court is not inclined to
entertain the writ petitions solely on the
ground that one petitioner is a purchaser
under the SARFAESI Act and therefore, they
are not liable to pay any amount either to the
PF or ESI Corporation. Further, the
contention that SARFAESI Act is a special
law and therefore, it overrides the other prior
enactment cannot be countenanced in the
light of the judgment of the Supreme Court
referred to above.
16.The writ petition in W.P.No.11208 of 2005
will stand dismissed as it is only a notice
under Section 7A of the EPF Act. If at all the
writ petitioner company was aggrieved by
that order, they should have moved the
Appellate Tribunal constituted under Section
7I of the EPF Act.
17.Similarly in W.P.No.19413 of 2009, the
petitioner if at all aggrieved, he has to raise a
dispute before the ESI Court under Section
75 and not rush to this Court on an
intimation of taking possession of the
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W.P(MD)No.21218 of 2021
property which was already under
attachment. Hence, W.P.No.19413 of 2009
stands dismissed.”
8.This Court paid its anxious consideration to the rival
submissions made and also perused the materials placed on record.
9.The orders impugned in this writ petition are the notices
issued under Section 45(A) of ESI Act and consequent orders of
recovery. As against the two notices, this writ petition is filed.
Admittedly, this petitioner is the subsequent purchaser of M/s. Thomas
Spinning Mills India Pvt Ltd, Dindigul. The erstwhile owner has already
contested the notice before the concerned ESI Court, in ESI Case No.58
of 2010 and the same was dismissed for default on 02.08.2018.
Admittedly, it was not decided on merits. Under such circumstances, in
order to provide one more opportunity to this petitioner, this Court set
aside the impugned orders and remits the matter back to the respondent
to provide an opportunity to the petitioner and to take further course of
action, in accordance with law, within a period of eight weeks from the
date of receipt of a copy of this order. The petitioner shall also work out
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W.P(MD)No.21218 of 2021
the possibility, if any, to restore the ESI Case No.58 of 2010, which was
already dismissed for default.
10.With the above said directions, the Writ Petition is
disposed of. No costs. Consequently, connected Miscellaneous Petition is
closed.
13.12.2021
Index:Yes
Internet:Yes
vrn
Note :
In view of the present lock down owing to COVID-19 pandemic, a web
copy of the order may be utilized for official purposes, but, ensuring
that the copy of the order that is presented is the correct copy, shall be
the responsibility of the advocate / litigant concerned.
To
The Recovery Officer,
Office of the Recovery Officer,
Employees State Insurance Corporation,
Sub Regional Office (Madurai),
Second West Street,
K.K.Nagar,
Madurai 625 020.
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W.P(MD)No.21218 of 2021
B.PUGALENDHI, J.
vrn
ORDER MADE IN
W.P(MD)No.21218 of 2021 and
WMP(MD) No.17800 of 2021
13.12.2021
https://www.mhc.tn.gov.in/judis
