Madras High Court
The Kanyakumari Central vs The Assistant Provident Fund on 19 October, 2022
W.A(MD)No. 1487 of 2011
BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT
DATED : 19.10.2022
CORAM:
THE HONOURABLE MRS.JUSTICE J.NISHA BANU
AND
THE HONOURABLE MR.JUSTICE N.ANAND VENKATESH
W.A(MD)No. 1487 of 2011
The Kanyakumari Central
Co-operative Bank Limited,
No.Y 11, Alexandira Press Road,
Nagercoil,
Represented by the Special Officer,
: Petitioner/Appellant
Vs.
1. The Assistant Provident Fund,
Commissioner,
Sub-Regional Office,
66, Water Tank Road,
Nagercoil-1
2. The Manager,
State Bank of India,
Main Branch,
Nagercoil-1
1/9
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W.A(MD)No. 1487 of 2011
3. The Chiramadam Primary Agricultural
Co-Operative Credit Society,
Y-213, Azhakiapandiapuram,
Kanyakumari District,
Represented by the Secretary,
: Respondents/Respondents
PRAYER : Writ Appeal filed under Clause 15 of Letters Patent, to set aside the
order dated 31.10.2011, made in W.P(MD)No.2873 of 2010, on the file of this
Court.
For Appellant : Mr.D.Shanmugaraja Sethupathi
For R1 : Mr.J.S.Murali
For R2 and R3 : No Appearance
JUDGMENT
J.NISHA BANU, J.
AND
N.ANAND VENKATESH,J.
This Writ Appeal has been filed by the Kanyakumari Central Co-
operative Bank Limited, challenging the order, dated 31.10.2011 passed by the
learned Single Judge dismissing the Writ Petition, which in-turn, challenges the
proceedings of the Assistant Provident Fund Commissioner, Nagercoil, dated
02.02.2010, whereby, a sum of Rs.1,88,866/- along with 18% interest was
recovered from the appellant Bank.
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W.A(MD)No. 1487 of 2011
2.The third respondent Society defaulted in the payment of contribution
towards Provident Fund and action was initiated under the provision of
Employees' Provident Funds and Miscellaneous Provisions Act, 1952 (hereinafter
referred to as 'the Act'). The third respondent Society was maintaining the
account with the appellant Bank. Since the contribution amount was not paid by
the third respondent Society, the first respondent issued a notice to the appellant
on 26.08.2009 stating that the third respondent Society has defaulted in making
payment to the Department and hence, the appellant Bank was directed to pay the
amount.
3.A show cause notice to that effect was issued in accordance with
Section 8F (3) (x) of the Act. The appellant Bank did not respond to the said
show cause notice. Hence, the appellant Bank was treated as a 'Deemed
Defaulter' and consequently, proceedings were initiated for the recovery of the
amount from the appellant Bank and the amount was also recovered. Aggrieved
by the same, the writ petition was filed by the Bank.
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W.A(MD)No. 1487 of 2011
4.The learned Single Judge, on considering the rival claims and after
taking note of the judgment of the Hon'ble Apex Court in Maharashtra State
Coop. Bank Ltd.,-vs-Provident Fund Commr., reported in (2009) 10 SCC 123,
held that it was well within the powers of the first respondent to recover the
amount and accordingly, the writ petition was dismissed. Aggrieved by the same,
this Writ Appeal has been filed before this Court.
5.Heard Mr.D.Shanmugaraja Sethupathi, learned counsel appearing for
the appellant and Mr.J.S.Murali, learned counsel appearing for the first
respondent.
6.The main ground that was urged by the learned counsel appearing for
the appellant is that a sum of Rs.20,00,000/- was received by the appellant Bank
from the Government towards the Rehabilitation Scheme and the said amount can
only be utilized towards revival of the Society and the amount cannot be utilized
for any other purpose. It was, therefore, submitted that the first respondent was
not entitled to recover the amount, which was lying in the account of the third
respondent Society in the appellant Bank, since the amount was received towards
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W.A(MD)No. 1487 of 2011
the Rehabilitation Scheme. The learned counsel further placed reliance upon
Section 8(F)(2) of the Act and submitted that the appellant Bank cannot be treated
to be the person, who is due to pay to the third respondent Society and there is no
question of any arrears by the appellant Bank towards the third respondent
Society and hence, the application of Section 8(F) of the Act cannot go against
the appellant Bank and the same is illegal. The learned counsel further submitted
that the amount has already been recovered by the first respondent and the
appellant Bank is answerable to the Government and the appellant Bank should
not be made liable or responsible for an act, where the appellant Bank had no role
to play. Accordingly, the learned counsel sought for setting aside the order passed
by the learned Single Judge.
7.Per contra, the learned counsel appearing on behalf of the Provident
Fund Commissioner submitted that the third respondent Society was maintaining
a bank account in the appellant Bank and there were Provident Fund dues and
damages payable by the Society to an extent of Rs.1,88,866/-. Since the third
respondent Society did not make the payment, the Department was entitled to
proceed further under Section 8F of the Act and accordingly, a show cause notice
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W.A(MD)No. 1487 of 2011
was also issued to the appellant Bank, as per Section 8F(3)(x) of the Act and the
appellant Bank was called upon to show cause as to why they should not be
treated as 'Deemed Defaulter'. Since no reply was given by the appellant Bank,
the appellant Bank was considered to be a defaulter under the relevant provisions
and the amount was recovered. The learned Counsel submitted that the entire
issue has been properly considered by the learned Single Judge and the order does
not warrant any interference.
8.In the present case, there is no dispute with regard to the fact that the
third respondent Society was in default in paying the Provident Fund dues to the
Department. It is also not in dispute that the third respondent was maintaining the
account with the appellant Bank. Since the Provident Fund dues were not paid by
the third respondent Society, the Department had to necessarily proceed further to
recover the amount from the account maintained with the appellant Bank.
Accordingly, proceedings were initiated under Section 8F(3) of the Act. This
provision is worded very widely, wherein, even the establishment where the
account of the employer is maintained can be served with notice under Section
8F(3)(x) of the Act, demanding for the payment of the amount and if the said
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W.A(MD)No. 1487 of 2011
demand is not complied with, the Bank, where the account is held, will be
deemed to be a defaulter. This power available to the Department has been
rightly considered by the learned Single Judge and the action initiated by the
Department was upheld.
9.We do not find any ground to interfere with the order passed by the
learned Single Judge, since it is backed by sufficient reasons. The only
apprehension on the part of the appellant Bank is that the State Government will
proceed against them for utilizing the amount, which was exclusively given under
the Rehabilitation Package. We make it clear that the appellant Bank had
absolutely no role to play, insofar as the dispute between the third respondent
Society and the Provident Fund Department. The role of the appellant came into
play only because of the account maintained by the third respondent Society in
the appellant Bank. The amount has now been recovered by the Department from
the Bank account of the appellant Bank maintained in the second respondent
Bank. The appellant Bank cannot be put to a loss and they will always be entitled
to adjust the amount lying in the account of the third respondent Society and
credit it to their account. If such an action is taken by them the Government
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W.A(MD)No. 1487 of 2011
cannot initiate action and go against the appellant Bank, since the appellant Bank
has been forced to incur the liability due to the third respondent Society.
10.In view of the above, the order passed by the learned Single Judge is
upheld and at the risk of repetition, we make it clear that the appellant Bank is
entitled to adjust the amount recovered from them by the Department from the
account maintained by the third respondent Society and if any such adjustment is
made by the appellant Bank, the State Government cannot go against the
appellant Bank on the ground that the amount has been taken away from the
Rehabilitation Package.
11.This Writ Appeal is disposed of in the above terms. No costs.
[J.N.B.,J] [N.A.V.,J]
19.10.2022
Index : Yes / No
Internet : Yes
LR/Ns
https://www.mhc.tn.gov.in/judis
W.A(MD)No. 1487 of 2011
J.NISHA BANU, J.
AND
N.ANAND VENKATESH,J.
LR/Ns
W.A(MD)No. 1487 of 2011
19.10.2022
https://www.mhc.tn.gov.in/judis
