G.Arun Kumar vs The Ap., Mahesh Cooperative Urban ...
2022 Latest Caselaw 4194 Tel

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                                                 W.P.No.8773 of 2016


THE HONOURABLE SMT JUSTICE P.MADHAVI DEVI

                 W.P.No. 8773 OF 2016

ORDER:

This Writ Petition is filed by the petitioner seeking

a writ of mandamus for the following relief:-

(a) to call for the records pertaining to proceedings

dated 15.07.2015 and the consequential

proceedings, dated 16.07.2015, issued by the

respondent bank and to declare them as bad,

illegal and arbitrary and as without jurisdiction

and violative of Sec.10 of the Employees'

Provident Funds and Miscellaneous Provisions

Act, 1952 and Rule 36 of employees Provident

Fund (trust) rules of the respondent bank and

consequently, to direct the respondent bank to

release the amount to the account of the

petitioner and to allow him to withdraw the same.

(b) hold the action of the Managing Trustee of the

Trust as well as the Regional Provident Fund

Commissioner, Hyderabad in not arresting the

W.P.No.8773 of 2016

above said illegality and being a mute spectator

as bad, illegal, arbitrary, discriminatory and

unconstitutional.

2. Heard the learned counsel for the petitioner

Sri.J.Sudheer and the Senior Counsel Sri.V.Srinivas,

representing the learned Standing counsel, Sri.Ravi

Mudra, appearing for respondent No.3.

3. The brief facts leading to the filing of this writ

petition are that the petitioner had joined the

respondent bank as a clerk cum cashier in the year

1984 and was promoted to various cadres. While he

was working as a Manager in-charge of Khammam

Branch, certain allegations were made against the

petitioner and a charge sheet dated 08.08.2014 was

also issued. The charge sheet eventually led to

dismissal of the petitioner from service vide

proceedings dated 13.02.2015. The appeal filed against

the said order was also dismissed vide proceedings

dated 25.04.2015 and the writ petitioner contemplated

to challenge the same. In the meantime, the

W.P.No.8773 of 2016

respondent No.2 credited an amount of Rs.14,01,525/-

in ODOS account of the petitioner in full and final

settlement of his Provident Fund account by

specifically mentioning in the letter dated 14.07.2015

that the employee's contribution is Rs.7,75,099/- and

the employer's contribution is Rs.6,26,426/- and vide

letter dated 15.07.2015, the petitioner was informed

that the petitioner was dismissed from services of the

bank due to serious irregularities committed by him

while he was working as Manager in-charge of

Khammam Branch and that there was a huge financial

loss to the tune of Rs.164.86 lakhs to the bank and in

view thereof, the respondent bank has recovered an

amount of Rs.6,26,426/- from the petitioner ODOS

account by exercising the Banker's General Lien,

towards the financial loss suffered by the bank.

Thereafter, they have also freezed the account so that

the petitioner could not withdraw the employee's

contribution of Provident Fund. The petitioner made

representation to all the respondents and since there

W.P.No.8773 of 2016

was no response to his representation, the present writ

petition is filed.

4. The learned counsel for the petitioner submitted

that under Rule 10 of the Employees' Provident Funds

and Miscellaneous Provisions of the Act, 1952, the

amount credited to the Provident Fund account shall

not, in any way, be capable of being assigned, changed

or shall be liable for attachment under any decree or

order of any Court in respect of the debt or liability

incurred by the member or the employee and that no

one will have any claim in such amount. He has drawn

the attention of this Court to the impugned order of

respondent bank, wherein it is stated that by virtue of

the General lien on the accounts of the petitioner, the

employer's contribution of Rs.6,26,426/- has been

recovered. However, according to the learned counsel

for the petitioner, the General lien can only be in

respect of the accounts of a customer and not on the

amounts held in Public Provident Fund account of the

petitioner on account of his being an employee of the

W.P.No.8773 of 2016

respondent bank. He therefore sought a direction to

the respondent bank to release the amount to the

petitioner.

5. The learned standing counsel for the respondent

bank, on the other hand, has raised a preliminary

objection as to the maintainability of the writ petition

itself. According to him, this writ petition is not

maintainable as the respondent bank is a private bank

and the inaction on the part of the respondent bank is

not on account of any statutory duty to be performed

by it. In support of his contention that the writ petition

against the respondent bank is not maintainable, he

placed reliance upon the following judgments:

(i) Sri.Konaseema Co-operative Central Bank

Ltd., Amalapuram and Another Vs.N.Seetharama

Raju1;

(ii) B.S.K.Madhavi Vs. Kotak Mahindra Bank

Limited and Others2;

AIR 1990 AP (FB) 171

2012 (6) ALT 51 (DB)

W.P.No.8773 of 2016

(iii) Phoenix ARC Private Limited Vs. Vishwa

Bharati Vidya Mandir and Others3;

(iv) Federal Bank Limited Vs. Sagar Thomas

and Others4.

Further even on merits, the learned counsel for

the respondent bank submitted that the petitioner has

not come to this Court with clean hands and since it

has been proven that the petitioner had committed a

fraud of Rs.164.86 lakhs, the writ petition filed by the

petitioner should not be entertained.

6. In rebuttal, learned counsel for the petitioner has

brought to the notice of this Court that the respondent

bank had credited to the ODOS Account of the

petitioner, both the Bank's as well as the petitioner's

contribution to the Provident Fund account, but it has

withheld only the employer's share of contribution. It is

submitted that Section 10 of the Public Provident Fund

Rules, prohibits attachment of any provident fund by

2022 AIR SC 1045

(2003) 10 SCC 733

W.P.No.8773 of 2016

virtue of even a Court order and that even the service

rules adopted by the bank also prohibit any such

attachment and therefore, the general lien as claimed

by the respondent bank for attachment of PPF is not

available to the respondent bank. Further, the learned

counsel for the petitioner submitted that this Writ

Petition filed by the petitioner is not against any bank

activity carried on by the respondent bank, but that it

is against the failure of the respondent bank in

fulfilling its statutory obligation in making payment of

the Bank's contribution of Provident Fund to the

petitioner on his removal from service and failure to

make the said payment is an illegality, which can be

challenged under the Article 226 of Constitution of

India.

7. Having regard to the rival contentions and

material on record, this Court finds that in this writ

petition for a writ of mandamus, the challenge made by

the petitioner is not with regard to any commercial

activity carried on by the bank, but it is for non-

W.P.No.8773 of 2016

fulfilment of its obligation as an employer in paying the

Provident Fund to its retired employee. As regards the

preliminary objection on the maintainability of this

writ petition, it is pertinent to examine the nature of

dispute. The dispute is with regard to non-compliance

or in fact violation of the provisions of the Employees''

Provident Funds and Miscellaneous Provision Act,

1952. The respondents 1 and 2 are governed by the

provisions of the said Act and in accordance therewith,

the bank has deducted the Employees' Contribution to

the Provident Fund from the salary of the petitioner

and has also contributed its share to the fund. The Act

is a social Security Legislation to protect the interest of

the workers employed in the factories and the other

establishments to which this Act applies. In the case of

Maharashtra State Co-operative Bank Limited Vs.

Provident Fund Commissioner5, the Hon'ble

Supreme Court has observed that in view of it being a

social welfare legislation, it is imperative for the courts

to give a purposive interpretation to the provisions

(209) 10 SCC 123

W.P.No.8773 of 2016

contained therein keeping in view the directive

principles of State Policy embodied in Article 38 and 43

of the Constitution of India. Therefore, non compliance

or violation of the provisions of this Act would

definitely attract the provisions of Article 226 of the

Constitution of India. The Learned counsel for the

respondent bank has relied upon the following

judgments in support of his arguments that this writ

petition is not maintainable.

8. In the case of Sri.Konaseema Co-operative

Central Bank Ltd., (cited supra), the full bench of AP

High Court was considering the case of an employee of

the Bank being terminated form the service of the bank

and the dispute was where it was in accordance with

the bye-laws of the bank. At para 51 of the judgment,

the full Bench has culled out the principles governing

the maintainability of a writ petition against a co-

operative Bank registered under A.P.Co-operative

societies Act. For the sake of ready reference, the

relevant para is reproduced hereunder:-

W.P.No.8773 of 2016

51. "Even if a Society cannot be characterised as a 'State'

within the meaning of Art.12, even so a writ would lie against it

to enforce a statutory public duty which an employee is entitled to

enforce against the Society. In such a case, it is unnecessary to

go into the question whether the Society is being treated as a

'person', or an 'authority', within the meaning of Art.226 of the

Constitution. What is material is the nature of the statutory duty

placed upon it, and the Court will enforce such, statutory public

duty".

9. In the case of Kadali Saroja Vs. ICICI Bank

Limited, Mumbai and others [2012 (6) ALT 51 (D.B.)],

this Court held as under :-

32. The Counsel for petitioners made a desperate effort to

distinguish Federal Bank's (2 supra). They rely on observations

in Mardia Chemical's (3 supra), A.Umarani v. Co-operative

Societies, 2005 (19) (2004) 7 SCC 112, K.C.Sharma v. Delhi Stock

Exchange (20), (2005) (3) SCJ 552 = (2005) 4 SCC 4 = AIR 2005

SC 2884, Zee Telefilms Limited v. Union of India (21) 2005 (2) scj

121 = (2005) 4 SCC 649 = AIR 2005 SC 2677 Binny Limited v. V.

Sadasivan (22) 2005 (6) SCJ 156 = (2005) 6 SCC

657, Transcore v. Union of India (23) 2007 (3) SCJ 201 = (2008) 1

SCC 125 and M.P.State Cooperative Dairy's (8 supra) and to

W.P.No.8773 of 2016

contend that Federal Bank is not an authority for proposition. We

are afraid the submission is unacceptable. There is direct

decision of the Supreme Court on the question whether a private

scheduled bank is a State within the meaning of Article 12

and/or whether such private bank performs public functions by

providing banking service is considered. The High Court cannot

ignore the decision of the High Court and take a different view.

Any such contra view of the High Court deviating from the ratio

laid down by the Supreme Court would be a judgment per

incuriam (State of U.P. v. Synthetics and Chemicals Limited (24)

(1991) 4 SCC 139). We do not intend to take such adventurous

path. Further, the following observations in MardiaChemicals's

case (supra), which was also delivered by the same learned

Judge who authored Federal Bank's case (supra), also supports

the petitioners. (Para 68 of SCC).

The main thrust of the petitioners as indicated in the earlier

part of this judgment to challenge the validity of the impugned

enactment is that no adjudicatory mechanism is available to the

borrower to ventilate his grievance through an independent

adjudicatory authority. Access to justice, it is submitted, is the

hallmark of our system. .... So far as remedy under Article 226 of

the Constitution of India is concerned, the submission is that it

may not always be available since the dispute may be only

W.P.No.8773 of 2016

between two private parties, the banking companies, cooperative

banks or financial institutions, foreign banks, some of them may

not be authorities within the meaning of Article 12 of the

Constitution of India against whom a writ petition could be

maintainable. Thus the position that emerges is that a borrower is

virtually left with no remedy. Where access to the Court is

prohibited and no proper adjudicatory mechanism is provided

such a law is unconstitutional and cannot survive. In support of

the aforesaid contentions besides others, reliance has particularly

been placed upon the case L.Chandra Kumar v. Union of India,

(1997) 3 SCC 261 and Surya Dev Rai v. Ram Chander Rai,

((2003) 6 SCC 675). A reference has also been made to the

decision of Kihoto Hollohan v. Zachillhu, (1992 Supp (2) SCC 651).

In the case of L.Chandra Kumar, it is held, some adjudicatory

process through an independent agency is essential for

determining the rights of the parties, more particularly when the

consequences which flow from the offending Act defeat the civil

rights of a party.

33. After saying so, in Paragraph 80(5) (of SCC) which

contains the propositions, the Supreme Court held that:

As discussed earlier in this judgment, we find that it will be

open to maintain a civil suit in civil Court, within the narrow

scope and on the limited grounds on which they are permissible,

W.P.No.8773 of 2016

in the matters relating to an English mortgage enforceable

without intervention of the Court.

34. Thus, in a narrow scope on limited grounds, if a suit is

still maintainable if the conclusion with regard to the breach of

contract by the bank is reached de hors the contract or in an

arbitrary manner, a writ petition as observed by Mardia

Chemicals's (3 supra), certainly bars against private bank.

35. The Counsel brought to the notice of this Court an

unreported decision of the Division Bench in W.P.No.200 of 2006,

dated 27.2.2006, and an unreported judgment of another Division

Bench in W.A.No.412 of 2008, dated 24.9.2009 in support of the

contention that a writ would still lie against a private bank. We

are afraid we need not deal with this matter in view of the

conclusion as above, which are based on binding decisions of the

Supreme Court. We accordingly hold that the writ petitions filed

against SRCs which are private bodies are not maintainable.

10. In the case of Federal Bank Ltd., (cited supra),

the Hon'ble Supreme Court has held as under :-

33. "For the discussion held above, in our view, a private

company carrying on banking business as a scheduled bank,

cannot be termed as an institution or company carrying on any

statutory or public duty. A private body or a person may be

W.P.No.8773 of 2016

amenable to writ jurisdiction only where it may become

necessary to compel such body or association to enforce any

statutory obligations or such obligations of public nature casting

positive obligation upon it. We don't find such conditions are

fulfilled in respect of a private company carrying on a commercial

activity of banking. Merely regulatory provisions to ensure such

activity carried on by private bodies work within a discipline, do

not confer any such status upon the company nor puts any such

obligation upon it which may be enforced through issue of a writ

under Article 226 of the Constitution. Present is a case of

disciplinary action being taken against its employee by the

appellant Bank. The respondent's service with the bank stands

terminated. The action of the Bank was challenged by the

respondent by filing a writ petition under Article 226 of the

Constitution of India. The respondent is not trying to enforce any

statutory duty on the part of the Bank. That being the position,

the appeal deserves to be allowed".

11. Even from the above judgments, it is clear that in

case of the violation of a statutory duty, a writ petition

under Article 226 of the Constitution of India is

maintainable. Therefore, the objection of the

respondent bank are rejected.

W.P.No.8773 of 2016

12. On merits of the petition, it is seen that the Writ

Petition is against recovery of the alleged pecuniary

loss caused to the bank from the Employer's

Contribution to the Provident Fund Account to the

tune of Rs.6,26,426/-.

13. The learned counsel for the Writ Petitioner has

relied on Section 10 of the Act and also Rule 36 of the

A.P.Mahesh Co-operative Urban Bank Employees

Provident Fund Rules. For the purpose of ready

reference, they are reproduced hereunder:

RULE 10 of the Act:

(1) The amount standing to the credit of any member in the

Fund [or of any exempted employee in a provident fund] shall not

in any way be capable of being assigned or charged and shall

not be liable to attachment under any decree or order of any court

in respect of any debt or liability incurred by the member [or the

exempted employee], and neither the official assignee appointed

under the Presidency-towns Insolvency Act, 1909 (3 of 1909), nor

any receiver appointed under the Provincial Insolvency Act, 1920

(5 of 1920), shall be entitled to, or have any claim

on, any such amount.

W.P.No.8773 of 2016

(2) Any amount standing to the credit of a member in the

Fund or of an exempted employee in a provident fund at the time

of his death and payable to his nominee under the Scheme or the

rules of the provident fund shall, subject to any deduction

authorised by the said Scheme or rules, vest in the nominee and

shall be free from any debt or other liability incurred by the

deceased or the nominee before the death of the member of the

exempted employee [and shall also not be liable to attachment

under any decree or order of any court].

(3) The provisions of sub-section (1) and sub-section (2)

shall, so far as may be, apply in relation to

the family pension or any other amount payable under the

[Pension] Scheme [and also in relation to any

amount payable under the Insurance Scheme] as they apply in

relation to any amount payable out of the

Fund.

RULE 36 OF Bank Rules:

The amount standing the credit of any member in the Fund

(or) of any exempted employee in a Provident Fund Shall not in

any way by capable of being assigned or charged and shall not

be liable to attachment under any decree or order of any court in

respect of any debt or liability incurred by the member (or the

exempted employee), and neither the official assignee appointed

W.P.No.8773 of 2016

under the Presidency Towns Insolvency Act, 1909 (3 of 1909) nor

any receiver appointed under the Provincial Insolvency Act, 1920

(5 of 1920) shall be entitled to, or have any claim, any such

amount.

14. From a reading of both the above rules, it is clear

that even under an order of Court, the Provident Fund

Account of the Writ Petitioner cannot be attached and

appropriated. The general lien of the bank can be

applied only in respect of banking transactions and not

in respect of service conditions of an employee.

Therefore, the respondent bank is directed to refund

the sum of Rs.6,26,426/- and also the employee's

contribution of Rs.7,75,099/- with interest @ 6% per

annum from the date of recovery till the date of

payment.

15. This Writ Petition is accordingly allowed. No order

as to Costs.

W.P.No.8773 of 2016

Pending miscellaneous petitions, if any, in this

Writ Petition shall stand closed.

______________________________ JUSTICE P. MADHAVI DEVI

Date: 23.08.2022 bak

W.P.No.8773 of 2016

THE HONOURABLE SMT JUSTICE P.MADHAVI DEVI

W.P.No. 8773 OF 2016

Dated: .08.2022

bak