Telangana High Court
M/S. Ampro Packaging Industries Ltd., vs Employees Provident Fund Organisation on 18 March, 2024
Author: Surepalli Nanda
Bench: Surepalli Nanda
IN THE HIGH COURT OF TELANGANA AT HYDERABAD
W.P.No.30372 OF 2012
Between:
M/s. Ampro Packaging Industries Ltd.,
and another
... Petitioners
And
Employees Provident Fund Organisation
and another
... Respondents
JUDGMENT PRONOUNCED ON: 18.03.2024
THE HON'BLE MRS JUSTICE SUREPALLI NANDA
1. Whether Reporters of Local newspapers : Yes
may be allowed to see the Judgment?
2. Whether the copies of judgment may be : Yes
marked to Law Reporters/Journals?
3. Whether Their Lordships wish to : Yes
see the fair copy of the Judgment?
_____________________________
SUREPALLI NANDA, J
2
WP_30372_2012
SN,J
THE HON'BLE MRS JUSTICE SUREPALLI NANDA
W.P.No.30372 OF 2012
% 18.03.2024
Between:
# M/s. Ampro Packaging Industries Ltd.,
and another
... Petitioners
And
$ Employees Provident Fund Organisation
and another
... Respondents
< Gist:
> Head Note:
! Counsel for the Petitioners : Mr.Vedula Srinivas
^ Counsel for Respondents : Mr.S.Prabhakar
Reddy
? Cases Referred:
-
3
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HON'BLE MRS JUSTICE SUREPALLI NANDA
W.P. No. 30372 of 2012
ORDER:
Heard Mr. Vedula Srinivas, learned counsel
appearing on behalf of the Petitioners and Mr.
S.Prabhakar Reddy learned counsel appearing on behalf
of the Respondents.
2. The petitioners approached this Court seeking
prayer as under:
"To issue a Writ of Mandamus or any other
appropriate writ order or orders, direction or directions
to declare the proceedings of the 1st respondent dated
05.08.2011 in No.AP/22487/P.D-Cell.I/RO/Hyd/T.5/
2011/671 and also the consequential proceedings of the
2nd respondent dated 13.09.2012 in reference
No.AP/22487/Recovery Cell/PDRC 155/12, as illegal,
arbitrary and violative of principles of natural justice and
to set aside the same and to issue a consequential
direction to the respondents to act in accordance with
law."
3. PERUSED THE RECORD :
The interim orders of this Court dated 28.09.2012
passed in W.P.No.30372 of 2012 reads as under :
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"It is contended by the learned counsel for the
petitioners that show cause notice bearing
Ref.No./A.P./22487/Recovery Cell/PDRC 155/12, dated
13.09.2012 is not served on the petitioners and that the
1st petitioner is not functioning from 2003 onwards.
In that view of the matter, notice before
admission.
Pending further orders, there shall be interim stay
as prayed for."
4. The case of the Petitioner, in brief, as per the
averments made by the petitioner in the affidavit filed
by the petitioner in support of the present writ petition
is as follows :
The 1st Petitioner is a company registered under
Companies Act, and it is carrying on the manufacture of
Packaging Material at its factory situated at IDA, Uppal. The
1st Petitioner ran into severe losses and ultimately stopped its
production activity in the year 2003, due to the accumulated
losses and bad financial position it could not pay the Provident
Fund contributions under the EPF Act, 1952 within the
prescribed time. All the workmen had left the employment and
there is no activity at all since June 2003. The Provident
contributions were paid upto the month of June 2003 belatedly
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and there is no need to pay any further contributions as
industry itself stopped its activities and the workmen have left
the employment.
It is further the case of the Petitioners that the 2nd
Petitioner was served with Notice by the 2nd Respondent on
24.09.2012 dated 13.09.2012 asking the 2nd Petitioner to
show cause as to why warrant of arrest should not be issued
against the 2nd Petitioner on account of the 1st Petitioner not
paying the arrears under the EPF Act. The said Notice was
issued U/s.8G of the EPF Act. The 2nd Petitioner was also
asked to appear before the 2nd Respondent on 25.09.2012 to
show cause why the 2nd Petitioner should not be committed to
civil prison. Upon inquiry it came to light that the 1st
Respondent passed an order dated 05.08.2011 imposing
damages U/s.14B of the EPF Act on the ground of delay in
payment of contributions by the 1st Petitioner company in
respect of the contributions paid during the periods 1995 to
2003 and in the furtherance of the said order of the imposition
of damages the 2nd Respondent had invoked the provisions of
Section 8G of the EPF Act for the recovery of the alleged
damages amount by way of 2nd Petitioner's arrest and
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detention in civil prison. Aggrieved by the same Petitioner filed
the present writ petition.
5. The Learned Senior Counsel appearing on behalf of
the Petitioner mainly put-forth the following
submissions :
i) The proceedings of the 1st Respondent dated
05.08.2011 are ex-parte in nature and hence
unsustainable.
ii) The 1st Respondent had initiated the proceedings
after more than 7 years from the date of delay in the
payment of last period of contributions and such a delay
in initiating the proceedings itself is illegal.
iii) The order impugned dated 05.08.2011 is in clear
violation of principles of natural justice.
iv) Unless the 1st Respondent records that there was
mens rea on the part of the 1st Petitioner there cannot
be imposition of damages automatically on mere delay
in payment of the contributions.
v) The Respondents are not empowered to arrest the
2nd Petitioner and detain the 2nd Petitioner in prison
towards the alleged arrears of the company since the
Directors of the Registered Company are having the
immunity of limited liability under the Companies Act
and they cannot be called upon to pay the amounts due
from the company.
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The Learned counsel appearing on behalf of the
Petitioner placing reliance on the aforesaid submissions
contends that the writ petition should be allowed as
prayed for.
6. The counter affidavit has been filed by the
respondents, in particular para 4 of the counter affidavit
reads as under :
"4. I submit, without prejudice to the above
contention, that the petitioner is covered establishment
under the provisions of the Act w.e.f. 1-3-1989 under
code number AP/22487. Thus they have to pay the dues
under the provisions of the Act within time. And that as
the petitioner failed to pay the dues within time for
period from 12/1995 to 5/2009, action u/s 14 B of the
Act has been initiated vide notice dated 30-10-2010
while personal hearing on 31-12-2010. And that as the
petitioner failed to attend the hearing, the enquiry has
been adjourned to 4-2-2011, then to 13-4-2011, 13-6-
2011, 21-7-2011, but the petitioner failed to attend
the enquiry. Thus an ex parte order dated 5-8-
2011 has been passed levying damages and
interest. And that as the petitioner failed either to
question the said order, or to pay the same, a
show cause notice dated 13.9.2012 was issued.
And that the petitioner instead of submitting the
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explanation raising all the contentions which are
raised in this Writ petition, straight away approached
this Hon'ble Court. Thus this Writ Petition is also not
maintainable on this ground also and liable to be
dismissed in limine."
DISCUSSION AND CONCLUSION :
7. A bare perusal of the order impugned dated
05.08.2011 passed by the 1st Respondent herein clearly
indicates that it is an order passed ex parte. Para 2 of
the order impugned dated 05.08.2011 of the 1st
Respondent reads as under :
"2) Hence Summons Notice No.AP/22487/PD Cell-
I/RO/Hyd/2010/T-5/1243, dated 30.11.2010 was issued
to the employer of the aforesaid establishment to show
cause as to why damages under Section 14B & 7Q of the
Act should not be levied and the employer was also
afforded opportunity of personal hearing on 31.12.2010
to enable the employer to present his case. Case called.
None appeared and the enquiry is adjourned and posted
to 04-02-2011, 13-04-2011, 13-06-2011, 21-07-2011,
03-08-2011. Case called. None appeared.
Establishment failed to avail opportunity of being heard
in person or made any submission. Inquiry therefore
concluded ex parte and damages and interest as
applicable shall be levied."
8. Taking into consideration that this Court passed
interim orders in favour of the Petitioner on 28.09.2012
staying all further proceedings in pursuance to the
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Notice issued by the 2nd Respondent dated 13.09.2012
which is a Notice to show cause why a warrant of arrest
should not be issued to the 2nd Petitioner and the said
orders dated 28.09.2012 are in force as on date and
further taking into consideration that none appeared on
behalf of the Petitioner's establishment on 04.02.2011,
13.04.2011, 13.06.2011, 21.07.2011 and 03.08.2011
and 1st Respondent proceeded and concluded the
inquiry ex-parte and levied damages to a tune of
Rs.3,22,053/- for the period from December 1995 to
May 2003 vide the impugned order dated 05.08.2011 of
the 1st Respondent herein i.e., after more than 7 years
from the date of delay in the payment of the last period
of contribution and duly taking into consideration a
clear admission at para 4 of the counter affidavit filed
by the Respondents that an ex-parte order dated
05.08.2011 had been passed by the 1st Respondent
levying damages and interest without even recording a
finding in the said order impugned dated 05.08.2011 of
the 1st Respondent whether Notice has been served on
the 1st Petitioner company or any person representing
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the 1st Petitioner company or a finding that despite the
service of the notice on the 1st Petitioner company or
any person representing the 1st Petitioner company
there was non-representation on the part of the 1st
Petitioner company, because the order impugned dated
05.08.2011 only indicates that the alleged notice dated
30.11.2010 as having been issued to the employer of
the Petitioner establishment, but however is silent with
regard to the said notice being acknowledged by the
Employer of the petitioner establishment hence, this
Court opines that the order impugned dated 05.08.2011
of the 1st Respondent is in violation of principles of
natural justice. The counter affidavit filed on behalf of
the Respondents also does not explain the details of the
Notice dated 30.10.2010 as being served and
acknowledged by the Petitioners herein and it only
states that action under section 14B of the Act has been
initiated vide Notice dated 30.10.2010.
9. This Court opines that the judgment relied upon by
the learned counsel appearing on behalf of the
Respondents do not apply to the facts of the case since
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the order impugned in the present writ petition passed
by the 1st Respondent dated 05.08.2011 is an ex-parte
order.
10. Taking into consideration the above referred facts
and circumstances of the case and duly considering the
interim orders of this Court dated 28.09.2012 which had
been passed in favour of the petitioner and which are in
force as on date and in the light of the discussion and
conclusion arrived as above the writ petition is allowed,
the proceedings of the 1st Respondent dated 05.08.2011
in No.AP/22487/P.D-Cell.I/RO/Hyderabad/T5/2011/
671 and also the consequential proceedings of the 2nd
Respondent dated 13.09.2012 in reference
No.AP/22487/Recovery Cell/PDRC 155/12 are set
aside and the matter is remitted to the 1st Respondent
to pass appropriate orders, in accordance to law by
giving opportunity of personal hearing to the Petitioner
to enable the Petitioner to present his case and to
conclude the proceedings in conformity with principles
of natural justice, within a period of 6 weeks from the
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date of receipt of the copy of the order. However there
shall be no order as to costs.
Miscellaneous petitions pending, if any, shall stand
closed.
_________________
SUREPALLI NANDA,J
Date: 18.03.2024
Note: L.R.Copy to be marked
(B/o) Yvkr
