B.S.N.L. and ANR. V. A.P.FUND COMMNR.andORS

WP(C)/12707/2010

AI Insights

The case involves BSNL, Rourkela challenging the orders passed by the Assistant Provident Fund Commissioner under the Employees' Provident Funds and Miscellaneous Provisions Act, 1952. The petitioners contested the liability imposed on them for the provident fund contributions of their contractors, arguing that the contractors were independent establishments responsible for their own compliance. The court examined whether the petitioners, as principal employers, could be held liable for the defaults of their contractors without direct evidence or notice to the contractors themselves. The court decided not to delve into the merits of the case but provided a procedural remedy by allowing an appeal to the Tribunal.

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 726146 (HC-CUTTACK)
• Appeal Type: Others
• Pronouncement Date: 30-07-2013
• Assessment Year: misc
• Other Referred Cases: Executive Engineer v. Regional Provident Fund Commissioner, Orissa, Governing Body Vyasanagar (Auto) College, Jajpur Road v. Regional Provident Fund Commissioner, Bhubaneswar, K.S. Rashid & Son v. Income Tax Investigation Commission & Ors., Kerala State Electricity Board & Another v. Kurieri E. Kalathil and Ors.
• Laws Referred To: Employees' Provident Funds and Miscellaneous Provisions Act, 1952
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: UPENDRA KUMAR SAMAL; A K RATH A K NATH
• Assessee Lawyers: S D DAS; P R BARIK
• Keywords: Coercive Action; Contractors; Minimum wages act; Natural Justice; Principal Employer; Provident fund; Labour Laws
• Section: 13(2); 2(f); 13(1); 7(a); 8(f); 7(I)

Judgement Text

"HIGH COURT OF ORISSA : CUTTACK W.P.(C) No.12707 of 2010 An application under Articles, 226 and 227 of the Constitution of India. ------------- BSNL, Rourkela & another … … Petitioners. Versus. Assistant Provident Fund Commissioner, Rourkela & Others. … … opp.parties. For Petitioners : M/s. S.D. Das, Sr. Advocate. P.R. Barik, P. Choudhury. For opp.parties : Mr. Upendra Kumar Samal, C.D.Sahoo. M.R. Mohapatra, S.P. Patra (opp.party no.1) : M/s. A.K. Rath & A.K. Nath (opp.party no.3) PRESENT THE HON’BLE SHRI JUSTICE B.K.NAYAK ------------------------------------------------------------------------------------------ Date of hearing : 28.06.2013 : Date of judgment: 30.07.2013 B.K.NAYAK, J. In this writ petition the petitioners challenge the legality and propriety of the order dated 23.04.2010/01.06.2010 (Annexure-3) passed by the Assistant Provident Fund Commissioner (opposite party no.1) under Section 7-A of the Employees’ Provident Funds and Miscellaneous Provisions Act,1952 (in short ‘the Act’) so also the order dated 20.07.2010 (Annexure-5) passed by opposite party no.1 directing the petitioners’ Banker, Union Bank of India-opposite party no.3 to attach the bank account of the petitioners. 2. The petitioners’ case as averred in the writ petition runs as under : The petitioners (BSNL) under the Orissa Telecom Circle take up various construction works such as cable laying/pipe laying, installation of towers and other job works through enlisted contractors by inviting tenders from them. As per the terms and conditions of the tender the contractor in whose favour the work order is issued, is to strictly comply with the various provisions of the labour laws for the welfare of the employees engaged by him. In the tender floated by the petitioners (Annexure-1), it has been specifically mentioned that payment of wages as per the Minimum Wages Act and the contribution of P.F. is the responsibility of the contractors, who are the principal employers and also they are to abide by other labour laws. The contractors undertaking different construction works have been allotted separate PF code numbers and as principal employer they are liable to deduct the EPF dues and remit the same to opposite party no.1. It is stated that on the information furnished by opposite party no.2, suo motu proceedings under Section 7-A of the Act were initiated by opposite party no.1 and the petitioners were called upon to submit details of payment made to the contractors. Three separate proceedings under Section 7-A were initiated for three different periods, i.e., Case No.7A/29 of 2005 for the period from October, 2000 to February,2005, Case No.7A/32/2005 for the period from March,2005 to May,2005 and Case No.7A/54/2005 for the period from June,2005 to 2 August,2005. All the three proceedings were taken up together. During the course of the proceedings the petitioners through their representatives filed all the required documents. As per the requirement, the petitioners submitted details of contractors engaged along with their addresses, PF code numbers, work orders issued and total amount paid against the bills etc. It is stated that since details of the employees engaged by the contractors and the PF compliance made by them were not within the knowledge of the petitioners, those details could not be filed and opposite party no.1 was requested to call for those details from the contractors and accordingly it was pleaded on behalf of the petitioners to exempt them from the liability of the PF contribution of the contractors, who are independent establishments. It is stated that opposite party no.1 without issuing notice to the contractors and without recording their statements and the statements of the employees engaged by the contractors passed order on 23.04.2010/01.06.2010 (Annexure-3) behind the back of the petitioners determining the liability towards PF contribution of the petitioners’ establishment to the tune of Rs.43,98,985/- and interest to the tune of Rs.41,30,106/- and called upon to pay the amount within a period of fifteen days from the date of receipt of this order. It is stated that the order was received in the office of the petitioners on 02.07.2010. It is the submission of the petitioners that the order was passed on 23.04.2010 as per the order sheet and it was signed on 01.06.2010. The order was communicated on 18.06.2010 but in fact it was dropped on 01.07.2010 as per the postal endorsement. The copy of envelop in which 3 the order was communicated has been filed as Annexure-4. It is further stated that opposite party no.1 although assured the petitioners not to take any coercive action before the expiry of the statutory period for appeal, it however, directed the petitioners’ banker-opposite party no.3 by order dated 20.07.2010 (Annexure-5) to attach the bank account of the petitioners. On receipt of the said order opposite party no.3 has attached the bank account of the petitioners’ establishment. 3. It is the submission of the learned Senior Counsel appearing for the petitioners that for the first time opposite party no.1 issued notice to the petitioners not for assessment of the petitioner’s establishment but for determination of the liabilities of the contractors, who are independent establishments and had been allotted with PF code numbers by the Provident Fund Authorities. The PF code numbers were supplied to the contractors basing upon the information supplied by them to the PF authorities. It is submitted that in case the contractors mislead the PF authorities with regard to the number of employees or the date of coverage, the authorities are empowered to issue notice to the contractors under Section 7-A of the Act to decide the applicability of the Act and to determine the amount due from the employer (contractors). The PF authorities are bound by law to conduct enquiry under Section 7-A of the Act after issuing due notice to the contractors and that despite the names and addresses of the contractors having been furnished to the PF authorities, no notice was issued to the contractors by the authorities and no enquiry was held against them and as such opposite party no.1 4 has committed grave illegality in saddling the petitioners with the dues which the contractors are liable to pay and as such the impugned order is vitiated. It is also contended that the assessment/determination of the amount done in the impugned order does not satisfy the requirement in paragraph-29(3) of the E.P.F. Scheme,1952. It is submitted that the contractors were only competent to show as to basic wages and other allowances paid to their employees and that without issuing notice to the contractors the assessment has been made on mere guess work and approximation, which is wholly uncalled for. The further submission of the learned counsel for the petitioners is that opposite party no.1 has determined the amount basing upon the report of the Enforcement Officer, a copy of which was never served or supplied to the petitioners and as such the impugned order under Annexure-3 is violative of principle of natural justice. It is also submitted that opposite party no.1 passed the order for attachment of the bank account under Annexure-5 in exercise of power under Section 8-F of the Act before the expiry of the statutory period available for filing an appeal, and that too after assuring that no coercive action shall be taken against the petitioners before the expiry of the period of limitation for filing the appeal and in the circumstances, the order under Annexure-5 is also liable to be quashed. 4. Opposite party nos.1 and 2 have filed a counter affidavit stating that the petitioners were the principal employer for the contract employee as per Section 2(f) of the Act and that the allotment of separate 5 EPF number to a contractor will not change the petitioners’ status as principal employer and absolve it of its liabilities under the Act. It is also stated that the petitioners were given ample opportunity of hearing requiring discovery and production of documents under Section 7-A (b) of the Act but they failed to comply with the same and therefore, opposite party no.2 being the Inspector appointed under Section 13 (1) of the Act and in exercise of his power conferred under sub section (2) of Section 13 furnished evidence on 07.12.2009. A number of bills were paid to the contractors year wise for the default period by the petitioners and out of these bills 35% was considered as labour component as per the Inspector’s report. It is also submitted that the petitioners’ claim that the impugned order was passed behind their back is not correct inasmuch as the petitioners having remained absent on several occasions notices were issued and the matter was fixed to several dates for hearing. It is also stated that the plea of the petitioners that the establishment has not deducted the amount from the contractors is not a bonafide ground to avoid liability. It is also contended that there is an alternative statutory remedy of appeal under Section 7-I of the Act and that the petitioners having not availed the same, this writ petition is not maintainable. 5. With regard to the alterative remedy of appeal, the learned counsel for opposite party nos.1 and 2 invited the attention of this Court to an earlier decision of this Court reported in 2012(1) O.J.R. (625) : Executive Engineer v. Regional Provident Fund Commissioner, Orissa, wherein it has been held as follows : 6 “xxx xxx xxx In the said view of the order impugned in this case is appealable. Attention was drawn to the Court order passed by a Division Bench of this Court in the case of Governing Body Vyasanagar (Auto) College, Jajpur Road v. Regional Provident Fund Commissioner, Bhubaneswar (W.A. No.368 of 2011), wherein a Division Bench of this Court while examining the question of availing alternative remedy, relied on a Constitution Bench decision of the Hon’ble Supreme Court in the case of K.S.Rashid & Son v. Income Tax Investigation Commission & Ors., AIR 1954 SC 207, and held that the Article 226 of the Constitution confers on the High Court a very wide power of the matter of writ petition. However, the remedy of writ is absolutely discretionary remedy and High Court has the discretion to refuse to grant any writ if it is satisfied the aggrieved party can have a suitable relief elsewhere. Further, in the case of Kerala State Electricity Board & Another v. Kurieri E. Kalathil and Ors. (2000) 6 SCC 293, the Hon’ble Supreme Court has held that while dealing with similar issue writ petition should not be entertained unless the party exhausted the alternative/statutory efficacious remedy. xxx xxx” 6. I find no reason to examine the propriety of the contentions raised by the parties on the merits of the case in this writ petition and in view of the legal position as seen above this writ petition is disposed of giving opportunity to the petitioners to file appeal before the learned Tribunal within 30 days from today raising all contentions available to them. On the filing of such an appeal the appellate Tribunal shall hear 7 and dispose of the appeal on merits after condoning the delay and without insisting upon the statutory deposit as required under Rule-7(3) of the EPF Appellate Tribunal (Procedure) Rules,1997, in view of the order of attachment under Annexure-5. The interim stay order passed by this Court on 27.07.2010 shall continue till the filing of the appeal. The appellate Tribunal shall do well to dispose of the appeal within a period of three months from the date of its filing. The writ petition is accordingly disposed of. …………………… B.K.Nayak,J. Orissa High Court, Cuttack The 30th. July, 2013/Gs. 8 "