C.B BLAKRISHNAN V. THE REGIONAL PROVIDENT FUND COMMISSIONER

OP(C)/1891/2013

AI Insights

The case involves a dispute over the recovery of dues under the Employees Provident Fund and Miscellaneous Provisions Act, 1952, by the Regional Provident Fund Commissioner from the petitioner, C.B. Blakrishnan, who had taken over the Kerala Cultural Organization Board. The petitioner challenged the maintainability of the recovery proceedings and sought to amend the plaint to include allegations of fraud, which was initially disallowed by the trial court. The High Court of Kerala dismissed both the civil revision petition and the original petition, affirming the trial court's decision and emphasizing the specific legal provisions that restrict civil court jurisdiction in such matters unless fraud is explicitly alleged.

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 727032 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 02-08-2013
• Assessment Year: misc
• Other Referred Cases: Municipal Corporation of Greater Bombay v. Lala Pancham and Others, RPFC v. Shibu Metal Workers
• Laws Referred To: Employees Provident Fund and Miscellaneous Provisions Act, 1952, Income Tax Act 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: N N SUGUNAPALAN; T N GIRIJA
• Assessee Lawyers: G VENUGOPAL
• Keywords: Fraud; Jurisdiction of Civil Courts; Recovery proceedings; Employees' Provident Funds Appellate Tribunal; Amendment of plaint
• Section: 32; 30; 38; 7A; 8G; 7(I)

Judgement Text

"CR IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE N.K.BALAKRISHNAN FRIDAY, THE 2ND DAY OF AUGUST 2013/11TH SRAVANA, 1935 OP(C).No. 1891 of 2013 (O) ------------------------ Against the Order in I.A. Nos. 6177/2012 dated 10-10-2012 in O.S. No. 1051 of 2006 on the file of the II Addl. Munsiff's Court, Thiruvananathapuram PETITIONER(S): ------------ C.B BLAKRISHNAN AGED 54 YEARS S/O. BHASKARAN NAIR, CHITHIRA, CHENTHY PONGUMMOODU, THIRUVANANTHAPURAM. BY ADV. SRI.G.VENUGOPAL RESPONDENT(S)/RESPONDENTS/COUNTER PETITIONERS/DEFENDANTS: 1. THE REGIONAL PROVIDENT FUND COMMISSIONER EMPLOYEES PROVIDENT FUND, BHAVISHYANIDHI BHAVAN PATTOM, THIRUVANANTHAPURAM-695004. 2. K.PURUSHOTHAMAN PILLAI RECOVERY OFFICER EMPLOYEES PROVIDENT FUNDS BHAVISHAYNIDHI BHAVAN PATTOM, THIRUVANANTHAPURAM-695004. BY ADVS. M/S. N.N.SUGUNAPALAN (SR.) R1 BY ADV. SMT.T.N.GIRIJA, SC,EPF ORGANISATION THIS OP (CIVIL) HAVING BEEN FINALLY HEARD ALONG WITH CRP NO. 551 OF 2012 ON 02-08-2013, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: OP(C).No. 1891 of 2013 (O) --------------------------- APPENDIX PETITIONER(S)' EXHIBIT ------------------ EXHIBIT P1- CERTIFIED COPY OF THE JUDGMENT DATED 10-10-2012 IN IA.NO'S 6177/2012 OF O.S.NO. 1051/2006 PASSED BY THE HON'BLE II ADDITIONAL MUNSIFF'S COURT, THIRUVANANTHAPURAM. RESPONDENT(S)' EXHIBITS --------------------- NIL CR N.K.BALAKRISHNAN, J. .................................................... O.P. (C ) No. 1891 of 2013 & CRP No. 551 of 2012 ................................................... Dated this the 2nd day of August, 2013 JUDGMENT The plaintiff in O.S. No. 1051/2006 has filed this Revision Petition and also a petition under Article 226 & 227 of the Constitution of India. The CRP is filed challenging the order passed by the learned Munsiff as per which the issue regarding the maintainability of the suit was held against the plaintiff. O.P. 1891/2013 was filed by the plaintiff challenging Ext. P1 order as per which the amendment of the plaint sought for by the plaintiff was disallowed in respect of the plea of fraud which was sought to be introduced by way of amendment. The application was partly allowed with respect to the plea of limitation as against the proceedings initiated by the respondents for recovery of the amount by resorting to the provisions of the O.P. (C ) No. 1891 of 2013 & CRP No. 551 of 2012 2 Revenue Recovery Act. 2. M/s. Kerala Cultural Organization Board, Thiruvananthapuram is an establishment covered under the Employees Provident Fund and Miscellaneous Provisions Act, 1952 (for short “the Act”). When the Act was first made applicable to the establishment, one Chandra Kumar was shown as the owner of the establishment. Thereafter, on the request made by the plaintiff for allotment of a separate Code Number to the establishment, on the ground that the assets of the establishment had been transferred to him on 31-3-2000, a separate code number was allotted but on condition that it will not affect the date of initial coverage. A sum of Rs. 97,598.40 was assessed as the arrears of the amount payable by the employer towards the Fund for the period from 7/1995 to 1/1999. It was assessed under the Act. That amount was outstanding against M/s. Kerala Cultural Organization Board. Since the O.P. (C ) No. 1891 of 2013 & CRP No. 551 of 2012 3 amount was not paid, the Authorised Officer issued recovery certificate to the Recovery Officer for recovery of the said amount. 3. Though originally Mr. Chandra Kumar was the owner of the said establishment, subsequently the assets of the establishment were transferred to the plaintiff who is the petitioner herein. Based on the request made by the petitioner a separate code number KR/12719- A was allotted to the establishment with effect from 1-4-2000. It was done for administrative convenience. The new Code number was allotted to him on the specific condition that it would not affect the date of original coverage of the establishment or entail any ground for its existence as separate entity for the purpose of the Act. 4. It is stated that the Recovery Officer, in exercise of the powers conferred under him under Sec. 8G of the Act, issued a notice on 26-6-2005 to the petitioner herein O.P. (C ) No. 1891 of 2013 & CRP No. 551 of 2012 4 to show cause why a warrant of arrest should not be issued against him for non-payment of the amount due; namely; Rs. 97598.40. On receipt of the notice he approached the Recovery Officer and requested two weeks' time and it was allowed. Thereafter, he filed the present suit for stay of further proceedings pursuant to the notice issued to him. The learned Munsiff originally granted a temporary injunction restraining the recovery proceedings. On receipt of the order the Regional Provident Fund Commissioner, the defendant filed I.A. 7260/2006 challenging the maintainability of the suit. It was contended that as per Rule 9 of Second Schedule to the Income Tax Act 1961, there existed a general bar to jurisdiction of civil courts except where fraud is alleged in recovery matters. Though that petition was originally dismissed by the learned Munsiff it was challenged before this Court by the defendant filing CRP 305/2007. This Court allowed the O.P. (C ) No. 1891 of 2013 & CRP No. 551 of 2012 5 Civil Revision Petition and remanded the matter to the trial Court for fresh hearing and disposal. After hearing the parties afresh the learned Munsiff passed the impugned order on 10-10-2012 holding that the suit is not maintainable. The above said order is challenged in this CRP. 5. It is not disputed that while the proceedings in I.A.17260/2006 was pending, the petitioner herein filed petition to amend the plaint to incorporate a pleading relating to limitation and fraud. The amendment, so far as it relates to the plea of limitation, was allowed but the allegation of fraud which was sought to be introduced by way of amendment was disallowed holding that plea if allowed, will affect the very nature and character of the suit. That is the order impugned in this O.P. 1891/2013. 6. The learned counsel for the petitioner submits that the court below went wrong in disallowing the amendment O.P. (C ) No. 1891 of 2013 & CRP No. 551 of 2012 6 petition. In fact there are sufficient materials in the plaint itself from which it can be discerned that fraud was practised by the respondents in initiating recovery proceedings against the petitioner herein, it is further contended. The petitioner contends that when he started functioning the institution in a rented building at Bhagavati at Ambalakkunnu, Chandrakumar mentioned earlier attempted to snatch away the said institution from the petitioner and accordingly, petitioner had filed O.S. 1790/2001 for a declaration and injunction as against the Kerala Cultural Organization Board and Chandrakumar mentioned above and that suit was decreed ex parte on 5-7- 2003. It is stated that the petitioner was declared as the owner of the said institution. Hence, the petitioner contends that he is not liable for the dues to be paid by Chandrakumar. He has also contended that the establishment became defunct and the first respondent O.P. (C ) No. 1891 of 2013 & CRP No. 551 of 2012 7 was expelled from the institution with effect from 31-3- 2002. It is contended that the respondents have no authority to issue notice to the petitioner since he became the owner only with effect from 31-03-2000 and also due to acknowledgment of change of ownership by the respondents. In paragraph 9 of O.P. 1891/2013, it is stated by the petitioner that there is no specific provision barring the jurisdiction and so it is not possible to find that the court lacks jurisdiction to entertain the suit. 7. The learned counsel for the respondents on the other hand strongly resisted the submission made by the learned counsel for the petitioner pointing out that there is a general bar under Rule 9 of the 2nd Schedule to the I.T. Act which provides for a general bar of jurisdiction of civil court except where fraud is alleged. Therefore, realising that insurmountable difficulty, the plaintiff later filed the application for amendment incorporating a plea of fraud O.P. (C ) No. 1891 of 2013 & CRP No. 551 of 2012 8 also. As it originally stood there was no allegation of fraud. The contention that plea of fraud can be discerned from the pleadings already made cannot be accepted at all. Similarly, the contention that the word ”fraud” is introduced by amendment only to make it clear that the suit is in fact laid alleging fraud cannot be accepted at all, the learned counsel for the respondents submits. 8. The suit was not originally founded on 'fraud' alleged to have been practised by the respondents or by anybody else. The suit was laid contending that he is not liable to pay the amount. The fact that he being the assignee became the employer with effect from 31-3-2000 was not disputed. 9. Sec. 30 of the Employees' Provident Funds Scheme, 1952 enjoins on the employer, in first instance to pay both the contribution payable by himself and also, on behalf of the member employed by him directly or by or O.P. (C ) No. 1891 of 2013 & CRP No. 551 of 2012 9 through a contractor. Section 32 which deals with recovery of member's share of contribution provides that notwithstanding the provisions in the Scheme or any law for the time being in force or any contract to the contrary that it shall be recoverable by means of deduction from the wages of the member and not otherwise. 10. Section 38 deals with the mode of payment of contribution. It is to be paid within 15 days of the close of every month by separate bank drafts or cheques on account of contributions and administrative charge. 11. Under Section 7-I of the Act an appeal lies from an order passed under Sec. 7 A of the Act. Sub Sec. (2) of Section 7-I provides that an appeal shall be filed in such form and in such manner and within such time as prescribed by the Rules. It is also stated that as provided under Rule 7 of the Employees' Provident Funds Appellate Tribunal (Procedure) Rules, 1997 the appeal shall be filed O.P. (C ) No. 1891 of 2013 & CRP No. 551 of 2012 10 within 60 days from the date of issue of the order appealed against. Since the order which is challenged in the suit is the order passed under Sec. 7A of the Act, there can be no doubt that it is an order appealable as provided under Section 7-I. The appeal lies to the Employees' Provident Funds Appellate Tribunal. Even an order passed ex parte is made appealable as elucidated in the Explanation to Sec. 7 A (4) of the Act. Therefore, it is vehemently argued by the learned counsel for the respondents that when specific provision is made in the Act itself which enables the party to challenge the order by filing the appeal, a party cannot approach the Civil court by filing a suit unless there are specific allegations of fraud. It is based on the aforesaid provisions the respondent has challenged the maintainability of the suit before the Civil Court. 12. The learned counsel for the respondent submits O.P. (C ) No. 1891 of 2013 & CRP No. 551 of 2012 11 that as per Rule 9 of the 2nd Schedule to the I.T.Act 1961, there exists a general bar on jurisdiction of the Civil Courts except where fraud is alleged. Rule 9 reads: “”Except as otherwise expressly provided in this Act, every question arising between the Tax Recovery Officer and the defaulter or their representatives relating to the execution, discharge or satisfaction of a certificate or relating to the confirmation or setting aside by an order under this Act of a sale held in execution of such certificate,shall be determined, not by suit, but by order of the Tax Recovery Officer before whom such question arises: Provided that a suit may be brought in a civil court in respect of any such question upon the ground of fraud”. Therefore, it is clear that in recovery matters there is an ouster of jurisdiction of civil court except where fraud is alleged. The court below has rightly found that the suit is not maintainable since there was no allegation of fraud in the plaint filed by the petitioner. 13. Now the crucial question that arises for O.P. (C ) No. 1891 of 2013 & CRP No. 551 of 2012 12 consideration is whether the court below is justified in disallowing the amendment as per which allegation of fraud is sought to be introduced. If the allegation of fraud is not there the suit is not maintainable. If the allegation of fraud is allowed to be introduced now that will have a fundamental impact on the very suit itself, the learned counsel for the respondent submits. It is further contended that if the amendment is allowed, it will change the nature and character of the suit because if the allegation of fraud is not there, then the suit will not be maintainable at all. It is not a case of an inadvertent or innocuous omission. 14. The pre-dominant consideration for dealing with the application for amendment is whether it is necessary for determining the real question in controversy between the parties and whether the amendment can be allowed without injustice to the other party. O.P. (C ) No. 1891 of 2013 & CRP No. 551 of 2012 13 15. Here the plaintiff is now making out a case of fraud for which there was not even the slightest basis in the plaint as it originally stood. It was held by the Hon'ble Supreme Court in Municipal Corporation of Greater Bombay v. Lala Pancham and Others – AIR 1965 SC 1008 that the mere use of the word 'malafide' in the plaint cannot afford any basis for permitting an amendment. In that case in the plaint originally filed, the plaintiff alleged that the order impugned in that case was 'malafide' and that it was obtained for collateral purposes. In that context it was held that the mere use of the word 'malafide' in the plaint cannot be the basis for permitting an amendment to introduce a plea of fraud. The other test for allowing the amendment is to find whether the proposed amendment works any serious injustice to the other side. There can be no doubt that serious injustice would be caused to the defendant since in the plaint originally filed there was no O.P. (C ) No. 1891 of 2013 & CRP No. 551 of 2012 14 allegation of fraud and as such the suit was not maintainable. Therefore, the trial court was perfectly justified in disallowing the amendment sought for, so far as it relates to the plea of fraud. 16. The learned counsel for the respondent is perfectly justified in her submission that if the amendment is allowed it will change the nature and character of the suit as it originally stood. To make the suit maintainable, a plea which was not there originally cannot be brought in by way of amendment. That apart, there is a specific provision for challenging the impugned order by filing appeal as mentioned earlier. That also would run counter to the plea raised by the plaintiff that the court below should have held that the suit is maintainable. 17. The learned counsel for the respondents submit that the Act is a social security legislation which provides for a lump sum payment to the employee on their O.P. (C ) No. 1891 of 2013 & CRP No. 551 of 2012 15 retirement so that they can spend their retired life with some element of comfort. Suits or petitions are filed by the employer with a view to defeat the object of social security legislation and to deny the benefit to the employee. Relying on the decision of the Supreme Court in RPFC v. Shibu Metal Workers – 1964-1965 (27) FJR 491 the learned counsel for the respondent submits that in construing the material provisions of the Act, if two views are reasonably possible, the courts should prefer the view which helps achievement and furtherance of the object. It is also submitted that when there is any doubt about the meaning it is to be understood in the sense in which it best harmonises with the object of the enactment and the object which the legislature had in its view. 18. It was also pointed out that on the request of the plaintiff/petitioner separate code number was allotted with a specific condition that it will not affect the date of O.P. (C ) No. 1891 of 2013 & CRP No. 551 of 2012 16 original coverage of the establishment or entail any ground for its existence as separate entity for the purpose of the Act. It is also pointed out that the petitioner had requested two weeks' time for appearance and remittance of the amount when notice was issued to him and suppressing that fact the petitioner moved the Civil court for injunction restraining the respondents from effecting recovery of the dues from the plaintiff/employer. The plea of limitation, which was subsequently introduced as per the amendment, according to the respondent, should not have been allowed but for the purpose of this case it is not necessary to dwell on that question, since even otherwise, the suit is not maintainable. The amendment petition by which the allegation of fraud is sought to be introduced was rightly dismissed by the trial Court. Hence, both these petitions are liable to be dismissed. In the result, both these petitions C.R.P. No.551/2012 and O.P. (C) 1891/2013 O.P. (C ) No. 1891 of 2013 & CRP No. 551 of 2012 17 are dismissed. Since these petitions were prosecuted bonafide, certainly this can be taken up as a ground for excluding the period of limitation if the petitioner files an appeal before the Tribunal within a reasonable time. Sd/-N.K.BALAKRISHNAN, JUDGE ani/ /true copy/ P.S. to Judge "