MS HINDUSTAN COPPER LIMITED THR ITS AUTHORIZED SIGNATORY CUM SENIOR MANAGER FINANCE H N CHOUDHURI V. UNION OF INDIA THROUGH REGIONAL PROVIDENT FUND COMMISSIONER

WPC/600/2019

AI Insights

The case involves Hindustan Copper Limited, the petitioner, challenging the orders and notices issued by the Regional Provident Fund Commissioner and the Assistant Provident Fund Commissioner under the Employees' Provident Funds and Miscellaneous Provisions Act, 1952. The disputes centered on the statutory deposit of provident fund dues for employees of India Resources Ltd., a company that had contracted with the petitioner. The petitioner argued that no liability had been adjudicated against them under Section 7A of the Act, which is necessary before any recovery under Section 8F can be initiated. The court examined the provisions of the Act and the responsibilities of the principal employer under the scheme, ultimately directing a resolution of the pending proceedings under Section 7A.

• Counselvise Citation: [2019] 140 COUNSELVISE.COM (IT) 725468 (HC-JHARKHAND)
• Appeal Type: Others
• Pronouncement Date: 13-03-2019
• Assessment Year: misc
• Other Referred Cases: A.T. Union (Pvt.) Ltd, Alwaye Vs R.P.F Commissioner, Trivandrum & Ors., State of Uttar Pradesh vs. Singhara Singh and Ors., Babu Verghese and Ors. vs. Bar Council of Kerla and Ors., Commissioner of Income Tax, Mumbai vs. Anjum M.H. Ghaswala & Ors., State of Jharkhand & Ors. vs. Ambay Cements & Anr., Zuari Cement Ltd. vs. Regional Direction ESIC Hyderabad & Ors.
• Laws Referred To: Employees' Provident Funds and Miscellaneous Provisions Act, 1952
• Result in Favour of: Partly Allowed
• Court: HIGH COURT
• Department Lawyers: RUPESH SINGH; RAJESH KUMAR
• Assessee Lawyers: SUMEET GADODIA
• Keywords: Exempted establishment; Garnishee proceedings; Principal Employer; Provident Fund Dues; Statutory deposit
• Section: 7A; 14(b); 8F; 7Q

Judgement Text

"1 IN THE HIGH COURT OF JHARKHAND AT RANCHI W.P (C) No. 600 of 2019 with W.P (C) No. 601 of 2019 M/s Hindustan Copper Limited, a Company registered under the Companies Act, 1956, having its unit at Indian Copper Complex, Ghatshila, P.O. Moubhandar, P.S. Ghatshila, District East Singhbhum-832103, through its Authorized Signatory-cum-Senior Manager, (Finance) namely, H.N. Choudhuri, aged about 37 years, son of Shri Chandan Choudhuri, resident of Indian Copper Complex, Ghatshila, P.O. Moubhandar, P.S. Ghatshila, District East Singhbhum-832103. .…… Petitioner (in both cases) Versus 1.The Regional Provident Fund Commissioner, having its Regional Office at Purulia Highways, Mango, P.O. and P.S. Azad Nagar, Jamshedpur, District East Singhbhum, PIN 832110. 2.Assistant Provident Fund Commissioner/Recovery Officer, Regional Office, Employees Provident Fund Organization, Purulia Highways, Mango, P.O. and P.S. Azad Nagar, Jamshedpur, District East Singhbhum, PIN 832110. 3.State Bank of India, through its Branch Manager, Moubhandar, P.O. Moubhandar, P.S. Ghatshila, District East Singhbhum-832103. …… Respondents (in W.P.(C) No.600 of 2019) 1.The Regional Provident Fund Commissioner, having its Regional Office at Purulia Highways, Mango, P.O. and P.S. Azad Nagar, Jamshedpur, District East Singhbhum, PIN 832110. 2.Assistant Provident Fund Commissioner/Recovery Officer, Regional Office, Employees Provident Fund Organization, Purulia Highways, Mango, P.O. and P.S. Azad Nagar, Jamshedpur, District East Singhbhum, PIN 832110. …… Respondents (in W.P.(C) No.601 of 2019) --------- CORAM: HON’BLE MR. JUSTICE SUJIT NARAYAN PRASAD ---------- For the Petitioner : Mr. Sumeet Gadodia, Adv. For the Respondent-EPF : Mr. Rupesh Singh, Adv. For the Respondent-SBI : Mr. Rajesh Kumar, Adv. ----------- 4/Dated: 13th March, 2019 Both the writ petitions is having the issue pertaining to statutory deposit of dues under the provision of Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 (hereinafter referred to as the Act 1952) is under consideration, therefore, both the writ petitions have been heard together and are being disposed of by this common order. 2 W.P.(C) No.600 of 2019 2. The instant writ petition has been filed for quashing the order bearing No.JH/RO/JSR/REC/14967/18/1132 dated 25.01.2019, in exercise of power conferred under Section 8F of the Act, 1952, wherein direction has been given to the petitioner’s banker-State Bank of India to immediately pay an amount of Rs.30,91,235/- to the Regional Provident Fund Commissioner, Jamshedpur, and for a further direction declaring the action of the respondent no.2 in initiating garnishee proceedings under Section 8F of the Act, 1952 is improper, without jurisdiction and arbitrary in view of the fact that till to date no liability under 7A of the Act towards alleged dues of provident fund has been adjudicated against the petitioner. W.P.(C) No.601 of 2019 3. The prayer has been made in the instant writ application for quashing the notice dated 16.10.2018 (Annexure-10) issued by the respondent no.2, wherein alleged proceeding for recovery of interest and penalty has been initiated against the petitioner under Section 7A and 14-B of the Act 1952 pertaining to Employees Provident Fund dues of M/s India Resources Ltd., and for further direction including writ of declaration for declaring that the very initiation of the proceeding for recovery of interest and penalty from the petitioner under Section 7Q and 14-B of the Act 1952 instead of dues of Employees Provident Fund of M/s India Resources Ltd, is wholly without jurisdiction and beyond the scheme of Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 specially in view of the fact that till to date no adjudication order has been passed fastening any liability towards Employees’ Provident Fund contribution of M/s India Resources Ltd. upon the petitioner. 4. The brief facts of the case of the petitioner is that, it is a Government company under Section 617 of the Companies Act, 1956 and 76% of its shares are held by the President of India and is under direct immediate control of the Ministry of Mines, Government of India and its activities are directly under the supervision of Ministry of Mines, Government of India. 5. The petitioner-company is having its Mining- cum-manufacturing unit at Ghatshila in the district of East Singhbhum and is engaged in the business of excavation of Copper and manufacturing of Copper cathode. 3 6. The petitioner is an establishment falling under the definition of ‘Employer’ as defined under Section 2(e) of the Act, 1952 and is liable to comply with the provisions of the said Act pertaining to discharge of Employees Provident Fund liability and is coming under the definition of exempted establishment as per the provision contained under Section 17(1) (a) of the Act, 1952. 7. The present issue pertaining to deposit of Employees Provident Fund pertains in favour of the employees of India Resources Ltd. which was given works by the petitioner through a transparent bidding process of global tender. The petitioner has come out with a global tender for supply of workers, in pursuance thereto one M/s Monarch foreign company registered at Australia was selected and accordingly petitioner had issued work order to the said establishment on 14.04.2007. The said Monarch Gold Mining Limited was subsequently changed to ‘Swan Gold Mining Company’ and thereafter to Eastern Goldfields Ltd., has floated a Special Purpose Vehicle Company in the name of India Resources Company for carrying out the work order dated 14.04.2007 issued by the petitioner-company, which is also a foreign company registered at Australia and in pursuance to the said work order it was carried out. The dispute has arisen with respect to not depositing of the statutory Provident Fund dues in the accounts of workers working under the India Resources Ltd. for a period from March 2017 to June 2017 and in order to determining the dues a proceeding under Section 7A was initiated against the India Resources Ltd. 8. It is the case of the petitioner, although a proceeding under Section 7A of the Act 1952 was initiated against the India Resources Ltd, but no proceeding has been initiated against the petitioner establishment under the provision of Section 7A of the Act 1952, but, however in the aforesaid proceeding the notice has been issued upon the petitioner establishment, in pursuance thereto, due appearance has been made by the petitioner’s representative before the Regional Provident Fund Commissioner but as yet no decision has been taken by determining the dues upon the petitioner establishment but a notice has been issued on 16.10.2018 as per the provision made under Section 8A (1) of the Act, 1952 holding therein that the petitioner establishment being the principal employer in relation of employees of M/s India Resources Ltd. is liable to pay the Provident Fund dues and, therefore, directed to appear before the Assistant Provident Fund 4 Commissioner/Recovery Officer to comply with this direction, failing which, it will lead to coercive action, being aggrieved with the same W.P (C) No.601 of 2019 has been filed. Simultaneously, the garnishee notice has also been issued under the provision of Section 8F of the Act, 1952 by the Assistant Provident Fund Commissioner-cum-Recovery Officer for making payment of Rs.30,91,235 by arriving to the conclusion. The said order is under challenge in W.P.(C) No.600 of 2019. 9. The petitioner has taken the grounds that without determining the dues as under Section 7A of the Act, 1952 and without fastening the liability upon the petitioner for commission of default in deposit of amount under the Provident Fund Account in the respective accounts of the worker of the India Resources Ltd., there cannot be any liability upon the petitioner under Section 14B of the Act, 1952 for the reason that Section 14B of the Act 1952 provides that in case of any default in making payment, damage is to be inflicted upon the establishment under the provision of Section 14B of the Act, but question herein is that the worker for whom the statutory Provident Fund dues is to be deposited, is the worker of petitioner establishment, they are worker working under India Resources Ltd, having the separate Provident Fund Account and if there is any default in making payment the liability of the damages cannot be fastened upon the petitioner under the provision of Section 14B of the Act. 10 It is the further argument of the petitioner that unless a determination of the dues is made within the meaning of Section 7A of the Act, there cannot be any recovery under the provision of Section 8F of the Act since the petitioner is disputing its liability of the principal employer of the worker working under India Resources Ltd. 11. Mr. Rupesh Singh, learned counsel appearing for the Employees Provident Fund has submitted that there is no infirmity in the initiation of the proceedings as also the liability fastened upon the petitioner, is for the reason that provision of Act, 1952 is a beneficiary legislation and when the Provident Fund dues has not been deposited, the respective Accounts of the worker working under India Resources Ltd, the petitioner being the principal employer will be liable to deposit the Provident Fund dues and, as such, the notices have been issued upon the petitioner under Section 8F of the Act 1952 which therefore suffers from no infirmity. 5 12. It has been submitted that the initiation of proceeding under Section 7A is entirely different to that of proceeding under Section 14B of the Act, 1952 and even if, the petitioner is before the authority for determination of his liability under Section 7A of the Act, that does not mean that there cannot be any redetermination under Section 14B of the Act. 13. Mr. Sumeet Gadodia, learned counsel for the petitioner in response, has submitted that even accepting the aforesaid argument of the learned counsel for the respondent, but, there is no liability fastened upon the petitioner either under Section 7A or Section 14B because the India Resources Ltd has not deposited the statutory amount that does not mean that his liability automatically be shifted upon him without any determination. 14. Having heard learned counsel for the parties and on appreciation of the rival submissions, this Court deem it fit and proper to deal with certain relevant provisions of the Act, 1952 and its scope. So far as Act, 1952 is concerned the Act has been enacted for making some provision for the future of the Industrial worker after he retires or for his dependents in case of his early death, so that any hardship upon such industrial worker may be avoided. Under the said scope and object, the Act has been promulgated, making it applicable to every establishment, if coming within the purview of Section 1(iii) of the Act. 15. The aforesaid Act contains the provision of definition as under Section 2 which contains a provision of employer under Section 2(e) which means as referred herein below: “2(e) “employer” means- (i) in relation to an establishment which is a factory, the owner or occupier of the factory, including the agent of such owner or occupier, the legal representative of a deceased owner or occupier and, where a person has been named as a manager of the factory under clause (f) of sub- section (1) of section 7 of the Factories Act, 1948 (63 of 1948), the person so named; and (ii) in relation to any other establishment, the person who, or the authority which, has the ultimate control over the affairs of the establishment, and where the said affairs are entrusted to a manager, managing director or managing 6 agent, such manager, managing director or managing agent;” 16. The employee has been defined under the provision of Section 2(f) which deals with: “2(f) “employee” means any person who is employed for wages in any kind of work, manual or otherwise, in or in connection with the work of [an establishment], and who gets his wages directly or indirectly from the employer, [and includes any person- (i) employed by or through a contractor in or in connection with the work of the establishment; (ii) engaged as an apprentice, not being an apprentice engaged under the Apprentices Act, 1961 (52 of 1961), or under the standing orders of the establishment;” Section 7A contains the provision for determination of moneys due from employers and purpose of its enactment is that, in a case where dispute arises regarding the applicability of this Act to an establishment, decide such dispute; and determine the amount due from any employer under provision of this Act, the scheme or the insurance scheme, as the case may be, and for the aforesaid purposes, may conduct such enquiry as he deem necessary. 17. While exercising the power, the said authority is to exercise the power vested in a Court under the Code of Civil Procedure, 1908. Subsection 3 of Section 7A stipulates that no order shall be made under sub-section (1), unless the employer concerned is given a reasonable opportunity of representing his case. While subsection 3-A provides that where the employer, employee or any other person required to attend the inquiry under subsection (1) fails to attend such inquiry without assigning any valid reason or fails to produce any document or to file any report or return when called upon to do so, the officer conducting the inquiry may decide the applicability of the Act or determine the amount due from any employer, as the case may be, on the basis of the evidence adduced during such inquiry and other documents available on record. 7-B contains the provision of review of an order passed under section 7-A while section 7-I provides provision of appeal to be filed before Tribunal against the order passed under subsection (3) or subsection (4), of section 1, or section 3, or sub-section (1) of section 7-A, or section 7-B 7 [except an order rejecting an application for review referred to in sub-section (5) thereof], or section 7-C, or section 14-B. The provision of Section 7-Q stipulates for interest payable by the employer. Section 8 provides the modes of recovery of money due from employers. Section 8F provides other modes of recovery. The said provision stipulates that in case any amount is due from any person to any employer who is in arrears, the Central Provident Fund Commissioner or any other officer authorized Central Board in this behalf may require such person to deduct from the said amount the arrears due from such employer under this Act. Section 14-A contains the provision of offences by companies while Section 14-B provides power to recover damages where an employer makes default in the payment of any contribution to the Fund or in the transfer of accumulations required to be transferred by him under subsection (2) of Section 15 or subsection (5) of Section 17 or in the payment of any charges payable under any other provision of this Act but before doing so the employer shall be given reasonable opportunity of being heard. 18. This Court, after going across the aforesaid provision of law has found that in case of any amount due, having dispute regarding applicability of the Act to be determined under the provision of Section 7A. So far as Section 14B is concerned the said provision states about the damages in making default in depositing the dues and in that circumstances the establishment will have to pay damage by way of deterrent measure so that the delay in depositing the statutory due may not reoccur in future. 19. The fact of the instant case is that the Indian Resources Ltd which has engaged the employees for providing their services under petitioner- establishment having separate provident fund account but the statutory deposit has not been paid for the period from March 2017 to June 2017, therefore, the Provident Fund authority has initiated a proceeding under Section 7A of the Act against the India Resources Ltd. as would be evident from Annexure-4, in which issuance of notice upon the petitioner in the capacity of principal employer, its representative has appeared and next date was fixed on 12.09.2017 and it is the admitted case of the Provident Fund 8 authority that the aforesaid proceeding has not reached to its logical end since no final decision has yet been taken. 20. The respondent-Provident Fund authority has passed an order under Section 14B of the Act 1952 against M/s India Resources Ltd, as would be evident from the copy of the order dated 18.08.2018 placed by Mr. Rupesh Singh, learned counsel representing them, whereby and whereunder liability has been casted upon the India Resources Ltd. under Section 14B and 7Q of the Act. 21. It is the admitted case that the liability upon the petitioner has not yet been fastened by the competent authority either under Section 7A or under Section 14B of the Act 1952 upon the petitioner establishment. 22. So far as the writ petition being W.P.(C) No.601 of 2019 is concerned the period involved November 2015 to November 2016 but so far as the writ petition being W.P.(C) No.600 of 2019 the period is inclusive of the period which is the subject matter of W.P.(C) No.601 of 2019. 23. The attachment of the Bank Account of the petitioner has been kept in abeyance by an order passed by the Provident Fund authority on 15.02.2019. 24. The question fell for consideration as to whether without fastening any liability either under Section 7A or Section 14B of the Act 1952 that too when Section 7A proceeding is pending, wherein the petitioner establishment has appeared having not reached to the logical end, can liability be fastened upon the petitioner establishment requiring the Provident Fund authority to invoke jurisdiction conferred to them under Section 8F of the Act 1952. 25. Before answering this issue, reference needs to be made of provision of para 30 of the Employees Provident Fund Scheme, 1952 wherein as per sub-scheme no.3 the responsibility has been mandatorily casted upon the principal employer to pay both the contribution payable by himself in respect of the employees directly employed by him and also in respect of the employees employed by or through a contractor and also the administrative charges. 26. This Court, looking to the sub-para 3 of para 30 of the Employees Provident Fund Scheme, 1952, has found with respect to responsibility and accountability of the principal employer but fact remains that the accountability and responsibility is to be determined under the provision of Section 7A or 14B, this would be evident from the provision of Section 8F 9 which contains the provision of recovery wherein under subsection 2 thereof it has been stipulated that if any amount is due from any person to any employer who is in arrears shall have to pay the said sum and if that provision read together with the provision of Section 7A of the Act it would be evident that the dispute pertaining to applicability and determination of the amount due is to be adjudicated and admittedly herein no determination of due under Section 7A has been made even though the petitioner establishment has appeared before the authority exercising the power conferred under Section 7A of the Act, 1952. 27. Further provision of Section 14B provides that the damage can be inflicted upon the employer but subject to opportunity of hearing which also does suggest that a proceeding is to be initiated either separately or along with 7A proceeding for passing an appropriate order after providing an opportunity of hearing to the establishment and it is only thereafter the mode of recovery will come into picture. 28. In that view of the matter, taking into consideration the aforesaid factual aspect herein that there is no determination of due either under Section 7A or 14B of the Act 1952 but the order of recovery while resorting to the provision of Section 8F has been passed which cannot be said different in consonance with the provision of law. 29. More so, it is the position of the law as has been held by the Hon’ble Kerla High Court in the case of A.T. Union (Pvt.) Ltd, Alwaye Vs R.P.F Commissioner, Trivandrum & Ors. reported in 1968 (17) FLR, 455 that without resorting to provision of Section 7A there cannot be the power under Section 8F to be invoked, although the scope of Act 1952 is of beneficial in nature but the question herein is that the action is to be taken by the authority under the Act which should be in consonance with the provision of law and they cannot be allowed to deviate from it on the settled position of law. 30. It is the cardinal rule of interpretation that when a statute provides that a particular thing should be done, it should be done in the manner prescribed and not in any other manner, reference in this regard be made to the judgment rendered by the Hon’ble Apex Court in the case of State of Uttar Pradesh vs. Singhara Singh and Ors., reported in AIR (1964) SC 358, wherein it has been held at paragraph 8 as under: 10 “…. Its result is that if a statute has conferred a power to do an act and has laid down the method in which that power has to be exercised, it necessarily prohibits the doing of the act in any other manner than that which has been prescribed. The principle behind the rule is that if this were not so, the statutory provision might as well not have been enacted ….” Reference has also made to the judgment rendered by the Hon’ble Apex Court in the case of Babu Verghese and Ors. vs. Bar Council of Kerla and Ors., reported in (1999) 3 SCC 422, wherein it has been at paragraphs 31 & 32 as under: “31. It is the basic principle of law long settled that if the manner of doing a particular act is prescribed under any statute, the act must be done in that manner or not at all. The origin of this rule is traceable to the decision in Taylor v. Taylor which was followed by Lord Roche in Nazir Ahmad v. King Emperor who stated as under: “[W]here a power is given to do a certain thing in a certain way, the thing must be done in that way or not at all.” 32. This rule has since been approved by this Court in Rao Shiv Bahadur Singh v. State of V.P. and again in Deep Chand v. State of Rajasthan. These cases were considered by a three-judge bench of this Court in State of U.P. v. Singhara Singh and the rule laid down in Nazir Ahmad case was again upheld. This rule has since been applied to the exercise of jurisdiction by courts and has also been recognized as a statutory principle of administrative law.” Reference to the judgment rendered by the Hon’ble Apex Court also needs to be made in the case of Commissioner of Income Tax, Mumbai vs. Anjum M.H. Ghaswala & Ors., reported in (2002) 1 SCC 633, wherein it has been held at paragraph 27 as under: “……. it is a normal rule of consideration that when a statute vests certain power in an authority to be 11 exercised in a particular manner then the said authority has to exercise it only in the manner provided in the statute itself …..” Reference has also made to the judgment rendered by the Hon’ble Apex Court in the case of State of Jharkhand & Ors. vs. Ambay Cements & Anr., reported in (2005) 1 SCC 368, wherein it has been held at paragraph 26 as under: “….. it is the cardinal rule of interpretation that where a statute provides that a particular thing should be done, it should be done in the manner prescribed and not in any other way. It is also settled rule of interpretation that where a statute is penal in character, it must be strictly construed and followed ……” Reference has also made to the judgment rendered by the Hon’ble Apex Court in the case of Zuari Cement Ltd. vs. Regional Direction ESIC Hyderabad & Ors. (in Civil Appeal No.5138-40/2007), reported in (2015) 7 SCC 690, wherein it has been held at paragraph 14 as under: “14. As per the scheme of the Act, the appropriate Government alone could grant or refuse exemption. When the statute prescribed the procedure for grant or refusal of exemption from the operation of the Act, it is to be done in that manner and not in any other manner. In State of Jharkhand v. Ambay Cements, it was held that: (SCC p. 378, para 26) 26…. It is the cardinal rule of interpretation that where a statute provides that a particular thing should be done, it should be done in the manner prescribed and not in any other way.” It is the settled position in law that a thing is required to be done strictly in pursuance to the provisions of law, if any deviation, then ultimately the provision as contained under the statute will have no effect.” 31. In view of the entirety of the facts and circumstances as narrated above and in view of the settled position of law as discussed hereinabove, in the considered view of this Court since the proceeding under Section 7A is lying pending before the competent authority, therefore, it would be just and 12 proper to direct the said authority to decide upon the same within a reasonable period preferably within a period of twelve weeks from the date of receipt of copy of the order. 32. The petitioner establishment is directed to cooperate with the aforesaid proceeding making it clear that if there will be non-cooperation, the competent authority will be at liberty to take decision in accordance with law. Needless to say that the follow up action will be taken which will depend upon the decision taken by the authority as directed hereinabove. 33. With the aforesaid direction, both the writ petitions stand disposed of. (Sujit Narayan Prasad, J.) Saket/- "