Jo Philip V. Assistant Provident Fund Commissioner, Employees Provident Fund Organization, Sub Regional Office, Bhavishya Nidhi Bhavan, Kaloor, Kochi and The Central Government Industrial Tribunal cum Labour Court Ernakulam

WP(C)/7326/2022

AI Insights

The case involves Jo Philip, the proprietor of M/s. Nirakkoottu Textiles, challenging the orders of the Assistant Provident Fund Commissioner and the Appellate Authority under the Employees Provident Funds and Miscellaneous Provisions Act, 1952. The petitioner argued that his establishment employed less than 20 employees and thus was not liable for contributions under the Act. The initial inspection and subsequent assessments by the authorities led to the clubbing of two units owned by the petitioner's wife, which was contested. The High Court found that the Appellate Authority had not properly considered the petitioner's documents and failed to follow legal precedents requiring thorough reasoning and consideration of all evidence.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 688268 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 30-08-2022
• Assessment Year: misc
• Other Referred Cases: Kranti Associates (P) Ltd. v. Masood Ahmed Khan [(2010) 9 SCC 496]
• Laws Referred To: Employees Provident Funds and Miscellaneous Provisions Act, 1952
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: SAJEEVKUMAR GOPAL
• Assessee Lawyers: LATHA ANAND; M N RADHAKRISHNA MENON; K R PRAMOTH KUMAR; S VISHNU; RADHAKRISHNA PILLAI SIDHARTH; P S JOBY GEORGEKUTTY
• Keywords: Appellate Authority; Assessment Order; Contribution; Employees; EPF Act; Quasi-judicial
• Section: 7A

Judgement Text

"WP(C) No.7326/2022 1 IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE AMIT RAWAL TUESDAY, THE 30TH DAY OF AUGUST 2022 / 8TH BHADRA, 1944 WP(C) NO. 7326 OF 2022 PETITIONER: JO PHILIP PROPRIETOR, M/S.NIRAKKOTTU TEXTILES, BEHIND DEVI TEMPLE, CHERTHALA, ALAPPUZHA-688 524. BY ADVS. LATHA ANAND M.N.RADHAKRISHNA MENON K.R.PRAMOTH KUMAR S.VISHNU (ARIKKATTIL) RADHAKRISHNA PILLAI B SIDHARTH P.S. JOBY GEORGEKUTTY RESPONDENTS: 1 ASSTT. PROVIDENT FUND COMMISSIONER EMPLOYEES PROVIDENT FUND ORGANIZATION, SUB REGIONAL OFFICE, BHAVISHYA NIDHI BHAVAN, KALOOR, KOCHI-682 017. 2 THE CENTRAL GOVERNMENT INDUSTRIAL TRIBUNAL CUM LABOUR COURT ERNAKULAM. BY ADV SRI.SAJEEV KUMAR K. GOPAL, SC, EPFO THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 30.08.2022, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C) No.7326/2022 2 JUDGMENT Orders Ext.P11 of the assessing authority under the EPF Act dated 14.08.2012 and the Appellate Authority dated 02.08.2021 Ext.P14 are under challenge on behalf of the petitioner stated to be proprietor of a textile shop under the name and style M/s.Nirakkoottu Textiles, Behind Devi Temple Cherthala, Alappuzha on the basis of Ext.P1 certificate issued by the concerned registration authority. 2. It is alleged that the establishment of the petitioner has been employing less than 20 employees all along and therefore, not liable to make the contribution of the employees under the provisions of the employees Provident Funds and Miscellaneous Provisions Act, 1952 (Hereinafter referred to as 'the Act'). The registration certificate issued by the Assistant Labour Officer for the period ending 31.12.2012 Ext.P2 reflects only 15 employees in the establishment of the petitioner. The inspection report Ext.P3 based on the inspection conducted on 26.04.2011 also reflects that the petitioner textile employed 15 persons. It is also an assessee under the Income Tax Act and Sales Tax Act as evident from the profit and loss account and the balance sheet for the year WP(C) No.7326/2022 3 ending 31.03.2010 and 31.03.2011 Exts.P5 and P6. Smt.Simi Joe, wife of the petitioner was also running another textile shop in shop building CMC 4/230A whereas the petitioner is carrying on the business in respect of building No.4/177B. The Enforcement Officer on 13.01.2011, inspected the premises of the petitioner and found that 15 persons were employed for wages. The first respondent on the basis of the report of the Enforcement Officer issued a notice under Section 7A of the Act which was replied and thereafter passed assessment order Ext.P11 by clubbing both the units bringing them under the realm of the aforementioned Act. 2. Learned counsel appearing on behalf of the petitioner submitted that the orders are not sustainable as the petitioner had placed on record the letter dated 16.06.2012 issued by the Sales Tax Officer, Cherthala, letter dated 07.06.2002 issued by the Public Information Officer, Municipal Office, Cherthala, copy of sale deed No.2038/10, profit and loss account for the years ending 31.03.2010 and 31.03.2011, copy of the shop Act Registration certificate of Nirakkoottu Textiles, copy of the shop Act Registration certificate of Nirakkoottu Sarees and Silks, receipt for renewal of Shop Act Registration of the year 2009, 2010 and 2011. Even the WP(C) No.7326/2022 4 ESI has also given a source security of 15 employees. All these facts were brought to the notice of the assessing authority, but failed to advert the same and were also placed on record in an appeal. The appellate court noticed the aforementioned documents while discussing the submissions of the respective counsel, but while returning to the findings, did not refer or dealt with, therefore, there is misdirection and abdication. 3. On the other hand, learned Standing Counsel appearing on behalf of the first respondent submitted that the petitioner failed to produce the documents before the assessment authority relating to assessment under Section 7A of the Act. The documents were produced only before the Appellate Authority and were found to be incomplete and uncertified. Clubbing of units was permitted only on account of the fact that both the units were found to be working in one unit. The petitioner alleged the closure of other establishments carried on under the name and style of Nirakkoottu Sarees and Silks by his wife in 2007 whereas, as per the records, it was found to have been closed in 2010. The petitioner had been telling lies before the authorities. Ext.P14 order is perfectly legal and justified and cannot be called in question by exercising the power WP(C) No.7326/2022 5 under Article 226 of the Constitution of India as this Court cannot re-appreciate the evidence and form a different opinion than the one arrived at. 4. I have heard counsel for the parties and appraised the paper book and am of the view that the order of the Appellate Authority dated 02.08.2021 Ext.P14 is not sustainable in the eyes of law and the reasons are not one but many. 6. The Appellate Authority has failed to refer to the documents submitted by the petitioner. Neither the registration certificate issued by the Labour Officer reflecting the employees to be 14, 15 in number, source security by the ESI, profit and loss account and heavily relied upon the report of the Inspector. There would have been a force in the argument of the inspector that both the units under the different proprietorship were carried on in the same building having a common municipal number if he had taken a photograph and verified the record from the Municipality. But, no such effort has been made. Quasi Judicial authorities are required to exercise the power in accordance with the law and reasoning as per the findings rendered by the Supreme Court in Kranti Associates (P) Ltd. v. Masood Ahmed Khan [(2010) 9 SCC WP(C) No.7326/2022 6 496] wherein it has been held that quasi judicial authority must record the reasons in support of the conclusion, refer to all the documents, record reasons to serve the wider principles of justice so that the justice must not only be done, but appeared to be done as well. Also, the reasons facilitate the process of judicial review by the superior courts. However, no such directions have been followed while rejecting the appeal of the petitioner. Thus I am of the view that the matter required to be revisited at the level of the Appellate Authority. The impugned order dated 02.08.2021 Ext.P14 of the Appellate Authority is set aside. The Writ Petition is allowed. The Appellate Authority is directed to decide the appeal in accordance with law in view of the observations made hereinabove and by taking into consideration all the documents by summoning the records of the assessing officer. The parties are directed to place on record additional documents in support of the case, if any. Appellate authority will decide the case within a period of six months. In the meantime the demand raised against the petitioner is ordered to kept in abeyance. Sd/- AMIT RAWAL JUDGE csl WP(C) No.7326/2022 7 APPENDIX OF WP(C) 7326/2022 PETITIONER'S EXHIBITS Exhibit P1 TRUE COPY OF REGISTRATION CERTIFICATE ISSUED BY THE ASSISTANT LABOUR OFFICER, CHERTHALA FOR THE PERIOD 31-12-2006 TO 31-12-2011 ALONG WITH ENGLISH TRANSLATION/TYPED COPY Exhibit P2 TRUE COPY OF REGISTRATION CERTIFICATE ISSUED BY THE ASSISTANT LABOUR OFFICER, CHERTHALA FOR THE PERIOD 31-12-2012 ALONG WITH ENGLISH TRANSLATION/TYPED COPY Exhibit P3 TRUE COPY OF THE INSPECTION REPORT DATED 26.4.2011 ALONG WITH ENGLISH TRANSLATION Exhibit P4 TRUE COPY OF THE NOTICE OF ESI CORPORATION DATED 01-02-2012 Exhibit P5 TRUE COPY OF PROFIT AND LOSS ACCOUNTS FOR THE YEAR ENDED ON 31.03.2010 AND 31.3.2011 Exhibit P6 TRUE COPY OF BALANCE SHEETS FOR THE YEAR ENDED ON 31.03.2010 AND 31.03.2011 Exhibit P7 TRUE COPY OF THE NOTICE OF THE ASSISTANT PROVIDENT FUND COMMISSIONER DATED 20-04-2011 Exhibit P8 TRUE COPY OF THE REPRESENTATION DATED 18-05- 2011 SUBMITTED BY THE PETITIONER Exhibit P9 TRUE COPY OF THE SUMMONS DATED 17-01-2012 Exhibit P10 TRUE COPY OF THE REPRESENTATION DATED 19-04- 2012 Exhibit P11 TRUE COPY OF ORDER ISSUED BY THE 1ST RESPONDENT DATED 14-08-2012 Exhibit P12 TRUE EXTRACT OF THE APPEAL WITHOUT EXHIBITS DATED 17.9.2012 WP(C) No.7326/2022 8 Exhibit P13 TRUE COPY OF COUNTER FILED BY THE 1ST RESPONDENT DATED 20.11.2013 Exhibit P14 TRUE COPY OF ORDER PASSED BY THE 2ND RESPONDENT DATED 2.8.2021 RESPONDENTS' EXHIBITS: Exhibit R1(a) TRUE COPY OF THE MAHAZAR DATED 14.1.2011 AND THE LIST "