M.K. Krishnan V. The Assistant Provident Fund Commissioner and Recovery Officer, Employees Provident Fund Organisation, Sub Regional Office

WP(C)/23009/2007

AI Insights

The case revolves around M.K. Krishnan, the son of late K.N. Madhavan Namboodiri, who was implicated in proceedings under Section 8B(1)(b) of the EPF & MP Act for non-payment of dues related to his father's closed tile factory. The factory was shut down in 2001, and its assets were sold to settle liabilities under the Act. The respondent, the Assistant Provident Fund Commissioner, initiated proceedings against Krishnan after his father's death, claiming he was a partner in the firm and thus liable for the dues. Krishnan contested these proceedings, arguing he had not inherited any assets and that the procedural requirements for such actions under the Act and the Income-tax Act were not followed.

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 799161 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 27-02-2012
• Assessment Year: misc
• Other Referred Cases: Ali v. Recovery Officer, E.P.F. Organisation, 2007(1) KLT 927
• Laws Referred To: Employees Provident Funds and Miscellaneous Provisions Act, 1952, Income-tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: S GOPAKUMARAN NAIR
• Assessee Lawyers: P RAMAKRISHNAN
• Keywords: Non-payment of dues; Arrest under Section 8B(1)(b); Proceedings under EPF & MP Act; Violation of Section 8G; Rule 73 of Part V of Schedule II
• Section: 14B; 8G; 7Q; 8B(1)(b)

Judgement Text

"IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE S.SIRI JAGAN MONDAY, THE 27TH DAY OF FEBRUARY 2012/8TH PHALGUNA 1933 WP(C).No. 23009 of 2007 (L) --------------------------- PETITIONER(S) : --------------------- M.K.KRISHNAN, KAPILANGATTU MANA, CHITTISSERY P.O., THRISSUR DISTRICT. BY ADV. SRI.P.RAMAKRISHNAN RESPONDENT(S) : ------------------------ 1. THE ASSISTANT PROVIDENT FUND COMMISSIONER AND RECOVERY OFFICER, EMPLOYEES PROVIDENT FUND ORGANISATION, SUB REGIONAL OFFICE, 36/685 A, BHAVISHYANIDHI BHAVAN, KALOOR, KOCHI - 17. BY SRI.S.GOPAKUMARAN NAIR, SC, P.F. THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 27-02-2012, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: AMV WP(C).No. 23009 of 2007 (L) APPENDIX PETITIONER(S) EXHIBITS : P1. : COPY OF ORDER DATED 09.02.05 UNDER SECTION 14 B OF THE EPF & MP ACT. P2. : COPY OF ORDER DATED 09.02.05 UNDR SECTION 7 Q OF THE EPF & MP ACT. P3. : COPY OF LETTER DATED 12.12.05 ISSUED BY THE RESPONDENT. P4. : COPY OF JUDGMENT DATED 13.02.06 IN WP(C) NO.1915/06. P5. : COPY OF NOTICE DATED 14.11.06 ISSUED BY THE RESPONDENT. P6. : COPY OF NOTICE DATED 05.01.07 ISSUED BY THE RESPONDENT. P7. : COPY OF STATEMENT DATED 14.02.07 SUBMITTED BY THE PETITIONER. P8. : COPY OF LETTER DATED 26.06.07 ISSUED BY THE RESPONDENT. RESPONDENTS' EXHIBITS : R1(A). : COPY OF PARTNERSHIP DEED. R1(B). : COPY OF THE LETTER. /TRUE COPY/ P.A.TO JUDGE AMV S. Siri Jagan, J. =-=-=-=-=-=-=-=--=-=-=-=-=-=-=-=-=-= W.P(C) No. 23009 of 2007 =-=-=-=-=-=-=-=-=--=-=-=-=-=-=-=-=-= Dated this, the 27th day of February, 2012. J U D G M E N T The petitioner is the S/o. late K.N. Madhavan Namboodiri. According to the petitioner, the said Madhavan Namboodiri was running a tile factory at Chittissery in Thrissur District. The establishment was closed down in 2001. All the assets of the said establishment and those of Sri. Madhavan Namboodiri were sold to meet the liability of the establishment under the provisions of the Employees Provident Funds and Miscellaneous Provisions Act, 1952 (for short the Act) and the Scheme made thereunder. Still, further amounts were claimed from the said Madhavan Namboodiri. Proceedings were initiated to arrest him under Section 8B(1)(b) of the Act for non-payment of dues under Sections 14B and 7Q of the Act. But before that could materialise, the said Madhavan Namboodiri died. Thereafter, the respondent has initiated proceedings under Section 8B(1)(b) of the Act against the petitioner. According to the petitioner, the petitioner has not inherited any of his father's assets and he was not an employer under the Act. It is further submitted that proceedings are initiated in violation of Section 8 G of the Act as per which Rule 73 of Part V of Schedule II of the Income-tax Act, 1961 would apply and the provisions of the same have not been complied with before initiating the action against the petitioner. The petitioner therefore seeks the following reliefs: “a. Issue a writ of certiorari or other appropriate writ or order quashing and setting aside Exts. P1, P2, P5, P6 and P8; W.P(C) No. 23009 of 2007 -: 2 :- b. Hold that the proceedings initiated against the petitioner for recovery of dues under the EPF and MP Act in relation to International tiles Chittissery, Thrissur are arbitrary, illegal and unsustainable; c. issue a writ of mandamus demanding the respondents to permit the petitioner to continue as teacher under the UGC Scheme under the attainment of the age of 62 years; d. issue a writ of mandamus or any other appropriate writ or order directing the respondent to return the amount of Rs. 79,332/- realized from the petitioner towards Ext.P2 demand.” 2. A counter affidavit has been filed by the respondent, wherein the stand taken is that the petitioner was also a working partner of the firm which was running the tile factory along with others as per Ext.R1(a) partnership deed. Therefore, the petitioner also answers the description of employer and hence the proceedings initiated are perfectly valid and proper. 3. I have considered the rival contentions in detail. 4. A Division Bench of this Court has, in Ali v. Recovery Officer, E.P.F. Organisation, 2007(1) KLT 927, on identical facts, held that before a person can be arrested under Section 8B(1)(b), the procedure prescribed under Section 8G read with Part V of the Second Schedule to the Income-tax Act, 1961 has to be complied with, particularly Rule 73(1) of the said Rules. Rule 73 reads thus: “73. Notice to show cause: (1) No order for the arrest and detention in civil prison of a defaulter shall be made unless the Tax Recovery Officer has issued and served W.P(C) No. 23009 of 2007 -: 3 :- a notice upon the defaulter calling upon him to appear before him on the date specified in the notice and show cause why he should not be committed to the civil prison, and unless the tax Recovery Officer, for reasons recorded in writing is satisfied; (a) that the defaulter, with the object or effect of obstructing the execution of the certificate, has after the drawing up of the Certificate by the Tax Recovery Officer dishonestly transferred, concealed, or removed any part of his property, or (b) that the defaulter has or has had since the drawing up of the certificate by Tax Recovery Officer the means to pay the arrears or some substantial part thereof and refuses or neglects or has refused or neglected to pay the same.” That being so, without a finding to the effect that the petitioner has, after the certificate was drawn up by the tax recovery officer, dishonestly transferred, concealed or removed any part of his property or that he has, after drawing of the certificate by the tax recovery officer, had the means to pay the arrears or some substantial part thereof and refused or neglected to pay the same, the petitioner cannot be arrested under Section 8B(1)(b). In the counter affidavit filed by the respondent, they have not stated that the conditions for the arrest as stated above have been satisfied. The respondent does not dispute the fact that all the assets of the establishment and that of Sri. Madhavan Namboodiri had been sold off to meet the liabilities under the Act. They have not stated before me in the counter affidavit that the petitioner possesses other properties or that he had disposed of any of the properties to defeat the recovery of the dues under the Act. They also W.P(C) No. 23009 of 2007 -: 4 :- have not specifically stated that the petitioner has means to pay arrears or some substantial part of the same and that he has refused and neglected to pay the same. Without proving the same, the respondent cannot arrest the petitioner in exercise of powers under Section 8B(1)(b) of the Act. 5. In the above circumstances, the impugned orders are quashed. But, I make it clear that it would be open to the respondent to take appropriate steps after being satisfied on materials available on record that the petitioner had, in fact, dishonestly transferred or sold any of his property to defeat the recovery of arrears due under the Act or that despite having means to pay the arrears or some substantial part thereof, he has refused or neglected to pay the same. The writ petition is disposed of as above. Sd/- S. Siri Jagan, Judge. Tds/ "