WA/1353/2006 of M/s.Saparna Infotech Ltd., 7-1-59(428), 3rd Floor, Vs Employees Provident Fund Organisation, Andhra Pradesh, on 28 December 2006

Conclusion

:: J U D G M E N T::

Counsel for the appellant : Sri V.Hari Haran Counsel for respondents 1 and 2 : Sri R.N.Reddy 28[th] December, 2006

Per G.S. SINGHVI, C.J.

This appeal is directed against order dated 25-8-2006 passed by the learned Single Judge, whereby he dismissed the writ petition filedby the appellant for quashing order dated 25-4-2006 passed byAssistant Provident Fund – Authority under Section 7A(4) of theEmployees Provident Funds and Miscellaneous Provisions Act, 1952(hereinafter referred to as ‘respondent No. 2’).

The appellant is covered under the provisions of the EmployeesProvident Funds and Miscellaneous Provisions Act, 1952 (for short‘the Act’). It has been assigned code No. AP/37794. On account of itsfailure to remit the contributions of provident fund, administrativecharges etcetera, respondent No. 2 issued notice dated 20-12-2002 tothe appellant under Section 7A of the Act. On the date of hearing i.e.,21-09-2003, Sri Kama Raju, Manager (Administration) appeared onbehalf of the appellant and sought time for production of the records. His request was accepted and the case was adjourned to 25-2-2003. However, on the next day, no one appeared on behalf of theappellant. Notwithstanding this, respondent No.2 adjourned theenquiry from time to time i.e. 15-4-2003, 27-5-2003, 10-6-2003, 9-7-2003, 5-8-2003 and lastly 26-8-2003. On none of these dates, therepresentative of the appellant appeared. Therefore, after examiningthe available record, respondent No. 2 passed order dated 16-9-2003,whereby he determined the appellant’s liability towards E.P.Fcontribution and administrative charges to the tune of Rs.4,12,924/-and called upon it to pay the amount within ten days along with simpleinterest at the rate of 12% per annum. Paragraphs 1 to 4 of order dated16-09-2003 read as under:

“M/s. SAPARNA INFOTECH LIMITED, is anestablishment covered under the provisions of the EPF & MPAct, 1952 under codeNo.AP/37794. The employer of the aboveestablishment failed to comply with the provisions of the Act andthe Scheme framed there under in as much as the contributionsand administrative charges etc., have not been remitted for the period from 06/2000 to 11/2002 in respect of workers. In view ofthe above inquiry under section 7A of the EPF & MP Act, 1952for determination of the dues was considered necessary and thesame was posted to 29.01.2003 after due intimation to theemployer vide summons Notice No.AP/37794/ZONE – X/3474,DATED 20.12.2002.

On 21-09-2003, Sri N. Kama Raju Manager (Adm) of theestablishment appeared with written request from Mr. B.V.Raju,Director of the establishment seeking time to produce hence theinquiry is posted to 25.02.2003. on 25.02.2003, 15.04.2003,17.05.2003, 10.06.2003, 09.07.2003, none appeared and theinquiry is adjourned to 05.08.2003. On 05.08.2003, noneappeared on behalf of the establishment. Therefore, ex-parteproceedings is issued as per the available records. Thefollowing amounts are found due under the heads of account forthe period from 06/2000 to 11/2002 totaling to Rs.4,12,932/-which is to be paid by the employer.

Now therefore in exercise of the powers conferred undersection 7 A of the EPF & MP Act, 1952, IM.S.K.V.SATYANARAYANA, Assistant P.F.Commissioner(Compliance) Sub-Accounts Office, Kukatpally, Hyderbad,Andhra Pradesh, do hereby determine a sum of Rs.4,12,924/-(Rupees Four Lakhs Twelve Thousand Nine Hundred and

Twenty Four Only) from the employer for the period from06/2000 to 11/2002 in respect of employees., I hereby direct theemployer of the said establishment to pay the said amount dulyreducing the amounts already paid if any within 10 days of thereceipt of this order. The employer shall also calculate simpleinterest @ 12% on the dues up to the date of actual remittanceand pay the same.

The permission of 10 days for the payment of dues ismentioned above will not absolve the employer of his liability topay damages contemplated under section 14B of the Act andthe other action as provided under section 14 and 8 of the EPF& MP ACT, 1952 that may be taken against the establishmentwhere the payments are not made within the due date.”

The aforementioned order was sent to the appellant at itsaddress available in the records of the office of respondent No. 2, butthe amount due was not paid. Thereupon, respondent No. 2 issuednotice dated 1-4-2004 requiring the appellant to pay the amount determined videorder dated 16-09-2003. In its reply dated 4-8-2004, the appellantmade a request to respondent No. 2 to withdraw the proceedingsinitiated for recovery of the dues of provident fund etcetera, bycontending that the company was incurring losses for the last threeyears and no employee is working in the company. For the sake ofconvenient reference, letter dated 4-8-2004 is reproduced below:

“With reference to the above we have already informedyour department no body is working in our company for the last3 years as per PF Act and our company is incurring losses forthe 3 years. Your officials also during inspection observed thatno employee of M/s. Saparna Infotech Ltd., is working in thepremises. We have informed several times to you that ouremployees who were originally employed left the organizationabout 3 years back and requested you to kindly withdraw theprovisions against our company for the recovery of dues.

Hence kindly withdraw the proceedings against our company for the recovery of dues.”

After one year and four months, the appellant sent letter dated 13-1-2006 to respondent No. 2 informing the latter that it intends toapproach the High Court for availing legal remedy. However, insteadof adopting that course, the appellant filed an application on 5-4-2006under Section 7A (4) of the Act for setting aside the order ofdetermination passed by respondent No.2. It also applied forcondonation of two years delay by claiming that the business ofdotcom was suspended due to recession in the business. Threeparagraphs application filed by the appellant for condonation of delayis reproduced below:

“We have filed the petition u/s. 7-A (4) for re-open the 7-A order,for the period 6/2000 to 11/2002, which was assessed anddetermined the dues on ex-parte basis by your authority.

Our organization main business operations of the “Dot.Com”business was suspended due to recession takes place in thisbusiness during that period.

Therefore prayed the Hon’ble authority to condone the delayinfilling the re-open petition as against the 7-A ex-parte order.” Immediately after filing of application under Section 7A (4), the appellant preferred Writ Petition No. 8688 of 2006 for quashing noticedated 3-4-2006 issued by Recovery Officer, SAO, Kukatpally,Hyderabad for execution of the order passed under Section 7A of theAct by arrest and imprisonment of its Director. The same wasdisposed of by the learned Single Judge with a direction to respondentNo. 2 to decide the application filed by the appellant under Section 7A(4) of the Act within a period of four weeks.

In compliance of the direction given by the Court, respondent No.2 passed order dated 25-04-2006, whereby he dismissed theapplication of the appellant on the ground that the same had been filedafter two years and six months of the passing of order under Section 7A of the Act.

The appellant could have challenged order dated 25-4-2006 byfiling an appeal under Section 7-I of the Act, but instead of availing thestatutory remedy available under the same very Act under which theorder burdening it with liability to deposit the amount of provident fundetcetera, was passed, the appellant chose to invoke the jurisdiction ofthis Court under Article 226 of the Constitution of India. The learnedSingle Judge dismissed the writ petition by observing that order dated25-4-2006 does not suffer from any jurisdictional infirmity or error oflaw, which could justify interference under Article 226 of theConstitution. The learned Single Judge noted that enquiry initiatedunder Section 7A had been adjourned on various dates, but theappellant did not bother to attend the enquiry and held that respondentNo. 2 did not commit any illegality by refusing to set aside order dated16-09-2003.

Sri V.Hari Haran, learned counsel for the appellant argued thatorders dated 16-9-2003 and 25-4-2006 passed by respondent No. 2should be declared nullity, because the same were passed withoutaffording reasonable opportunity of hearing to his client. Heemphasised that even though Sri N. Kama Raju, Manager(Administration) of the appellant appeared before respondent No. 2 on29-1-2003 and sought time for producing the records, the latterarbitrarily proceeded ex parte and determined the liability of theappellant under Section 7A. He then argued that even though theremay be some justification for passing order dated 16-09-2003,respondent No. 2 was not at all justified in dismissing the applicationfiled under Section 7A (4) without giving notice to the appellant aboutthe date of hearing and without taking into consideration the fact thatorder dated 16-9-2003 had not been served on the appellant.

Sri R.N. Reddy, learned Standing Counsel for Provident FundOrganisation supported the order under challenge and argued that thelearned Single Judge did not commit any error by declininginterference with order dated 25-04-2006. Sri Reddy emphasised thatthe appellant had exhibited highly recalcitrant attitude towards theproceedings initiated by respondent No. 2 under Section 7A of the Actinasmuch as its representative did not bother to appear and producethe record despite the fact that the enquiry was adjourned at least onseven dates after 29-1-2003. Learned counsel then argued that the appellant’s failure todeposit the amount of provident fund dues and administrative chargesfor the period from June, 2000 to November, 2002 constituted a validground for passing order under Section 7A. He also defended thedismissal of application filed under Section 7A (4) and argued that thebald assertion made on behalf of the appellant that order dated 16-9-2003 had not been communicated to it was not supported by affidavit.

We have given serious thought to the respective arguments. Inour opinion, the order under challenge does not suffer from any error,which could justify exercise of the power by the Division Bench underClause 15 of the Letters Patent. The attitude of non-cooperationexhibited by the applicant is evinced from the fact that even thoughrespondent No. 2 had served notice under Section 7A and adjournedthe proceedings on at least seven dates, no one appeared on itsbehalf except the first date of hearing, on which date, Sri N. KamaRaju, Manager (Administration) sought adjournment for production ofrecords. If the appellant was genuinely interested in participating inthe proceedings initiated by respondent No. 2 under Section 7A of theAct, nothing prevented it from producing the relevant records toconvince the competent authority regarding its liability or otherwise to deposit the amount of provident fund etcetera. The appellant’s pleathat order dated 16-9-2003 was not served on it also sans credibility,because along with application filed under Section 7A(4), no affidavitwas filed. More over, a bare reading of communication dated 4-8-2004sent by the appellant shows that it was very much aware of thedetermination made by respondent No. 2 under Section 7A of the Actand the consequential action taken for execution of that order. Thus,there was no justification whatsoever for filing application underSection 7A(4) after more than two years and six months. Rather, thislong delay strengthens the inference that the appellant was neverinterested in cooperating with the authorities concerned. Therefore,the learned Single Judge rightly declined to interfere with order dated25-4-2006 and we do not see any reason to take different view.

No other point has been urged.

In the result, the appeal is dismissed.

As a sequel to dismissal of the appeal, WAMP No.2865 of 2006filed by the appellant for interim relief is also dismissed.

G.S.SINGHVI, C.J.

28[th] December, 2006

C.V.NAGARJUNA REDDY, J.

ARS