WP/25494/2006 of Everest English Medium High School, Vs The Employees Provident Fund Organisation, on 22 December 2006

O R D E R:

The petitioner is a school claims to have been established inthe year 1995. It is pleaded that the petitioner had never employedteaching and non-teaching staff put together exceeding 20 innumber. Thus, it is contended that the petitioner-school does notcome under the purview of the Employees Provident Fund andMiscellaneous Provisions Act, 1952 (for short ‘the Act’). While so,the auction notice dated 25-08-2006 was published in a local dailyproposing to auction the land, building and machinery of thepetitioner-school as is where is basis. The said auction noticewas issued by the second respondent-Assistant Provident FundCommissioner under the provisions of the Act alleging that thepetitioner is a defaulting establishment and therefore, the movableand immovable properties specified thereunder were attached andthe same would be sold on 08-09-2006 and 11-09-2006 at 10.00 A.M. However, since no bidder has comeforward, the auction proposed under the said notice did not takeplace. Subsequently, the respondents have issued a warrant ofarrest dated 11-09-2006 in the name of the correspondent-secretary of the petitioner-school. It was alleged in the saidwarrant that as per recovery certificate No.23/2004, dated 05-04-2004, a sum of Rs.12,88,689/- is to be recovered from thepetitioner-school under the provisions of the Act and since the said amount has not been paid, the correspondent and Secretary of thepetitioner-school is liable to be arrested. Pursuant thereto, thecorrespondent was arrested and detained in sub jail, Nellore till 13-09-2006. Subsequently, he was released on payment of aboutRs.20,00,000/- towards purported dues. That apart, therespondents had also obtained two post-dated cheques from thesecretary and correspondent of the petitioner-school by coercion.The said post-dated cheques were dated 20-12-2006 and 25-12-2006 for Rs.12,00,000/- each from theaccount being maintained in the State Bank of India, Nellore TownBranch. Thereafter, the second respondent issued furtherproceedings dated 12-09-2006 purportedly under Section 7C of theAct assessing that a sum of Rs.42,328/- is payable towards theescaped amount for the period from 6/95 to 4/02 and 5/02 to10/06. Aggrieved by the said action of the respondents, this writpetition is filed seeking a declaration that the action of therespondents in determining the liability of the petitioner-schoolunder the provisions of the Act is arbitrary and illegal andconsequently direct the respondents to refund the amountscollected on 12-09-2006.

On behalf of the respondents, the Assistant Provident FundCommissioner filed a counter affidavit stating that all theeducational institutions were brought under the purview of the Actthrough notification dated 19-02-1982 issued under Section 1(3)(b) of the Act. Pursuant thereto, the petitioner itself furnished thecoverage particulars mentioning that it employed 20 persons as on08-07-1993. Basing on the said particulars, the petitioner-schoolwas issued coverage intimation dated 18-10-1993 allotting CodeNo.AP/25107 and the same was acknowledged by the petitioner on 05-11-1993. Thereafter, an enquiry under Section 7A of the Actwas initiated to assess the dues. Though summons dated

04-11-1994 were served on the petitioner, he failed to attend theenquiry and consequently an ex parte assessment was made forRs.32,780/- for the period from 8/93 to 5/95 vide proceedingsdated 11-10-1995. The said order was served on the petitioner on30-10-1995. Subsequently, for the period from 6/95 to 4/2002 asum of Rs.12,88,689/- was assessed by order dated 11-03-2004. In spite of service of summons, the petitioner failed to attend thesaid enquiry and after granting several adjournments, ultimately anex parte assessment was made for the said period.

Similarly, in the enquiry conducted under Section 7A of theAct for the period from 5/02 to 5/06, the petitioner failed to appearin spite of service of summons dated 13-08-2004.

A further notice dated 02-01-2006 was returned with postalendorsement ‘refused’. Thus, an ex parte assessment was madeon 07-07-2006 determining that a sum of Rs.8,44,495/- is payable.

That apart, an enquiry under Section 7C of the Act was alsoinitiated to assess the dues of escaped amounts and the samewas assessed at Rs.42,328/- by order dated 12-09-2006 and further interest and damages payable underSection 7Q and 14B of the Act were also levied vide proceedingsdated 12-09-2006 which was quantified at Rs.7,90,851/- andRs.13,15,888/- respectively.

Thus, it is contended that the respondents following dueprocess of law had rightly determined the amounts payable by thepetitioner under the provisions of the Act and since the petitionercommitted default in payment of the same, the warrant of arrestwas issued. Subsequently, the correspondent of the petitioner-school was released on deposit of Rs.20,00,000/- through demand drafts and another Rs.20,00,000/- through post-dated cheques. Still there is a balance of Rs.3,15,131/- and therefore, thepetitioner is not entitled to any refund as claimed by it.

An affidavit in reply has been filed by the petitioner disputingthe version of the respondents and reiterating that the petitionerwas not aware of any assessments said to have been made underSection 7A of the Act. It was also stated that there was no noticeat any point of time to the petitioner with regard to the enquiry saidto have been conducted under Section 7A of the Act.

I have heard the learned counsel for both the parties andperused the material on record.

The learned counsel for the petitioner contended that thoughin the counter affidavit the respondents have made an attempt toshow that more than Rs.40,00,000/- is due from the petitioner-school, the fact that in the warrant of arrest dated 11-09-2006,Rs.12,00,000/- was shown as due itself shows that the allegedassessment was not bonafide and only an after thought to defeatthe rights of the petitioner.

Having regard to the rival claims made by the parties and onperusal of the original record placed before this Court, it is clearthat assessments under Section 7A of the Act have been madefrom time to time against the petitioner-school starting from theyear 1993, whereas the respondent claimed that the petitioner-school was allotted Code Number and the provisions of the Actwere made applicable only on the basis of the particulars furnishedby the petitioner and the coverage intimation dated 18-10-1993was served on the petitioner apart from the summons in theenquiries taken up from time to time under Section 7A of the Actas well as the orders of assessment, the petitioner contends thatno such notices or orders were however served on it and that it was not aware of any of the said proceedings. It is alsovehemently contended that the provisions of the Act cannot beextended to the petitioner-school since the petitioner has neverengaged persons exceeding 20 at any point of time from theinception.

The above issues being a pure disputed questions of factcan neither be enquired into nor decided by this Court in exerciseof jurisdiction under Article 226 of the Constitution of India. It is tobe noted that under Section 7 I of the Act, an efficaciousalternative remedy of appeal is available against the orderspassed either under Section & 7E or 7C and 14 of the Act. It isopen to both the parties to produce the supporting material tosubstantiate the respective claims of the parties before theappellate forum, in which event, on appreciation of the same, thevalidity of the findings recorded by the second respondent can bedecided.

However, the fact remains that as on today, threeassessments were made under Section 7A of the Act against thepetitioner for three different periods and more than Rs.40,00,000/-is payable by the petitioner. Though the petitioner disputes thesaid assessments for the purpose of the present writ petition, thesame cannot be accepted in view of the record placed before thisCourt by the learned counsel for the respondents. However, it ismade clear that this Court shall not be understood to haveexpressed any opinion since this Court opined that it is a matterfor enquiry by the appellate authority.

However, the learned counsel for the petitioner pointed outthat as on today, the appellate forum is not functioning for want ofquorum.

Be that as it may, since it is not in dispute that the petitioner has paid a sum of Rs.20,00,000/- by way of demand drafts, I deemit appropriate to dispose of the writ petition granting liberty to thepetitioner to prefer appeals against the impugned assessmentsmade by the second respondent. If such appeals are made withinfour weeks from today, the same shall be entertained andappropriate orders be passed in accordance with law. Since asum of Rs.20,00,000/- being half of the liability of the petitionerwas already satisfied, it would be appropriate to await the decisionof the appellate forum and till such time, it is necessary in theinterest of justice to restrain the respondents from recovering thebalance of the alleged arrears.

Accordingly, the writ petition is disposed of with a directionto the respondents to return the post-dated cheques obtained fromthe petitioner forthwith. No costs.

Dated 22-12-2006KLP

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(G. ROHINI, J)