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SCA/14969/2010 18/ 18 ORDER
IN
THE HIGH COURT OF GUJARAT AT AHMEDABAD
SPECIAL
CIVIL APPLICATION No. 14969 of 2010
=========================================================
PASCHIM
GUJARAT VIJ CO.LTD. FORMERLY G.E.B & 1 - Petitioner(s)
Versus
RECOVERY
OFFICER AND ASSISTANT PROVIDENT FUND COMMISSIONER & 1 -
Respondent(s)
=========================================================
Appearance
:
Mr
KB Trivedi, Senior Advocate with MS LILU K BHAYA
for
Petitioner(s) : 1 - 2.
Mr. NIRAL R MEHTA for Respondent(s) : 1 -
2.
=========================================================
CORAM
:
HONOURABLE
MR.JUSTICE H.K.RATHOD
Date
: 27/04/2011
ORAL
ORDER
Heard
learned Senior Advocate Mr. KB Trivedi with learned Advocate Ms.
Lilu K. Bhaya for petitioners and learned Advocate Mr. Niral R.
Mehta for respondents.
Considering
submissions made by both learned advocates, question raised in this
petition would require examination. Hence, Rule. Service of notice
of rule is waived by learned Advocate Mr. Niral R. Mehta appearing
for respondents PF Authority. With consent of both learned
advocates, matter is taken up for final hearing today.
By
filing this petition, petitioner – Paschim Gujarat Vij Company
Limited, (Government of Gujarat Company) (Formerly Gujarat
Electricity Board) having its registered / Head Office at Race
Course, Vadodara (Gujarat) and Circle Office at Porbandar has
challenged order passed by respondent PF Authority as per prayers
made in paragraph 21(A),(B) and (C) which are quoted as under:
“21(A) To
issue a writ of mandamus or a writ in the nature of mandamus or any
other appropriate writ, order or direction which the Hon’ble Court
may deem fit, just and proper quashing and setting aside the
judgment and order dated 8.9.2010 passed by Learned Employees’
Provident Fund Appellate Tribunal, New Delhi in Appeal NO.
ATA/830(5)/2004 and further be pleased to allow the said appeal and
quash and set aside the order dated 30.9.2004 passed by the
respondent no.2 for the reasons stated in the Memo of Petition.
(B) To
issue a writ of mandamus or a writ in the nature of mandamus or any
other appropriate writ, order or direction which the Hon’ble Court
may deem fit, just and proper quashing and setting aside the order
dated 24.9.2010 passed by the respondent no.1 under Sec. 8-F of the
Act attaching the Bank Account of the petitioner and directing the
Bank to pay Rs.81,11,245/- by way of Demand Draft from the account
of the petitioner without serving the petitioner copy of the
judgment rejecting the appeal or notice calling upon the petitioner
to pay the amount for the reasons stated in the Memo of Petition.
(C) Pending
admission, hearing and final disposal of the above Special Civil
Application to stay the execution, implementation and operation of
the order dated 24.9.2010 issued by the respondent No.1 on the State
Bank of India Manek Chowk Branch,Porbandar and restrain the
respondents, their agents and servants from recovering amount of
Rs.81,11,245.00 pursuant to attachment order dated 24.9.2010
directing the State Bank of India Manek Chowk Branch,Porbandar to
pay an amount of Rs.81,11,245.00 for the reasons stated in the Memo
of Petition.”
In
this matter, affidavit in reply is filed by respondents page 101.
During pendency of petition, one Draft Amendment has been placed on
record which is dated 9th December, 2010. It has been
allowed by this court and accordingly, amendment is made in this
petition by petitioner in view of order passed by this court dated
14th December, 2010. Para 15(A),(B),(C),(D) (i) to (vi)
and (E) have been added to petition pursuant to order of this court
dated 14.12.2010.
Respondents
– PF Authority has passed order in proceedings under section
7A of Employees’ Provident Fund and Miscellaneous Provisions Act,
1952. Petitioner is having PF Code No. GJ/920-G. Respondent PF
Authority passed aforesaid order under section 7-A on 30th
September, 2004 and directed present petitioner to pay due amount
while determining dues payable by petitioner establishment under PF
Act and Schemes framed thereunder on basis of information available
on record as laid before Provident Fund Authority for period under
reference from 2000 to 2004. Total amount comes to Rs.59,84,367.00
with interest under section 7-Q to be paid by petitioner which
amount comes to Rs.17,70,769.00. Thereafter, order passed by PF
Authority was challenged by petitioner before Employees Provident
Fund Appellant Tribunal, New Delhi by filing Appeal ATA No. 830(5)04
wherein appellate tribunal has decided appeal on 8.9.2010 and appeal
preferred by petitioner has been dismissed. Then, respondent PF
Authority has issued order dated 24th September, 2010
while exercising powers under section 8F of Employees’ Provident
Funds and Miscellaneous Provisions Act and addressed a letter to
State Bank of India (earlier State Bank of Saurashtra) Porbandar to
remit amount mentioned in order total comes to Rs.81,11,245.00. It
is submitted by learned Senior Advocate Mr. KB Trivedi that in view
of order passed by PF Authority under section 8F of Act which is
dated 24.9.2010, that amount is already transferred in account of
respondent PF Department. However, learned Advocate Mr. Niral R.
Mehta appearing for respondents PF Department is not having any
clear instructions whether such amount as referred to above has been
transferred to account of respondent PF Department or not.
When
matter was examined by Competent Authority under section 7A of PF
Act, representative from petitioner appeared before competent
authority and submitted proof of having been submitted statutory
returns. Establishment has failed to produce pay roll, muster roll,
voucher etc. in respect of contractor engaged by establishment
despite adjournments granted by competent authority in proceedings
under sec. 7A of Act. Before competent authority, an affidavit of
Shri BA Parmar, (SE) was submitted by petitioner wherein it was
stated that records for period from 16.11.1995 to 31.3.2000 are not
available. However, establishment produced Form No. 26-C from
1.4.2000 to 31.1.2004 along with list of 30 contractors which are
self employed wherein employer himself is doing work for which
affidavits are produced on record before competent authority. List
of 410 contracts with details of contract, contract amount paid,
labour charges invoiced therein etc. were submitted by petitioner
establishment before competent authority, however, petitioner
establishment failed to produce pay roll, muster roll, names of
labourers etc. and have stated to have paid wages at rate of 16 per
cent of contract amount. This aspect was examined by competent
authority and it was considered that 16 per cent wages is not
considered to be justified and same has not been acceptable and
therefore, 20 per cent wages are considered on contract amount paid
and find out that employer in relation to establishment is liable
to remit dues payable under the Act and Schemes framed thereunder
for period under reference. Dues for period from 11.1995 to 02.2000
could not be determined by competent authority as record is not
available with establishment for reason of natural calamity in shape
of cyclone and earthquake as constrained in affidavit dated
3.8.2004. However, in event if subsequently any fact is discovered
to contrary of affidavit or any claim is advanced by contract labour
for period upto February, 2000 from November, 1995, establishment
shall be liable to make payment on account of provident fund.
Appellate
Tribunal has considered order passed by competent authority under
section 7A of PF Act and only considering definition of employee
under section 2(f) of Act, came to conclusion that it is duty of
principal employer to prepare list of employees engaged by him as
per para 36 A&B. Persons engaged by contractor were working for
appellant means present petitioner establishment and, therefore,
present petitioner being principal employer, having primary
responsibility for payment of contribution and to get necessary
details of workmen employed by contractor. Petitioner had engaged
contractor to execute work, then, it is duty of petitioner to get
necessary details of workmen employed by contractors at commencement
of contract since primary responsibility for payment of contribution
is on principal employer. It was observed that it was also duty of
petitioner company to get temporary identity certificate issued to
workmen and to pay the contribution. It was also observed that since
petitioner failed to do so, it cannot be heard to say that workmen
are unidentifiable. It was observed that in this case, appellant has
not prepared any list nor supplied same to competent authority,
so,at this stage, he is not permitted to say that workmen are not
identifiable. Therefore, appellate tribunal has rejected appeal
preferred by petitioner and confirmed order passed by competent
authority under section 7A of PF Act.
In
light of this back ground, contention which has been raised by
petitioner before this Court in para 15(A) (B),(C),(D) (i) to (vi)
and 15(E) in petition amended as per this Court’s order dated
14.12.2010 are quoted as under:
“15(A)
Petitioners have challenged the order dated 8.9.2010 of the
appellate authority which in fact confirms the order of the
Assistant Provident Fund Commissioner dated 30.9.2004. It is
submitted that the said order is passed on conjectures and surmises
since the same is rendered in utter disregard of the documents on
record. Petitioners further submit that the liability sought to be
imposed on the petitioner can never be fastened as services of all
those people were hired on principal to principal basis and not on
contractual basis. Therefore, the alleged liability totalling to the
tune of Rs.81,11,245/- can never be fastened
on the petitioner company.
15(B) Petitioners
submit that it is pertinent to note that in this case, neither the
alleged contractors nor their employees are available. It is
pertinent to note that even in such cases where the persons are
either not found to be working with the alleged contractors or not
working in the capacity of employees of such contractors and are not
registered with the office of the petitioners or the contractors,
any deposit made by the petitioners is not going to benefit any of
the alleged workers.
15(C)
It is submitted that the amounts paid to various independent
parties are not wages and that therefore there was no question of
deducting any amount therefrom by way of provident fund dues and
therefore no question arises of depositing the alleged PF dues
thereon. Whilst assuming without admitting that they are wages, then
in that case also, there is no question of depositing the entire
share i.e. share of employer and employees, insamuch as at no point
of time any amount from the order value paid to the said
independent parties has been deducted and retained by the petitioner
company. It is true that the petitioner company had produced Form
No.26C containing the names of all such independent parties to whom
various amounts were paid from time to time during the period from
1.4.2000 to 31.3.2004 along with the affidavits of 30 independent
parties which were self employed. For ready reference, copy of the
said Form No. 26C containing
the names of in all 410 parties is annexed hereto and marked as
Annexure C.
15(D) In
order to show the nature of work performed by each of the said
parties long with other information, the petitioners also submitted
various details as indicated hereinbelow.
(i)
Statement containing the names of in all 276 parties along with the
nature of work performed by them with total amount paid to them i.e.
Rs.7,80,21028/- 20% of the said amount coming to the tune of
Rs.1,56,04,206.00 on which alleged PF dues to the tune of
Rs.39,96,237.00 have been worked out.
(ii)
List of 30 parties out of the aforesaid 276 parties referred to in
Statement A along with their respective affidavits which were filed
before the respondents.
(iii) List
of 45 parties of the aforesaid 276 parties along with their
affidavits which came to be filed before the Appellate Authority.
(iv) Statement
B indicating the names of 134 parties with the total amount paid to
them to the tune of Rs.3,88,04,539/- during the period in question
which were engaged for a longer period.
(v) Summary
as regards the calculation of alleged PF dues while assuming that
the amounts i.e. the order value paid to 410 parties and indicated
in statement A and Statement B are wages @ 29 % and 16%
respectively.
(vi) Summary
showing the calculation of alleged PF dues with reference to the
employer share @ 20 per cent and 16% and 16% of the said order
value.
For
ready reference all the aforesaid details are annexed hereto and
collectively marked as Annexure C (colly) If one peruses first
summary of calculation referred to above, it becomes abundantly
clear that if 276 independent parties
indicated in Statement A are excluded, the total liability comes to
the tune of Rs.15,90,055.00 while considering both the shares of
employer and employees. However, in reality when there was no
question of deducting the employees share, at the best, liability of
the petitioner company could be confined to its own share i.e.
employer’s share which come to the tune of Rs.8,45,008.00 with
reference to the parties indicated in Statement B while assuming
that it was only 16% of the total order value which allegedly
represented the alleged wages.
15(E) Petitioners
submit that there is no justification or reasons given by the
respondents for raising the amount of alleged wages from 16% to 20%.
Petitioners submit that though the aforesaid details were produced
by the petitioners and affidavits were also filed stating inter alia
that the parties were not the workers of the petitioners company nor
were they workers of the alleged contractors and that they are self
employed,but unfortunately such details have not been considered by
the respondents as well as by the appellate authority. It was
specifically brought to the notice of the respondents as well as the
appellate authority that the advocate is giving his professional
services whereas other independent parties rendered their services
as principals and despite this, such glaring facts have not been
appreciated by the respondents as well as by the appellate authority
though voluminous material was placed below them.”
Learned
Senior Advocate Mr. KB Trivedi has also emphasized in his
submissions that whatever contentions raised in draft amendment were
also raised before PF Authority in proceedings under section 7A but
those contentions have not been considered either by competent
authority or by appellate tribunal under section 7I of PF Act.
I
have perused affidavit in reply filed by respondent PF Authority. In
affidavit in reply also, same and similar stand has been taken by
respondent PF Authority page 101 to 116. Relevant averments made by
respondent PF Department in para 13 of affidavit in reply which
being answer to amended paragraph 15A and paragraph 14 being answer
to amended paragraph 15B. Except that, no other affidavit is filed
by respondent PF Authority before this Court. Therefore, para 13 and
14 of affidavit in reply filed by respondent PF Department are
quoted as under:
“13. With
regard to amended paragraph no. 15 A, I say and submit that for the
purpose of EPF & MP Act, 1952, the contractors who have worked
for the petitioners and the workers engaged by such contractors
certainly be termed as employees of the petitioners within the
meaning of section 2(f) of the Act. For the sake of brevity, I crave
leave to reproduce the section for ready reference as under:
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 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;]
Bare
perusal of the aforesaid Section, it is abundantly made clear that
the employees engaged through the contractor for the work of the
petitioners establishment for the purpose of compliance of the Act
and it is the prime duty of the petitioners establishment being
principal employer to secure compliance of all the employees of the
establishment including those employed through contractors. More so,
as per the provisions of section 8A read with paragraph 26, 30,
36,36B and 38 of the EPF Scheme, 1952,t he principal duty has been
cast upon the petitioners to secure compliance of such contractor’s
employee being the principal employer. It is pertinent to note that
the petitioners itself has provided list of 410 contractors working
for the petitioner establishment with the details of contract,
contract amount paid, labour charges involved therein, etc. and has
further admitted to have paid wages @ 16% of the contract amount.
However, Respondent/Authority after having taken into consideration
totality of facts and ratio laid down by the Hon’ble Madras High
Court in the case of Regional Director, ESIC v/s. Sundaram Clayton
reported in 2004 LLR 627, deemed fit to consider wages @ 20 % of the
contract amount in absence of non submission of documents like pay
roll, muster roll and wage register in connection with the
contractors by the petitioners. Under the circumstances, the order
dated 30.9.2004 is justified and in consonance with the Act and the
Scheme. It is thus the petition deserves to be dismissed being
devoid of any merits.
14. With
regard to mended paragraph 15B is concerned, I say and submit that
contention raised by petitioners therein that deposit made by the
petitioners is not going to benefit any of the alleged worker is
nothing but an effort to take advantage of their own misdeeds. It is
further submitted that on the one hand petitioners have not
maintained the list of workers, wages paid and muster roll of the
contractor’s employees and/or having chosen not to produce before
the respondent authority during the course of enquiry for the
reasons best known and on the other hand is contending that deposit
made by the petitioners I s not going to benefit any of the alleged
workers, which is in my respectful submission nothing but an after
thought with a view to evade PF liability and circumvent their own
misdeeds. Under the circumstances, it will be just and proper for
this Hon’ble High Court to dismiss the petition with exemplary
cost.”
In
light of this back ground and considering submissions made by both
learned advocates and also considering controversy on factual
aspects as has been raised by petitioner establishment and no
sufficient material and evidence led by petitioner establishment
before competent authority in proceedings initiated under section 7A
of PF Act, whether section 2(f) of Act defining employee
is attracted or not, that question is required to be examined which
is giving definition of employee
because stand taken by petitioner establishment is that contractor
who has been engaged for particular kind of work to be performed by
him but there was no employee of contractor but he himself was
contractor of petitioner and on that basis, contractor himself is to
be considered Principal and there is agreement between principal and
principal and question of engaging any employee by contractor does
not arise. According to my opinion, these facts are required to be
re-examined by respondent PF Authority being facts to be determined
and to consider stand taken by petitioner establishment. For that,
at the relevant point of time, such material was not produced by
petitioner establishment and no oral evidence was led by petitioner
establishment in support of such contentions. Therefore according to
my opinion, decision which has been taken by competent authority
under under section 7A of PF Act is required to be quashed and set
aside so that entire controversy between petitioner establishment
and PF Department could be decided a fresh and that would meet ends
of justice between parties.
I have perused order passed by competent authority under section 7A
of PF Act. I have also perused order passed by Appellate Tribunal
and perusal of aforesaid both orders makes it clear that they have
not satisfactorily examined issue/controversy between parties
perusal of aforesaid both orders makes it clear that this
controversy is still remaining between parties and in exercise of
powers under Article 226/227 of Constitution of India, this Court
cannot re-examine factual aspects and re-appreciated factual aspect
and this Court also cannot appropriately deal with and decide
factual aspects. Therefore, according to my opinion, if order passed
by competent authority under section 7A of Act dated 30.9.2004 as
well as order passed by Appellate Tribunal dated 8.9.2010 in appeal
ATA No. 830(5)04 as well as order dated 24.9.2010 passed by PF
Authority under section 8F of Act are quashed and set aside without
expressing any opinion on merits while remanding matter back to
respondent PF authority to consider aforesaid aspects, this will
meet ends of justice between parties.
Accordingly,
for reasons recorded above, order passed by competent authority
under section 7A of Act dated 30.9.2004 as well as order passed by
Appellate Tribunal dated 8.9.2010 in appeal ATA No. 830(5)04 as well
as order dated 24.9.2010 passed by PF Authority under section 8F of
Act are quashed and set aside without expressing
any opinion on merits and matter is remanded back to respondent PF
Authority with a direction to respondent competent authority to
decide and determine dues of petitioner establishment while
initiating proceedings under section 7A of Act a fresh and give
reasonable opportunity of hearing to petitioner establishment and it
is open for petitioner establishment to produce all relevant and
material documents/records and also to lead oral evidence to
establish contentions/stand before competent authority and competent
authority under section 7A of PF Act is directed to decide afresh
proceedings under sec. 7A of Act while re-examining entire issue and
controversy on the basis of evidence on record, as early as
possible, within period of six months from date of receipt of copy
of present order and thereafter to communicate decision to
petitioner establishment. It is made clear by this Court that while
reconsidering and re-examining matter as per remand order passed by
this Court, naturally competent authority would not be influenced by
earlier order dated 30th
September, 2004 passed by it as well as order passed by appellate
tribunal dated 8th
September, 2010 and will pass appropriate fresh reasoned order on
basis of record available before competent authority without being
influenced by aforesaid orders in accordance with law.
In
pursuance to order dated 24.9.2010, if amount
is transferred by Branch Manager, State Bank of India, Porbandar in
account of PF Department,
then, that amount would remain with PF Department subject to final
out come of remanded proceedings under section 7A of PF Act, meaning
thereby, it is subject to result of proceedings under sec. 7A of PF
Act as per this remand order passed by this Court but if Branch
Manager, State Bank of India, Porbandar has not transferred such
amount in account of respondent PF Department as per order dated
24.9.2010, then, it is directed to Branch Manager, State Bank of
India, Porbandar to transfer such amount from account of petitioner
establishment to account of PF Department immediately, within period
of one week from date of receipt of copy of present order. For that
purpose, registry of this Court is directed to send yadi of this
order to State Bank of India, Porbandar.
In
view of above observations and directions,this Court has not
examined any factual aspects and controversy between parties while
remanding matter and has also not expressed any opinion on merits.
Therefore, order passed by competent authority under section 7A of
Act dated 30.9.2004 as well as order passed by Appellate Tribunal
dated 8.9.2010 in appeal ATA No. 830(5)04 as well as order dated
24.9.2010 passed by PF Authority under section 8F of Act are quashed
and set aside without expressing any opinion on merits while
remanding matter back to competent authority under PF Act to decide
afresh proceedings under section 7A of Act after giving reasonable
opportunity of hearing to petitioner and it is open for petitioner
establishment to lead oral evidence and also to produce documentary
evidence and material before competent authority in proceedings
under sec. 7A of Act and competent authority under PF Act will have
to decide remanded matter strictly in accordance with law as well as
consider documentary and oral evidence which are on record, without
being influenced by earlier orders as referred to above. Rule is
accordingly made absolute to extent indicated herein above with no
order as to costs.
(H.K.
Rathod,J.)
Vyas
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