2001 (7) TMI 1160 - HC - Companies Law

Issues Involved:
1. Challenge to demand notices for employer's provident fund contributions.
2. Applicability of Section 22(1) of the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA) over the Employees' Provident Funds and Miscellaneous Provisions Act, 1952.
3. Legality of attachment of bank accounts.
4. Judicial interpretations and precedents related to statutory dues recovery from sick companies.
5. Procedural aspects and remedies available under the Employees' Provident Funds and Miscellaneous Provisions Act, 1952.

Detailed Analysis:

1. Challenge to Demand Notices:
The petitioner challenged the demand notices issued by the respondent authorities, which called for payment of Rs. 65,56,417 as employer's contribution under the Employees' Provident Funds and Miscellaneous Provisions Act, 1952. The petitioner argued that the company is a sick company under Section 3(1)(o) of the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA), and thus, proceedings for recovery should be stayed under Section 22(1) of the SICA.

2. Applicability of Section 22(1) of SICA:
The petitioner contended that Section 22(1) of the SICA, which stays proceedings for execution or distress against the properties of a sick industrial company, should prevail over the Employees' Provident Funds and Miscellaneous Provisions Act, 1952. The petitioner cited several judgments, including Maharashtra Tubes Ltd. v. S.I.I.C. of Maharashtra and Damodaran (M.V.) v. Registrar of Co-operative Societies, to support their argument that statutory dues recovery should be stayed under Section 22(1).

3. Legality of Attachment of Bank Accounts:
The petitioner argued that the attachment of their bank account was wrongful and that the respondent did not consider their representation or the fact that they had already paid the employees' contribution. The respondent, however, maintained that the attachment was legal under Section 8B(a) of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952.

4. Judicial Interpretations and Precedents:
The petitioner relied on various judicial interpretations to argue that Section 22(1) of the SICA imposes a restriction on the recovery of statutory dues, including judgments in Gram Panchayat v. Shree Vallabh Glass Works Ltd., Industrial Finance Corpn. of India v. Maharashtra Steels Ltd., and Tata Davy Ltd. v. State of Orissa. The respondent countered with judgments such as Palliwolf Ltd. v. Regional Provident Fund Commissioner and Vikram Poddar v. Regional Provident Fund Commissioner, arguing that statutory liabilities, including provident fund dues, cannot be indefinitely withheld.

5. Procedural Aspects and Remedies:
The respondent argued that the petitioner had not exhausted the statutory remedy of appeal under Section 7-I of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952, and thus, the writ petition was not maintainable. The court noted that the petitioner had not taken steps to challenge the demand notice through the appropriate statutory channels.

Judgment Analysis:
The court concluded that the petitioner had no right to take shelter under Section 22 of the SICA for statutory liabilities under the Employees' Provident Funds and Miscellaneous Provisions Act, 1952. It was noted that the amendment to the Employees' Provident Funds Act in 1988 took into account the existence of the SICA, and thus, the SICA could not be said to prevail over the Provident Funds Act. The court emphasized that statutory dues must be paid, and Section 22(1) of the SICA cannot be interpreted to allow the petitioner to avoid their statutory obligations. The petition was dismissed, and no costs were awarded.

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