2001 (11) TMI 951 - HC - Companies Law

Issues Involved:
1. Applicability of Section 22(1) of the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA) to recovery proceedings under the Employees Provident Fund (EPF) Act, 1952.
2. The statutory obligations of the employer under the EPF Act.
3. The power of the Provident Fund Commissioner under Section 14B of the EPF Act.
4. The overriding effect of SICA over other laws including the EPF Act.
5. The rights of employees under the Provident Fund Scheme.

Detailed Analysis:

1. Applicability of Section 22(1) of SICA to Recovery Proceedings under the EPF Act:
The primary issue was whether Section 22(1) of SICA, which provides for suspension of legal proceedings against sick companies, applies to recovery proceedings under the EPF Act. The court held that Section 22(1) does not apply to the recovery of employees' provident fund contributions. The court emphasized that the EPF Act is a welfare legislation aimed at providing social security to employees and that the contributions deducted from employees' wages do not belong to the company but to the employees. Therefore, such amounts must be remitted to the Provident Fund without delay.

2. Statutory Obligations of the Employer under the EPF Act:
The court highlighted the statutory obligations of the employer under the EPF Act to deduct employees' contributions from their wages and remit the same along with the employer's contribution to the Provident Fund within 15 days of the close of every month. The employer's failure to do so would attract damages and other penal consequences under Section 14B of the EPF Act.

3. Power of the Provident Fund Commissioner under Section 14B of the EPF Act:
Section 14B of the EPF Act empowers the Central Provident Fund Commissioner to recover damages from employers who default in payment of contributions to the Provident Fund. The court noted that while the Central Board has the power to reduce or waive such damages for sick industrial companies, no such provision exists for exempting the employer from remitting the employees' contributions.

4. Overriding Effect of SICA over Other Laws:
The court examined the interplay between SICA and other laws, including the EPF Act. It referred to various judgments of the Supreme Court, including Maharashtra Tubes v. S.I.I.C. of Maharashtra and Gram Panchayat v. Shree Vallabh Glass Works Ltd., to conclude that while SICA provides for the revival and rehabilitation of sick industrial companies, it does not override the statutory obligations under the EPF Act. The court held that the provisions of the EPF Act, particularly regarding employees' contributions, do not fall within the purview of Section 22(1) of SICA.

5. Rights of Employees under the Provident Fund Scheme:
The court underscored the importance of protecting the rights of employees under the Provident Fund Scheme. It noted that the contributions deducted from employees' wages are their hard-earned money and must be remitted to the Provident Fund promptly. The court emphasized that the EPF Act is a social security measure in line with the directive principles of state policy contained in Part IV of the Constitution of India. Therefore, the recovery of provident fund dues cannot be stayed under Section 22(1) of SICA.

Conclusion:
The court dismissed the appeal, holding that the provisions of Section 22(1) of SICA do not apply to the recovery of employees' provident fund contributions under the EPF Act. The court affirmed that the statutory obligations of the employer under the EPF Act must be fulfilled, and the employees' contributions must be remitted to the Provident Fund without delay. The court also noted that while the Central Board can reduce or waive damages under Section 14B for sick industrial companies, this does not exempt the employer from remitting the employees' contributions. The judgment underscores the importance of protecting employees' rights and ensuring compliance with social security measures.

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