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TMI Blog2016 (6) TMI 339X X X X Extracts X X X X X X X X Extracts X X X X ..... tive Home Fashions Pvt. Ltd. (Company). The respondents no.5 to 9 are stated to be Directors in each of the respondents no.2 to 4 Companies. 4. It is inter alia the claim of the petitioner Assistant Provident Fund Commissioner that the petitioner has a charge over the properties being auctioned on account of Provident Fund (PF) dues owed by the respondent no.2 Company. 5. The respondent no.1 Bank had attempted sale of the aforesaid properties as far back as in the year 2011 and which sale has been held up since then for the reason of the said objection of the petitioner. 6. Earlier, the petitioner passed orders dated 20th January, 2012 prohibiting the respondent no.1 Bank from auctioning the said properties, compelling the respondent no.1 Bank to file W.P.(C) No.1726/2012 in this Court impugning the said orders of the petitioner. The said writ petition remained pending in this Court till 30th July, 2014 when it was allowed, reasoning that the respondents no.3&4 Companies are separate juridical entities than the respondent no.2 Company which is stated to owe PF dues to the petitioner and that the assets of the respondents no.3&4 Companies cannot be proceeded against for r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fted the corporate veil and held the respondents no.5 to 9 directors of the respondent no.2 Company to be the owners of the properties aforesaid at Noida being auctioned by the respondent no.1 Bank and attached the said properties for the recovery of PF dues of Rs. 2,96,87,014/- and penal damages / interest to the tune of Rs. 3,44,77,868/- owed by the respondent no.2 company. 9. I have enquired from the counsel for the petitioner as to what is the power of the petitioner or its Recovery Officer to lift the corporate veil. 10. The counsel for the petitioner, save for generally stating that the petitioner exercises judicial functions, is unable to cite any provision under which the petitioner may have been authorised by law to undertake an exercise as of lifting of corporate veil. 11. The order dated 17th May, 2016 is in a proceeding under Sections 8B to 8G of the PF Act and which provisions also are not found to be so authorising or empowering the petitioner. Section 8B authorises the petitioner to issue to the Recovery Officer (RO) a certificate specifying the amount of arrears and empowers the RO to on receipt of such certificate proceed to recover the amount "from the establi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at mask for not being treated as a related person when, in fact, it was one and the same person; however again, what was for adjudication was the applicability of Section 4(1)(a) of the Central Excise and Salt Act, 1944 dealing with sales 'not to a related person'; (c) M/s L. N. Gadodia and Son Pvt. Ltd. Vs. Regional Provident Fund Commissioner MANU/DE/9834/2007 where also clubbing of the employees of two companies for applying the provisions of the PF Act was upheld; (d) G.V. Films Ltd. Vs. S. Priyadarshan MANU/TN/2550/2005 where a Single Judge of the High Court of Madras to have held that the Tax Recovery Officer, acting under Rules 82 and 83 of the Second Schedule to the Income Tax Act, 1961, is entitled to lift the veil of corporate entity and pay regard to the realities; though a number of judgments were relied upon but if I may respectfully say so, none is with respect to the power of the authorities such as the petitioner herein or its RO and are in the context of the power of the Court to lift the corporate veil; (e) M/s. Gujarat Sweet Mart Vs. Regional Director, Employees State Insurance MANU/MH/0378/2014 holding that in the matter of realisation of sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s held to be not liable for provident fund dues of its subsidiary. 16. In my view, corporate veil can be lifted either where it is permitted by a statute or where it is contractually so agreed or under the common law. 17. The question is not whether the corporate veil can be pierced or not. It definitely can be. There is also no doubt that avoidance of statutory liabilities under a social welfare legislation is a reason enough to lift the corporate veil. The question which however arises for adjudication is, whether the corporate veil can be pierced/lifted by the authorities under the PF Act. Again, in my view, corporate veil can be pierced by the authorities under a statute only where the statute itself permits lifting of corporate veil for realisation of dues thereunder. A perusal of the PF Act with the Second and Third Schedules of the Income Tax Act, in my opinion, neither provides for corporate veil to be pierced nor empowers the authorities under PF Act to lift corporate veil to recover the dues of one company from another. Lifting of corporate veil entails adjudication of facts and which I do not find the authorities under the PF Act to be empowered to do. Merely because ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the property, it may take another five years or so and of which there is no certainty also as of now. On the contrary, the respondent no.1 Bank is on the threshold of selling the property and realization of sale proceeds thereof. It is not deemed appropriate to at this stage interfere with such sale. 21. I need in this context refer only to Vikas Singh Vs. Lieutenant Governor 227 (2016) DLT 333 (DB), Manisha Sharma Vs. Commissioner of Delhi Police MANU/DE/3411/2015 and Delhi Development Authority Vs. Manav Shiksha Samiti (Regd.) MANU/DE/0815/2012 (DB) holding that this Court in exercise of power under Article 226 of the Constitution of India is empowered to deny a relief even if the petitioner is entitled thereto, if otherwise granting of such relief is not found to be just or proper. I fear that if this Court were to interfere with the sale today and / or to entertain this petition, the property will be wasted further, benefiting neither the petitioner nor the respondent no.1 Bank and may be to the benefit of the respondents no.2 to 9. 22. There is another reason for not entertaining the petition. I am of the view that the petitioner if aggrieved from the measures taken by th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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