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TMI Blog2003 (3) TMI 757X X X X Extracts X X X X X X X X Extracts X X X X ..... ents. The third respondent had secured four loans by hypothecation of goods/stocks, etc., and also by the personal guarantee given by the husband of the managing partner of the third respondent. The hypothecated goods/stocks had been insured for a sum of ₹ 12,00,000 with United India Insurance Co. Ltd., Udupi, by the appellant-bank, through the third respondent. It is stated that the premia were paid by the appellant-bank and debited to the cash credit account of the third respondent. It appears the hypothecated goods/stocks stored in the factory premises of the third respondent were destroyed by fire on September 9, 1990. The appellant-bank lodged an insurance claim with United India Insurance Co. Ltd. the third respondent. Since the parties did not agree for any acceptable terms, the dispute was carried on by the third respondent to the Karnataka State Commission for Consumer Redressal under the Consumer Protection Act. The Commission by its order dated January 23, 1995, held that the third respondent is entitled to a sum of ₹ 9,49,168.60 towards principal and interest till the date of payment to it. Having declared so and taking into account the hypothecation agreeme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds as follows : "Now, therefore, in exercise of the powers conferred on me under Sub-section (3) of Section 8F of the Act, you are hereby directed to pay forthwith ₹ 30,217.75 (rupees thirty thousand two hundred and seventeen and paise seventy-five only) by way of demand draft drawn in favour of the Regional Provident Fund Commissioner, Mangalore, from out of the money being held by you on account of and on behalf of the above said defaulting establishment/employer." On receipt of the above notice, the appellant by his letter dated February 13, 1995 addressed to the first respondent informed the first respondent that there is no credit balance outstanding in the account of the third respondent. While informing so, the appellant also informed the first respondent that the third respondent had to pay a sum of ₹ 15,00,000 to the appellant-bank towards its liability. This was followed by an affidavit duly sworn to by the manager of the appellant-bank dated June 18, 1996 as required under Section 8F(3)(vi) of the Act which reads as follows : "AFFIDAVIT I, Sri Krishna M. Shetty, S/o Mynda Shetty, aged about 47 years, resident of Padubidri, do hereby solem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id cashew industry remained a debtor to the bank and that at no time, the bank is or has due any amount to the cashew industry, nor does it hold any money for or on behalf of the said Akshaya Cashew Industry. Nor does the bank hold any assets of the aforesaid cashew industry as to attract the provisions of the Section 11(2) of the said Employees' Provident Funds and Miscellaneous Provisions Act, 1952. On the other hand, the said cashew industry is due and has been due to the bank to an extent of ₹ 5,94,000 (rupees five lakhs ninety-four thousand only) with interest from April 1, 1995, in all its loan accounts. That this affidavit is made and executed in accordance with the provision contained in Clause (vi) of Sub-section (3) of Section 8F of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952. Sworn at Padubidri, D. K. on this 8th day of June, 1996. (Krishna Shetty)." The demand raised by the first respondent was not complied with by the appellant. Since the first respondent has passed the prohibitory order under Section 8F(3) of the Act the appellant-bank being aggrieved by the said action of the first respondent, approached this court b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns of Clause (i) of Sub-section (1) of Section 8F and to sustain the impugned action of the Commissioner, it has to be established that on the date the appellant-bank received the impugned notice issued by the Commissioner, it held the money to an extent of ₹ 30,217.75 due to the employer. The facts are not in dispute. It is seen from the records that a sum of ₹ 15,00,000 or more was due from the employer to the appellant-bank on the day the appellant-bank received the impugned notice from the Commissioner. This position is very much reflected in the reply of the appellant-bank dated February 13, 1995, and also from the sworn affidavit filed under Clause (vi) of Sub-section (3) of Section 8F of the Act. However, it is the contention of learned counsel for the first respondent that the interest and the costs awarded by the Commission could not be regarded as a part of the hypothecated property and, therefore, the appellant-bank is entitled to lay its claim over the interest and costs awarded by the Commission in terms of the hypothecation agreement. This submission is not acceptable to us. The relevant question is, by the time the appellant-bank received a sum of ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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