9911796707
TMI Blog2011 (3) TMI 1824X X X X Extracts X X X X X X X X Extracts X X X X ..... nd Commissioner, however, submits that this liability has been rightly fastened due to the provisions of Section 17-B of the Employees Provident Fund and Misc. Provision Act, 1952 (for short the Act ). The extent of liability as created by Section 17-B of the Act, thus, is an issue requiring determination in this case. First the facts M/s Goindwal Cooperative Spinning Mills Limited was registered as a society with the Registrar of Cooperative Societies and was allotted a provident fund code under the provisions of the Act. Due to heavy losses suffered by this concern, the Unit was closed down permanently. In fact, Registrar Cooperative Societies had issued an order winding up the Society and had appointed official liquidator to settle the claim of debtors and creditors. On 11.1.2006, the official liquidator put this concern to sale by auction. The present petitioner was the highest bidder with the offer of ₹ 536 lacs and purchased this Unit as a composite unit. An agreement to sell was entered into between the petitioner company and the official liquidator. The detailed terms of the agreement have been placed on record as Annexure P-3. Some of the important con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a fresh application being made, the new P.F. Code No.34385 was issued to the petitioner company on 14.1.2009. The petitioner company, thus, received the order with shock whereby statutory liability of ₹ 35,78,931/- was fastened on the petitioner company by invoking the provisions of Section 17-B of the Act. Concededly, this liability to pay the provident fund was that of M/s Goindwal Cooperative Spinning Mills and, thus, the petitioner has filed the present petition to impugn this order by pleading that petitioner concern cannot be held liable to pay provident fund liability even under Section 17-B of the Act. Regional Provident Fund Commissioner in its reply would term this writ petition to be totally misconceived. Besides stating that appeal would be maintainable for challenging the order under Section 14-B of the Act, it is urged that this amount is due from the transferrer. It is then pointed out that M/s Goindwal Cooperative Spinning Mills was covered by the provisions of the Employees Provident Fund Misc. Provisions Act and had not deposited the provident fund dues from January, 2002 to March, 2002 and had further not deposited the provident fund dues for different ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned by him by such transfer.] Plain and simple reading of the provision would show that an employer if transfers any establishment in whole or in part, by sale, gift, lease or licence or in any other manner whatsoever, then he alongwith the person to whom the establishment is so transferred can be jointly and severally held liable to pay contribution and other sums due from the employer under the provisions of the Act. As per the proviso, the liability of the transferee is limited to the value of the assets obtained by him by such transfer. The counsel for the petitioner has raised more than one ground to attack the impugned order, which, according to him can neither be sustained in law nor in equity. The order dated 3.8.2009 addressed to the petitioner talks of recovery of statutory dues in respect of M/s Goidwal Cooperative Spinning Mills and after reproducing the provisions of Section 17-B of the Act, reads as under:- The possession of the M/s Goindwal Co-Op Spinning Mills Ltd., Goindwal Sahib, Tarn Taran has been handed over to M/s Tayal Energy Limited. M/s Tayal Energy Ltd., had been the highest bidder and the sale deed of the assets and property of the M/s Goind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is taken over or transferred to the new establishment under any contract or arrangement, the establishment of the new industrial unit would have no liability whatsoever to pay any amount on account of PF contribution and other charges for the period prior to its coming into existence. It is not a matter of much dispute that the petitioner concern has not continued with any activity of the erstwhile unit. It has not only changed the name but has started entirely different and new manufacturing activity and has employed its own work force. None of the earlier worker has been employed by the petitioner. Reference here can be made to the case of The Provident Fund Inspector, Trivandrum Vs. The Secretary, N.S.S. Co-operative Society, Changanacherry, AIR 1971 SC 82 to show that the burden of providing proof that old establishment had continued and the new establishment was not set up would be on the authority assessing the same i.e. Provident Fund Inspector in this case as it had filed a criminal case for prosecution of the respondent in the above noted case. Since this aspect clearly comes out from the pleadings and has not been seriously refuted by the respondent- Regional Fund Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ransfer, which was the situation in the said case. In this case, respondent establishment was covered under the provisions of Act and was under the control of the State Government prior to June 30,1981. Thereafter, a separate corporation was constituted, which was entrusted with the affairs of the respondentestablishment. There was default in payment of contribution from 1978 to October 1987. The Provident Fund Commissioner passed an order under Section 14-B of the Act, which order was challenged before the High Court. Single Judge allowed the writ petition, which was appealed against and the Division Bench has taken a view as noted above. Similar was the argument raised in this case by counsel appearing for the Provident Fund Commissioner, who urged that transferee establishment was jointly and severally liable alongwith the transferor to pay dues under Section 14-B by virtue of Section 17-B of the Act irrespective of the fact whether the scheme of taking over provides for taking over of the liability under Section 14-B of the Act or not. The Division Bench, after distinguishing the ratio of law laid down in Vitro Pharma Products Company Limited Vs. R.P.F. Commissioner, 1986 I LLN ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Calcutta High Court had made some observation in this regard while dealing with the liability of a transferee unit in the context of the provisions of Section 14-B, 15(2) and 17(5)(b) of the Act. It is noticed that these Sections contemplates a period and/or stage prior to transfer of establishment. Section 17-B on the other hand contemplated stage post transfer. This aspect has been highlighted by noticing the words and expressions used in the Section, reading the employer and the person to whom the establishment is so transferred shall jointly and severally be liable to pay contribution and other sum due from the employer. it is accordingly noticed that the employer and the other person to whom the establishment is transferred clearly indicates that the transferee does not come within the meaning of employer as in Section 2(e) of the Act. Under Section 17-B of the Act, transferee is the other person . Accordingly, it is noticed that there is a distinction between `employer' and 'the other person'. The other person comes only after transfer of establishment either in whole or in part. The absence of expression `the other person' in Section 14-B of the Act clea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction company acting under and as per the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, was not held to be an employer for the purpose of Section 17-B. It is further observed that Section 17-B can be invoked when voluntary transfer of establishment is made by an employer in default. Auction sale/purchase is not to be held pulled to bring it in the influence zone of Section 17-B. For the same view, reference can be made to M/s Suburban Ply Panels (P) Ltd. Vs. Regional Provident Fund Commissioner and others, 2004 Lab.I.C.1190, Vitthal Sahakari Sakhar Karkhana and Anr. Vs. Assistant Provident Fund Commissioner, Aurangabad Ors., 2008 Lab.I.C. (NOC) 683 (Bom.) and Regional Provident Fund Commissioner, Mangalore Vs. M/s Karnataka Forest Plantations Corporation Ltd., Bangalore, 2000 Lab.I.C. 1268. It is viewed that Section 17-B of the Act can not be interpreted to mean that transferee employer would be liable also to pay penalty for default committed by previous employer during the period anterior to the transfer. The different High Courts have consistently viewed that transferee would be liable only if it is voluntary transfer i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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