Bank of Baroda vs The Recovery Officer and Others

A.S. Bopanna, J.—The petitioner is before this Court assailing the summons/notice dated 26/02/2007, the order dated 15/03/2007 as also the order dated 25/06/2007. They are impugned at Annexures "C, F and H" respectively.

The establishment known as M/s. Sree Krishna Lodging and Boarding, Bijapur, a proprietary concern owned by one Sri. Santhosh Krishnarao Shetty was required to pay the ESI contributions. The said establishment also had certain bank transactions with the petitioner bank as they had maintained an over draft account. Since the said establishment was due to pay ESI contributions to the respondents herein, an attachment notice dated 03/10/2002 to pay a sum of Rs. 65,892/- was issued.

The petitioner bank contends that fixed deposit dated 16/10/2000 which was available with accrued interest for Rs. 26,548/- was pre-closed and a sum of Rs. 13,900/- which was due to the petitioner bank had been appropriated and the balance sum of Rs. 12,648/- was remitted to the first respondent as required under the attachment order. The petitioner, therefore, contends that the obligation of honouring attachment order had come to an end on such amount being remitted to the first respondent. The respondents, however, contending that the petitioner had not paid the amount from the account of the establishment, had issued summons dated 26/02/2007. Subsequently, the order dated 15/03/2007 under Section 45G of the ESI Act was passed holding the petitioner to be a deemed defaulter and an amount of Rs. 47,211/- payable by M/s. Sree Krishna Lodging and Boarding was sought to be recovered from the petitioner. Pursuant to the same, a notice dated 25/06/2007 under Section 45-G is also issued to the petitioner. It is in that view, the petitioner claiming to be aggrieved is before this Court.

A perusal of the papers would disclose that the petitioner bank by themselves are not liable to pay the amount to the respondents. In the instant facts, the petitioner is, in law, considered to be deemed defaulters since according to the respondents, the petitioner bank has not fulfilled the legal obligation of attaching the amount from the account of M/s. Sree Krishna Lodging and Boarding. It is in that view summons was issued to hold a proceedings in this regard under Section 45-G of the ESI Act and having passed the order, recovery is sought to be made.

A perusal of the order dated 15/03/2007, at Annexure "F" to the petition would disclose the details relating to the claim made by the respondents from M/s. Sree Krishna Lodging and Boarding to the tune of Rs. 65,892/-. Since the petitioner has paid a sum of Rs. 12,648/- only which was available, the respondents are claiming the amount of Rs. 47,211/- from the petitioner bank. The case of the petitioner bank is that the fixed deposit that was available with them has been pre-closed. The order dated 15/03/2007, however, indicates that the first respondent has passed the order more in the nature of default order since the petitioner had not participated in the said proceedings and produced the documents to indicate that as on the date the claim was made by the respondents with the petitioner, the amount to the account of M/s. Sree Krishna Lodging and Boarding, Bijapur, was not available. It is in that view, the petitioner has been held to be a deemed defaulter in respect of the amount due and payable by the covered establishment.

Having taken note of the contentions put forth in the instant petition, a proper adjudication could be made by the respondents only if the petitioner appears before the respondents and produce all the documents to show that the amount which was available with them has been paid to the first respondent and they have not committed any default in closing any of the accounts of the said covered establishment. Hence, taking note of these aspects, I am of the opinion that the matter would require reconsideration by the first respondent. To enable the same, the order dated 15/03/2007 Annexure "F" and the notice dated 25/06/2007 (Annexure H) are quashed. The matter is remitted to the first respondent who shall issue a fresh notice to the petitioner and provide an opportunity to put forth all contentions and thereafter pass fresh orders in accordance with law.

The petitioner is accordingly allowed in part.