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Judgment
Ruma Pal, J.—This appeal was filed from an order dismissing an application for further interim orders in a writ application. The Appellant company and its directors had filed the writ application challenging (a) the notice of demand dated September 16, 1993 relating to the provident fund dues and other contributions liable to be paid by the Appellant company for the period March, 1983 to February, 1993 amounting to Rs. 1,32,01,838.05 ; (b) notice to appear u/s 7A of the Employees Provident Fund and Miscellaneous Provisions Act, 1982 (hereinafter referred to as the Act) in respect. of the period March 1983 to February, 1994 ; (c) criminal cases pending in the Court of the Metropolitan Magistrate in respect of Provident fund dues of the Petitioner for the period March, 1983 to February, 1994 and (d) certificate proceedings initiated by the Regional Provident Fund Commissioner against the Petitioners for the period March, 1983 to February, 1994 for recovery of dues.
On July 7, 1994 the Appellants filed a supplementary affidavit in the writ in which it was stated that in proceedings before the Board of Industrial and Financial Reconstruction (BIFR) under the Sick Industrial and Reconstruction (Special Provisions) Act, 1985, the Appellant company had been directed, inter alia, to deposit a sum of Rs. 44 lakhs with the Indian Overseas Bank (hereinafter referred to as SOB) in a ''no lien'' account. The Appellant company had deposited a sum of Rs. 33 lakhs with the IOB. According to the supplementary affidavit, more than Rs. 43 lakhs had accumulated in the account. It was also stated in the supplementary affidavit that the Appellant company had been directed to be wound up by the BIFR. An appeal had been preferred before the Appellate Authority which was pending. It was therefore, prayed that the Manager IOB should be made a party to the proceedings so that the Appellant company could make payment of a sum of Rs. 30 lakhs out of the amount lying with the IOB to the Provident Fund Authorities. It was also stated that the Respondents should be restrained from initiating any proceedings either criminal or certificate proceedings for any alleged defaults in the payment of provident fund dues for the period March, 1983 to February, 1994. The initiation of the criminal and recovery proceedings was challenged on the ground that the provisions of Section 7A of the Act had not been complied with.
What the Appellants had not stated either in the writ petition or in the supplementary affidavit was that the writ petition was the 12th writ petition filed against the provident fund authorities by the Appellants since 1976.
The Appellant company is admittedly covered by the Act as well as the Scheme framed under the Act. According to the Provident Fund Authorities, the Appellant company committed default in making payment of its dues under the Act from February 1976. Criminal cases were initiated in respect of default covering the period from February 1976 to April 1976. According to the Authorities, the determination had been made u/s 7A and Notices of demand had been issued. This started a series of litigation a tabulation of which will make it abundantly clear as to how the process of Court has been misused by the Appellants to avoid payment of their statutory liabilities:
SI. No.
Date
Writ Petn. No.
Period/Amount
Order/Compliance
1.
Aug. 31, 76
C.R. No. 1131-4 (W)/76
2/76 - 4/76
Interim order staying all Cr. cases against Appellant.
2.
July. 18, 77
CR. no. 3925 (W)77
Rs. 184000.00
Installment of Rs. 50,000/- p.m. Default after July 78
3.
Sept. 12, 79
C.R. No. 10451 (W)/79
Rs. 5.78 Lacs (approx.)
Monthly installment of Rs. 25,000/- . Cr. Proceedings stayed. Default from 9/79
4.
Oct. 7, 82
Rs.13 lacs(appx)
Staying Criminal Proceedings subject to payment of installment of Rs. 25000/- p.m. Default from 7/1983.
5.
Sept. 16, 83
Rs. 15,44,877.50
Cr. cases stayed subject to payment of arrear by monthly installment of Rs. 25000/ Default from Dec.83
6.
June 8, 84
Rs. 20,93,285.75
Interim order staying all proceedings
subject to payment of arrears by monthly installment of Rs. 25000 Default from 9/84
7.
April 16, 85
Rs. 26,69,291
Interim order staying all proceedings subject to payment of arrears at Rs. 25000 per month.
8.
May 12, 87
Rs. 44,6921
Interim order staying all proceedings subject to payment of Rs. 1.5 lacs per month towards arrears.
8(b).
Sept. 14, 87
Appeal
Interim order staying all proceedings subject to payment of Rs. 80000 p.m. Default from 11/87
9.
Dec. 23, 88
Rs. 5166327/-
Final Order staying all proceedings subject to payment of monthly installments.
Order modified on 23.12.88 extending time to make payment of installments. Default.
10.
June 1990
Pending
11.
Nov. 1990
C.0. 14502 (W)/90
Rs. 4822862 (3546327: arrears + 1276535: current dues from 12/88)
Interim order staying all proceedings against the Appellant till 15.1.91 subject to the payment of Rs. 5 lacs writ pending. Application for further interim order pending
12
April 25,1994
C.O. 8869 (W)/94
13201838.05 between 3/83 to 2/93 and 3702256/- from 3/93 - 2/94
Interim order July 7, 94
Application for further interim order --Dismissed dt. July 12, 95
The order which was passed on July 7, 1994 in the 12th writ petition added the Manager, Indian Overseas Bank as a party. It also directed the Manager to pay a sum of Rs. 30 lakhs out of the amount lying deposit in the ''no lien'' account to the Provident Fund Commissioner at once preferably within a period of 12 days from the date of production of xerox copy of the order. The Appellants were directed to go on pay off a sum of Rs. 1,50,000 by the 7th of each succeeding month. On failure to pay any two instalments the stay was to:
automatically come to an end. This order is in respect of the outstanding provident fund dues. So far as the subsequent dues are concerned, according to the Learned Counsel for the R.P.F. Commissioner an order u/s 7A has been passed which, according to the Petitioners, is an exparte order and that at least an opportunity was not afforded to the Petitioner before passing such order. If the allegation of the Petitioner is correct, there is a remedy provided u/s 7A Sub-clause 4, and if such an approach is made by the Petitioners the authorities will look into the matter and pass appropriate order in accordance with law within a period of three months from the filing of such an application if filed within a period of two weeks from today.
In the normal course this Court is not inclined to pass an order of stay in such matters where provident fund dues are outstanding and there have been failure on the part of the employer to make payment, but looking into the fact and circumstances of the case that this is a sick industrial unit and rehabilitation proceedings are likely to take place and if for the recovery of an amount of outstanding dues coercive method takes place it may be difficult for the Unit to revive. In these circumstances, during the pendency of the application u/s 7A(4) if filed within two weeks from date, the authorities will withhold the recovery proceedings against the Petitioners in pursuance of Annexure B to the writ petition commencing from 3rd March, 1983 to February, 1993.
A subsequent application filed on July 12, 1995 was made on the basis that the Manager 10B had failed to comply, with the order dated July 7, 1994. It was accordingly prayed that the Manager should be directed to pay a sum of Rs. 30 lakhs out of the deposit no lien account to the Regional Commissioner, Provident Fund, West Bengal and that the Appellants be given liberty to pay the balance arrear dues for the period March 1983 to February, 1994 by instalments. The second prayer was for stay of all criminal and further proceedings initiated in 1989 being approximately 98 in number filed in respect of the period March 1983 to February, 1994.
It was this application which was dismissed with the following observation:
In my view, no further order need be passed on the application for further interim order since that order is already on record. It will however be open to the concerned parties to make application for enforcement of the order. In the result, the application for Interim relief is disposed of.
Learned advocate for the Respondent submits that since no affidavit in opposition has been filed by the provident fund authorities the allegations contained in the writ petition shall not be deemed to have been admitted by the authorities.
There will be no order as to costs.
This appeal was thereafter preferred from the order dated July 12, 1995. Before dealing with the proceedings in the Appeal Court it is to be noted that in the meantime, four days earlier, or. June 8, 1995 a 13th writ petition was filed by the Appellant being Company No. 8678 (W) of 1995. It was not mentioned in this writ petition either that an earlier writ petition had been filed in respect of the same period. An interim order was passed on June 8, 1995. This order did not touch the period March, 1993 to February, 1994 which was the subject matter of the 12th writ petition. As far as the period March, 1994 to November, 1994 the criminal cases filed in respect thereof were stayed till disposal of the writ petition subject to the outstanding dues in respect of that period amounting to Rs. 17,97,006.00 (our of which Rs. 6 lakhs had been paid), being paid in specified instalments pending which the certificate proceedings relating to the period was stayed. This writ application is pending.
To. return to the appeal from the order dated July 12, 1995 passed on the 12th writ petition, an application was filed before the Appeal Court on December 18, 1995 (hereinafter referred to as the first application) in which an order was passed on May 30, 1996. In that application nothing was stated either about the filing of the 11th writ petition or the filing of the 13th writ petition. The order dated May 30, 1996 in so far as it is relevant reads as follows:
Indian Overseas Bank, Indian Exchange Place Branch, is directed to make over the sum of money lying deposited with them in terms of the order of the BIFR dated April 22, 1991, in the No lien account. Such money along with all the accruals thereof be made over to the Registrar, Appellate Side, within a period of three weeks from the date hereof. Registrar, Appellate Side is directed to invest the same in a short term deposit, nor more than 181 days, with the United Bank of India, High Court Branch, being a nationalised bank. Registrar, Appellate Side, shall hold the same subject to further orders of this Court.
The Appellants/Petitioners herein are directed to continue to deposit with Regional Provident Fund Commissioner the sum of money, as directed, month by month and every month until further orders of this Court and arrears, if any, be paid to the Regional Provident Fund Commissioner within a period of eight weeks from the date hereof. In the event of there being any default in payment of any one of the monthly instalments or the failure to pay the arrears within the time stipulated above in this order, the Regional Povident Fund Commissioner would be at liberty to take appropriate steps and to proceed against the Appellants/Petitioners in accordance with law. In the event, however; such installments are paid in terms of the order as also the arrear as noted above, then and in that event, the Regional Provident Fund Commissioner shall not take any further steps as regards criminal proceedings, being the subject matter of the writ petition pending before the Learned Trial Judge until further orders.
The Learned Advocate on record for the Bank is directed to serve a copy of the application for stay on the Appellants/Petitioners.
Xerox certified copy of this order, if applied for, be supplied with utmost expedition and not later than 15th June, 1996.
The first application was dismissed for non-prosecution on February 9, 1996. It was restored on an application filed on July 9, 1996. A second application was filed in the appeal by the Appellants for modification and variation of the order dated May 30, 1996. In this application a prayer was made that the Manager, United Bank of India should pay a sum of Rs. 40 lakhs out of total deposits of Rs. 46,99,251.00 to the Regional Provident Fund Commissioner and for a direction on the Regional Provident Fund Commissioner to adjust Rs. 30 lakhs against arrears and Rs. 10 lakhs against the current dues. An interim order of injunction was also prayed to restrain the Respondents from initiating any proceeding for any provident fund dues upto May, 1996. On August 5, 1996 an interim order was passed adjourning the application for two weeks. In the meantime no further step was to be taken in respect of the subject matter of the application. The application for modification was disposed of by an order dated August 20, 1996 by directing:
(1) the money lying deposited in United Bank of India by the Registrar Appellate Side should be transferred by him to the extent of Rs. 40 lakhs with interest in favour of the Regional Provident Fund Commissioner within 2 weeks and the Provident Fund Commissioner was to hold the money on account of arrear Provident Fund Dues; (2) restraining the Appellant company from dealing with or disposing of any of its assets or selling or alienating or transferring the same except in the usual course of business until the entire dues of its creditors including the Provident Fund dues are paid up with interest; (3) the Appellant was to go on paying monthly installments of Rs. 1 lakh. If the company reopened it was to clear the entire arrears of provident fund dues in 12 equal monthly installments; and (4) in default of paying any instalment of arrears or current dues the interim order passed on May 30, 1996 would stand vacated.
it was noted in the order that admittedly upto April, 1995 an amount of Rs. 2 crores was due out of which the Appellant had paid a sum of Rs. 32 lakhs by installments.
A third application was made in the appeal on November 15, 1996 for modification and variation of the interim order passed on May 30, 1996. It is stated in this application that the Manager, United Bank of India had not complied with the order dated August 28, 1996 and also that the Appellant had paid an amount of Rs. 2 crores in terms of the order dated August 28, 1996. In the application the prayers are for an order directing the Manager, United Bank of India to pay the sum of Rs. 40 lakhs out of the total deposits of Rs. 46,99,251.00 for repayment of the arrear and current dues ; an order directing the Regional Provident Fund Commissioner to adjust the said payment of Rs. 30 lakhs against the arrears and Rs. 10 lakhs against the current dues and for an ad interim order of injunction restraining the Provident Fund Commissioner and his officers from initiating any further certificate order or criminal proceeding in respect of any provident fund dues up to the month of May, 1996.
The first point which needs to be noted is that the prayers in the third application are a verbatim reproduction of the prayers in the second application.
After the filing of affidavits the third application was listed before this Court on February 11, 1997.
Counsel for the parties agreed that the appeal could be heard and disposed of on the basis of the papers available. The appeal was accordingly directed to be listed before this Court.
The submission on the Appellant on the merits is that the Respondent authorities have initiated proceedings one after another including that criminal cases without any valid determination of the dues u/s 7A of the Act. It was also submitted that as the Appellants had paid an amount of approximately 37.13 lakhs in respect of the provident fund dues they should be granted time to pay the balance principal dues as on July 16, 1996 on account of provident fund of Rs. 1,89,00,000.96.
The scope of the appeal has been widened considerably by the various applications made by the Appellants. The only question before this Court in the appeal was whether the order dated July 12, 1995 was justified. In our view no exception can be taken to the order at all. The Learned judge was. perfectly justified in saying what he did. If the Manager, Indian Overseas Bank had failed to comply with the order dated July 7, 1994, the Appellants could not make a further application for the same relief. The appeal has in any event become in fructuous by virtue of the various orders passed in the appeal.
We are of the view that the Appellants had been filing applications after applications before the Court and obtaining orders by which they have not only successfully avoided the criminal liability under the Act but also enjoyed the protection of the Court from recovery proceedings. At least in the 12th writ application in which the order under appeal was passed, no mention had been made of the earlier writ proceedings and the orders passed thereon and the repeated defaults by true Appellants in complying with those orders. The Appellants have resorted to a form of legal jugglery which is to be condemned.
The two challenges raised to the action of the provident fund authorities also appear to be without any merit. The provident fund commissioner in his affidavit in opposition, filed in answer to the third application in the appeal, has stated that there was a determination of the dues u/s 7A of the Act and notices of demand had duly been issued. It was also stated that. in several of the cases the Appellants rushed to the Court and filed applications under Article 226 whew tree provident fund authorities issued notices cabling upon them to show cause as to why action should not be taken against them. Apart from the aforesaid in several of the orders as noted earlier before this Court the Appellants have .from time to time admitted that diverse amounts were due to the Provident Fund-Authorities. Even now they admit of approximately Rs. 1,89,00,000.96 is due. In addition, the Appellants have themselves repeatedly defaulted in payment of the installments granted by the Courts from time to time and as such in terms of the orders of the Court the Provident Fund Authorities were free to take action against the Appellants not only in respect of the criminal cases in respect of which 12 writ petitions had been filed, but also in respect of the certificate proceedings initiated in respect thereof.
It is of significance that the Appellants have not paid the installments fixed by-the Learned Single Judge either in the 13th writ petition or by the Appeal Court in the first two applications. This is clear from the statement handed up by the Appellants to this Court as Jo the amounts paid by the Appellants towards provident fund dues.
It was sought to be argued before this Court that the direction in the Second application in this appeal on the Registrar, Appellate Side, to transfer the amounts of Rs. 40 lakhs lying with the United Bank of India to the Respondent No. 1 was wrong in that no account had been opened by the Registrar pursuant to the order of Court. This submission is unacceptable to this Court. The initial order passed on the first application on May 30, 1996 was a direction on the Manager, 10B to make over the amount deposited in the ''no lien'' to the Registrar, Appellate Side who in turn was directed to invest the same in a short term fixed deposit. The 10B therefore could not. have handed over the amount in a manner other than that specified in the order. If the 10B had done so it would be in gross contempt of the Court. In fact in the second application filed in this appeal by the Appellants it has been stated by the Appellants that the 10B had complied with the order dated May 30, 1996. It has not been stated before this Court by the Appellants in whose name the account with the United Bank of India has been opened if not in the name of the Registrar. In the affidavit-in-opposition filed by the provident fund authorities to the third application it is also accepted the Registrar, Appellate Side had invested the amount received by him from the 10B with the United Bank of India. There is no document in the third application which would suggest that the united Bank of India is refusing to comply with any request made by the Registrar to make over the amount from the account to the Regional Provident Fund Authorities. In these circumstances to file a third application for same relief as was claimed in the second application is yet another instance of the gross abuse 6f the process of Court by the Appellants.
It is clear from the narration of facts above that there is no subsisting injunction against the provident fund authorities in respect of any criminal proceeding against the Appellant or certificate proceedings. The prayer of the Appellants before us for some time to pay the dues and to stay the criminal and certificate proceedings is in the circumstances of this case wholly unacceptable and is rejected. Apart from the factual aspect of the matter in our view the Court should not under Article 226 of the Constitution" interfere with criminal proceedings unless there are extra-ordinary circumstances justifying such interference. We are not prepared to hold for the purposes of this appeal that there are any such circumstances.
For all these reasons except for confirming the direction, to the Registrar (AS) as contained in the order dated August 28, 1996, the appeal is dismissed. The Registrar (AS) will comply with this order forthwith and not later than two weeks from date. The Appellants will pay the costs of the appeal to the Respondent No. 1 assessed-at Rs. 5,000.00 within two weeks from date.
Devendra Kumar Jain, J.
I agree.