R.R. Cashew Exports, Kollam vs The Provident Fund Commissioner and Others

K. Harilal, J. - The 3rd respondent was running a Cashew Factory under the name and style, Nessiya Enterprises, an establishment covered by the provisions of the Employees Provident Fund and Miscellaneous Provisions Act, 1952 (hereinafter referred to as ''the Act''), having Code No:KR/3080. The petitioner entered into a lease agreement on 11.04.2008, in respect of the above Cashew Factory with the original owner, M/s.Anderson Industries Limited and the same was evidenced by Ext.P1. While so, the 2nd respondent issued Ext.P3 notice, directing the petitioner to pay Rs.8,29,162/- towards recovery of penal damages and interest under Section 14B and 7Q of the Act for the period from 03/2005 to 02/2007 and 03/2007 to 02/2008 in respect of M/s. Nessiya Enterprises run by the 3rd respondent. According to the petitioner, since the petitioner had occupied the factory for the period from 11.04.2008 to 31.12.2010, as per Ext.P1 lease agreement, he is not liable to pay the liability created by the 3rd respondent,during the period, in which he was occupying the Factory. Thus, Ext.P3 is illegal and arbitrary and liable to be quashed in exercise of the writ jurisdiction under Article 226 of the Constitution of India. This is the grievance projected in this writ petition.

The 1st respondent filed a counter affidavit, denying the averments in this writ petition and contented that the liability under Section 17B of the Act is joint and several. It is contended that even though, the petitioner is a subsequent purchaser, after the amount became due he is also liable to pay the arrears as if that of the original owner in whose period the amount has become due.

Heard the learned counsel for the petitioner and the learned standing counsel for the 1st and 2nd respondents.

Learned counsel for the petitioner mainly contended that the impugned order under challenge was passed in violation of the statutory mandate under Section 14B of the Act. The learned counsel drew my attention to the 1st proviso to Section 14B of the Act, which makes it a mandate that before levying and recovery of damages, the employee shall be given reasonable opportunity of being heard. According to the learned counsel for the petitioner, in the instant case an opportunity of being heard was not given to the petitioner and Ext.P3 is the first notice, which was issued by the respondents.

Per contra, learned Standing Counsel for the respondent drew my attention to Exts.R2(a) and (b) and submitted that an opportunity of being heard was given to the petitioner as contemplated under the 1st proviso to Section 14B of the Act and the same is evidenced by Ext.R2(b). Learned Standing Counsel further submits that even though notice was issued to the petitioner calling upon him to be present for hearing on 24.03.2010, he was not present, though, he acknowledged receipt of the notice. In his absence, the proceedings were concluded ex parte and the impugned order, Ext.R1 (b) was passed accordingly.

According to the submission made by the learned Standing Counsel on instruction, even though, notice was issued to the petitioner directing him to be present before the Assistant Commissioner on 24.03.2010, he failed to appear before the said Officer and in his absence, the proceedings were concluded and Ext.R1(b) was passed accordingly. But, going by Ext.R1(b), it is seen that notice was issued to the petitioner, directing him to be present on 24.03.2010, to offer his explanation for the delay in making payments and as requested by the petitioner, the hearing was adjourned to 03.03.2010. Needless to say, the hearing which was posted on 24.03.2010, can never be adjourned to 03.03.2010. Though, the learned Standing Counsel for the respondent submitted that the posting date mentioned above was a mistake only, this Court is not inclined to accept the same in the absence of any other material to show that it was a typographical mistake only. In the above view of the matter, I am of the opinion that an opportunity of being heard was not given properly to the petitioner in accordance with the statutory mandate under the 1st proviso to Section 14B of the Act.

Consequently, Exts.R1(a), R1(b) and Ext.P3 will sand set aside. The respondent is directed to pass order afresh, after affording an opportunity of being heard to the petitioner strictly in compliance with the 1st proviso to Section 14B of the Act, within a period of one month from the date receipt of a copy of this judgment.

This writ petition is disposed of accordingly.