CANARA BANK SIA SECTION INFANTRY ROAD BANGALORE Vs. REGIONAL PROVIDENT FUND COMMISSIONER KARNATAKA BANGALOREEMPLOYEES PROVIDENT FUNDS AND MISCELLANEOUS

JUDGEMENT

(1.) THE third respondent-establishment has fallen in arrears to wards provident fund contributions. The third respondent has also availed of loan facilities from the petitioner-Canara Bank, one of which relates to cash credit facility to the extent of Rs. 330 lakhs. The third respondent has, from out of this limit of Rs. 330 lakhs, drawn to a certain extent and that limit is not yet exhausted, in the sense, that the third respondent can still draw some more amount within the said limit of Rs. 330 lakhs. From out of the balance that the third respondent can so draw from the petitioner in respect of the said cash credit facility, respondents 1 and 2, namely Provident Fund Authorities, are seeking to recover from the said balance towards the arrears of provident fund contributions that the third respondent is still due. In other words, respondents 1 and 2 are construing that the unutilised cash credit facility is money payable by the petitioner-Canara Bank to the third respondent, which the said respondents 1 and 2 can recover from the petitioner-bank. Respondents 1 and 2 are thus construing the position of the petitioner-Canara Bank as a garnishee. With that understanding, they have sought to recover the arrears of provident fund contributions by proceeding under Section 8-F of the Employees' Provident Funds and Miscellaneous Provisions Act, 1972 ('act' for short ). Inspite of the petitioner filing an affidavit in terms of clause (6) of sub-section (3) of Section 8-F of the Act, explaining the position, respondents 1 and 2 have proceeded to term the petitioner-bank itself as an 'establishment' within the meaning of clause (x) of subsection (3)of Section 8-F, and, have proceeded to recover the amounts due in the manner provided therein. In this writ petition under Article 226 of the Constitution, the said proceedings are challenged.

(2.) SRI Mangal Charan Inna, learned Counsel for respondents 1 and 2 would submit thus: An extent of Rs. 330 lakhs by way of cash credit facility provided to the third respondent-establishment is the money belonging to the third respondent and in the custody of the petitionerbank. Any portion of that amount can therefore be proceeded against in course of recovery of provident fund contributions.

(3.) SRI P. S. Sundar Markal, learned Counsel for the petitioner, however,urges that merely because a cash credit or overdraft facility is provided to a customer, the amount upto the limit that is provided for would not become the amount belonging to the customer and in the custody of the bank. All that such arrangement would mean is that upto that limit, the customer can draw loan subject to the conditions agreed upon. Providing overdraft facility or cash credit facility does not make the bank a 'debtor' nor would it make a customer a 'creditor' vis-a-vis the bank. With reference to the said customer, therefore, that is with reference to the third respondent-establishment herein, the petitioner-bank can never be called a garnishee.