MANAGER VIJAYA BANK PADUBIDRI DAKSHINA KANNADA Vs. REGIONAL PROVIDENT FUND COMMISSIONER SUB REGIONAL OFFICE BALMATTA

JUDGEMENT

(1.) THE third respondent-Sri Akshaya Cashew Industries (hereinafter referred to as 'the employer") was provided by petitioner-Vijaya Bank ('bank', for short) with credit facility up to a certain limit. Employer also hypothecated the goods, machinery, etc. , belonging to it to the Bank. The hypothecated property had been duly insured. Though hypothecated, the hypothecated property as such remained in the premises of the employer's factory. Employer availed of the cash credit facility and became due to the Bank several lakhs of rupees. Employer was also due to the first respondent-Regional Provident Fund Commissioner a sum of Rs. 30,217. 75 being the contributions which the employer was liable to pay under the Employees' Provident Funds and miscellaneous Provisions Act, 1952 ('act', for short ).

(2.) IN the above background, the property hypothecated by the employer to Bank and that remained in the premises of the factory of the employer was involved in a fire accident on 9-1-1990. The property had been insured with the United India Insurance Company. There was a dispute with regard to actual loss involved on account of the fire accident insofar as cashew stored in the godown was concerned. Eventually, the employer approached the Karnataka State consumer Disputes Re-dressal Commission, Bangalore, with a complaint against the United india Insurance Company wherein the Bank also was made the second respondent, and in which proceeding, the Bank fully supported the claim of the complainant-employer. By its order dated 23-1-1995, the Commission awarded a sum of Rs. 9,49,168. 60 which the Insurance Company was directed to pay to the petitioner to the account of the employer. On 15-3-1995, the Insurance company credited a sum of Rs. 13,77,624. 25 in pursuance of the said order of the Commission, communication in respect of which was received by the Bank on 17-3-1995. The said sum included the award amount of Rs. 9,49,168. 60 and interest at 15 per cent per annum from 19-3-1992 to 15-3-1995 amounting to Rs. 4,25,955. 65 and costs of Rs. 2,500-00. While this amount was received by the Bank on 17-3-1995 as at Annexure-M, the first respondent-Regional provident Fund Commissioner, as per Annexure-B, on 2-3-1995 itself, passed a prohibitory order under Section 8-F of the Act, against the Bank, bringing to its notice that the employer was due in a sum of Rs. 30,217. 75 by way of contribution for the period from June 1991 to December 1993, that the information had been available with the Provident Fund Commissioner with regard to the employer having a Bank account with the Bank, and that, from out of the amount to the credit of the employer, the sum of Rs. 30,217. 75 should be sent to the Provident Fund commissioner by demand draft. It was also specified in Annexure-B that even in respect of future receipts, no payments should be made to the employer. The said prohibitory order was received by the concerned Branch of the petitioner-Bank on 7-3-1995 as the seal of the Bank at annexure-B would indicate. Thus, on 17-3-1995 as per Annexure-M dated 15-3-1995, when the bank received on account of the employer Rs. 13,77,624. 25, there was the above said prohibitory order in respect of a sum of Rs. 30,217. 75. When the Bank did not meet the demands of the Regional Provident Fund Commissioner, notice of demand prior to attachment of moveable properties was issued to the Bank as at Annexure-A and a notice of demand was also sent to the Bank as per Annexure-C on 5-6-1996. In this writ petition under Articles 226 and 227 of the Constitution, petitioner-Bank seeks quashing of the said Annexures-A to C.

(3.) BEFORE going to the merits of the case, it also needs to be mentioned that on the day the Bank received a sum of Rs. 13,77,624. 25 on account of the employer, the employer was due to the bank several lakhs more than the said sum of Rs. 13,77,624. 25 in respect of the above said cash credit facility availed by the employer. In the light of the above facts, Sri Sundar Murkal, learned counsel for the petitioner, would submit thus: The provisions contained in Sections 8-A to 8-F of the Act would relate to recovery of property or the assets of the employer. Section 8-F would relate to recovery of any amount due from any person to any employer who is in arrears. In the present case, if the amount of the employer is with the Bank, then, respondent 1-the Provident fund Commissioner could certainly ask the Bank to remit that amount in respect of the contributions payable by the employer. Employer having availed cash credit facility and himself being due to the Bank to an extent of more than Rs. 15 lakhs, not only on the day the prohibitory order was received by the Bank not a single paise of the employer was with the Bank to be sent to the Provident Fund Commissioner, but also that even the subsequent amount of Rs. 13 lakhs and odd received in terms of the award of Consumer Redressal Commission was also being liable to be adjusted towards the amount that the employer was due to the Bank. Therefore, at no point of time was any amount of the employer there with the Bank so as to comply with the demands of the Provident Fund Commissioner. Even the amount of Rs. 13 lakhs and odd since related to the amount paid in respect of the loss of goods in the fire accident which goods had been hypothecated to the Bank, the said amount needed to be applied towards the liabilities due from the employer to the Bank. Therefore, when there was no amount in the name of the employer at all with the Bank, the Provident Fund Commissioner could not have enforced his claim for Rs. 30,217. 75 by taking recourse to Section 8 of the Act.