EMPLOYEES PROVIDENT FUND ORGANISATION Vs. MANOJ K

JUDGEMENT

(1.) This Writ Appeal is directed by the Employees' Provident Fund Organization and its Recovery Officer at Kollam, the appellants herein, against the impugned judgment passed by the learned Single Judge of this Court in W.P.(C). No.3566/2010 filed by the 1st respondent herein.

(2.) It is the case of the 1st respondent herein that he is a lessee who had undertaken a cashew factory bearing Registration No.CHW/KUR/11/194/1998 as per Ext.P1 rental agreement dated 21.1.2009 entered into between him and the 2nd respondent. The period of lease was for 5 years commencing from 21.1.2009 to 31.12.2013. According to him, as per Clause 11 of Ext.P1 agreement, the 2nd respondent herein is liable for the dues/responsibility towards the various statutory authorities incurred, prior to the date of agreement. While so, Ext.P2 warrant of attachment of movable property dated 7.1.2010 was affixed in the premises of the factory, from where it was revealed that an amount of Rs.29,40,543/- was due from the defaulter M/s.Kairali Cashew, Vappala, and that constructive possession of around 4000 Kgs of raw cashew nuts packed in 75 bags lying in the godown, in addition to another 15 bags, were attached for the realisation of the said dues by the authorities under the first appellant. According to the 1st respondent, he had absolutely nothing to do with the factory for the period from 10/2001 to 7/2008 and the liability amounting to Rs.29,40,543/- covered for the above period, had occurred prior to the undertaking of the factory. So, the finished goods absolutely owned and possessed by him cannot be made liable for the dues, if any, committed by the defaulter.

(3.) The appellants 1 and 2 contended that the aforesaid amount can be recovered from the 1st respondent in this writ appeal. According to the appellants, the proviso to section 17B of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 (for brevity "the Act") provides that the liability of the transferee shall be extended to the value of assets obtained by him by such transfer and the term 'assets' herein relates to the entire 'establishment'. Thus, if the entire establishment has been transferred, the liability of the transferee is unlimited. Since, in the instant case, the entire factory has been leased out, the transferee cannot escape from the liability by taking course to this proviso.