SICOM LTD Vs. UNION OF INDIA

JUDGEMENT

(1.) Rule. Heard forthwith.

(2.) Kusum Ispat and Wire Products Limited for the loan advanced to them by the petitioner and Respondent No.5 had been secured by a mortgage. The aforesaid Company defaulted in paying the amounts. The petitioner and respondent No.5 as secured creditors took possession of the mortgaged property and sold it and realised a net sum of Rs.2,05,00,000/-. The said amounts were appropriated by the petitioner and respondent No.5 in partial discharge of their debts. According to the petitioner even after appropriation of the said amount, monies are still due and payable.

(3.) The Company Kusum Ispat and Wire Products Limited it appears were also in default of dues under the provisions of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952, hereinafter referred to as the EPF Act. The respondent No.4 by show cause notice dated 25th April, 2006 informed the petitioner that the petitioner has failed to remit the statutory P.F. dues of the aforesaid company to respondent No.4. The Respondent No.1 directed the petitioner to pay an amount of Rs.3,51,150/- with simple interest at the rate of 12% per annum within 7 days from the said notice, failing which the petitioner would be declared as deemed defaulter as per the provisions of the EPF Act and further legal action was contemplated under Section 8B and 8G of the EPF Act. The petitioner by letter dated 26th May, 2006 replied to the said show cause notice and inter alia stated that the petitioner and respondent No.5 were secured creditors in respect of the mortgaged property and held paramount and superior rights/charge over the mortgaged property. It was further stated that the claim of the petitioner was as a secured creditor and that the respondent No.4 has erroneously proceeded on the assumption that the petitioner are the successor to the business of the said industrial concern. It was stated that a Financial Corporation who enforces its security by bringing the security to sale for recovery of its dues pursuant to its statutory rights does not become the successor and as such were not liable or responsible to pay the P.F. arrears of the company. The petitioners were informed by respondent No.4 that P.F.dues are first charge over all other dues. on the assets of the concern. Further correspondence took place between the respondent No.4 and the petitioner. Respondent No.4 issued show cause notice dated 22nd December, 2006 and corrigendum dated 15th January, 2007 informing the petitioners that the petitioners had failed to remit the statutory P.F. dues and called on the petitioners to pay the dues along with interest failing which the petitioner would be declared as deemed defaulter as per the provisions of E.P.F. Act. The petitioner thereafter filed a Writ Petition before this Court being Writ Petition No.1153 of 2007 for quashing the said show cause notice. By order dated 18th September, 2007 the petitioners were called upon to file their additional reply if any to the show cause notice within two weeks. The respondent NO.4 thereafter by order dated 26th October, 2007 has ordered the petitioners to pay the amounts as set out in the order. Aggrieved by that action the present petition.