SARASWATI SISHU MANDIR Vs. REGIONAL PROVIDENT FUND COMMISSIONER

JUDGEMENT

(1.) The petitioner, which is an educational institution situated in village Balichandrapur in the district of Jajpur and a registered body under the Societies Registration Act, 1860, has filed this writ petition challenging the order dated 17th May, 2007 passed by the Assistant Provident Fund Commissioner, opposite party No. 2 under Section 7-A of the Employees Provident Fund and Miscellaneous Provisions Act, 1952 for the period from August, 1997 to May, 2006 demanding a sum of Rs. 4,45,581.00 inclusive of an amount of Rs. 1,86,438.00 as penal interest under Section 7Q of the said Act and directed to pay the same within a period of fifteen days. The factual matrix, as revealed from the records available, is that the petitioner-Institution was established in the year 1989 and registered under the Societies Registration Act, 1860 with effect from 26.2.1992. The same has come within the fold of Employees Provident Fund and Miscellaneous Provisions Act, 1952, hereinafter to be referred to as "the Act", in short, with effect from 1.7.2002 having EPF Code No. OR-6306. After coming within the fold of the Act, the petitioner-Institution volunteered for coverage under the Act by submitting relevant form as provided by the Provident Fund authorities as the number of employees during the relevant month had reached 20. The petitioner received a notice on 20.5.2004 from the opposite party No. 2 to appear for the purpose of enquiry under Section 7-A of the Act for determination of the dues of the establishment for the period from August, 2002 to March, 2004 on the ground that the petitioner had failed to remit the contribution for the said period. The enquiry under Section 7-A in connection with the notice dated 20.5.2004 under Annexure-1 was taken up on 2.6.2004, 17.2.2004, 27.7.2004 and 26.8.2004, but on the date fixed, neither any statement nor any information was given by the Provident Fund Department in respect of the claim nor any effective hearing took place. After last date, i.e. 26.8.2004 there was no communication whatsoever from the Commissioner. Therefore, it was reasonably construed that Section 7-A enquiry pursuant to Annexure-1 remained inconclusive and without any liability sought to be fastened on the petitioner. While the aforesaid 7-A proceeding was pending for finalization for more than three years, the petitioner received a letter bearing No. 1960 dated 14.3.2007 issued by the Regional Provident Fund Commissioner requesting the petitioner to comply with the provisions of Act from 01.02.1992 till June, 2002 and submit the relevant records in such respect. Since all these staffs engaged in the establishment from 1992 onwards were not continuing in employment, and the existing employees relented payment of contribution for the past period on account of their miserable financial condition and limited salary received during their employment, the petitioner-Institution made a request by their letter dated 16.5.2007 praying for waiver of the employees' and employer's share of P.F. contribution from August, 1997 to June, 2002. Though the petitioner has been called upon to comply with the provisions of the Act for the period from January, 1992 to June, 2002, request was made for waiver for the period from August, 1997 to June, 2002 reason being that the required staff strength reached 20 in August, 1997 only and not prior to August, 1997 and therefore, the petitioner-Institution could not be brought within the fold of the Act. In the meantime, the petitioner received a letter on 27.4.2007 regarding the adjourned date of the 7-A enquiry to 17.5.2007. In accordance with the said notice, the petitioner appeared and stated the above facts with regard to their entitlement for assessment and submitted a representation vide Annexure-3. The opposite party No. 1 though assured for consideration of the said representation in Annexure-3 dated 16.5.2007, but demand has been made in Annexure-4 without application of mind and without affording an opportunity of hearing to the petitioner. Challenging the said demand notice under Annexure-4, the petitioner has approached this Court by filing the present writ petition.

(2.) This Court while issuing notice to the opposite parties, passed an interim order staying operation of the impugned demand notice dated 17.5.2007 under Annexure-4 passed by the Assistant Provident Fund Commissioner, Orissa in a proceeding under Section 7 of the Act keeping in view the fact that even though notice for determination of dues has been issued for the period from August, 2002 to March, 2004, the impugned order has been passed in respect of the period from August 1997 to May, 2006.

(3.) Pursuant to the notice, the opposite parties appeared in the case and filed their counter affidavit admitting the contentions raised by the petitioner in the writ petition, but stated that the petitioner failed to register the institution under the Act even though it has engaged 20 employees including teaching and non-teaching staff with effect from August, 1997, but admitted the fact that the petitioner volunteered to take registration and submitted information about its employees in the prescribed form during August, 2002 and in response to which code No. OR/6306 has been allotted vide letter No. 1538 dated 19.8.2002. But due to failure to comply with the requirement of filing the returns and making deposit of the contributions, proceeding under Section 7-A of the Act was initiated against the petitioner by issuing notice dated 20.4.2004 under Annexure-1 calling upon the petitioner to submit its records pertaining to the period from August, 2002 to March, 2004. During pendency of the enquiry, the fact of registration of the school management as Society with effect from 26.2.1992 came to light and on that basis the notice under Annexure-2 was issued calling upon the petitioner to submit report in respect of the period from February, 1992 to June, 2002 for compliance of the provisions of the Act and the scheme framed thereunder. In response to the said notice, the petitioner in its letter dated 16.5.2007 under Annexure-3 stated that the staff strength reached 20 in August, 2007 and deposits are being made from July, 2002 and therefore, the prayer made for waiver of requirement of the EPF and allied dues from August, 1997 to June, 2002 on the ground of financial constraints.