MOHAN Vs. REGIONAL POVIDENT FUND COMMR

JUDGEMENT

(1.) Whether the arrears of the provident fund and other amounts payable by a private limited company under the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 (for short the 'Act') can be recovered from its Managing Director is the question which arises for determination in this petition filed by Shri Mohan Lal for quashing notices dated January 28, 2000 (Annexure P5) April 5, 2000 (Annexure P6) and May 15, 2000 (Annexure P7) issued by the respondents, under Sections 8-B and 8-C of the Act.

(2.) The petitioner was one of the five partners of Picks Auto Industries, Ludhiana (hereinafter described as the Firm) which was engaged in the manufacture of automobile parts, auto bolts etc. The Firm was brought within the purview of the Act w.e.f. April 1,1980. After 10 years, the petitioner and five members of his family, four of whom were partners of the Firm, got incorporated a private limited company under the Companies Act, 1956 under the name and style of Picks Auto Industries Private Limited (hereinafter described as 'the Company'). The main object of the Company was to take over the running concern Picks Auto Industries, Ludhiana along with its assets and liabilities and to carry on the business as manufacturers, importers, exporters, dealers, repairers, buyers, sellers, engineers, fabricating and forging of all types of automobile parts, auto bolts, implements, gauges, tools, accessories etc. After its incorporation, the Company continued to be covered by the provisions of the Act. In July,1996, Area Enforcement Officer submitted a report to the Regional Provident Fund Commissioner, Ludhiana (respondent No. 1) that the Company had failed to deposit the employees' share of provident fund under the Employees' Provident Funds Schemes, 1952, 1971 and 1995 and Deposit Linked Insurance Scheme, 1976 for different periods. Respondent No. 1 issued notice dated July 28, 1997 to the Company under Section 7-A of the Act for determination of its liability under the Act and after hearing the representatives of the Company and the department, he passed order dated December 23, 1997 (Annexure P2) holding the Company liable to pay Rs.1,73,129.00 with a direction to deposit the amount within 15 days. After about five months, he issued recovery certificate Annexure P3 dated May 6, 1998 and directed Recovery Officer, Ludhiana (respondent No. 2) to recover the amount specified in Annexure P-2 as arrears of land revenue in accordance with Sections 8-B to 8-G of the Act. Respondent No. 2 sent notice of demand dated May 26, 1998 (Annexure P4) to the petitioner under Section 8-B(2) with an indication that he will also be liable to pay interest in terms of Section 7-Q of the Act and costs etc. This was followed by notice No. Rcy Cell/Peon/15945/5358 dated September 23, 1999 vide which respondent No. 2 asked the petitioner to appear before him on September 13, 1999 and to show cause as to why he may not be committed to civil prison in connection with the recovery of outstanding amount. The petitioner did not respond to either of the two notices. However, instead of sending him to prison, respondent No.2 issued notice dated January 28, 2000 (Annexure P5) to the petitioner and gave him final opportunity to deposit the amount of Rs.2,11,371.00 which included interest and costs within seven days. The petitioner ignored this notice as well leaving respondent no. 2 with no choice except to take more harsh steps for recovery of the dues. This he did by issuing warrant for attachment of the petitioner's movable property. As soon as the warrant was served upon the petitioner, he submitted application dated March 22, 2000 and promised to clear the arrears within one month. He also deposited a sum of Rs. 28,000.00 to show that he was genuinely interested in clearing the arrears. For the sake of reference, the relevant extracts of letter Annexure R2 are reproduced below:

(3.) After having succeeded in avoiding the consequences of attachment of his movable property, the petitioner reverted to his old stance and did not pay a single penny over and above what was tendered with application Annexure R2. Therefore, respondent no. 2 issued notice dated May 15, 2000 (Annexure P7) to him to appear on May 30, 2000 and show cause as to why he may not be committed to civil prison in execution of the certificate of recovery issued by respondent No. 1. The petitioner filed reply dated May 30, 2000 (Annexure P8) to contest the notice by asserting that he was not liable to pay the arrears due from the company and the respondent was unnecessarily harassing him. Soon thereafter, he filed the present petition and succeeded in persuading the Court to stay the execution of Annexure P7.