IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR FRIDAY, THE 8TH AUGUST 2008 / 17TH SRAVANA 1930 WP(C).No. 24671 of 2006(K) -------------------------- PETITIONER: ------------ N.DAMODHARAN, PUTHENPURAYIL VEEDU, EZHUKON P.O., KOLLAM. BY ADV. SRI.M.K.CHANDRA MOHANDAS RESPONDENTS: ------------- 1. THE ASSISTANT PROVIDENT FUND COMMISSIONER, KERALA, REGIONAL OFFICE, BHAVISHYANIDHI BHAVAN, PATTOM, THIRUVANANTHAPURAM. 2. THE ENFORCEMENT OFFICER, EMPLOYEES PROVIDENT FUND, DISTRICT OFFICE, HOSPITAL ROAD, KOLLAM. 3. RECOVERY OFFICER, OFFICE OF THE RECOVERY OFFICER, BHAVISHYANIDHI BHAVAN, PATTOM, THIRUVANANTHAPURAM. 4. SHARIFF RAHMAN, PROPRIETOR, K.M.K.CASHEW COMPANY, PUTHENPURA, EZHUKON P.O., KOTTARAKKARA. BY ADV. SRI.N.N.SUGUNAPALAN (SR.) FOR R1 TO 3 SMT.T.N.GIRIJA, SC,EPF ORGANISATION FOR R1 TO R3 THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 08/08/2008, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: APPENDIX PETITIONER'S EXHIBITS: P1: TRUE COPY OF AGREEMENT OF R4 DT.18.2.2001. P2: TRUE COPY OF LICENCE DT.NIL. P3: TRUE COPY OF NOTICE OF RECOVERY OF AN AMOUNT OF RS.2,34,512/- DT.11.8.06. P4: TRUE COPY OF PROCEEDING OF R1 IN THE MATTER OF ENQUIRY DT.3.12.2002. P5: TRUE COPY OF PROCEEDINGS OF R1 DT.18.7.2003. P6: TRUE COPY OF ORDER IN CRL.M.C. NO.4784/2003 DT.9.10.2003 OF THE HIGH COURT OF KERALA. P7: TRUE COPY OF REPLY NOTICE DT.8.9.2006. TRUE COPY PA TO JUDGE C.N.RAMACHANDRAN NAIR, J. .................................................................... W.P.(C) No.24671 of 2006 .................................................................... Dated this the 8th day of August, 2008. JUDGMENT The petitioner is challenging recovery proceedings for recovery of Provident Fund contribution due in respect of a factory which according to the petitioner was leased out to 4th respondent under Ext.P1 lease agreement. It is seen that even though prosecution was launched against the petitioner, the same was quashed by this court in Crl. M.C. No.4996/2003 on 21.11.2006. However, it is observed in the judgment that recovery can be made from the transferor as well as transferee by virtue of Section 17(b) of the Act. Counsel for the petitioner contended that lease arrangement is accepted by the Provident Fund department and that is why assessment is completed in the name of 4th respondent, the lessee under the agreement. However, on going through Ext.P4, it is seen that even though one Manager by name Sri.Unnikrishnan took notice, the order passed is an exparte order and it is made in the name of the 4th respondent. However, ultimate demand is seen raised against petitioner as well as 4th respondent. In the first place, the lease itself does not stand proved before the department and they have proceeded to assume that factory was on lease as 2 claimed by the petitioner. The petitioner's case is that since assessment is made in the name of the 4th respondent, recovery also should be made from him. However, when this court issued notice to 4th respondent, it was returned with the endorsement "closed and left". In fact petitioner himself showed the name of 4th respondent with the factory address which he no longer possesses. Counsel for the petitioner contended that 4th respondent is available and he has assets and recovery can be made from him. Counsel appearing for the Provident Fund relied on Section 17(b) and contended that recovery can be made from the transferor upto the date of transfer. Ext.P1 provides for payment of Provident Fund contribution by the lessee. However, since lessee has not participated in the adjudication process, it is not known whether he himself has carried on business. No enquiry is seen made by the first respondent before adjudication is completed. Since 4th respondent has not filed any objection after receipt of notice in adjudication and since he has not filed appeal, recovery can be made against his assets. It is for the petitioner to bring to the notice of respondents 2 and 3 the details of assets, bank account etc. of the 4th respondent for them to proceed for recovery. However, if recovery is not possible for want of assets, recovery has to be necessarily against the petitioner in terms of Section 17 (b) for the period covered by the said Section. 3 2. Since the factory is again given on lease and since default has happened once, there will be direction to the first respondent to take steps to close the factory until arrears upto date are paid so that employees do not get continuously cheated by repeated change of licence. If the present lessee is allowed to continue the lease, it will be open to the first respondent to demand security towards payment of contribution for continued lease of factory so that arrears can be recovered. There will be a further direction to the first respondent to give code number to any further lessee only after clearing the arrears of the previous lessee. If petitioner furnishes details of assets of the defaulter-4th respondent, then no steps for sale of the factory should be made until efforts to recover arrears based on information furnished by the petitioner do not succeed. C.N.RAMACHANDRAN NAIR Judge pms