CWP No. 12561 of 2006 (1) IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH CWP No. 12561 of 2006 Date of Decision:8.9.2008 M/s S.B. Packagings Ltd. ......Petitioner Versus Provident Fund Commissioner .....Respondents Coram: HON'BLE MR. JUSTICE HEMANT GUPTA HON'BLE MR. JUSTICE KANWALJIT SINGH AHLUWALIA Present: Shri Akshay Bhan, Advocate, for the petitioner. Shri Rajiv Sharma, Advocate, for the respondents. 1. Whether Reporters of local papers may be allowed to see the judgment? 2. To be referred to the Reporters or not? 3. Whether the judgment should be reported in the Digest? HEMANT GUPTA, J. The petitioner is a Company, engaged in the manufacturing of Poly Coated Paper, Plastic Film in reels, Plastic Film lacquered, flexible laminated film and Lady Flat Tubing etc. Due to erosion in its net worth, the petitioner approached the Board of Industrial and Financial Reconstruction (for short `the BIFR') for registration of its case under Section 15(1) of the Sick Industrial Companies (Special Provisions), Act, 1985 (for short `the SICA') on 23.6.2005. The petitioner is also registered with the Provident Fund Commissioner, Rohtak and had failed to remit the employees' share of provident fund for the months of June, 2002 to May, 2003, July, 2003 to November, 2003, December, 2003 and January, 2004. A penalty of Rs.5,00,742/- was imposed on the petitioner vide order dated 16.6.2004 passed by the Assistant Provident Fund Commissioner, under Section 14B of the Employees' Provident CWP No. 12561 of 2006 (2) Fund & Miscellaneous Provisions Act, 1952 (for short `the EPF Act'). The grievance of the petitioner is that since the Rehabilitation Scheme is being considered by the BIFR, therefore, the impugned recovery is liable to be stayed in terms of Section 22 of the SICA. Learned counsel for the petitioner relies upon a Single Bench judgment of Madras High Court reported as Essorpe Mills Ltd. v. Central Provident Fund Commissioner and others, 104(2001) Company Cases 588, to contend that the respondent could not take any distress or coercive proceedings to recover the amount with respect to which the order of adjudication has been passed. We have heard learned counsel for the parties and do not find any merit in the present writ petition. In Deputy Commercial Tax Officer and others v. Corromandal Pharmaceuticals and others, AIR 1997 Supreme Court 2027, while interpreting Section 22 of the SICA, it was held by the Hon'ble Supreme Court that the language of Section 22 is of wide import regarding suspension of legal proceedings from the moment an inquiry is started, till after the implementation of the scheme or the disposal of an appeal under Section 25. It will be reasonable to hold that the bar or embargo envisaged in Section 22(1) can apply only to such of those dues reckoned or included in the sanctioned scheme. Such amounts like sales tax, etc., which the sick industrial company is enabled to collect after the date of the sanctioned scheme legitimately belonging to the Revenue, cannot be and could not have been intended to be covered within Section 22 of the SICA. In the present case, though the provident fund dues are in respect of the period prior to the petitioner's approaching the BIFR in the year 2005, but the fact remains that the scheme which is being considered by the BIFR, has not been produced on record. The petitioner moved the BIFR in the year 1995, but the status of the proceedings CWP No. 12561 of 2006 (3) pending before the BIFR, has not been brought to the notice of the Court. Apart from the said fact, a learned Single Judge of Orissa High Court in Industrial Development Corporation Orissa Ltd. and another v. Regional Provident Fund Commissioner-II and another, 2002(1) Labour Law Journal 774, has held that it can never be construed as the purpose or intention of the enactment, to deprive or defer the payment of wages to an employee during which the Company becomes sick and a scheme remains pending with the BIFR or in an appeal as against the decision of the BIFR, before the Appellate Authority. Such view was taken by the learned Single Judge, relying upon the judgment of the Bombay High Court in Ralliwolf Ltd. v. R.P.F. Commissioner, 2001(I) Labour Law Journal 1423. It was held to the following effect:- “....The framers of the provision, the Parliament could never have contemplated to defer the payment of due wages or the like to the workmen serving in those Sick Companies indefinitely till the proceeding before the authorities under the Act are completed may be after years. The workers or the employees of a Company, who are members of the Fund under the E.P.F. Act contribute their share to the fund and such share is deducted from their salary which would otherwise mean that it is a part of salary or the wages of such employees and the other half, matching the employee's contribution is required to be paid by the employer company to the Fund. In such view of the matter, the provident fund etc. dues of a workman or an employee in the Company are a part of the legitimate wages. Such employees cannot be deprived of their legitimate statutory dues by way of provident fund entitlements. Wages are paid to its workers for day to day running of the business and the business otherwise cannot run without workers. It can never be construed as the purpose or intention of the enactment, to deprive or defer CWP No. 12561 of 2006 (4) the payment of wages to an employee during which the Company becomes sick and a scheme remains pending with the BIFR or in an appeal as against the decision of the BIFR, before the Appellate Authority. It is this context, the provision of Section 22(1) of the SIC Act has to be construed and so construed it has to be held that the statutory dues of an employee covered under the provident fund scheme, which is a part of his legitimate claim of wages are not intended to be indefinitely deferred under sub- section (1) of Section 22 of the Act. A similar view is taken by a learned single Judge of the Bombay High Court in Ralliwolf Ltd. v. R.P.F. Commissioner (supra). 14. In such view of the matter, it has to be held that the provident fund dues of an employee and steps like certificate or recovery proceeding taken by the Provident Fund Commissioner for realisation or recovery of such dues under the provisions of the Employees' Provident Funds and Miscellaneous Provisions Act cannot be held to be covered under the exception contemplated in Section 22(1) of the Sick Industrial Companies (Special Provisions) Act, 1985 and therefore cannot stand suspended till after completion of such proceedings before the BIFR or ABIFR, the appellate authority.” In the judgment reported as Universal Paper Mills Limited and others v. Regional Provident Fund Commissioner and others, 2001(II) Labour Law Journal 1193, a learned Single Judge of Calcutta High Court has held that Section 14B of the EPF Act, was amended subsequent to enactment of the SICA in the year 1985 and, therefore, it cannot be said that the SICA, will prevail over EPF Act. It was held to the following effect:- “19. I further cannot accept the contention CWP No. 12561 of 2006 (5) raised before me by Mr. Saha that the SICA Act must prevail over the Provident Funds Act, 1952. It is a fact that the SICA Act came into operation in the year 1985, but it is also to be noted that the Employees' Provident Funds and Miscellaneous Provisions Act, 1952, was amended by Act 33 of 1988. Such amendment of 1988 expressly notices the position of the SICA Act of 1985 and, therefore, it cannot be said that the said SICA Act must prevail over the Employees' Provident Funds Act. Section 14-B of the said Act was amended taking into consideration an establishment which is a sick industrial company and in respect of which a scheme for rehabilitation has been sanctioned by the BIFR under the provisions of the SICA Act, 1985, subject to the terms and conditions of the Scheme. Therefore, the amendment of the said Employees' Provident Funds Act, 1952, was enacted by Act 33 of 1988, and the legislators were conscious of the existence of the Sick Industrial Companies (Special Provisions) Act, 1985. Therefore, in no way can it be said as sought to be contended before me that the SICA Act, 1985, must prevail over the Provident Funds Act, 1952. 20. Apart from that the further question arose whether a sick industrial company can claim the benefit of the provisions of Section 22 in respect of the dues payable towards provident fund under the Employees' Provident Funds Act, 1952. It further appears from the records that the matter was placed before the BIFR in the year 1990. The amount was to be paid by the petitioner company being the contributions of the employer which have not been paid by the employer and same have been unlawfully retained by the employer.” CWP No. 12561 of 2006 (6) The judgment of the Madras High Court in Essorpe Mills Ltd.'s case (supra), is clearly distinguishable, in as much as the writ petitioner has sought restraint order in respect of adjudication of the proceedings under Section 7A of the E.P.F. Act. It was held that the adjudication proceedings under Section 7A of the E.P.F. Act, have not been barred or prohibited nor the contributions to be paid under the EPF Act, are suspended. In the said case, it was conceded by the learned counsel for the respondents that since the matter is pending before the BIFR, the respondents will not take any distress or coercive action against the assets of the Company for the enforcement of the arrears, except by following the procedure prescribed under Section 22 of the SICA. The question of stay of coercive or distress action against the Company, during the pendency of the proceedings before the BIFR, was conceded. But in the judgments referred to above, the question has been specifically dealt with and answered to hold that the proceedings under the E.P.F. Act cannot be stayed, in view of the amendment in Section 14B of the EPF Act, vide Act 33 of 1988 with effect from 1.9.1991, dealing with the situation, where the Company has approached the BIFR. In view of the above, we do not find any merit in the present writ petition. Hence, the same is dismissed. (HEMANT GUPTA) JUDGE (KANWALJIT SINGH AHLUWALIA) JUDGE 08-09.2008 ds