SBCWP NO.1586/2005 – J.K. CEMENT WORKS AND ANOTHR V/S STATE OF RAJASTHAN AND ORS. :JUDGMENT DTD.23.4.2009 1/8 IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JODHPUR. S.B. CIVIL WRIT PETITION NO.1586/2005 1. J.K.Cement Works, Nimbahera. 2. J.K. White Cement Works, Gotan. versus Union of India and ors. PRESENT HON'BLE Dr.JUSTICE VINEET KOTHARI Mr.Ramit Mehta } Mr.Avinash Acharya }, for the petitioners. Mr.M.R. Pareek, for the respondents. DATE OF JUDGMENT : 23rd April, 2009. JUDGMENT 1. This petition has been filed by the petitioner J.K. Cement Works and J.K. White Cement Works (Unit/Division of J.K. Cement Limited) impugning therein the attachment order issued under Section 8F of the Employees Provident Fund and Misc. Provisions Act, 1952 (hereinafter referred to as the Act of 1952) and also to quash the attachment of account No.30234 with S.B.B. J. Merta City. The said account was attached by the respondent – Provident Fyund Department for recovery of PF dues of Rs.40,16,042/- pertaining to SBCWP NO.1586/2005 – J.K. CEMENT WORKS AND ANOTHR V/S STATE OF RAJASTHAN AND ORS. :JUDGMENT DTD.23.4.2009 2/8 the period 1996-97 in respect of J.K. Tyre Cord, Kota and J.K. Acrylic, Kota (Units/Division of M/s J.K. Synthetics Limited). 2. The ground of challenge by the present petition is that these two units J.K. Tyre Cord and J.K. Acrylic whose PF dues are sought to be recovered from the present petitioners are units of J.K. Synthetics Limited and not of J.K. Cement works and upon demerger scheme approved by the Appellate Authority for Industrial and Financial Reconstruction, New Delhi in appeal No.301/2000 dtd.23.1.2003 in which the cement undertakings of J.K. Synthetics were demerged and separated and these cement units vide Clause (E) of Rehabilitation Strategy got merged with the present petitioner i.e. J.K. Cement Limited. 3. It is argued on behalf of the petitioner by Mr. Ramit Metha that since these two units J.K. Tyre Cord and J.K. Acrylic were never taken over by the present petitioner – company and they continued to remain with J.K. Synthetics Limited, therefore, the PF dues of these two units could not be recovered from the present petitioner. He relied upon the aforesaid clause E (b) of the Scheme which is reproduced hereunder for ready reference: “(E) Rehabilitation Strategy (a).... SBCWP NO.1586/2005 – J.K. CEMENT WORKS AND ANOTHR V/S STATE OF RAJASTHAN AND ORS. :JUDGMENT DTD.23.4.2009 3/8 (b) The demerger of the cement undertaking of JKSL and JKCL is as a 'going concern' on as-is-where-is-basis free from encumbrances which inter-alia includes all fixed assets, current assets, intangible assets, all rights, patents, trade mark, mining lease etc. and all current liabilities including trade deposits, workers' dues, contingent liabilities and all litigation with respect to the cement undertaking.” 4. He further pointed out that as a mater of subsequent development in another order passed by the same Appellate Authority for Industrial and Financial Reconstruction, New Delhi in appeal No.133/2008 and other connected matters by order passed on 11.12.2008, copy of which has been placed on record for perusal of the Court, whereas the company M/s Arafat Petro-Chemicals Pvt. Ltd. has taken over these two units of J.K. Tyre Cord and J.K. Acrylic under a scheme approved by the said appellate authority and he relied upon clause 39 of the said Scheme approved by AAIFR which is also reproduced hereunder for ready reference: “39. In this view of the matter giving permission U/s 22 (1) of SICA to the associations/unions/employees of the company for the recovery of the dues against M/s JKSL is uncalled for and not justified under the circumstances. These dues are to be settled by APPL alone in respect of SBCWP NO.1586/2005 – J.K. CEMENT WORKS AND ANOTHR V/S STATE OF RAJASTHAN AND ORS. :JUDGMENT DTD.23.4.2009 4/8 Kota unit. Further the question of JKSL shirking its responsibility in the rehabilitation process also does not arise. This too is something which APPL is required to do. The responsibility of maintaining status quo is that of APPL and not of JKSL. It is APPL which is fully in charge of the management of the Kota Units.” 5. The learned counsel for the petitioner therefore, contended that the respondents are not entitled to recover the said PF dues of Rs.40,16,042/- from the present petitioner – company. He submitted that under the Bank attachment order though this Court passed interim order in favour of the present petitioner company after hearing both the sides on 18.3.2005 staying the operation of the impugned orders Annex.4, 5, 6, 9 and 12 dated 14.3.2005 and 15.3.2005 respectively, the respondents recovered the said amount of Rs.40,16,042/- from the aforesaid bank account of the petitioner – company which deserves to be refunded back to the petitioner =- company as the petitioner company was never liable to pay such dues. He further submitted that with other company namely M/s Arafat Petro Chemicals Pvt. Ltd. taking over these two units, namely, M/s J.K. Tyre Cord and M/s J.K. Acrylic under the scheme approved by the AAIFR on 11.12.2008 and that company has been continuously paying these old dues of these two units, which earlier belonged to M/s J.K. Synthetics Limited for the period 1996-1997 and by now a sum of Rs.23,21,392/- already stands paid to the respondent – SBCWP NO.1586/2005 – J.K. CEMENT WORKS AND ANOTHR V/S STATE OF RAJASTHAN AND ORS. :JUDGMENT DTD.23.4.2009 5/8 department, therefore, he submitted that as matter of fact to the extent of Rs.23,21,392/- , the respondent – Department has recovered the said amount twice over, one from the petitioner – company and other from the said company from time to time as per the copies of challan receipts filed with the application for early hearing, namely, IA No.1391/2009 filed on 28.1.2009 in this Court. He, therefore, submitted that the respondents may be directed to proceed for recovery of the balance amount also from the said company which has taken over the liability to pay PF dues and other dues of the units J.K. Tyre Cord and J.K. Acrylic and the petitioner – company deserves to be absolved from its liability to pay such dues and the money already recovered from the Bank account deserves to be refunded back to the petitioner - company. 6. On the side opposite Mr. Pareek, learned counsel for the respondents relied upon the provisions of Section 17-B of the said Act and submitted that the petitioner – company could be proceeded against for recovery of its dues in view of transfer of these units to the petitioner – company. The provisions of Section 17-B of the Act read as under: “17-B. Liability in case of transfer of establishment:- Where an employer, in relation to an establishment, transfers that establishment in whole or in part, by sale, gift, lease or licence or in any other manner whatsoever, SBCWP NO.1586/2005 – J.K. CEMENT WORKS AND ANOTHR V/S STATE OF RAJASTHAN AND ORS. :JUDGMENT DTD.23.4.2009 6/8 the employer and the person to whom the establishment is so transferred shall jointly and severally be liable to pay the contribution and other sums due from the employer under any provision of this Act or the Scheme or the Pension Scheme or the Insurance Scheme, as the case may be, in respect of the period upto the date of such transfer: Provided that the liability of the transferee shall be limited to the value of the assets obtained by him by such transfer.” 7. It is not in dispute before this Court that under the impugned order, the said dues of Rs.40,16,042/- admittedly pertained to two units J.K. Tyre Cord (PF account No.RJ/1719) and J.K. Acrylic (PF account No.RJ/3568). No determination order was ever passed against the present petitioner - company and notice of demand Annex.R/5 relied upon by the learned counsel for the respondents was passed against the Units M/s J.K. Tyre Cord and J.K. Acrylic which earlier belonged to M/s J.K. Synthetics Limited and now stands merged with M/s Arafat Petro-Chemicals Pvt. Limited under the orders of AAIFR dtd.11.12.2008. The provisions of Section 17B of the Act cannot be applied against the present petitioners - company because there is no evidence or document of any sale/gift/lease or licence or transfer in any manner whatsoever of these two units of SBCWP NO.1586/2005 – J.K. CEMENT WORKS AND ANOTHR V/S STATE OF RAJASTHAN AND ORS. :JUDGMENT DTD.23.4.2009 7/8 J.K. Tyre Cord and J.K. Acrilic to the present petitioner – company, namely, M/s J.K. Cement Works Limited. It is needless to emphasise that a limited company is separate and independent juristic person having capacity to contract and therefore, unless transfer of particular industrial unit is shown to have been made to the present – petitioner company, there was no basis with the respondent – Provident Fund Department to proceed against the present petitioners – company for recovery of PF dues of the two units, namely, M/s J.K. Tyre Cord and M/s J.K. Acrylic, merely because the present – petitioner – company is sister concern or is a group company. That does not furnish any valid basis to recover the dues of these two industrial units from the present petitioners- company. Section 17-B of the Act gets attracted only if the factum of sale/gift/lease/licence or transfer in any other manner of two units to the present petitioner - company is established. This Court finds no such evidence on record to support such recovery of dues of these two units from the present petitioner company. On the other hand, the documents produced on record clearly establish that these dues are being paid by the company (Arafat Petro Chemicals Pvt. Ltd.) from time to time for the period 1996-97 and by now a sum of Rs.23,21,392/- stands paid to the respondents – Department against the said dues of Rs.40,16,042/-. In view of this, recovery of said dues of Rs.40,16,042/- from the Bank account of the present petitioner – company cannot be justified. SBCWP NO.1586/2005 – J.K. CEMENT WORKS AND ANOTHR V/S STATE OF RAJASTHAN AND ORS. :JUDGMENT DTD.23.4.2009 8/8 8. Consequently this writ petition is allowed and the impugned order Annex.4 to 6, 9 and 12 dated 14.3.2005 and 15.3.2005 are quashed. The respondent – Department shall refund back the said amount of Rs.40,16,042/- which is stated to have been recovered from the Bank Account of the petitioner – company within a period of 15 days from today with interest @6% per annum from the date of recovery till the date of payment. It is needless to say that the respondent – PF Department can recover its balance dues in question from other company M/s Arafat Petro Chemicals Pvt. Ltd. which in law is liable to pay the said PF dues in respect of M/s J.K. Tyre Cord and M/s J.K. Acrylic with interest in accordance with the provisions of Act of 1952. No order as to costs. (Dr.VINEET KOTHARI)J. Item No.S-4 Ss/-