51 cJ 0 CWP Nol00 of 2008and 1 h CWP No18294 of2007 IN THE HIGHCOURT OF PUNJAB S HARYANA CHANDIGARH CWP NolOO of 2009 Dateof decision July242009 VijayAggarwal Petitioner Versus The RecoveryOfficer EmployeesProvident Fund 8 Misce Provisins Act 1952 SCO Noe7 Sector 17eD Chandigarh and 1 another 0 3 0 Respondents 0 Z CWP No 8294 of 2007 C9 0m 5 RajivAggarwal 22 Petitioner Versus V2 0 The RecoveryOfficer EmployeesProvident Fund S Misc Provisions Act 1952 SCO Noe7 Sector 17eD Chandigarh and X another 05 m Respondents 7 2 CORAM HONBLE MR JUSTICE K KANNAN Om Presentle Mt P MutnejaAdvocate for the petitionerin CWP N700 of 2008 Mrl CIerma Stdvocate with M MeenakshiVerma Advocate for the petitioner in CWP Nol 8294 of 2007 M GeetaSharma Advocate for the respondents Mr RvlahajanAdvocate Ilrltk 1 Whether reportersof Iocal newspapers may be allowed to see thejudgment7 Yes 1 2 To be referredto the reporters or not7 Yes 3 Whether thejudgmentshould be reportedin the r 44 r digest2Yes Radhika 2014.01.10 15: 06 True Scanned Copy Of The Original PHHC,Chandigarh JOYTI RANI 2016.03.28 16:25 I attest to the accuracy and integrity of this document 52 0 CWP NoJOO of 2008and 2 4 CWP No18294 of 2007 K KannanJ 1 The two writ petitionsaddress the same issue namelyof the ofthe orders of recoveries issued againstthe 01eosgfDirectorsof the for failure to make the contributions to the ProvidentFund bythe The impugned noticeswere on the basis that there were arrears assessed againstthe Company and they j have not been paid and hence the authorizedofOcerhad forwardedthe 0 claim to be recovered bythe Recovery Omcerthrough a certificateissued C3 I under Section8C of the ProvidentFund and Miscovisions C5 Act 1952 hereinafter referred to as the Actl The impugned notice also I states that the recovery of arrears and interestpayableunder Section7Q Z of the Act havingnot been paidit was proposedto execute the certificate fK byarrest and of the persons lt is seen that in both the writ C Svr petitionsthe notices had been issued to Sh VijayAggarwal W c8 him as Directorof Mls UshaAutocastLimited The notice also 03 recites that in the event of failureof depositof arrears as demanded funher mn interest at the rate of 120Ioper annum will be calculatedand recovenes Ll besidestakingall other penalactions under Section8mBto 8C of the Act 2 The Iearnedcounsel Mr Mutnejaappeanng on behalf of the petitionerand Mi Mahajanappearing on behalf of Mr C Verma state that the Iiability to contributeto the fund under the Act was onlyagainstthe employer which under Section 2 of the Act meanteither the owner or occupieror the other persons detailed under the Sectior The definitionunder Section 2 of the ProvidentFund Act statesas followsl el employer meansa r e lil in relation to an establishment which factorythe is a owner or occupierof the factotyincludingthe agent Radhika 2014.01.10 15: 06 True Scanned Copy Of The Original PHHC,Chandigarh JOYTI RANI 2016.03.28 16:25 I attest to the accuracy and integrity of this document 53 0 CWP N700 of2008and 3 r CWP Nol8294 of2007 of such owner or occupierthe Iegalrepresentative of a deceasedowner or occupierand where a person has been named as a managerof the factoryunder clause o of subsection ll of section 7 of the Factories Act 1948 63 of 19481the person So namedand iilin relation to any other establishment the person who or the authority which has the ultimate control over the affairsof the establishment and where the V said affairs are entrusted to a manager CC managing director or managing agentsuch manager managing 0 director or managing agent 0 I Section70f the Factories Act requiresthe Occupierof the factoryto send l5 the Chief Inspectora written notice containing several details that include I under Section 7 Ol bl the name and addressof the occupierand the Z name and addressof the owner of the premisesor buildingThe attempt C4 of the Iearnedcounsei was to show that the employer who could be futther I a owner or occupiermust be shown to be a person notiOed within Chief 06 Inspectordescribing the person in such capacityAccordingto him if the OO employer was a Companyit should onlybe the Companythat could be m Z shown as either the owner or the occupierlanagingDirectorof the tl Companycannot be treated as either the owner or the occupiei lf any Iiability is to be cast on a Director or ManagingDirector he should have been shown in the registerto the Chief Inspector of factoriesthat such a Directorwas either the owner or theoccupier 3 The issuance of the recovery cetlificate contemplated under Section 8wBof the FF Act reads as follows 8B Issue of certificate to the RecovetyOHiceroll l Where any amount IS in arrear under Section 8 the authorizedofficer may issue to the RecoveryOHicer a certificate under his signaturespecifyingthe amount of arrears and the RecoveryOfficer on receiptof such Radhika 2014.01.10 15: 06 True Scanned Copy Of The Original PHHC,Chandigarh JOYTI RANI 2016.03.28 16:25 I attest to the accuracy and integrity of this document 54 0 CWP NolOO of 2009and 4 CWP No 18294 of 2007 cettificateshall proceedto recover theamount specified therein from theestablishmentor as the case may be the employerbyone or more of the modes mentioned below al attachmentand sale of the movable or immovable propertyof the establishmentor as the case may be theemployer bl arrest of the employer and his detentionin prison cl appointing a receiver for the management of the 1 1Z movable or immovablepropetes of the establishment or as the case maybe theemployer 0 0 Providedthat the attachmentand sale of anyproperty I under this section shall first be effected againstthe C5 propettiesof the establishment and where such I attachment and sale IS insufficientfor recovering the whole of the amount of arrears specified in the Z certificate the RecoveryOfficer may take such proceedings againstthe propertyof the employerfor 4r recovetyof the whole or any palt of such arrears I The for recovery shouldbe issued under the said provisions 05 CQ onlyagainstimmovablepropertyof the establishmentor as the case may 7 be of the Employer or the arrest of the and detention If the Z amount for recoveryby the attachment or of the immovableor movable CL propeiliesof the Company could not be made then the provisionsfor arrest could be exercised onlyagainstthe which in this case is the If the Companyitself could not be arrested in the absenceof any specificprovision the authoritiesto proceedpersonally againstthe Director there was no scope for proceedings againstthe Directorof the CompanyThis is too obvious by the express provisionsof the Act The provisionsthat allow for of penaltiesand the mode of inflictingpunisllmentfor the offences committed by the Companies providedunder Section 14 and 144 of the ProvidentFund Act contain 9 1 distinr provisionsrelatingto criminal prosecutionthat would extend 1 Radhika 2014.01.10 15: 06 True Scanned Copy Of The Original PHHC,Chandigarh JOYTI RANI 2016.03.28 16:25 I attest to the accuracy and integrity of this document 55 D CWP NolOO of 2009and 5 Cp CWP No18294 of 2007 punishmentwith It must be noticed that the impugned are not taken under Section 14A by pinningdown the Directoras a person responsibleto the in the conduct of the business of the CompanyThe recovery proceedings should be issued onlyagainstthe employerwhich in this case cannot be said to be a Directoror the ManagingDirector 4 Learned counsel appearingfor the petitioners 1 C referSto the decisionsof the Honble supremecoun in Emplovees State 0 InsuranceCorporation Vs S K Aqqarwaland others 1199816 SCC C0 I that dealt with the expressionprincipal occurringunder Section t5 40 of the ESl Act when it held that a Director cannot be I proceededagainstfor any offencebythe CompanyHe further relied on Z TransportCorporation ofldia Ltcl and others Vs R M Gandhi and 2 others 1999411LLJ that dealt with a case of failureto suobmitmonthly I returnsand contributionswhere the Directorswho had been imputed as c0 beingIncharge of establishment were proceededagainstforfacingpenal OQ actions The Courtheld thatsuch prosecutionbymere vague avermentsin em Z the complaintcannot be upheld Shard Mittersain Jain and others Vs Qm State of Maharashtra 2004ell LLJ that dealt with an action againstthe Directorsof the Company for prosecution under Section406 of the IPC by reasoningthat the definition of under Section 2 el of the Employees ProvidentFund that the Company itself is owner of the factoiy and was the employer cannot result in prosecutionof the Directorsof the Companyitself I have alreadypointedout that this is not a case where any cnminal prosecutionby the penaltyprovidedunder Section 14 or 14A are invoked The impugnednotices are at the stageof recovery The certific8tecannot be issued againstthe Director of the 1 Company nor could there be an action personallyagainstany Directorof r Radhika 2014.01.10 15: 06 True Scanned Copy Of The Original PHHC,Chandigarh JOYTI RANI 2016.03.28 16:25 I attest to the accuracy and integrity of this document 56 0 CWP Nol00 of 2008and 6 CWP No18294 of2007 the CompanySuch an action would be clearlyoutside the scope for powersavailable with RecoveryOmcerunder Section8B of the Act The notices are illegaland Iiableto be quashed 5 The writ petitions are allowed No costs vv K KANNANI JUDGE July242009 Ot 01 11 0 C3 I C5 I Z 1 CC I oll C0 2 Z 0 DI tArhl 271 zs57 pH4 rrl 9 e I 4 Radhika 2014.01.10 15: 06 True Scanned Copy Of The Original PHHC,Chandigarh JOYTI RANI 2016.03.28 16:25 I attest to the accuracy and integrity of this document