IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HON'BLE THE CHIEF JUSTICE MR.J.CHELAMESWAR & THE HONOURABLE MR. JUSTICE P.R.RAMACHANDRA MENON MONDAY, THE 27TH JUNE 2011 / 6TH ASHADHA 1933 WA.No. 811 of 2011() -------------------- AGAINST THE JUDGEMENT IN WPC.1133/2009 Dated 28/03/2011 .................... APPELLANT(S): RESPONDENTS ------------------------- 1. M/S.LEKSHMI ENTERPRISES, 2ND MILE KILIKOLLOOR P.O., KOLLAM, REP. BY ITS MANAGING PARTNER MR.K.RADHAKRISHNA PILLAI. 2. MR.K.RADHAKRISHNA PILLAI, S/O.SRI.KUTTAN PILLAI, MANAGING PARTNER, M/S.LAKSHMI ENTERPRISES, "LAKSHMI", 2ND MILE, KILIKOLLOOR P.O., KOLLAM. 3. MRS.K.VASANTHAKUMARI, W/O.MR.K.RADHAKRISHNA PILLAI, PARTNER, M/S.LAKSHMI ENTERPRISES, "LAKSHMI", 2ND MILE, KILIKOLLOOR P.O., KOLLAM. BY ADV. SRI.E.K.NANDAKUMAR SRI.A.K.JAYASANKAR NAMBIAR SRI.K.JOHN MATHAI SRI.P.BENNY THOMAS SRI.P.GOPINATH RESPONDENT(S): PETITIONER ------------------------- 1. SINDHU L., W/O.LATE ANIL KUMAR, AGED 38 YEARS, ELLAMKONATHU HOUSE, EZHUKONE P.O., EZHUKONE VILLAGE, KOTTARAKKARA TALUK, KOLLAM. 2. ABIN, S/O.LATE ANIL KUMAR, AGED 17 YEARS, ELLAMKONATHU HOUSE, EZHUKONE P.O., EZHUKONE VILLAGE, KOTTARAKKARA TALUK, KOLLAM, REP. BY HIS MOTHER AND NATURAL GUARDIAN SINDHU L. 3. BHAGYA, D/O.LATE ANIL KUMAR S., AGED 14 YEARS, ELLAMKONATHU HOUSE, EZHUKONE P.O., EZHUKONE VILLAGE, KOTTARAKKARA TALUK, KOLLAM, REP. BY HER MOTHER AND NATURAL GUARDIAN SINDHU L. ADV. SRI.K.K.JOHN FOR R7 THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 27/06/2011, ALONG WITH WA NO. 813 OF 2011 THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: J. CHELAMESWAR, C.J & P.R.RAMACHANDRA MENON, J. ---------------------------------------------- W.A.No. 811 of 2011 & W.A.No. 813 of 2011 ---------------------------------------------- Dated this the 27th day of June, 2011 JUDGMENT J.Chelameswar, CJ. Appellants are the same in both the appeals and even the respondents are same except for one. The first appellant is a partnership firm. The other two appellants are the partners of the said firm. The appellants borrowed certain amounts from the ING Vysya Bank Ltd., one of the respondents in these appeals. As there was default in payment of the amounts borrowed from the Bank, the said Bank initiated proceedings under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act (SARFAESI Act). Eventually, two items of properties belonging to the appellants were brought to sale and purchased by the concerned respondents in these two appeals. The sales have become final. 2. It appears that the appellants were also liable to make some payments under the Employees Provident Funds and Miscellaneous Provisions Act, 1982. In view of the said liability, the authorities under the abovementioned Act attached the WA.811 & 813/11 2 properties, which were sold under the provisions of the SARFAESI Act. 3. The purchasers of the property approached this Court by filing W.P(C).Nos. 1127 and 1132 of 2009 claiming that they are entitled for a declaration (in substance) that the purchase of the property made by each of them is not subject to any encumbrance and consequently, the proceedings initiated under the Employees Provident Funds and Miscellaneous Provisions Act are legally unsustainable. 4. By the judgment under appeal the learned Judge of this Court made a declaration as follows: “1. It is declared that the Provident Fund Organisation does not have any right to proceed against the properties purchased by the petitioners in proceedings under the Securitizatin and Reconstruction of Financial Assets and Enforcement of Security Interest Act, in sale proceedings initiated by the Bank. 2. It is declared that the rights of the Provident Fund Organisation in exercise of their statutory first charge in respect of the properties is only to proceed against the sale price obtained by the Bank by sale of the said properties in favour of the petitioners in these writ petitions. 3. Accordingly, it is declared that the petitioners hold the properties free from all encumbrances created by the owner of the properties in favour of the Bank and the statutory first charge in favour of the Provident Fund Organisation. WA.811 & 813/11 3 4. The Bank shall surrender their mortgage rights on 52.57 ares of land (made up of 31.97 ares in Re.Sy No.60/7-1 [old Sy.No.572/4) and 20.60 ares in Re.Sy No.60/3 (old Sy No.572/AD)] of Sasthamkotta Village, Kunnathur Taluk, belonging to Shri.Radhakrishna Pillai together with the cashew factory and machinery thereon covered by sale deed Nos.515/990 and 1967/97 of Sasthamkotta Sub Registrar's Office, in favour of the Provident Fund Organisation. This shall done within two weeks. 5. On getting surrender of the properties, the Provident Fund Organisation shall take steps to sell the properties by public auction or by inviting tenders. The Bank shall be informed about every step taken by the Provident Fund Organisation for sale of the said properties. The Provident Fund Organisation shall take into account every reasonable suggestion made by the bank in respect of such sale for realizing the best possible price for the properties. Notice regarding sale of the property shall be issued to M/s.Lekshmi Enterprises and, the owner of the property. Purchasers in such sale would have all the rights of purchasers who purchase land in a sale in exercise of powers of the Bank under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act. 6. After the sale of the properties, if the sale proceeds realised are in excess of the dues of the Provident Fund Organisation, the balance amount realised shall be handed over to the Bank, who shall credit the same to the loan account of the mortgagee. If the sale price realised is not sufficient to cover the balance dues of the Provident Fund Organisation, it would be open to the Provident Fund Organisation to WA.811 & 813/11 4 proceed against, either the sale price with the Bank by sale of the properties, which is the subject matter of these writ petitions, or against other properties belonging to the defaulter establishment or its partners. 7. The Provident Fund Organisation shall complete the sale proceedings as directed above within a period of three months from the date of receipt of a copy of this judgment. I make it clear that, it is without prejudice to the right of the establishment and its partners to challenge the quantum fixed by the Provident Fund Organisation, as amount due from them, in accordance with law.” 5. It can be noticed from the above extract that the learned Judge did not decide the question of law whether the statutory first charge created under the Employees Provident Funds and Miscellaneous Provisions Act is enforceable against the purchaser of properties in the sale brought by creditor's bank invoking the provisions of the SARFAESI Act. On the other hand, the learned Judge, on the facts of the case, made a declaration that the sale of another piece of property of the appellant herein mortgaged to the respondent-Bank would suffice the requirements of meeting the provident fund dues and give certain incidental directions. Hence these appeals. 6. Irrespective of the answer to the question of law which remains unanswered by the judgment under appeal, the WA.811 & 813/11 5 appellants did not dispute their liability under the provisions of the Employees Provident Funds and Miscellaneous Provisions Act, though there appears to be some doubt about the actual quantum of money due from the appellants under the abovementioned Act. In the circumstances, interfering with the judgment under appeal on the ground that an academic question of law, arises for consideration in this Court, in our opinion, is not permissible. It must be remembered that the appellant is not the purchaser of the property. The appellants shall not be permitted to avoid his statutory liability under the Employees Provident Funds and Miscellaneous Provisions Act by raising such academic questions. The fact that each of the properties held by the appellants is charged under the provisions of the Employees Provident Funds and Miscellaneous Provisions Act is enough to non-suit the appellants herein. The Writ Appeals are, therefore dismissed at the admission stage itself. J.CHELAMESWAR, CHIEF JUSTICE P.R.RAMACHANDRA MENON, JUDGE vgs