IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD (Special Original Jurisdiction) THURSDAY, THE TWENTY FOURTH DAY OF JULY TWO THOUSAND AND EIGHT PRESENT THE HON'BLE MR JUSTICE B.SESHASAYANA REDDY WRIT PETITION NO : 15194 of 2008 Between: Smt. Saritha Upendra Nath W/o. M.N. Upendra Nath R/o. SRT 144, Jawaharnagar, Chikkadapally, Hyderabad. ..... PETITIONER AND 1.The Assistant Provident Commissioner, Employee's Provident Fund Organization, Regional Office, Hyderabad. 2 B. Venu Gopal S/o. B. Kilasham R/o. H.No. 1-1-695, Gandhinagar, Hyderabad. .....RESPONDENTS Petition under Article 226 of the constitution of India praying that in the circumstances stated in the Affidavit filed herein the High Court will be pleased to issue an appropriate writ order or direction preferably one in the nature of Writ of Mandamus declaring the impugned Order of the 1st Respondent Vide Ref.No. AP/Hy/2666/RRC/Circle II /R.C.No. 106/04/2008 dt. 19-2-2008 and the consequential attachment under Magazar Order dt. 28-3-2008 as arbitrary, illegal, violative of Principles of natural justice and contrary to the Provisions of Employees Provident Funds and Miscellaneous Provisions Act 1952 and set aside the same and consequently direct the 1st Respondent to release the articles attached on 28-3-2008 to the petitioner herein forthwith. Counsel for the Petitioner: MR.S.RAMA SARMA Counsel for the Respondents: MR.R.N.REDDY (SC FOR EMPLOY'S PF ORG.) The Court made the following : THE HON’BLE SRI JUSTICE B.SESHASAYANA REDDY Writ Petition No.15194 of 2008 ORDER: This writ petition has been filed by Smt.Saritha Upendra Nath assailing the proceedings, vide Ref.No.AP/Hy/2666/RRC/Circle II/RC.No.106/04/2008, dated 19.02.2008, issued by the Assistant Provident Commissioner, Employees’ Provident Fund Organisation, Regional Office, Hyderabad-first respondent. The petitioner purchased the assets of M/s.Sarada Engineering Company held by B.Venugoal-second respondent under a document styled as ‘Articles of Sale’, dated 21.12.2006. Since the second respondent fell due certain amounts towards provident fund, proceedings have been initiated under the provisions of the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 (for short ‘the Act’) and execution of warrant of attachment of movable properties of M/s.Sarada Engineering Company came to be issued. The said attachment order is under challenge in this writ petition. It is contended by the learned counsel for the petitioner that the petitioner purchased the assets of M/s.Sarada Engineering Company held by the second respondent for a valid consideration and therefore, the assets of the company are not liable for attachment. When the writ petition came up for admission, Mr.R.N.Reddy, learned Standing Counsel for Employees’ Provident Fund Organisation, received notice on behalf of the first respondent. The learned counsel for the petitioner submits that the petitioner parted a sum of Rs.2,20,000/- and acquired the assets of M/s.Sarada Engineering Company and therefore, he is not liable for the provident fund dues, if any, payable by the second respondent. The learned Standing Counsel appearing for the first respondent submits that the assets of the company are liable as first charge for the provident fund dues under the provisions of the Act and if the petitioner purchased the assets of the company, still they are liable for attachment. The learned Standing Counsel referred to Section 11 of the Act, which reads as hereunder. 11.Priority of payment of contribution over other debts:- 1. Where any employer is adjudicated insolvent or, being a company, an order for winding up is made, the amount due – (a)from the employer in relation to an establishment to which any Scheme or the Insurance Scheme applies in respect of any contribution payable to the fund or, as the case may be, the Insurance Fund, damages recoverable under Section 14B, accumulations required to be transferred under sub- section (2) of Section 15 or any charges payable by him under any other provision of this Act or any provision of the Scheme or the Insurance Scheme; or (b)from the employer in relation to an exempted establishment in respect of any contribution in respect of any contribution to the provident fund or any Insurance Fund (in so far as it relates to exempted employees), under the rules of the provident fund or any Insurance Fund, any contribution payable by him towards the Pension Fund under sub-section (6) of Section 17, damages recoverable under Section 14B or any charges payable by him to the appropriate Government under any provision of this Act or under any of the conditions specified under Section 17, shall, where the liability therefor has accrued before the order of adjudication or winding up is made, be deemed to be included among the debts which under Section 49 of the Presidency-towns Insolvency Act, 1909 (3 of 1909), or under Section 61 of the Provincial Insolvency Act, 1920 (5 of 1920) or under Section 530 of the Companies Act, 1956 (1 of 1956) are to be paid in priority to all other debts in the distribution of the property of the insolvent or the assets of the company being wound up, as the case may be. Explanation:- In this sub-section and in Section 17, “insurance fund” means any fund established by an employer under any scheme for providing benefits in the nature of life insurance to employees, whether linked to their deposits in provident fund or not, without payment by the employees of any separate contribution or premium in that behalf. (2) Without prejudice to the provisions of the sub-section (1), if any amount is due from an employer whether in respect of the employees’ contribution (deducted from the wages of the employee) or the employees’ contribution the amount so due shall be deemed to be the first charge on the assets of the establishment and shall, notwithstanding anything contained in any other law for the time being in force, be paid in priority to all other debts.” It is clear from the above referred provision that the assets of employer are liable to be attached since the amount payable under the Act shall be deemed to be first charge. Therefore, the contention of the learned counsel for the petitioner that the assets of M/s.Sarada Engineering Company held by the second respondent and purchased by the petitioner are not liable for attachment has no merit. The writ petition is accordingly dismissed. No costs. ____________________ (B.Seshasayana Reddy,J) Dt.24th July, 2008. VGB