1 BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT DATED: 09.09.2011 CORAM: THE HONOURABLE MR.JUSTICE VINOD K.SHARMA W.P.(MD).Nos.4643 and 4644 of 2011 And M.P.(MD).Nos.1, 2, 1 & 2 of 2011 M/s. S.M.Ponnusamy Chettiar & Sons Through its Proprietor, P.B.Murugan No.120-A, South Avani Moola Street Madurai - 625 001. : Petitioner in both W.Ps. Vs. 1. The Assistant Provident Fund Commissioner Employees Provident Fund Organization Regional Office, Lady Doak College Road, Madruai - 2 2. The Enforcement Officer Employees' Provident Fund Organization Regional Office, Lady Doak College Road, Madurai – 2 3. The Employees' Provident Fund Appellate Tribunal (Ministry of Labour and Employment Government of India) 4th Floor, Core 2, Scope Minar Laxmi Nagar, New Delhi - 110 092. :Respondents in both W.Ps. PRAYER IN W.P.(MD).No. 4643/2011: Writ Petition filed under Article 226 of the Constitution of India praying to issue a Writ of Certiorari calling for the records relating to the proceedings in File No. TN/RO/MDU/6454A/Enf./Circle 6/16052/2007 dated 25.10.2007 on the file of the first respondent as confirmed in appeal in ATA No. 702(13) 2008 dated 28.01.2011 on the file of the third respondent and quash the same. PRAYER IN W.P.(MD).No. 4644/2011: Writ Petition filed under Article 226 of the Constitution of India praying to issue a Writ of Certiorari calling for the records relating to the proceedings in File No. TN/MDU6454A/Enf./Circle 16/16053/2007 dated 25.10.2007 on the file of the first respondent as confirmed in appeal in ATA No. 703(13) 2008 dated 28.01.2011 on the file of the third respondent and quash the same. For Petitioner in both W.Ps. : Mr.M.P.Senthil For RR 1 & 2 : Mr.G.R.Swaminathan R3 : Tribunal C O M M O N O R D E R The petitioner in these Writ Petitions, has approached this Court with a prayer for issuance of a Writ in the nature of Certiorari, to quash the order passed by the Assessing Officer, under Section 7-A of the Employees' Provident Fund and Miscellaneous Provisions Act 1952, [herein-after https://hcservices.ecourts.gov.in/hcservices/ 2 referred to as the "Act"] and that of Employees Provident Fund Appellate Tribunal, in dismissing the appeals filed by the petitioner. 2. The grandfather of the petitioner along with his son constituted a partnership firm, under the name and style of M/s. S.M.Ponnusamy Chettiar & Sons, for running jewelry business. The partnership firm was covered under the Act. On the death of Thiru.S.M.Ponnusamy Chettiar, the partnership firm was dissolved and taken over by the father of the petitioner in the year 1991. He continued business under the name and style of M/s. S.M.Ponnusamy Chettiar & Sons, till the year 2003. Due to ill-health, the father of the petitioner, could not continue with the business and closed the proprietorship concern. 3. The registration certificate issued by the Commercial Tax Department was surrendered, and the account of the establishment was closed. On close of the sole proprietorship concern, the employees working with the father of the petitioner were given their dues including provident fund. The provident fund account bearing No. TNR/6454/A of M/s. S.M.Ponnusamy Chettiar & Sons, was also closed. 4. The petitioner, who was working in the Multi National company, resigned the job and started the business under the name and style of M/s.S.M.Ponnusamy Chettiar & Sons, as the name after closer of firm was not registered by the Registrar of Firms in favour of anybody-else. 5. The petitioner was issued a new registration certificate, on 03.07.2003 by the Commercial Tax Department, in his name as proprietary concern. The petitioner employed three persons and claimed that the petitioner was not covered under the Act, therefore did not pay contribution to the provident fund. 6. The notice was issued on 01.05.2007, calling the petitioner to remit the employees share of Employees Provident Fund. In response to the notice, the petitioner appeared before the Assessing Officer, and brought to his notice, that the petitioner concern was an proprietary concern, which had not taken over as a running concern, as the father of the petitioner had closed the partnership firm, viz., M/s. S.M.Ponnusamy Chettiar & Sons, by settling the accounts of the employees. 7. The Assessing Officer, without meeting with the contention raised by the petitioner, passed the order under Section 17-A on the presumption that the establishment once registered under the Act continues to be registered, and there, the petitioner cannot take benefit of registration of his firm as a new entity. 8. The petitioner being aggrieved by the order passed under Section 7-A, instead of filing the statutory appeal, approached this Court by filing W.P.(MD).No. 10196 of 2007. The Writ Petition was dismissed by this Court, holding that the petitioner had an alternative statutory remedy of appeal. The liberty was, however granted to the petitioner to approach the Employees Provident Fund Appellate Tribunal, by filing statutory appeal. https://hcservices.ecourts.gov.in/hcservices/ 3 9. The appeal filed by the petitioner was also dismissed, by recording that the applicability of the act was not questioned. This finding on the face of it is perverse, as the only ground of defence was that the act was not applicable to the petitioner, being a new proprietary concern, employing only three persons. 10. The learned Tribunal, is also held that once the establishment was covered under the Act, it continues to be covered, till the authority comes to the conclusion that the firm was no more in existence. This proposition was also blindly applied, as the case of the petitioner was that the firm which was covered under the Act was closed, and the registration certificate surrendered. 11. The finding of the learned Tribunal, that no documents were filed to show the closer of business, is also outcome of misleading of the material on record, as the petitioner had placed on record the cancellation of registration certificate and other docuemnts. 12. The finding of the learned Tribunal, that there were no limitation prescribed for reopening the assessment, does not call for any comments as it is rightly recorded. 13. The impugned orders, cannot be sustained, being outcome of non application of mind, and are non speaking, as orders do not deal with the contentions raised by the petitioner, that the firm registered under the Act should dissolve and in fact the petitioner was running an independent new unit. 14. The quasi judicial authorities were bound to form an opinion that after considering the evidence on record, and by recording a finding as to whether the business run by the petitioner would be treated as a new firm or not. In absence of a positive finding that it was the old firm which was revived, and that surrender of registration certificate etc., and closure of account had no effect. It is not possible to fasten the liability on the petitioner, as done. 15. Learned counsel for the respondents vehemently contended, that the impugned orders do not call for any interference, by this Court, as it is well settled in law that the applicability of the Act is to establishment, and not the management, therefore, mere change of management could not take the establishment out the purview of the Act. 16. The proposition canvassed cannot be disputed, but it does not apply to the facts of the case. The question whether establishment is a continuing establishment under the new Management or that the covered establishment has ceased to exist or not is to be decided by the Assessing Officer in each case, when such a controversy is raised. In case, where a partnership firm is dissolved, and accounts are settled, thereafter, if a new firm is continued and business started in the same premises, it will not result in revival of old establishment, but will be a new establishment for all intended purposes. https://hcservices.ecourts.gov.in/hcservices/ 4 17. The Assessing Officer, therefore, was required to apply his mind, to the facts and circumstances of the case, and record a finding as to whether, the stand of the petitioner, that he started new establishment under the old name, by getting fresh registration number etc., or it was old establishment under the new management. 18. The Assessing Officer was also required to record a finding on the basis of the materials available on record as to whether the establishment of the petitioner, was covered under the Act or not 19. This exercise has not been done, and the impugned orders are passed, merely on presumptions. The orders therefore suffer from vice of arbitrary exercise of power. 20. The impugned orders, on the face of it being arbitrary, and outcome of non-application of mind, cannot be sustained in law. 21. Consequently, these Writ Petitions are allowed, the impugned orders, are set aside by remitting the matter back to the Assessing Officer, to decide the case afresh, after giving positive findings on the points raised by the petitioner, in defence to coverage of his establishment under the Act. 22. Connected Miscellaneous Petitions are closed. No costs. SD ASST REGISTRAR ( AE ) /TRUE COPY/ SUB ASST REGISTRAR vsg To 1.The Assistant Provident Fund Commissioner Employees Provident Fund Organization Regional Office, Lady Doak College Road, Madruai - 2 2.The Enforcement Officer Employees' Provident Fund Organization Regional Office, Lady Doak College Road, Madurai - 2 3.The Employees' Provident Fund Appellate Tribunal (Ministry of Labour and Employment Government of India) 4th Floor, Core 2, Scope Minar Laxmi Nagar, New Delhi - 110 092. 1CC TO MR. M.P. SENTHIL, ADVOCATE, SR: 30832: 1CC TO MR. G.R. SWAMINATHAN, ADVOCATE, SR; 31009: DM::2011:SEPTEMBER:28:: W.P.(MD).Nos.4643 and 4644 of 2011 And M.P.(MD).Nos.1, 2, 1 & 2 of 2011 09.09.2011 4P:6C:: https://hcservices.ecourts.gov.in/hcservices/