IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE V.K.MOHANAN TUESDAY, THE 16TH JUNE 2009 / 26TH JYAISHTA 1931 WP(C).No. 24163 of 2003(B) ---------------------------------------- PETITIONER(S): ------------------------ J.JAYASANKAR, KAMLAJ, SASTHAMANGALAM, THIRUVANANTHAPURAM-10 BY ADVS.MR.K.A.ABRAHAM MR.S.S.NAIR MR.BIJU MARTIN SMT.MINI.S.NAIR RESPONDENT(S): ---------------------------- 1. THE REGIONAL EMPLOYEES PROVIDENT FUND COMMISSIONER, BHAVISHYA NIDHI BHAVAN, KALOOR, KOCHI-682017 2. THE RECOVERY OFFICER, EMPLOYEES PROVIDENT FUND, BHAVISHYA NIDHI BHAVAN, KALOOR, KOCHI-682017 BY ADV. MR.S.GOPAKUMARAN NAIR, SC, P.F. FOR R1,2 THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 16/06/2009, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: W.P.(C) NO.24163/2003 APPENDIX PETITIONER'S EXHIBITS P1:- COPY OF THE RETURN IN FORM NO.32 DT. 20.10.2000 FILED BEFORE THE REGISTRAR OF THE COMPANIES. P2:- COPY OF THE PROHIBITION ORDER NO.KR/KC/276/RECOVERY/2000-01 /3014 DT. 2.8.01. P3:- COPY OF THE REPLY OF THE PETITIONER SENT TO THE 2ND RESPONDENT ON 11.8.01. P4:- COPY OF THE WARNING NOTICE NO.KR/KCH/276 RECOVERY /02-03/32894 DT. 9.1.03. P5:- COPY OF THE LETTER SENT TO THE 2ND RESPONDENT DT. 15.1.03. P6:- COPY OF THE LETTER NO.T.S.1/CP.25/94 AND 4 /2000/F1/6780/03 DT. 20.6.03. P7:- COPY OF THE LETTER NO.KR/KCH/276/RECOVERY /03-04/4403 DT. 18.7.03. ANNEX P1:- COPY OF THE STATEMENT FILED BY THE PETITIONER DT. 16.8.03. ANNEX P2:- COPY OF THE LETTER SUBMITTED BY THE PETITIONER DT. 1.2.05. TRUE COPY P.A. TO JUDGE TSS V.K.MOHANAN, J. --------------------------------------------- W.P(C).No. 24163 of 2003 B --------------------------------------------- Dated this the 16th day of June, 2009 J U D G M E N T The petitioner was the former Managing Director of the Express Malayalam (P) Ltd., Thrissur a company which was publishing the daily “Express (Malayalam)”. According to the petitioner, he had resigned from the Board of Directors and also from the post of Managing Director on 30.9.2000 and his resignation was brought to the notice of the Registrar of companies. The grievance of the petitioner is that even thereafter, the respondents are behind him to realise a sum of Rs.3,36,197.45, being the amount allegedly due towards the employees contribution under the provisions of the Employees Provident Funds and Miscellaneous Provisions Act, 1952 (for short 'the Act'). Therefore, he has preferred this writ petition with a prayer to call for the records leading to Ext.P7 and to set aside Ext.P2, P4 and P7 by issuing a writ of certiorari. It is also prayed for a declaration that the petitioner in his personal capacity is not liable to pay the amount of arrears, due on the provident fund contribution of the company and the second respondent has no WP(C) NO.24163 of 2003 :-2-: jurisdiction to attach and sell the movable or immovable properties of the petitioner or for initiating proceedings for arrest and detention of the petitioner in jail. 2. On behalf of the respondents, a detailed statement is filed controverting the contentions and averments of the petitioner and stating the liability of the petitioner to clear the arrears of contribution which pertains to the period that is, 10/98 to 6/99 since the petitioner was acting as the Managing Director of the said company during the said period. 3. I have heard learned counsel for the petitioner as well as the Standing Counsel for the respondents. 4. Learned counsel for the petitioner, on the strength of the decision of the Division Bench of this Court reported in Ali v. Recovery Officer, E.P.F.Organisation (2007(1) KLT 927), submits that the petitioner is in no way liable to pay the arrears as he had already resigned from the post of the Managing Director of the company with effect from 30.9.2000 and even at the time of initiating proceedings, he had quitted the company and therefore, no personal liability can be fixed. Another contention raised by learned counsel for the petitioner is that in view of Section 8B of the Act and as held by the Division Bench of this Court in the WP(C) NO.24163 of 2003 :-3-: decision referred above, the respondents ought to have proceeded against the assets and properties of the company first. But, in the present case, no such step was taken and therefore, the proceedings against the petitioner are liable to be set aside. 5. On the other hand, learned counsel for the respondents submits that the petitioner, who was the then employer of the employees relating to the establishment, was liable for making the contribution. In paragraph 5 of their statement, it is specifically stated that the petitioner has paid wages to the employees during 10/98 to 6/99 and the corresponding provident fund subscription have been deducted from the wages of the employees. It is also the case of the respondents that after having recovered the provident fund subscription from the wages of the employees, the petitioner failed to remit to the fund and misused the money for ulterior motives which is an offence under the Act and Scheme. Therefore, according to the counsel for the respondents, the proceedings are rightly initiated against the petitioner and he cannot evade from his liability. 6. I have carefully considered the contentions advanced by both the counsel. WP(C) NO.24163 of 2003 :-4-: 7. At the outset, it is relevant to note that on a conjoint reading of Section 8B and 8G, especially in the light of the definition 'employer' defined in Section 2(e) of the Act, there cannot be any doubt that the person, who was acting as an employer at appropriate time, has got a liability to pay the contribution and if there is any failure on his part, he is personally liable for the same, especially in the light of the liability fixed by the provisions of this Act. Therefore, I am not inclined to allow the second prayer of the petitioner in this writ petition when such issues can be settled only on the basis of evidence and other materials. 8. Regarding the submission of learned counsel for the petitioner on the basis of decision of this Court referred above, I am of the view that the said submission deserves serious consideration. After having considered the various provisions contained in the Act and the Rules, this Court has held that the conditions for resorting to either of the modes above mentioned are that attachment and sale of property shall first be effected against the properties of the establishment and then against the property of the employer for recovery whether of the whole or any part of the arrears, if the attachment and sale of the property of WP(C) NO.24163 of 2003 :-5-: the establishment is insufficient for recovery of the entire amount in arrears. It is further held that where the attachment and sale of the property of the establishment be found sufficient for recovery of whole of the amount in arrears, the properties of the employer shall not be proceeded with. In the present case, the proceedings are initiated against the petitioner and no materials are produced by the respondents to show that any step is taken against the properties of the establishment for realisation of the arrears. In this juncture, it is to be noted that all these procedures are prescribed by the Act to ensure the payment towards contribution to the fund which is for the welfare of the employees or the workers in general. If that be so, the amount can be realised, if the proceedings are taken at appropriate time against the properties of the establishment. Here, it is a case where the petitioner resigned from 30.9.2000 from the establishment and I am unable to understand why the respondents proceeded against the petitioner though very clear and effective measures are open and provided for realisation of the arrears. It is to be noted that merely because the petitioner has resigned from the post of Managing Director of the establishment, that by itself will not discharge him from his personal liability under the provisions WP(C) NO.24163 of 2003 :-6-: of the Act unless there is sufficient ground to hold that he is not personally responsible and liable. In the light of the decision of the Division Bench of this Court reported in Ali's case [2007(1) KLT 927], the respondents have to adopt the mode for realising the arrears against the properties of the establishment first. It is also beyond dispute that the establishment is under the liquidator and therefore, the respondents can approach the company court for recovering the arrears that is due to the respondents. In the result, this original petition is disposed of directing the respondents to proceed first against the properties of the establishment and to approach the liquidator appointed by the High Court , in this regard and it is made clear that if the amount, which is due, had not been completely realised by resorting the above method, the respondents are further free to proceed against the petitioner in accordance with the relevant provisions of the Act, on sufficient ground and if the same is in accordance with law and rules. V.K.Mohanan, Judge MBS/ WP(C) NO.24163 of 2003 :-7-: V.K.MOHANAN, J. -------------------------------------------- O.P.NO. OF 200 -------------------------------------------- J U D G M E N T DATED: -6-2009 WP(C) NO.24163 of 2003 :-8-: WP(C) NO.24163 of 2003 :-9-: