IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE S.SIRI JAGAN TUESDAY, THE 31ST MAY 2011 / 10TH JYAISHTA 1933 WP(C).No. 9072 of 2007(E) -------------------------------- PETITIONER(S): ---------------------- 1. YOUSAF KUNJU, MANANGING PARTNER, LYLA CASHEW COMPANY, KARALIMUKKU, ARINALLOOR, KOLLAM DISTRICT. 2. BRIJESH D.S., ATB CASHEW COMPANY, KARALIMUKKU, ARINALLOOR P.O., KOLLAM DISTRICT. BY ADV. SRI.B.MOHANLAL RESPONDENT(S): ------------------------ 1. THE ASSISTANT PROVIDENT FUND COMMISSIONER, EMPLOYEES PROVIDENT FUND ORGANISATION, PATTOM, THIRUVANANTHAPURAM-4. 2. THE ENFORCEMENT OFFICER, EMPLOYEES PROVIDENT FUND ORGANISATION, PATTOM, THIRUVANANTHAPURAM. 3. SMT.ANU THANKACHAN, W/O C.G.THANKACHAN, PROPRIETRIX, NITHIN EXPORTS, CHARAKKALPUTHENVEEDU, UMMANNOOR P.O., KOTTARAKKARA, KOLLAM DISTRICT. * ADDITIONAL R4 IMPLEADED 4. THE BRANCH MANAGER, SBT, BISHOP JEROME NAGAR, KOLLAM IS IMPLEADED AS PER ORDER DT. 16.03.2007 IN W.P.(C) FOR R1 TO R2 ADV. SRI.N.N.SUGUNAPALAN, SENIOR ADVOCATE SRI.N.N. SUGUNAPALAN, SC, P.F. SMT.T.N.GIRIJA, SC,EPF ORGANISATION FOR R3 SRI.S.ABDUL RAZZAK FOR ADDL.R4 SRI.SATHISH NINAN SRI.SANTHOSH MATHEW THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 30/05/2011, THE COURT ON 31/05/2011 DELIVERED THE FOLLOWING: sm S. SIRI JAGAN, J --------------------------------------- WP(C) No. 9072 of 2007 --------------------------------------- Dated this the 31st day of May, 2011 JUDGMENT The first petitioner is the owner of a cashew factory. He has leased out the factory to the 3rd respondent for some time and the 3rd respondent ran the cashew factory on lease. After the 3rd respondent ceased to occupy the factory, the first petitioner entered into a lease agreement with the second petitioner for running the factory for the period from 01.03.2001 to 31.12.2007. The factory was being run by the 3rd respondent for the period prior to that including the period from April 1999 to August 2001. Proceedings were initiated by the respondents 1&2 for recovery of contributions from the petitioners for various periods including the period from April 1999 to August 2001 as also the period during which the 2nd petitioner was running the factory. That is under challenge in this writ petition. 2. The contention is that out of the amount WP(C) No. 9072 of 2007 -: 2 :- demanded, only Rs.1,17,238.85 relates to the period during which the second petitioner was running the factory on lease and he is prepared to pay the same. But for the period during which the 3rd respondent was running the factory, the petitioners are not liable to pay the contribution is the contention raised, which comes to Rs.90515/-. 3. I have heard Counsel for the petitioners and the Standing Counsel for the Provident Fund Organisation. None appears for the 3rd respondent. 4. The only question to be decided is as to whether the petitioners are liable to pay contributions for the period from April 1999 to August 2001when the 3rd respondent was running the factory. Admittedly the first petitioner is the owner of the factory. He has first transferred the factory to the 3rd respondent by lease and thereafter to the second petitioner. In case of transfer of establishment liability is prescribed under section17(B) of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 which reads thus; WP(C) No. 9072 of 2007 -: 3 :- [17(B). Liability in case of transfer of establishment - Where an employer, in relation to an establishment, transfers that establishment in whole or in part, by sale, gift, lease or licence or in any other manner whatsoever, the employer and the person to whom the establishment is so transferred shall jointly and severally be liable to pay the contribution and other sums due from the employer under any provision of this Act or the Scheme or the Pension Scheme or the Insurance Scheme, as the case may be, in respect of the period up to the date of such transfer. Provided that the liability of the transferee shall be limited to the value of the assets obtained by him by such transfer] 5. Insofar as there was a transfer first to the 3rd respondent and then to the second respondent, the transferees are liable for contributions for the period up to the transfer also but limited to the value of the assets obtained by the transferee. What has been transferred is the factory. So the second petitioner is liable for the periods up to the transfer also but limited to the value of assets received by him by the transfer. In the above circumstances, I am of opinion that WP(C) No. 9072 of 2007 -: 4 :- the petitioners as well as the 3rd respondent are jointly and severally liable for the contribution for the period from April 1999 to August 2001. But I am of opinion that insofar as the factory and the land in which the same stand are available which is the asset transferred by the 1st respondent, the PF organization should first proceed against the same. But this will not stand in the way of the PF organisation proceeding against the 3rd respondent for recovery of contribution for the period when the 3rd respondent was the employer of the factory. Likewise if petitioners 1 and 2 do satisfy any liability of the 3rd respondent by virtue of Section 17(B) of the Act, the petitioners would be free to recover the same from the 3rd respondent. With the above direction the writ petition is disposed of. S. SIRI JAGAN, JUDGE.