IN THE HIGH COURT OF JUDICATURE AT PATNA CWJC No.11891 of 2010 1. M/S SWASTIK ALLUMUNIUM WORKS, KAJICHAK, BARH, PATNA THROUGH ITS PROPRIETOR NAMELY BIRENDRA PRASAD SAH S/O LATE SHEO LAL SAH R/O MOHALLA- KAJICHAK, P.S.- BARH, DISTT.- PATNA Versus 1. THE STATE OF BIHAR 2. THE ASSISTANT PROVIDENT FUND COMMISSIONER, BIHAR, PATNA ----------- 2/ 13/01/2011 Heard learned counsel for the petitioner and for the Provident Fund Department. The petitioner is aggrieved by the order dated 25.2.2005 affirmed by the Appellate Tribunal dated 26.5.2010 imposing liability under Section-7A of the Employees’ Provident Fund and Miscellaneous Provisions Act,1952 (hereinafter referred to as the E.P.F. Act) directing the petitioner to deposit the dues. Proceedings were started under Section-7A against the petitioner in respect of provident fund dues for the period December, 1990 to July, 1993. Learned counsel for the petitioner submits that the unit was established in 1988. It never came to function. There is no enquiry report under Section-7A of the E.P.F. Act much less that 20 persons were employed. The unit remained closed between 1988 to 1992 as has been certified by the Factories’ Inspector and the Commercial Tax Authorities. The question of any inspection of a closed factory in September, 1993 simply does not arise much less 20 workers being found on the - 2 - premises. An ex parte determination in this manner was initially done on 22.8.1994. In pursuance of a writ application filed by the petitioner the fresh order dated 25.2.2005 has been passed which is based on conjectures and surmises. Equally, the appellate order rejects certificates issued by statutory authorities i.e. Commercial Taxes and Factories Inspector, without any reasoning and any further materials in its own wisdom to rebut the findings of the statutory authorities even while accepting that the unit was closed from 1988 to 1992. Learned counsel for the Provident Fund Department asserted that the order dated 22.8.1994 demonstrates that despite repeated notices to him from October, 1993 he refused to participate whereafter only orders were passed ex parte. It was for the petitioner to demonstrate that it never had 20 employees at any point of time. Under Section-1(5) of the E.P.F. Act liability attaches if an establishment employs 20 persons even if the number of the employees subsequently falls. The petitioner never adduced any evidence that he had not engaged 20 persons or that the factory never recommenced production. Section-7A of the E.P.F. Act provides for determination of money due from the employer. Sub- section-(1) thereof postulates the holding of an enquiry - 3 - for deciding the applicability of the Act and during such enquiry the Enquiry Officer has the same powers as are vested in a Court under the Code of Civil Procedure with regard to attendance of persons, examining them on oath, enquiring, discovery and production of documents, receiving evidence on affidavit, issuing commission for examination of witnesses and the proceedings before the Enquiry Officer shall be deemed to be a judicial proceeding under Sections-193,196 and 228 of the Indian Penal Code. Under Sub-section-(3) the employer has to be given a reasonable opportunity to put forth his defence. Under Sub-section-(3)(a) only in the event that the employer or any other persons or both fail to attend the enquiry without valid reasons or produce any document or file, the Enquiry Officer may decide the applicability of the Act and determine the dues, as the case may be, on the basis of evidence available with him. Therefore, if liability has to be imposed upon the petitioner from December, 1990 there has to be an enquiry report in terms of Section-7A determining its liability and coverage under the Act. On the records of the case, there is no such enquiry and hence the question of the applicability of the Act to the petitioner remains an inconclusive issue. The petitioner had adduced evidence of the - 4 - factory being closed from 1988 to 1992 from the Factory’s Inspector and the Commercial Tax Officer. These were certifications issued by statutory authorities empowered to supervise and regulate the establishment also under their own powers. A presumption of the correctness of their certificates shall arise under Section-114(e) of the Indian Evidence Act which provides that all official acts have been regularly performed in normal course of duties. The presumption is rebuttable. It was for the Provident Fund Authorities to rebut this presumption. The fact that they may have made enquiries from the Commercial Tax Officer who in turn told them that it was issued on instructions of the Assistant Commissioner of Commercial Taxes based on materials furnished by the petitioner is hardly of relevance till such time that the certificate is not cancelled. No efforts appear to have been made for cross-verification from the Factories Department. On the contrary, with regard to an official document the Provident Fund Authorities have proceeded on surmises and conjectures that it was not to their satisfaction. There is no finding that the certifications was not genuine. Learned counsel for the petitioner has rightly submitted that even if no enquiry was done in accordance with Section-7A before determining liability from - 5 - December, 1990 and the defence of the petitioner was that the unit was closed from 1988 to 1992, it was open to the appellate authority in exercise of powers under Section-7(J) to carry out the same enquiry and in the same manner, with the same powers as provided under Section-7A. In stead of exercising that statutory power if the appellate authority has proceeded to decide the appeal on surmises and conjectures, the Court finds it difficult to sustain the orders. The mere holding that there were three employees will not suffice unless there was a finding first that in December, 1990 there were 20 employees whereafter only the provisions of Section-1(5) of the E.P.F. Act shall have full force. The appellate order disbelieving the statutory certificates from the aforesaid two authorities in a negative language arrives at the conclusion that the factory was in existence as the petitioner had failed to put forth reliable evidence that the factory was not functional. To the contrary, the onus was on the Provident Fund Authorities to rebut the certificates issued by the Commercial Taxes and Factories Act Authorities. For reasons of the aforesaid discussion, the Court finds it difficult to sustain the order dated 25.2.2005 and the appellate order dated 26.5.2010. They are accordingly set aside. All consequential orders - 6 - automatically become unsustainable. The writ application is allowed. KC ( Navin Sinha, J.)