THE HON’BLE SRI JUSTICE P.S. NARAYANA WRIT PETITION No.9463 of 2005 Dated: 28.01.2008 Between A. Mohan Rao, S/o.Veera Swamy Proprietor, M/s.Chandra Constructions. …Petitioner And The Assistant Provident Fund Commissioner, O/o. The Regional Provident Fund Commissioner, VUDA Layout, Marripalem, NAD (P.O), Visakhapatnam and others. …Respondents THE HON’BLE SRI JUSTICE P.S. NARAYANA WRIT PETITION No.9463 of 2005 ORDER: This Court ordered rule nisi on 26.04.2005 and granted interim direction directing the fifth respondent to release the petitioner on payment of a sum of Rs.3,50,000/- and it was made clear that such payment shall be subject to further orders in the writ petition. 2. The writ petition is filed for issuance of writ of mandamus declaring the action of the third respondent in issuing the impugned arrest warrant and executing the same under Section 8(B)(b) of the Employees’ Provident Fund and Miscellaneous Provisions Act, 1952 (for short ‘the Act’) vide proceeding No.AP/Recy/31774/VSP/2005, dated 20.04.2005, as arbitrary, illegal and contrary to the provisions of the Act and to set aside the same with a consequential direction to the respondents not to recover any dues from the petitioner under the Act without passing final orders on the application dated 25.08.2003 filed by the petitioner to set aside the ex parte orders and to pass such other suitable orders. 3. Sri D.V.Seetharam Murthy, learned counsel representing the writ petitioner had taken this Court through the contents of the affidavit filed in support of the writ petition and would maintain that inasmuch as the conditional order passed by this Court had been complied with further opportunity may be given to the petitioner to pursue the remedies in accordance with law. The learned counsel also had taken this Court through the contents of the reply affidavit as well. 4. On the contrary, Sri R.N.Reddy, learned counsel representing respondents 1 to 4 had taken this Court through the contents of the counter-affidavit and also placed the order made in W.P.No.6161 of 2004 and would maintain that in the light of the said order, at the best, some time may be granted for the purpose of making payment of the rest of the amount due, and that except giving such time no further relief can be granted in the present writ petition. 5. Heard the learned counsel. 6. The petitioner is the proprietor of M/s.Chandra Constructions, which has its office at Visakhapatnam with the major business interests in civil contracts and executing works of M/s.Rajashree Cement (An Aditya Birla Group), Aditya Nagar, Malkhed Road, Gulbarga District, Karnataka. The petitioner has experience in the field of making available manpower and prevention of shutting down works at sites etc. The contracts discharged by the petitioner were in the nature of his being the agent of the company (i.e., Principal), which has awarded the work to him to draft workmen to sites. 7 . While so, pursuant to their acceptance of work from M/s.Rajashree Cement there was a statutory claim on their Principal and the petitioner as its agent to remit the P.F contribution on behalf of the employees engaged by him. Accordingly, their Principal M/s.Rajashree Cement started paying the said contribution in their account vide under code No.KN/11331 at Gulbarga. With the passage of time, the number and nature of contracts executed by the petitioner increased. 8 . While so, the fourth respondent vide his proceeding No.AP/VP/31774/VSP-IV/ENF-I/98/00, dated 22.04.1998, intimated the petitioner that the Act is made applicable to his company with effect from 01.11.1996 by allotting code No.AP/VP/31774. While so, the petitioner appointed one Machineni Krishna Murthy of Vuyyuru to attend all these administrative duties and for proper discharge of the statutory obligations provided under the Act. The said M.Krishna Murthy absconded with cash entrusted to him for payment of P.F. contributions. The petitioner reported the same to the authorities and made a disclosure voluntarily and has taken steps for remitting the said dues through their Principal M/s.Rajashree Cements. Thus, an amount of Rs.5,17,043/- was remitted by the Principal at their instance. Thereafter, the petitioner has been remitting the dues payable to the authorities towards the contribution payable towards P.F. periodically. 9 . On seeing out accomplishment of the duties without any blemish, the petitioner was entrusted with new assignment from M/s.Dredging Corporation (A Government of India undertaking) and other concerns. The petitioner was issued certification of completion of work under the contracts and thereafter he made an application for release of the security deposit. The Assistant Commissioner P.F. had issued ‘No Due Certificate’ vide letter No.AP/VP/31774/ENF/CC54/02, dated 18th July 2002. 10. It may be stated that during the two years contract work with M/s.Dredging Corporation, Visakhapatnam, the workers, who were engaged in the said work, received all of their P.F claims etc., while arriving to settlement with the DCI workers union. 11. It is also stated that when the P.F authorities issued letters calling upon the petitioner to pay the P.F contributions of workers engaged in the works relating to M/s.Rajashree Cement for the periods 1998-1999, 1999-2000 and 2000-2001, the petitioner under intimation to the respondents prevailed on the Principal to remit the dues payable. The Principal M/s.Rajashree Cement through a D.D bearing No.734236, dated 25.09.2001, paid a sum of Rs.1,94,907/- to the P.F. authorities at Visakhapatnam. Thereafter, when the Principal Employer wanted to retrench certain of the workers, the petitioner entered into a Memorandum of Settlement in the presence of the Deputy Labour Commissioner on 12.10.2001. As per the said settlement, the petitioner’s contract was closed and there is no outstanding liability of P.F contributions. In pursuance thereof, the petitioner brought the same to the notice of the respondents herein. 12. It is further stated that the petitioner is not doing any business whatsoever from the year 2001. In all its statutory returns to the authorities, the petitioner used to indicate that he is not doing any business since 2001 by showing the works undertaken as “Nil”. The administrative office of the petitioner however was operational. In the past, a similar notice was issued for the earlier period vide proceedings dated 25.09.2003 claiming amounts to be due from the petitioner. The petitioner was never put on notice as regards such adjudicatory proceedings under Section 7A, and admittedly an ex parte order was passed. The petitioner, through his representation, dated 07.03.2003, replied to the first respondent to drop further action in pursuance of the said notice while intimating the fact that an application to set aside the ex parte order is already filed. So far no orders are passed on the said application filed by him. 1 3 . However, to the petitioner’s dismay, the Regional P.F Commissioner, Hyderabad, the fourth respondent vide his proceedings No.AP/RO/31774/RC (C&R)/COORD/Major Defaulters/ 2005/746, dated 09.02.2005, intimated that the petitioner has committed default in payment of P.F contributions to a tune of Rs.4,35,008/- under various accounts i.e., A/c No.1, No.2, No.10, No.21 and No.22 and further intimated that the petitioner has to pay damages and interest to an extent of Rs.7,88,370/-. The petitioner submits that the aforesaid orders were issued without giving any notice to him and without considering his objections. In as much as the proceedings were made ex parte, the petitioner filed an application to the authority against the said ex parte order. However, no action has been taken and the said application is still pending. 14. Thereafter, the petitioner submitted a representation/appeal to the fourth respondent on 22.02.2005, which has not evoked any response. However, the third respondent-Recovery Officer issued a notice vide Ref.No.AP/Recy/VSP/31774/05 dated 12.04.2005 calling upon the petitioner to appear before him on 20.04.2005. The petitioner, who was under the impression that the said notice might have been issued in pursuance of the representation/appeal filed by him, approached the Recovery Officer on 20.04.2005. Surprisingly, without conducting any enquiry and without referring to the representation, the third respondent insisted the petitioner to pay the said amount of Rs.7,88,369.90 then and there. When the petitioner expressed his inability, the third respondent served a warrant of arrest, which was already prepared and placed on his table, and drafted him to Central Prison, Visakhapatnam. 15. Several grounds had been raised in the affidavit filed in support of the writ petition. 16. In the counter-affidavit filed by respondents 1 to 4, it is stated that an enquiry under Section 7A of the Act was initiated through summons dated 24.10.2001 fixing the hearing on 27.11.2001, but the petitioner failed to attend the enquiry; that to afford reasonable opportunity, the enquiry was adjourned from time to time; and that on 17.09.2002, the petitioner himself attended and sought time to produce the records. Thus the enquiry was adjourned to 03.10.2002, but the petitioner failed to appear on the said date. Therefore, the enquiry was further adjourned to 28.10.2002, 12.11.2002, 03.12.2002, 23.01.2003, 20.02.2003 and 12.03.2003, but the petitioner failed to attend the enquiry on that dates also. Thus, having no other alternative, the dues were assessed ex parte at Rs.6,26,338/- and an order dated 10.06.2003 was issued to that effect. The petitioner came up with a petition under Section 7 A(4) of the Act dated 25.08.2003 and the same was rejected through letter dated 18.11.2003. However, the petitioner failed to pay total arrears. Thus a Recovery Certificate dated 09.03.2004 was issued to the Recovery Officer to recover the outstanding arrears of contributions of Rs.3,75,071/- and the Recovery Officer issued a demand notice dated 09.03.2004 to recover the said amount. 17. It is also stated that the petitioner also committed default in paying the contributions in time and thus an action under Section 14 B of the Act for the recovery of the damages was initiated and the petitioner was called upon through an order dated 13.05.2003 to pay damages and interest to the tune of Rs.3,28,846/-. However, the petitioner was given an opportunity of making a representation against the said levy, or otherwise the said amount will be recovered. But, the petitioner failed to make any representation in spite of receipt of the said order on 19.05.2003. Thus a Recovery Certificate dated 08.04.2004 was issued to the Recovery Officer to recover the said dues also. 18. It is further stated that questioning the above actions of the respondents, the petitioner filed W.P.No.6161 of 2004 and the same was withdrawn on 01.11.2004 to file appeal before the Tribunal, but as on date no appeal is filed by the petitioner. Thus the respondents had no other alternative than to arrest the petitioner, impugning which the present writ petition is filed. It is further stated that this Court again shown indulgence and granted interim direction to release the petitioner on deposit of Rs.3.5 lakhs, but the petitioner did not comply with the said order. Thus the writ petition is liable to be dismissed both for non-compliance of the orders of this Court and also on availability of effective alternative remedy. 19. A reply-affidavit was filed to the counter-affidavit, wherein again the stand taken in the affidavit filed in support of the writ petition in fact had been repeated. It was offered in para 2 of the reply-affidavit that for the period from 01.11.1996 to 30.04.1998 P.F contributions were already deducted by M/s.Rajashree Cements, their Principal Employer, and they were remitting the same in their account having Code No.KN/11331 at Gulbarga. The amounts were deducted every month from the employees by the said organization and they used to remit the same after adding the employer’s contribution from their end. If there was any delay in remitting the P.F contributions before May, 1998, the same has to be explained by M/s.Rajashree Cement and remit the amount, if any. Further, regarding payments due from June, 1998 to March, 1999 and December, 1999 to October, 2000, the amounts were entrusted in cash to one Mr.M.Krishna Murthy, who was appointed to look after the statutory obligations under the Act. But he has absconded with the cash without depositing the same with PF organization. Soon after this was detected and PF authorities were informed, the dues i.e., Rs.5,17,043/- were remitted by a Demand Draft bearing No.56803, dated 14.12.2000, issued by the Principal Employer M/s.Rajashree Cement. The said amount was adjusted with the Principal Employer from the bills due and retention money due to the petitioner. The petitioner reiterate that he paid this amount with great difficulty owning his responsibility for the misdeeds of his employee, for which, he request that he may not be burdened with additional amounts towards damages and interest. In so far as claim for the period from November, 1996 to May, 1998, the petitioner could not submit the details as the Principal Employer had taken away all his records including attendance register and account books etc. Since the records were forcefully taken away, the petitioner had lodged criminal complaint against the concerned employees of the Principal Employer vide Private Complaint No.26/2001 at JFMC, Sedam, which was later converted as C.C.No.378/2003 before JFMC, Sedam. The matter is now pending before the High Court of Karnataka in Crl.Petn.No.1371 of 2006 and consequent to the stay granted by the High Court C.C.No.378 of 2003 is still pending. 20. It is also stated that the petitioner discontinued supply of manpower to Rajashree Cements in 2001. Similarly, his work of manpower supply to DCI was also discontinued on 15.12.2000. He is not engaging or supplying any manpower from 2001. No single person is employed by him since mid-October, 2001 save for a small contract of a value of Rs.50,000/- including the cost of materials and labour. They have duly remitted the P.F contributions for this period of contract. Hence, he reiterate that there are no P.F contributions dues from him for the period June, 2002 to March, 2003. He submit that the P.F authorities have issued him a “No Due Certificate” vide Ref.No.AP/VP/31774/ENF/CC54/02, dated 18.07.2002 confirming the receipt of P.F contributions in full upto May, 2001 and hence, now the respondents are estopped from claiming any amounts for the period prior to 18.07.2002. 21. It is further offered that the contentions in para 2 of the counter- affidavit are neither true nor correct. The petitioner further submit that as stated supra, he has not been doing any business since October, 2001 and the contribution dues of Rs.1,94,907/- were paid on 26.09.2001 for the period upto August, 2001. Thereafter another demand draft on 12.10.2001 for contributions for September, 2001 and part of October, 2001 was made by M/s.Rajashree Cements. He further submit that an ex parte order was passed on 10.06.2003. The order has been passed, as he had not submitted his monthly and yearly returns for the period from June, 2001 to March, 2003. At the cost of repetition, he submit that he had discontinued his business activity from October, 2001, save a small contract of Rs.50,000/- including material and hence there is no liability on his part towards P.F contributions. Because of his personal problems and continued ill health, he could not attend the enquiry. 22. Certain further averments also had been made in para 5 of the reply affidavit. 23. The order, dated 01.11.2004, passed in W.P.No.6161 of 2004 is placed before this Court and the order reads as here under: “Learned counsel for the petitioner seeks permission to withdraw the writ petition with liberty to the petitioner to file an appeal before the Appellate Tribunal. Permission is granted. Recording the above submission made by the learned counsel, the writ petition is dismissed as withdrawn. No costs.” 24. In the light of the specific stand taken in the counter-affidavit and also nature of the order made by this Court in W.P.No.6161 of 2004, no further relief can be granted in the present writ petition. However, liberty is given to the petitioner to make a request by way of representation to the competent authority, if the petitioner is so advised in getting some reasonable time for making the rest of the payment. 25. With the above observation, the writ petition is hereby dismissed. There shall be no order as to costs. _______________ P.S.Narayana, J Date: 28.01.2008 va