HON’BLE MR.JUSTICE R. SUBHASH REDDY Writ Petition No.96 of 2009 Date: November 28, 2011 Between: Sree Mahayogi Lakshmamma Cooperative Bank Ltd., rep. by Manager G.Murali Kumar, S/o.G.Aswatha Narayana … Petitioner And The Regional Provident Fund Commissioner-II and Recovery Officer, Employees Provident Fund Organization/SRO, D.No.1/30, Railway Station Road, Kadapa District and others … Respondents Order: This writ petition is filed seeking mandamus declaring proceedings No.AP/294/KNL/RECY.Cell/SRO/KDP/2008, issued by the 1st respondent herein – the Regional Provident Fund Commissioner-II & Recovery Officer, Employees Provident Fund Organization, as illegal and arbitrary. By the said proceedings, the 1st respondent proposed to sell the land admeasuring Ac.4.48 cents in Sy.No.408 of Kallubavi village, Adoni Municipality, Adoni, Kurnool District for an amount of Rs.1,42,64,700/- towards penal damages and interest due under the provisions of the Employees Provident Act, 1952. Petitioner is a Cooperative Bank Ltd. The 3rd respondent-Industry has obtained a term loan facility from the petitioner-bank to the tune of Rs.53.50 lakhs under various accounts and mortgaged an extent of Ac.4.48 cents covered by Sy.No.408 of Kallubavi village, Adoni Municipality, Adoni, Kurnool District. Though it has repaid certain amount at different intervals, it has fallen due an amount of Rs.74,44,889/- as on 24.09.2008. The 3rd respondent is an Industry governed by the provisions under the Employees Provident Fund Act, 1952. When amounts due under the provisions of the Act were not paid by the 3rd respondent, action was taken and damages and the interest payable was determined. Such amounts were quantified at Rs.1,42,64,700/-. To recover such amount, the 1st respondent has issued the impugned proclamation of sale to sell the property, which is mortgaged by the 3rd respondent, by way of public auction. At that stage, petitioner approached this court. At the stage of admission, by order dated 07.01.2009, interim stay of the impugned proclamation was granted. The only ground raised by the petitioner is that as much as the property in question, namely, the land to the extent of Ac.4.48 cents covered by Sy.No.408 of Kallubavi village, Adoni Municipalityi Adoni, Kurnool District and the constructions made thereon are already mortgaged to it, it is not open to respondents 1 and 2 to proceed with the sale of the said property for recovery of their dues on account of penal damages and interest. Counter-affidavit is filed by respondents 1 and 2. Though notice is served on the 3rd respondent, there is no appearance on its behalf to oppose the relief sought. In the counter-affidavit filed by respondents 1 and 2, it is stated that the 3rd respondent failed to repay the dues payable to them under the provisions of the Act and the scheme thereunder. It is stated that dues which are payable by the 3rd respondent were determined as per the provisions of the Act and recovery certificates were issued to the 1st respondent to recover such dues and the 1st respondent has issued the impugned proclamation of sale of the property in question. It is further stated that the 3rd respondent is liable to pay the dues under the provisions of the Act and therefore respondents 1 and 2 have first charge on the assets of the 3rd respondent- company; in that view of the matter, petitioner cannot question the impugned proclamation of sale. It is submitted by the learned counsel for the petitioner that though some other properties belonging to the 3rd respondent are available; there is no reason to proceed to sell the property in question alone. On the other hand, it is submitted by the learned standing counsel appearing for respondents 1 and 2 that the subject matter of the present writ petition is covered in view of the judgment of the Hon’ble Supreme Court in the case of Maharashtra State Cooperative Bank Ltd., v. Assistant Provident Fund Commissioner[1]. To decide the issue involved in the writ petition, it is apposite to refer to the provision under Section 11(2) of the Employees Provident Fund Act, 1952. Section 11(2) of the Act reads as under: “Without prejudice to the provisions of the sub-section (1), if any amount is due from an employer [whether in respect of the employees’ contribution (deducted from the wages of the employee) or the employees’ contribution] the amount so due shall be deemed to be the first charge on the assets of the establishment and shall, notwithstanding anything contained in any other law for the time being in force, be paid in priority to all other debts.]” It is not in dispute that arrears to the tune of Rs.1,42,64,700/- are due, from the 3rd respondent, covered under various recovery certificates issued by the authorities under the provisions of the Act towards damages determinable under Section 14 of the Act and also interest under Section 79 of the Act. With reference to the said aspects, the Hon’ble Supreme Court, in the judgment referred above, has held that there is no reason to give restricted meaning to the expression ‘any amount due from the employer’ used under Section 11(2) of the Act. In the said judgment, the Supreme Court has clearly held that if interest payable by the employer under section 7-Q and damages leviable under Section 14 are excluded from the ambit of expression “any amount due from the employer”, every employer will conveniently refrain from paying contribution to the Fund and other dues and resist the efforts of the concerned authorities to recover the dues as arrears of land revenue by contending that the movable or immovable property of the establishment is subject to other debts; any such interpretation would frustrate the object of introducing the deeming provision and non obstante clause in Section 11(2). In view of the clear provision under Section 11(2) of the Act, respondents 1 and 2 have the first charge on the properties belonging to the 3rd respondent. In view of the clear meaning under Section 11(2) of the Act, respondents 1 and 2 have preferential claim over the subject property under the Act itself. Therefore, the petitioner cannot question the impugned proclamation of sale merely on the ground that the property in question is mortgaged to it. Further, the argument of the learned counsel for the petitioner that there are other properties of the 3rd respondent and they can be put for sale cannot be accepted. For the aforesaid reasons, petitioner is not entitle to the relief sought. Writ petition is accordingly dismissed. No costs. _____________________ (R.SUBHASH REDDY, J) November 28, 2011 MRR [1] 2009-Supreme-7-515