1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION WRIT PETITION NO.7947 OF 2008 Decunhas Modular Concepts Pvt. Ltd. ..Petitioner. Vs. The Regional Provident Fund Commissioner and another ..Respondents. .... Mr. S.C. Naidu with Mr. Manoj Gujjar i/b M/s. C.R. Naidu & Co. for the Petitioner. Mr. Sureshkumar with Ms. Shraddha Chavan for the Respondents. .... CORAM: DR. D.Y. CHANDRACHUD, J. 8th December, 2008. P.C. : 1. Rule, by consent of the learned counsel made returnable forthwith. Counsel appearing for the Respondents waives service. With the consent of the learned counsel and at their request, the matter is taken up for hearing and final disposal. 2. The challenge in these proceedings under Article 226 of the Constitution is to a prohibitory order dated 25th November, 2008 passed by the Assistant Provident Fund Commissioner. The 2 Petitioner is engaged in the manufacture of office furniture and has a factory at Navi Mumbai. The Petitioner is covered by the provisions of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952. The Petitioner received a summons on 30th July, 2008 under Section 7-A directing it to appear before the Assistant Provident Fund Commissioner, the Second Respondent to these proceedings. The Petitioner was directed to produce the following documents : “67) Attendance Register / Muster Rolls for the period in question 68) Payment Register/ Pay Bills for the period in question 69) Trading and Profit & Loss account and Balance Sheets 70) Cash books and vouchers 71) Copy of statutory returns as submitted to Income Tax authorities / Registrar of Companies 72) Any other documents necessary for ascertaining the amount due for the above mentioned period.” The Petitioner replied to the aforesaid communication on 18th August, 2008. A hearing was convened on 3rd September, 2008 which was a public holiday. Thereafter the Petitioner appeared on 20th September, 2008, 6th November, 2008 and 25th November, 2008. On 25th November, 2008 the Second Respondent issued directions calling upon the Petitioner to submit its entire set of records during the next 3 hearing which was to take place on 2nd December, 2008 and observed that a warrant of arrest would be issued together with an attachment of property if this was not complied with. Without waiting for the hearing which was to take place on 2nd December, 2008 a prohibitory order was issued on 25th November, 2008. The prohibitory order was addressed to the Citizen Credit Co-operative Bank Limited. The Petitioner was prohibited from receiving a debt alleged to be due from the bank to the Petitioner. 3. On behalf of the Petitioner it has been submitted that the basis of the prohibitory order is that the Petitioner had failed to appear before the Second Respondent during the enquiry under Section 7-A. Learned counsel submitted that this as a matter of fact is erroneous since the record will show that the Petitioner had appeared in the proceedings except on 3rd September, 2008 when it was a pubic holiday. Secondly, it was submitted that the Second Respondent did not have the power to issue a prohibitory order. Learned counsel submitted that the powers conferred upon the Second Respondent under Section 7-A(2) read with Section 32 of the Code of Civil 4 Procedure 1908 did not extend to issuing a prohibitory order of the nature that has been passed in this case. 4. For the purposes of these proceedings, it is not necessary for the Court to adjudicate upon an issue wider than what would be necessary for the disposal of the proceedings. The material on the record would show that as a matter of fact the Petitioner had appeared before the authority in the course of the proceedings under Section 7-A. Therefore, the basis of the impugned order which is that the Petitioner had failed to appear before the authority inspite of the receipt of summons is incorrect. That apart, on 25th November, 2008 an order was passed by the Second Respondent calling upon the Petitioner to submit its records on the next date of hearing which was to be 2nd December, 2008. Without waiting for the aforesaid date of hearing, the Second Respondent proceeded to issue a prohibitory order. 5 5. There is merit in the submission that the Second Respondent was not justified in law in issuing a prohibitory order. Sub section (3) of Section 7-A provides as follows : “(3) No order shall be made under sub-section (1), unless the employer concerned is given a reasonable opportunity of representing his case. (3A) Where the employer, employee or any other person required to attend the inquiry under sub-section (1) fails to attend such inquiry without assigning any valid reason or fails to produce any document or to file any report or return when called upon to do so, the officer conducting the inquiry may decide the applicability of the Act or determine the amount due from any employer, as the case may be, on the basis of the evidence adduced during such inquiry and other documents available on record.” 6. The consequences of a failure to produce documents when a person is called upon to do so is that it is open to the assessing officer to determine the amount due from the employer on the basis of the evidence adduced during the enquiry and other documents available on the record. An order passed under Section 7-A is subject to a review under Section 7-B and an appeal under Section 7-I. Section 7-O preconditions an appeal with a deposit of 75% of the amount due. The enactment therefore provides for a comprehensive 6 and self contained code. Under sub section (2) of Section 7-A, the Second Respondent is vested with the powers of a Court under the Code of Civil Procedure 1908 in respect of the following matters viz. (a) enforcing the attendance of any person or examining him on oath; (b) requiring the discovery and production of documents; ( c) receiving evidence on affidavit; (d) issuing commissions for the examination of witnesses. 7. Section 32 of the Civil Procedure Code is a provision under which a Court may compel the attendance of any person to whom a summons has been issued under Section 30 and for that purposes may (a) issue a warrant of arrest; (b) attach and sell his property; (c ) impose a fine upon him not exceeding Rs.5,000/- and (d) order him to furnish security for his appearance or in default commit him to civil prison. 8. The issuance of a prohibitory order of the nature that has been imposed by the Second Respondent was not warranted since the foundation of the order namely, that the Petitioner did not attend 7 the proceedings was demonstrably incorrect. Once an amount is determined to be due from an employer in a proceeding under Section 7-A, wide powers are vested in the Provident Fund Commissioner inter alia under Sections 8, 8-A, 8-B, 8-C, 8-F and 8-G. These powers, it must be emphasized, apply once an amount has been found due in duly constituted proceedings under the provisions of the Act. In the present case, however, a prohibitory order came to be passed even before an amount was determined to be due from the Petitioner purportedly on the ground that he had not complied with the summons to appear before the authority. The finding that the Petitioner had not appeared before the authority in response to the summons is incorrect since as a matter of fact the Petitioner had appeared before the authority in response to the summons. 9. Having observed so, it is necessary to take note of the fact that in the summons dated 30th July, 2008 the Petitioner was called upon to produce certain records. The reply of the Petitioner dated 18th August, 2008 was to the effect that the monthly returns in Form No.12-A were being submitted on regular basis and that would suffice 8 for the purposes of the enquiry. Though the Petitioner attended the proceedings before the Second Respondent, from the record it would not appear that all the necessary documentary material has been produced by the Petitioner before the Second Respondent. For the purposes of the enquiry under Section 7-A, the Petitioner must comply with the requisition made by the Second Respondent in order to enable the Second Respondent to complete the enquiry under Section 7-A. The documentary evidence of which disclosure is sought is referred to in the summons dated 30th July, 2008 and has already been extracted in the earlier part of this order. 10. At the hearing, Counsel appearing for the Petitioner has stated that the Petitioner would produce the documentary material at Sr. Nos.67, 68, 69 and 71 of the summons on the next date of hearing. Insofar as Sr. No.70 is concerned, it relates to cash books and vouchers. The contention of the Petitioner is that the production of all cash books and all vouchers would be an impractical exercise in view of the large volume involved and instead it would be appropriate if the undertaking of the Petitioner is recorded to the effect that the 9 Petitioner would keep all its records in the form of cash books and vouchers open for inspection to any team that may be deputed by the Second Respondent to its establishment. Such an undertaking is tendered on instructions by Counsel during the course of hearing. Accordingly the Second Respondent would be at liberty to depute one or more of his officers to inspect the cash books and vouchers as necessary and to take copies thereof at the expense of the Petitioner. Finally, Sr. No. 72 of the summons refers to “any other documents necessary for ascertaining the amount due”. This is obviously a vague request. Should the authorities require any specific documentary material in addition to what is referred in the summons dated 30th July, 2008, it would be open to the Second Respondent to issue a requisition in that regard and the Petitioner shall co-operate in furnishing the information so as to ensure that the proceedings under Section 7-A are concluded expeditiously. 11. The Petition shall accordingly stand disposed of with the following directions : 10 (i) The Petitioner shall appear before the Second Respondent on 11th December, 2008 which is the next date of hearing together with all the documentary material which is referred to in Sr. Nos. 67, 68, 69 and 71 of the summons dated 30th July, 2008; (ii) The Second Respondent would be at liberty to depute a team of one or more officials subject to his superintendence to the establishment of the Petitioner to take inspection of the cash books and vouchers referred to in Sr. No.70 of the summons on a date which may be appointed for that purpose; (iii) The undertaking of the Petitioner to grant inspection in terms of (ii) above and allow copies to be taken at the expense of the Petitioner is accepted; (iv) The prohibitory order dated 25th November, 2008 shall stand set aside; (v) Counsel appearing for the Petitioner, has, assured the 11 Court on the instructions of the Managing Director who is present personally that the Petitioner shall co-operate in all respects in complying with the requisitions of the Second Respondent for the production of documentary material for the completion of the enquiry under Section 7-A. The Petition is accordingly disposed of. There shall be no order as to costs. ****