Auchtel Products Ltd. vs Regional Provident Fund Commissioner

D.K. Deshmukh, J.—By this petition, the petitioner challenges the order dated 18th December 1995 passed by the Regional Provident Fund Commissioner. A show cause notice dated 23rd August, 1995 was issued to the petitioner asking them as to show cause why amount of Provident Fund, Family Pension Fund, Deposit Linked Insurance Fund and Administrative Charges should not be recovered as an arrears of land revenue u/s 8 of the Employees'' Provident Fund and Miscellaneous Provisions Act, 1952. It is not disputed before me that this show cause notice related to the employees who were engaged by the Transport Contractors engaged by the petitioner. Pursuant to the show cause notice, the petitioner submitted a detailed explanation before the Regional Provident Fund Commissioner pointing out therein employees engaged by the Transport Contractors engaged by the petitioner, cannot be termed as employees of the petitioner-company. It was also pointed out that apart from doing the work of petitioner-company the Transport Contractors engaged by the petitioner, do other work and therefore, the work of petitioner-company is only apart of the work or business carried on by the Transport Contractors and their employees. It was also pointed out that the same issue as to whether the employees engaged by the Transport Contractors of the petitioner, can be termed as employees of the Petitioner-company, is pending consideration before the Industrial Court, Thane in Complaint ULP No. 267 of 1987, therefore, the present proceeding should be stayed till that case is decided by the Industrial Court. Provident Fund Commissioner passed order an 18th Oct. 1995 holding that the employees engaged by the Transport Contractors of the petitioner-company are the employees of the petitioner Company for the purpose of Provident Fund Act. It is this order, which is challenged in the present petition.

The learned counsel for the petitioner submitted before me that the petitioner had given elaborate explanation in their reply to the show cause notice as to why the employees engaged by the Transport Contractors cannot be treated as employees of the petitioner-company. However, in the submission of the learned counsel, neither that explanation has been considered by the Provident Fund Commissioner and though that explanation has been rejected by the Provident Fund Commissioner, no reasons have been disclosed for doing so. Bare perusal of the order shows that the submission made by the learned counsel for the petitioner is well founded. Though elaborate explanation is given in the show cause notice, the Provident Fund Commissioner has nowhere considered that explanation and he has given no reasons in rejecting that explanation. In my opinion, very purpose behind giving show cause notice is to afford an opportunity to the persons concerned to submit his explanation and the moment such an explanation is submitted, the authority issuing show cause notice, is duty bound to consider the explanation submitted, and to give reasons for rejecting that explanation. As no such thing is done by the Provident Fund Commissioner in the present case, in my opinion, the order suffers from total non-application of mind and therefore, it is liable to be quashed and set aside and the matter is to be remitted back to the Provident Fund Commissioner for consideration and decision in accordance with law. While proceeding further, the Provident Fund Commissioner may also consider whether it would be better to wait for the decision of the Industrial Court which is considering the identical issue according to the submission made by the learned counsel for the petitioner. The Provident Fund Commissioner shall pass a final order in accordance with law after granting the petitioner adequate opportunity of being heard.

In the result, the petition succeeds, and is allowed. The order passed by the respondent dated 18th December 1995 is quashed and set aside. Proceedings are remitted back to the respondent for consideration and decision in accordance with law and in the light of observation made above, with no order as to costs.

Pursuant to the interim order passed by this Court dated 17th July 1996, the petitioner has deposited an amount of Rs. 2,25,000/- in this Court. It is obvious that since the impugned order is set aside, the liability of the petitioner is over, as now that order itself has been set aside, there is no justification for withholding that amount. The amount deposited by the petitioner in this Court pursuant to the order dated 17.7.1996, therefore, should be refunded to the petitioner.

Certified copy expedited.