Binod Nayak @ Binand Nayak @ Vinod Nayak vs State of Jharkhand

Heard counsel for the petitioner and the Respondent Corporation.

The Bank through its Branch Manager, has approached this Court on being declared a deemed defaulter by order dated 21.03.2017 passed by the Recovery Officer Employees' State Insurance Corporation, Ranchi (Annexure-4) on failing to comply with the earlier order dated 30.01.2013 to remit / transfer the amount totaling Rs. 4,19,533/- from the accounts of establishment M/s Sanjay Automobiles or its principal employer Sanjay Minocha to the coffers of the Corporation towards realization of demand under the provisions of E.S.I. Act.

The Branch Manager, Canara Bank, Chutia Branch, Ranchi was earlier in receipt of the notice dated 30.01.2013 issued by the Recovery Officer to make such remittance under the provisions of Section 45G of the Act of 1948 read with the Second Schedule of the Income Tax Act, 1961 and Income Tax (Certificate Proceedings) Rules, 1962. This however was never acted upon. Subsequently, another notice dated 07.03.2017 was also issued by the Recovery Officer upon the Branch Manager of the Respondent Bank, asking him to explain as to why he be not declared deemed defaulter. Certain details of accounts of M/s Sanjay Automobiles were also directed to be produced. Thereafter, it appears from the documents at Annexure-3 and response of the learned counsel of ESIC on instruction, that despite appearance of the Senior Manager on 20.03.2017, such details were not actually produced leading to issuance of order impugned dated 21.03.2017, declaring the Bank as deemed defaulter. Thereafter, the Respondent Recovery Officer has also issued an order on 28.03.2017 upon the Reserve Bank of India to transfer the amount available in the possession of the Bank from the account of Canara Bank, failing which, it may also be declared as deemed defaulter. This has propelled the petitioner to come before this Court.

Learned counsel for the petitioner has taken pains to explain by way of statement of cash credit account of the establishment M/s Sanjay Automobiles enclosed to the supplementary affidavit that since January 2013 till date, the balance in the account has been in the negative. Entries in the said account however do show the deposits as also withdrawals were made from time to time. Learned counsel for the petitioner has however sought to explain that had opportunity been granted to explain the circumstances, the petitioner Bank would have been able to show its bonafide and also remit / transfer the amount lying with Bank from another account of the proprietor of M/s Sanjay Automobiles. However, declaration of deemed defaulter and consequential orders passed upon the Reserve Bank of India, would certainly entail serious consequences and stigma upon the petitioner Bank. He submits that the petitioner Bank is ready and willing to remit the outstanding dues, as conveyed through notices / orders, within a period of ten days from today and accordingly take steps against the establishment or its proprietor for its recovery

also. However, the order declaring deemed defaulter, may be kept in abeyance.

Learned counsel for the Corporation submits that the petitioner Bank and its official have been acting wise. They have failed to execute the orders to realize the demand under the Act of 1948 since 2013. That is why, such coercive steps were taken by the Recovery Officer. He however submits that the Reserve Bank of India, as per his instruction, have kept the amount from the account of Canara Bank, but the same has not yet been remitted to the account of Employees' State Insurance Corporation. He also submits that only upon deposit of such amount, would the Recovery Officer not proceed further in the matter.

Considered the submissions of the counsel for the petitioner and the Corporation and the relevant material facts pleaded. Upon consideration of the entire background facts, noted herein-above, this Court is of the view that the petitioner Bank should remit / transfer the outstanding demand raised by the Respondent Corporation within a period of ten days from today, in case not yet remitted, from the accounts maintained by M/s Sanjay Automobiles or its Principal Employer. The Respondent No. 2 Recovery Officer on being satisfied with such remittance, would be free to pass necessary orders. In case remittance is not made, the amount so kept by the Reserve Bank of India from the account of Canara Bank, would be remitted to the account of Corporation towards realization of the outstanding demand. Writ petition is accordingly disposed of.