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Judgment
M. Venugopal, J.—The Petitioner has filed the present writ petition seeking the relief of writ of certiorarified mandamus in calling for the records of the first Respondent in Proceedings No. TN/TNY/10541/Recovery/KK/2007 dated 19/1/2007 and the consequential order passed by the first Respondent in his proceedings in E.P.F.C.P17 No. TN/TNY/10541/ENF.1 (Recovery)/CP17/2008 dated 21/2/2008 and to quash the same. Further, the Petitioner has sought for issuance of an order by this Court in directing the Respondents in discharging the Petitioner''s Society from its Liability.
According to the Petitioner/Society, it is registered under the Tamil Nadu Co-operative Societies Act, 1983 on 13/2/1960. The object of the Co-operative Societies is to give continuous employment to the loom-less Weavers. But the Petitioner''s Society has established the looms and other accessories including work shed to its members for their benefit. The Society initially functioned profitably and latter, it is not open in a position to run further.
The Petitioner''s Society''s control vests with the Board of Management, who are elected from the members of the Society. The strength of the Petitioner''s Society has been of 123 members. The first Respondent/Recovery Officer, Employees'' Provident Fund Organisation, Sub-Regional Office, Tirunelveli, demanded a sum of Rs. 3,85,726/- as Employee''s contribution for the period from September 1978 to July 1995 from the Petitioner''s Society.
The Board of Directors of the Petitioner''s Society, filed O.S. No. 222 of 1997 against the claim made by the first Respondent before the Principal Sub-Court, Nagercoil, on the basis that the Petitioner''s Society is not coming under the ambit of Employees'' Provident Fund and Miscellaneous Provisions Act, 1952. Also, the plea of the Petitioner is that the Society has also provided to its members under the Weavers Savings and Security Schemes controlled by the Government of Tamil Nadu. As per the scheme, the members of the Society has contributed 8% of their wages and the State as well as the Central Government has also contributed 4% each and interest thereon. Moreover, the Insurance Policy is also covered to the members if they died before attaining the age of retirement. The suit in O.S. No. 222 of 1997 has been dismissed by the learned Principal Sub-Judge, Nagercoil by means of a judgment dated 4/1/2001 holding that the Court has no jurisdiction. Later, the Petitioner/Society has become defunct.
The Assistant Director of Handlooms and Textiles, Nagercoil by his proceedings dated 19/3/2001 has been appointed as the Handloom Officer as the Liquidator as per Section 137(1) of the Tamil Nadu Co-operative Societies Act, 1983 for settling the assets and liabilities of the Society. The Official Liquidator has taken charge of the Society from its President on 6/7/2001. The Official Liquidator has settled the members Savings and Security Scheme sums with the Tamil Nadu Government.
The Official Liquidator has sent a letter dated 17/7/2001 to the Respondents that he has taken the charge on 6/7/2001 and several files pertaining to Employees'' Provident Fund have been missing and he is taking steps to trace out the files and requested the Respondents to furnish the details of the contribution. The Petitioner/Society received an intimation letter dated 10/9/2001 from the Respondent that members of the Petitioner Society has to pay a sum of Rs. 1,18,659/-for the period from 1978 to 1982 and a sum of Rs. 2,67,067.05 for the period from 1982 to 1995 and has also requested the Liquidator to pay the said sum.
The Liquidator has sent a letter to the first Respondent/Recovery Officer, Employees'' Provident Fund Organisation on 12/11/2003, requesting him to furnish the details about the name of the Employees'' Account No., and the detailed statement showing the demand for PF dues etc., relating to the claim of Rs. 3,85,726.05. The first Respondent by its letter dated 28/11/2003 has intimated that the Account numbers has to be allotted by the Employer and the demand for P.F dues has been assessed only on the basis of records produced by the Employer which are available with the establishment. The Petitioner sent a letter dated 21/3/2004 informing the first Respondent and requested the Respondent to raise an attachment order and also intimated that the first Respondent has not given any account number in respect of the Petitioner Society and requested to provide the aforesaid details. So far, no reply has been received by the Petitioner.
The first Respondent/Employees'' Provident Fund Organisation Office on 26/10/2006 has issued a show cause notice to the Petitioner Society as per Section 14B of the Employees'' Provident Fund and Miscellaneous Act, 1952 and directed the Petitioner to appear for personal hearing on 16/11/2006 at 11 a.m., but the Petitioner has requested to fix some other date for hearing. On 12/1/2007, the Petitioner''s Society has sent a letter to the Regional Provident Fund Commissioner - II, E.P.F. Organisation, Sub-Regional Office, Tirunelveli, requesting him to raise by its proceedings dated 19/1/2007 intimated the Petitioner that the attachment order will be released only on payment of Rs. 7,71,453.30 and Rs. 5,000/- and also enclosed Form No. 66 affidavit as regards the proof of debt.
The Employees'' Provident Fund Organisation, Sub-Regional Office, by its proceedings dated 13/2/2007, again ordered for damages as per Section 14B of the Act for the period from 1978 to 1995 for a sum of Rs. 2,01,297/-.
The stand of the Petitioner Society is that it has already been charged for a sum of Rs. 3,85,726.65 as damages and as such it is not open to the Respondents to demand for the very same period once again claiming a sum of Rs. 2,01,297/-.
On 10/10/2007, the Employees'' Provident Fund Organisation, Sub-Regional Office, Tirunelveli has given the details of dues of Employees'' Provident Fund Account. On 18/2/2008, the Respondents has informed that the Provident Fund dues should be given priority over the other dues of the Society and requested the Petitioner to settle the amount, otherwise, the Employees'' Provident Fund Organisation will proceed further for recovery by bringing the property in auction. On 21/2/2008, the first Respondent has issued a notice for settling the sale proclamation for the Petitioner Society and in which it has been indicated that the Petitioner has to bring to the notice of the Respondents any encumbrances, charges, claims or liabilities etc., and fixed the date on 19/3/2008.
Per contra, the learned Counsel for the Respondents submits that the Petitioner''s Society is covered as per Employees Provident Fund and Miscellaneous Provisions Act, 1952 with effect from 1/9/1978 and that the coverage notice No. H2/TN/10541/Regl/79 dated 12/4/1979 and since the Petitioner''s Society failed to remit the Provident Fund dues, inquiries as per Section 7A of the Employees Provident Fund and Miscellaneous Provisions Act, 1952 have been initiated and the dues for the period from September 1978 to June 1982 and July 1982 to July 1995 amounting to Rs. 1,18,659.60 and Rs. 2,67,067.05 respectively have been determined.
The learned Counsel for the Respondents contends that Recovery Certificates in Ref. Nos. D7/TN/10541/ENF/MDU/SRO/91 dated 27/11/1991 and D7/TN/MDU/10541/ENF/SRO/96 dated 25/3/1996 have been issued by the Authorised Officer as per Section 8B of the Employees Provident Fund and Miscellaneous Provisions Act, 1952. The Recovery Officer, in pursuance of the Recovery certificates received, issued notices of demand dated 10/12/1991 and 25/3/1996 as per Rule 2 of the second Schedule to the Income Tax Act, 1961, which is made applicable to the Recovery of Employees Provident Fund dues as per Section 8G of the Act. Later, the Petitioner''s immovable property has been attached by the Recovery Officer as per order No. TN/Recy/10541/96 dated 6/11/1996. A Notice of proclamation of sale No. TN/TNY/10541/Recy/RO (NS)/97 dated 2/12/1997 has also been issued by the Recovery Officer and the said notice has been challenged by the Petitioner in O.S. No. 222 of 1997 on the file of the Principal District Court, Nagercoil and the same has been dismissed on 4/1/2001 holding that the Court has no jurisdiction.
The Liquidator has been appointed by the Co-operative Department in respect of the Petitioner Society and he has taken charge on 6/7/2001. The Recovery Officer as per his letter dated 10/9/2001 has informed the Official Liquidator-cum-Handloom Officer about the outstanding amount and requested him to pay the amount, treating the letter as a Claim Petition filed by the Recovery Officer. However, the Liquidator has not taken any action to remit the amount.
The learned Counsel for the Respondents take a stand that Section 11 of the Employees Provident Fund and Miscellaneous Provisions Act, 1952 provides that where an order of winding up of an Establishment is made, the amount due towards Employees Provident Fund
An Inquiry as per Section 14B of the Employees Provident Fund and Miscellaneous Provisions Act, 1952 has been initiated as per Notice dated 26/10/2006 providing an opportunity to the Petitioner''s Society to be heard and since the Petitioner delayed the payment of Provident Fund dues, another Claim Petition for a sum of Rs. 7,71,453.30 including the aforesaid amount and damages payable have been filed with the Official Liquidator on 28/12/2006.
As a matter of fact, an inquiry as per Section 14B of the Employees Provident Fund and Miscellaneous Provisions Act, 1952, as per Notice dated 26/10/2006 has been posted finally on 18/1/2007 and that the Petitioner''s authorised representative attended the inquiry and after hearing, the statement made by him, the damages payable on the dues for the said period upto the date of initiation of inquiry amounting to Rs. 2,01,297/-has been levied as per proceedings dated 13/2/2007. Since the Petitioner has not been inclined to remit the outstanding amount as per the Recovery Certificates dated 27/11/1991 and 25/3/1996. The first Respondent decided the sale of the immovable property and therefore, for setting a sale proclamation No. TN/TNY/10514/ENFI(recovery)/CP 17/2008 dated 21/2/2008 has been issued, so as to realise the amount relating to the poor employees of the establishment.
The learned Counsel for the Petitioner submits that there is no Employer-employee relationship between the Petitioner''s Society and its Members and therefore, are to be paid in priority to all other debts in the distribution of assets of the Establishment, etc. the Petitioner''s Society is not covered as per the Employees Provident Fund and Miscellaneous Provisions Act, 1952. To lend support to the said contention, the learned Counsel for the Petitioner relies on the decision of Honourable Supreme Court in Regional Provident Fund Commissioner and Ors. v. Madathupatti Weavers Co-Operative Production and Sales Society Ltd. reported in 2008 (3) L.L.N. 507, wherein it is held that
The finding that no employer-employee relationship exists between Weavers Co-operative Society between Weavers and its members has not been interfered with and the enquiry conducted as per Section 17 has been held to be not a proper one.
The learned Counsel for the Petitioner draws the attention of this Court to the order dated 11/2/2006 in W.P. (MD) No. 14028 of 2000 between The Secretary, M/s. Vazhai Thottam Handloom Weavers Co-Op. Production and Sales Society Limited, Palliyadi and The Regional Provident and Commissioner, Tirunelveli and 2 Ors. wherein in paragraph 2, it is held as follows:
When the writ petition is taken up for final disposal today, learned Counsel for the Petitioner brought to my notice the communication from the Government of India, Ministry of Textiles, dated 13/2/1998 which clarifies the position that the provisions of the Employees Provident Fund and Miscellaneous Provisions Act, 1952 are not applicable to the Weaver members of the Weavers Co-operative Societies.
In view of the said communication dated 13/2/1998, the impugned order is set aside and the writ petition is allowed. No costs. Connected W.P.M.P. Nos. 20303 and 20304 of 2000 are closed."
The learned Counsel for the Petitioner cites a Division Bench of this Court in Regional Provident Fund Commissioner Ii, Employees'' Provident Fund Organisation, Madurai and Anr. v. Sree Visalam Chit Funds Ltd. Palathur and Anr. reported in 2010 (4) L.L.N 716, wherein it is held that
The purpose of levying damages u/s 14B of the Act serves a dual purpose remedy to penalise employer for his default committed and also to compensate the employee for the loss sustained by him by such delayed payment and further, unless it is established that failure to pay the contribution was attributable to the mens rea or actus reus on the part of employer, question of levying damages as per Section 14B of the Act does not arise.
The learned Counsel for the Petitioner seeks in aid of the order dated 15/3/2001 made in W.A. No. 1147 of 1997 between Q.793 Madathupatti Weavers Co-Operative Production and Sales Society Ltd., rep. by its president, Srivilliputhur v. The Regional Provident Fund Commissioner, Madurai 625 002 and Two Ors. wherein in paragraph 31, it is observed as follows:
A constitutional Bench of the Supreme Court repelling the challenge to the provisions of Sections 1(3)(b) and 17 in Mohamedalli v. Union of India AIR 1964 SC 930 held that the underlying idea behind the provisions of the Act is to bring all kinds of employees and is intended to benefit the employees. Their Lordships also held that the Co-operative Societies stand on a special footing which distinguish from other establishment or Corporation and it is the settled policy of the Government to roster co-operative societies with a view to their development and growth in the interest of Community, of course, this is in reference to societies employing workers and paying wages. That apart, the emphasis is the employment and the protection and interest of employees.
Also, in paragraph 32 of the aforesaid order, it is laid down as follows:
The learned Single Judge''s attention was not drawn on those aspects with the result, there was a finding as though the Society paid wages to the members of the Society and they work in connection with the business of the Society, we have seen that the proceedings u/s 7A of the Act has to be drawn only after an enquiry like a suit and for a proper determination, the so called material furnished by the Assistant Secretary of the Society viz., heads of accounts was, in no way, sufficient material to come to conclusion on the various aspects of the coverability as well as determination of the amounts due.
The learned Counsel for the Respondents submits that as against the orders passed by the authority concerned, as per Section 7A of the Employees Provident Fund and Miscellaneous Provisions Act, 1952 (in regard to the determination of money dues from the Employers), an appeal lies before the appellate authority and it is open to the Petitioner to avail such remedy as per Employees Provident Fund and Miscellaneous Provisions Act, 1952 and as such, the writ petition filed by the Petitioner is not maintainable before this Court.
It is to be noted only when the Employees Provident Fund and Miscellaneous Provisions Act, 1952 applies to the Employees in question, the liability arises under the Act. It is needless for this Court to point out that what is done as per Section 7A of the Employees Provident Fund and Miscellaneous Provisions Act, 1952 is only determination of quantification of the amount as per the decision of the Honourable Supreme Court in S.K. Nasiruddin Beedi Merchant Ltd. Vs. Central Provident Fund Commissioner, . Even as per Section 7B of the Employees Provident Fund and Miscellaneous Provisions Act, 1952, any person aggrieved by an order made as per Sub-section (1) of Section 7A, but from which no appeal has been preferred under this Act and discovery of new and important factor or evidence which, after the exercise of due diligence was not within his knowledge or could not be produced by him at the time when the order was made, or on account of some mistake or error apparent on the face of the record or for any other sufficient reason, desires to obtain a review of such order may apply for a review of that order to the officer who passed the order and when he decides to obtain a review.
One cannot lose sight of an important fact that for the members of the Society, there is no supervision and there is no nexus of Master and Servant relationship between the Society and its Members. The Co-operative Society is distinguished from an Establishment or a Corporation in the eye of law, as opined by this Court. In fact, the Members of the Petitioner''s Society are not workers or employees of the Society, if they share the profits by means of self-employment, certainly, they will not be covered as per the Employees Provident Fund and Miscellaneous Provisions Act, 1952.
Added further, it is seen from the order of W.P. (MD) No. 14028 of 2000 between The Secretary, M/s. Vazhai Thottam Handloom Weavers Co-op. Production and Sales Society Limited, Palliyadi v. The Regional Provident And Commissioner, Tirunelveli and 2 Ors., the first Respondent in W.P.(MD) No. 2514 of 2008 before this Court is a party to the said order and in short, the order passed in W.P.(MD) No. 14028 of 2000 dated 11/2/2006 binds the interse parties and more so, it will bind the present first Respondent in W.P.(MD) No. 2514 of 2008 in the considered opinion of this Court.
Indeed, the order dated 11/2/2006 passed by this Court in W.P. (MD) No. 14028 of 2000 between the Petitioner and the Regional Provident And Commissioner, Tirunelveli and 2 Ors. has become final and conclusive between the parties. Therefore, the Respondents in W.P.(MD) No. 2514 of 2008 before this Court cannot wriggle out of the situation that they are in.
This Court worth recalls the decision in Cochin Steamer Agents Association Vs. E.S.I. Corporation, , wherein it is held that
When there was no Employer-Employee relationship between the Steamer Agents Association and Steamer Workmen, the Full Bench of High Court has set aside the order of ESI Court, holding that the Association is liable to get itself covered and registered under the Employees Provident Fund and Miscellaneous Provisions Act, 1952.
Also, this Court aptly points out that even the Members of Co-operative Society during probation will not be Employees under the Employees Provident Fund and Miscellaneous Provisions Act, 1952, in the considered opinion of this Court.
In E.S.I. Corporation v. Prakash Paper Mart reported in 2003 (3) LLJ 1117 (A.P), it is held that
When there was no proof that the Respondent had only control over binder or his Employees to come within the meaning of Section 2(9) defining an ''Employee'' to be covered under the Act, their coverage will be set aside.
Be that as it may. On a careful consideration of the respective contentions and in view of the fact that in the instant case on hand before us, it is not established that there has been a relationship of Employer and Employee between the parties and even there is no contract pleaded on the side of the Respondents or evidence satisfactorily produced before this Court to establish that there has been a relationship of an Employer-Employee between the Society and its Members. Further more, since the Members of the Society are not to be supervised and since there is no supervision and time frame work for them, this Court comes to an inevitable conclusion that in the present case, it is not proved to the satisfaction of this Court that their exists a relationship of Employer-employee between the Petitioner''s Society and its Members and as such, this Court opines that the Employees Provident Fund and Miscellaneous Provisions Act, 1952 is not applicable to the Petitioner''s Society and consequently, the proceedings of the third Respondent in H2/TN/10541/Regl dated 27/10/79 and No. B.10/TN/10541/Regional/82 dated 12/10/1982 and the subsequent order passed by the fourth Respondent in proceedings No. D7/TN MD/10541/ENF/SRO/96 dated 26/2/1996 and the resultant proceedings of the first Respondent in TN/TNY/10541/Recovery/KK/2007 dated 19/1/2007 and the consequent proceedings of the first Respondent in E.P.F.C.P17 No. TN/TNY/10541/ENF.1 (Recovery)/CP17/2008 dated 21/2/2008 are all hereby quashed.
As a logical corollary, the Petitioner''s Society is discharged from its obligation to pay the liabilities claimed by the Respondents. Viewed in that perspective, the writ petition succeeds.
In the result, the writ petition is allowed, leaving the parties to bear their own costs. Accordingly, proceedings of the third Respondent in H2/TN/10541/Regl dated 27/10/79 and No. B.10/TN/10541/Regional/82 dated 12/10/1982 and the subsequent order passed by the fourth Respondent in proceedings No. D7/TN MD/10541/ENF/SRO/96 dated 26/2/1996 and the resultant proceedings of the first Respondent in TN/TNY/10541/Recovery/KK/2007 dated 19/1/2007 and the consequent proceedings of the first Respondent in E.P.F.C.P17 No. TN/TNY/10541/ENF.1 (Recovery)/CP17/2008 dated 21/2/2008 are all hereby quashed. Consequently, the connected Miscellaneous Petition is closed.