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Judgment
Rajiv Narain Raina, J.—The petitioner is a Company registered under the Companies Act, 1956 which was ordered to be wound up by the Delhi High Court on 6.11.1986. The Company was handed over to the Official Liquidator attached to that Court. A creditor of the Company filed a petition for winding up the company for inability to discharge debt. The Company was incorporated on 16.4.1961 as M/s. Usha Spinning and Weaving Mills Ltd. The Company was declared closed vide a general notice dated 1.12.1984 following labour unrest Presently, the name of the Company has been changed to M/s. Espier Infrastructure Corporation Limited through a certificate issued by the Ministry of Company Affairs. During the winding up proceedings, M/s. Usha (India) Limited filed a Scheme of rehabilitation of the Company which was approved by the Delhi High Court vide its order dated 14.3.1995. In its order, the High Court listed out several liabilities of the Company which had to be taken care of by M/s. Usha (India) Limited, in accordance with the rehabilitation scheme presented before the High Court. The statutory liabilities/dues outstanding in the Provident Fund Account were capped at Rs. 20.00 lacs by the Court. The Regional Provident Fund Commissioner, Faridabad on coming to know that a Scheme of rehabilitation was under consideration, sent a demand notice calling upon the petitioner to pay a sum of Rs. 21,98,562.56. This was followed by an application moved in the Company petition before the High Court. The respondent-Department also filed a Company Application No. 1795 of 1997 praying for modification of the Scheme and for payment of its dues for the period 1981-1982 and for the periods; March 1982 to August, 1982, September, 1982 to February, 1983, March, 1983 to April, 1983, May, 1983 to July, 1983. It was stated by the Department in the application that after due verification from the record, no other dues were pending against the Company. The application was decided by order on 8.2.2002 (P-2). The Delhi High Court granted right of recovery of principal amount of Rs. 21,98,562.56, along with 9% interest which came to Rs. 35,27,826.56 from the date of sanctioning of the rehabilitation scheme till the date of the order. The aforesaid amount was paid in 12 instalments and the order stood complied with.
Meanwhile, the Regional Provident Fund Commissioner, Faridabad raised a fresh demand of provident fund dues of Rs. 5,34,848 plus damages. The petitioner pleads that this amount said to be due was not included or shown before the Court at the time of passing of the order dated 8.2.2002. It is this amount which is challenged before the Appellate Tribunal seeking waiver of provident amount as the period in question was protected by infancy period of the Company. The appeal was allowed and the relief was granted vide order dated 17.5.1999 (P-3). On 20.3.2003, the Regional Provident Fund Commissioner, Faridabad issued fresh notice demanding a sum of Rs. 5,31,262/- along with damages.
This notice was challenged by the petitioner by filing Company Application No. 294 of 2003 before the Delhi High Court in the pending case. By an interim stay, recovery was stalled. On 14.9.2005, the application was withdrawn by the petitioner to approach the Regional Provident Fund Commissioner, Faridabad.
In the proceedings before the assessing authority u/s 7-A of the Employees Provident Fund and Miscellaneous Provisions Act, 1952 (for short "the Act"), the impugned order dated 28.2.2007 was passed calling upon the petitioner to pay a sum of Rs. 5,31,262/-. The Company was also directed to submit returns from March, 1981 to March, 1995 failing which legal action would be initiated against the petitioner. This is the first impugned order in this petition. Aggrieved by the order passed u/s 7-A of the Act, the petitioner moved an appeal before the Employees'' Provident Fund Appellate Tribunal, New Delhi which has been dismissed on 8.10.2010 (P-6). Aggrieved, the present petition has been filed.
It is the submission of Mr. Saini, learned Counsel appearing for the petitioner that both the orders have been passed in violation of the orders of the Delhi High Court wherein the liability to pay dues of Provident Fund was fixed at Rs. 35,27,826.56 which stands paid. The additional demand of Rs. 5,31,262/-, subject matter of the present petition is an attempt to go behind the order of the Delhi High Court. Learned Counsel for the petitioner would urge that the orders were passed by the Delhi High Court on the department''s application during the operation of the rehabilitation scheme pending before the Delhi High Court when this fresh demand was not claimed. On the contrary, a specific pleading had been made before the Delhi High Court that on due verification of record and satisfaction of the Provident Fund Department, there was no demand other than Rs. 35,27,826.86. The rights and liabilities of both the parties stood settled and crystallized in the order of the Delhi High Court dated 8.2.2002 (P-2). The liabilities under the order dated 8.2.2002 admittedly stand discharged through payment of instalments and nothing remains due to be paid so far as that amount is concerned. The department having settled the matter to its satisfaction in judicial proceedings culminating on 8.2.2002 without demur could not be put to further burden of interest and damages beyond February, 2002. Mr. Saini further submits that the petitioner has discharged its liability as per the rehabilitation scheme approved by the Delhi High Court on 14.3.1995. In the Scheme adequate provision was made for settling provident fund, employees'' State Insurance and other statutory dues. The amounts were earmarked accordingly.
The Employees Provident Fund Appellate Tribunal in its impugned order dated 17.5.1999 found that the establishment of the appellant is not in continuation of the old management. While partly allowing the appeal, the Appellate Tribunal held the appellant entitled to infancy benefit and if necessary for redetermination of provident fund contributions the same could be done u/s 7-A of the Act by the lower authority. There is no dispute that against the order of the Appellate Tribunal no appeal was filed. The fresh proceedings u/s 7-A culminated in the order dated 28.2.2007. The Regional Provident Fund Commissioner, Faridabad has held that since no appeal was filed by the establishment against the order dated 17.5.1999 (P-3), they should have to deposit Rs. 5,31,262.00 for the period from August, 1983 to November, 1984 of PF Contribution and other allied dues and from 1.12.1984 to February, 1995 administrative charges only since the Company was admittedly closed. Accordingly, the petitioner was called upon to comply with the earlier order of the Appellate Tribunal dated 17.5.1999 and direction was issued accordingly in the appeal carried before the Employees'' Provident Fund Appellate Tribunal, New Delhi.
The department''s case before the Appellate Tribunal was that when the appellant-company had preferred ATA No. 16(1)/99, it remained pending when the matter was taken up by the Delhi High Court. Therefore, the amount of Rs. 5,31,262/- involved in the appeal was not mentioned by the department in its pleadings before the Delhi High Court and it was only after the disposal of the said ATA that the amount was claimed. The appeal has been dismissed on the short ground that the present disputed amount was assessed as per the directions in ATA No. 16(1)/99.
Learned Counsel for the respondents supports both the impugned orders as legal, valid and justified. He submits that on the basis of the order dated 17.5.1999 passed by the Appellate Tribunal, infancy benefits were granted to the petitioner-Company for the period March, 1995 to 14.3.1998, in accordance with law. No other point was decided or stood operative against the company requiring to be further challenged. Therefore, if the petitioner did not prefer an appeal against that order, they could not be compelled to deposit the additional amount of Rs. 5,31,262/- for the period from August, 1983 to November, 1984 representing provident fund contribution and other allied dues, and for the period 1.12.1984 to February, 1995, administrative charges on account of closure.
The short controversy that requires determination is as to what would be the effect where the department made claims in its application filed before the Delhi High Court during the rehabilitation scheme sanctioned by the Delhi High Court to revive the Company when no specific claim was laid over the disputed amount of Rs. 5,31,262/- for the period from August, 1983 to November, 1984. There is obviously an admission of the respondent-department that the present disputed amount was not claimed before the Delhi High Court when the order dated 8.2.2002 was passed in the presence of the parties. It would be necessary to read the order passed by the Delhi High Court in order to understand the issue raised by the petitioner in the present proceedings. The same is reproduced as under:--
Having considered the facts and circumstances of the case, the submissions which were made at the bar and having gone through the record and the fact that the Company under liquidation has been rehabilitated under the Scheme sanctioned by the Court and the fact that the transferee company, namely, M/s. Usha (India) Ltd., has made genuine efforts to liquidate various liabilities, in the interest of all including the applicants, the transferee company and the employees, I consider that passing of the following orders will meet ends of justice:
The Company will pay full amount of demands raised by the Regional Provident Fund Commissioner and by Employees'' State Insurance Corporation, namely a sum of Rs. 21,98,562.56 and Rs. 15,68,999.00 respectively in the manner stated hereinafter.
Rs. 20,00,000 was directed to be deposited by the Company by means of a draft with the Registrar of this Court. This amount of Rs. 20,00,000/- alongwith interest accrued there upon will be paid in equal share to both the applicants, namely, Regional Provident Fund Commissioner and the Employees'' State Insurance Corporation by the Registry, which will be adjusted towards the principal amount of contribution. The balance amount towards principal contribution will be paid by the Company, namely, Usha (India) Ltd. respectively to the Regional Provident Commissioner and the Employees'' State Insurance Corporation on or before 28.2.2002. In this manner, the liability of the company under liquidation for the aforementioned dues as regards principal shall stand fully discharged.
The company being the transferee company is held not liable to pay any interest and damages on the principal amount upto the date of sanctioning of the Scheme, which liability being that of the Company under liquidation. In any case considering the facts and circumstances, the liability of the company under liquidation to pay damages is waived off including the liability to pay interest up to date of sanctioning of the Scheme, namely, 14.3.1995.
The Company, namely, M/s. Usha (India) Ltd., however, will pay interest at the rate of 9% p.a. on the principal amount of Rs. 21,98,562.56 being the contribution towards Employees Provident Fund and on Rs. 15,68,999/- being the principal amount of the contribution under Employee''s State Insurance Corporation from 14.3.1995 to 28.2.2002. This amount of interest, the Company, namely, M/s. Usha (India) Ltd. will pay respectively to the Regional Provident Fund Commissioner and to Employee''s State Insurance Corporation in 12 equal monthly instalments commencing on and from the month of March, 2002 by 10th day of each month.
On payment of interest in 12 instalments and on making payment of the principal in the manner aforesaid, the entire liability of the transferee company towards the aforementioned dues will stand fully discharged. It is made clear that on failure to pay the amounts aforementioned, it will be open to the Regional Provident Fund Commissioner and to the Employees'' State Insurance Corporation to levy appropriate damages in accordance with law.
It may be noticed that the Employees'' Provident Fund Appellate Tribunal passed the order dated 17.5.1999 in case ATA/16(1) 99 against the order dated 7.10.1998 passed u/s 7-A of the Act by which the assessing authority had determined PF dues amounting to Rs. 5,55,551/-. In the written statement filed by the department in the earlier appellate order, a stand has been taken which reads as follows:--
....In the counter-affidavit it is stated that appeal is barred by time. It is stated that 7-A proceeding was initiated against the appellant for the period from 8/83 to 8/96. It is admitted that the present management on 14.3.1995 as per order of the Hon''ble High Court has to discharge the liability as per the Scheme approved by the High Court on 14.3.1995. It is further stated that the Hon''ble Company Judge on page 9 has said there is adequate provisions made in the scheme for settling the Provident Fund, Employees'' State Insurance and other statutory dues.
Further, the operative part of the order deserves reproduction to further understand the matter. It reads as follows:--
The appeal is allowed partly. It is held that appellants are entitled for infancy benefit and if necessary, the redetermination of provident contribution be done by the 7-A authority.
Sd/- S.N. Singh, Presiding Officer EPF Appellate Tribunal
Dated: 17.5.1999
I do not find any direction in the order dated 17.5.1999 calling upon the petitioner to deposit any amount. The re-determination ordered u/s 7-A of the Act was obviously linked to infancy benefits alone. It was a stand of the department that the continuity of the establishment was not broken, but that stand was rejected in appeal. No continuity was found. Therefore, infancy benefit would follow. It is for the determination of infancy benefits, if necessary; redetermination was suggested to be done. In my view, there was nothing in the order dated 17.5.1999 for the petitioner to question in writ proceedings, the order being statutorily final. If that is a position, then I am afraid the respondent-department cannot take shelter or make use of the order dated 17.5.1999 as has been done in both the impugned orders (P-5 and P-6). The order has run its course. The additional claim of Rs. 5,31,262.00 would be deemed to have been given up during the proceedings before the Delhi High Court. The claim, if any, would also be barred by the principles of Order II, Rule 2 CPC. For the foregoing reasons, this writ petition is allowed and the impugned orders dated 28.2.2007 (P-5) and 8.10.2010 (P-6) are set aside but with no order as to costs.