The High Court
Case Details
IN THE HIGH COURT OF ORISSA AT CUTTACK W.P.(C) No. 7636 of 2013 Steel Authority of India Ltd., Rourkela Steel Plant, Rourkela -Versus- The Recovery Officer, Employees Provident Fund Organization, Rourkela & Anr. ..…... Petitioners Mr. N.K. Sahu, Adv. .……. Opposite Parties Mr. S.S. Mohanty, Adv. CORAM: DR. JUSTICE S.K. PANIGRAHI ORDER 13.03.2024 1. This matter is taken up through hybrid arrangement. 2. Heard learned counsel for the parties. 3. In this Writ Petition, the Petitioner/Company has challenged the notices dated 10.01.2013 and 22.02.2013 issued by the Opposite Party No.1/Recovery Officer, Employee Provident Fund Organization, Rourkela in Certificate Case No.161/2000, 89/2002 and 46/2012, calling upon the Petitioner/Company who is not a party to the proceedings, to liquidate the Provident Fund Order No. 13.
Legal Reasoning
Signature Not Verified Digitally Signed Signed by: LITARAM MURMU Designation: Personal Assistant Reason: Authentication Location: High Court of Orissa Cuttack Date: 24-Apr-2024 10:39:30 dues allegedly recoverable from another establishment named M/s. HSWCCS Ltd a defunct Co-operative Society which was framed by the employees of Rourkela Steel Plant. 2
Legal Reasoning
4. Learned counsel for the Petitioner submits that Steel Authority of India Ltd., Rourkela Steel Plant is a Public Sector Unit under the Government of India and a Company incorporated under the Companies Act, 1956. Whereas Hindustan Steel Wholesale Consumers' Cooperative Society Limited, Rourkela was formed by the employees of the Petitioner/Company and has been duly registered under the provisions of the Co-operative Societies Act, 1962. The Society is an independent entity, governed by its own bye-law and in no circumstance the Petitioner/Company is legally liable to pay the EPF amount of the employees of the Society as the Petitioner/ Company is an exempted establishment under Section 17(1) of the EPF &MP Act, 1952. The society sustained financial loss and went into liquidation as per the order dated 21.08.2001 passed by the Joint Registrar of Co- operative Societies, Orissa. The Opposite Party No.2/The Assistant Registrar, Co-Operative Societies, Panposh Circle was appointed as liquidator of defunct society. It was also clarifying to note that any person having claimed against society would claim the same before the Liquidator as per provisions of Rule 86 of Orissa Co-operative Societies Rules, 1965. Signature Not Verified Digitally Signed Signed by: LITARAM MURMU Designation: Personal Assistant Reason: Authentication Location: High Court of Orissa Cuttack Date: 24-Apr-2024 10:39:30 5. Learned counsel for the Petitioner further submits that the proceedings have been initiated against the Society under Page 2 of 8 3 Section 7A, 7Q and 14-B of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952. As per the orders dated 08.04.1999, 14.05.2001 and 27.02.2011 passed by the Regional Provident Fund Commissioner, Rourkela, penalty and damages were imposed on the Defunct Society along with interest to the tune of Rs 10,84,997/-. The Petitioner/Company was never impleaded as a party in the aforementioned proceedings and the penal amount was directed to be recovered from the office bearers of the Society. 6. Learned counsel for the Petitioner/Company further argues that during the subsistence of the Liquidation Proceedings, the Opposite Party No.2 filed his show cause dated 11.10.2012 before the Opposite Party No.1/Recovery Officer, Employees Provident Fund Organization, Sub-Regional Office, Panposh, Rourkela wherein it has deliberately tried to shift the burden on the Petitioner/Company by making a false statement that the Society was functioning as a Department of RSP and employees were deputed from the Petitioner/Company to become members of the Society. Such statement made by the Opposite Party No.2 is out and out erroneous. The Opposite Party No.1 should have Signature Not Verified Digitally Signed Signed by: LITARAM MURMU Designation: Personal Assistant Reason: Authentication Location: High Court of Orissa Cuttack Date: 24-Apr-2024 10:39:30 approached the liquidator for collecting the outstanding dues instead of approaching the Petitioner/Company who is not at all Page 3 of 8 4 a party to the proceedings. The Recovery Officer issued notices to the Petitioner/Company on 10.01.2013 and 22.02.2013 for recovery of penal amount to the tune of Rs.10,57,997/- in Certificate Cases 161/2000 89/2002 & 46/2012 which is erroneous. 7. Learned counsel for the Petitioner/Company further contends that the Petitioner/Company is exempted from the operation under Section 17(1) of the EPF & MP Act, 1952. He further submits that the Petitioner/Company is under the direct control of the Central Government, as Central Government has 51% share holding the Company. The Petitioner/Company has its own trust called the HSLCPF Trust for extending the provident fund benefit. Thus, the Petitioner/Company cannot be held liable under CPF & MP Act, 1952, as Section 16 of the Act prescribed that any company which is under the Control of the State cannot be made liable under the Act. 8. Learned counsel for the Petitioner/Company further submits that as per Section 9 of the Co-operative Societies Act, 1962, a Society which is registered under the Act is a body Corporate and has its independent existence. Thus, the penalty which is imposed on the society cannot be recovered from the Signature Not Verified Digitally Signed Signed by: LITARAM MURMU Designation: Personal Assistant Reason: Authentication Location: High Court of Orissa Cuttack Date: 24-Apr-2024 10:39:30 Petitioner/Company as they are two separate entities. He again submits that as per definition given under Section 2(e) of the EPF Page 4 of 8 5 & MP Act, 1952, RSP is not an employer when it comes to the case of the members of the Society-in- question. Thus, RSP is not at all liable for payment of any penalty which has been imposed against the Society for non-payment of provident fund dues to its members. 9. Learned counsel for the Petitioner/Company strenuously contends that the Petitioner/Company was not impleaded as a party to the original proceeding and suddenly Certificate Case was initiated and the penalty and damages against the Society were calculated to be Rs.10,84,997/-. Out of the said amount, Rs.31,000/- was recovered from the account of the Opposite Party No.2/Official Liquidator. The Balance amount of Rs. 10,57,997/- should have been recovered from the Society. However, the Recovery Officer at the Stage of Recovery has issued notices dated 10.01.2013 and 22.02.2013 to the Petitioner/Company for recovery of the penal amount. The aforesaid notices are ex-facie illegal. Therefore, the entire proceeding is not at all maintainable and liable to be set aside. 10. In support of his contentions, learned counsel for the Petitioner/Company relies on the decision of the apex Court in Regional Provident Fund Commissioner vs. Sanatan Dharam Signature Not Verified Digitally Signed Signed by: LITARAM MURMU Designation: Personal Assistant Reason: Authentication Location: High Court of Orissa Cuttack Date: 24-Apr-2024 10:39:30 Page 5 of 8 6 Girls Secondary School and others1. The relevant paragraph is reproduced hereunder: “35. We further observe that the State Government has the power of superintendence or the authority to direct, restrict or regulate the working of the educational institutions. It was, therefore, submitted that the institutions had satisfied both Conditions (1) and (2) mentioned above and as such they would fall within the exception contained under Section 16(1)(b) of the EPF Act, 1952.” 11. Further, in Universal Pollution Control (I) P. Ltd. vs. Regional Provident Fund Commissioner and another2, the apex Court observed as follows. “On the affidavit which has been filed by the respondent the only ground taken is that this Court should lift the corporate veil and fasten the liability on the petitioners herein. The contention raised is without any merits and baseless. As mentioned above both the companies are separate legal entity under the provisions of the Companies Act and there is no provision under the Provident Fund Act that a liability of one company can be fastened on the other company even by lifting the corporate veil. In that view of the matter the defence raised has no merits and thus rejected. In that light of the matter the impugned demand is unsustainable in law and accordingly the same is quashed and set aside.” 12. On the other hand, learned counsel for the Opposite Party No.1/The Recovery Officer, Employees Provident Fund Organisation, Sub-Regional Office, Panposh, Rourkela submits that the Petitioner/Company undertakes several activities for its employees and the inhabitants of the township apart from Signature Not Verified Digitally Signed Signed by: LITARAM MURMU Designation: Personal Assistant 1 (2007) 1 SCC 268 Reason: Authentication Location: High Court of Orissa Cuttack 2 2006 (3) Mh.L.J Date: 24-Apr-2024 10:39:30 Page 6 of 8 7 several developmental activities undertaken in the periphery development under its Corporate Social Responsibilities. The aforesaid welfare activities include extending help like accommodation, financial and logistic support for promoting co- operative movements amongst the employees of the Petitioner/Company. As a result, several Co-operative Societies are now functioning in Rourkela, one of such Co-operative Society was M/s. HSWCCS Ltd. 13. He further submits that in the instant case, M/s. HSWCCS Ltd. has no dues pending against the Petitioner/Company. On the other hand, the Petitioner/Company is to get about 1.4 crores from the said society. In the process of liquidation, several proceedings under the EPF Act were pending before the appropriate authority due to non-payment of EPF dues and due to delayed payment of the dues. 14. Learned counsel for the Opposite Party No.1 further contends that Rules 22, 27(1), 27(2) and 28(1) (b) to (e) of the Bye-Laws of the M/s. HSWCCS Ltd. say that officers of RSP, Rourkela were having administrative, management and financial control over the M/s. HSWCCS Ltd. Signature Not Verified Digitally Signed Signed by: LITARAM MURMU Designation: Personal Assistant Reason: Authentication Location: High Court of Orissa Cuttack Date: 24-Apr-2024 10:39:30 15. Considering the submission made by the learned counsel for the parties and after perusing the materials available on record, Page 7 of 8 8 this Court is of the view that the Petitioner/Company cannot be held responsible for any default payment or non-payment of the EPF dues of the M/s. HSWCCS Ltd. Hence, the claim of the EPF against the Steel Authority of India Ltd. Rourkela Steel Plant, Rourkela is not maintainable. Accordingly, the amount demanded cannot be raised against the present Petitioner.
Decision
16. Accordingly, the Writ Petition is dismissed. ( Dr. S.K. Panigrahi) Judge Murmu Signature Not Verified Digitally Signed Signed by: LITARAM MURMU Designation: Personal Assistant Reason: Authentication Location: High Court of Orissa Cuttack Date: 24-Apr-2024 10:39:30 Page 8 of 8