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Madhya Pradesh High Court · body

2012 DIGILAW 837 (MP)

Textile Mazdoor Congress v. State of M. P.

2012-08-31

SUJOY PAUL

body2012
ORDER 1. These writ petitions are interconnected and, therefore, with the consent of parties were analogously heard. The brief facts necessary for adjudication of these matters are as under : Writ Petition No.1177/2012 : The petitioner is an auction purchaser namely M/s. Mahendra Metal. M/s. C.T. Cotton Yarn Ltd., Malanpur could not repay the loan to the financial institution, IFCI Ltd. (respondent No.2), therefore, respondent No.2 invoked the provisions of Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act, 2002) and took possession of the property of respondent No.3 company, thereafter the said property was put to sale by following the due process of law. The present petitioner is the auction purchaser of the property. The petitioner has paid full and final payment of Rs.560.00 lacs to respondent No.2. As per the schedule fixed by respondent No.2 for inspection of movables, the petitioner visited the respondent No.3’s factory premises where movables were situated. At the time of inspection or even thereafter till 30.11.2011, the petitioner did not find any attachment notice or order in this regard affixed by respondent No.2, the EPF Organisation constituted under the provisions of Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 (hereinafter called ‘EPF Act’). 2. On 4.12.2009, the authorised officer of respondent No.2 issued a sale certificate in favour of the petitioner. The sale certificate is filed as Annexure A. In the certificate, it is mentioned that the sale price is Rs.560.00 lacs excluding liabilities, in respect of the movables which sold in full and handed over the delivery and possession of the items listed therein. The petitioner, accordingly, took possession of the respondent No.3 company. The Assistant Commissioner, Central Excise and Custom, Division Gwalior had filed Writ Petition No.1200/2010 for recovery of their dues under the Central Excise Act, 1944. The dues were claimed pursuant to the aforesaid Act and the attachment referred in the said writ petition against the petitioner. The matter was considered by this Court and it was made clear by this Court that respondent No.3 therein (present petitioner) is entitled to receive possession of the plant and machinery as per the sale certificate. It is reported by learned counsel for the petitioner that after getting possession of the land pursuant to order dated 28.4.2010, the respondent No.3 therein had no role to play in the said writ petition. It is reported by learned counsel for the petitioner that after getting possession of the land pursuant to order dated 28.4.2010, the respondent No.3 therein had no role to play in the said writ petition. The petitioner, accordingly, took possession and had removed approximately 70% movables from the factory premises. It is the case of the petitioner that the officers of respondent No.1 visited the factory premises and put up a board stating that factory is under attachment since 2006. The petitioner made an effort to lodge a complaint against the aforesaid action of respondent No.1 but the said report was not recorded by the police authorities. 3. On 1.12.2011, the petitioner received a letter dated 1.12.2011, wherein respondent No.1 had claimed that the machinery belonging to respondent No.3 company were under attachment of respondent No.1 since 2006 and, therefore, dealing with these machineries by present petitioner is completely illegal and impermissible. It is further stated in the letter that respondent No.1 came to know that the machineries have been purchased by the petitioner and, therefore, petitioner is liable to deposit entire sale proceed received by the petitioner out of sale of machineries with respondent No.1. 4. In response to letter dated 1.12.2011 (Annexure D), the petitioner replied on 9.12.2011 stating that the said letter is illegal and there was nothing on movables/machineries/factory premises by way of notice or notice board to show any kind of attachment by respondent No.1. Since taking possession pursuant to sale letter w.e.f. December, 2009 till 1st December, 2011, no officer/agent of respondent No.1 had ever visited the factory premises nor any claim was made. Respondent No.1, in turn, directed the petitioner to remain present in the office. This communication dated 12.1.2012 is Annexure F. The petitioner by letter dated 14.1.2012 (Annexure G) denied the claim. 5. In the present petition, the petitioner has challenged the notice dated 1.12.2011 and 12.1.2012 issued by the respondent No.1. The main contention of the petitioner is that he is a bona fide purchaser. He purchased the property with the under which is free from any kind of encumbrances and is not liable to pay any kind of alleged contribution under the EPF Act. It is further stated that the petitioner is under no obligation to fulfil the statutory requirement under the EPF Act. 6. He purchased the property with the under which is free from any kind of encumbrances and is not liable to pay any kind of alleged contribution under the EPF Act. It is further stated that the petitioner is under no obligation to fulfil the statutory requirement under the EPF Act. 6. Shri Rishabh Shah, learned counsel for the petitioner, submits that respondent No.2 had made wide publicity to its action of sale under the SARFAESI Act. The EPF Organisation did not submit any objection before the respondent No.2 about the intended sale by the respondent No.2. The petitioner submitted its bid/candidature and being the highest bidder succeeded and consequently, the sale certificate (Annexure A) was issued in his favour. Such a bona fide purchase on the part of the petitioner cannot be put to jeopardy by respondent No.1 by claiming statutory claims under the EPF Act from the petitioner. Writ Petition No.766/2012 : 7. The IFCI Ltd. has challenged the legality, validity and propriety of the order dated 12.1.2012 issued by EPF Organisation. In the said order, EPF Organisation directed the petitioner financial institution to appear before it on a fixed date and to deposit an amount of Rs.395.40 lacs. The petitioner, in this case, has assailed it on the ground that it had sanctioned a loan to erstwhile company M/s. C.T. Cotton Yarn Ltd., Gwalior. The said financial loan was not repaid by the erstwhile company. It is stated that as per terms and conditions of the agreement with the erstwhile company, the whole of the fixed assets of the borrower company including its land, building and structures, plant and machinery etc. were mortgaged and by way of charge to the lenders as a security and were charged with the repayment of the loan including interests, liquidated damages etc. The agreement gave power to the financial institution to take possession, seize, recover, remove or sell the property in the event of non-payment of the loan by way of auction etc. The copy of deed of hypothecation is filed as Annexure P-2. Since, borrower department made default in making payments of its dues as per the repayment schedule, the petitioner invoked section 13(2) of SARFAESI Act calling upon the erstwhile company to repay the amount in question. The copy of deed of hypothecation is filed as Annexure P-2. Since, borrower department made default in making payments of its dues as per the repayment schedule, the petitioner invoked section 13(2) of SARFAESI Act calling upon the erstwhile company to repay the amount in question. Since, the borrower company failed to repay the amount, the petitioner exercised its right as a leader of consortium of other lenders and took possession of plant and machinery under section 13(4) of the SARFAESI Act, 2002 on 11.7.2006 and issued sale notice on 14.9.2006. The advertisements were issued in leading newspapers by giving it wide publicity but the EPF Organisation did not take any objection of any nature regarding on outstanding amount towards EPF contribution or its alleged attachments etc. The plant and machinery of erstwhile company/borrower was sold in auction to the petitioner of Writ Petition No.1177/2012. 8. Ms. Nandita Dubey, learned counsel for the petitioner, submits that only certain machineries were sold and the land and other property and certain machineries are still there which will be sold in near future in accordance with law. The petitioner has filed the relevant newspapers cuttings as Annexure P-3, the possession notice, sale notice and minutes of meeting are also placed on record as Annexures P-4 and P-5. The consent letters of the secured creditors are also filed by the petitioner. It is the case of the petitioner that in the year 2011 when the petitioner intended to auction the assets (land and building) of the erstwhile company to recover its balance amount, the EPF Organisation asked the petitioner to pay the outstanding amount which were pending against erstwhile company C.T. Cotton Yarn Ltd. Subsequently, petitioner received the impugned notice dated 12.1.2012 directing it to pay the amount. This order is challenged on the ground that the land and building of establishment is still available and yet to be sold, the respondents may recover EPF dues/contribution from the sale of immovable property of the establishment. 9. It is the case of the petitioner that petitioner not an “employer” as per section 2(e) of the EPF Act and, therefore, no contribution can be asked from the petitioner. It is further stated that the impugned order is without authority jurisdiction and competence. 9. It is the case of the petitioner that petitioner not an “employer” as per section 2(e) of the EPF Act and, therefore, no contribution can be asked from the petitioner. It is further stated that the impugned order is without authority jurisdiction and competence. There is no enabling provision under the EPF Act which permits the respondent to demand statutory contribution under the EPF Act from the financial institution. Impugned order is challenged on yet another ground that as per the provision of EPF Act, respondent’s organisation ought to have proceeded against the erstwhile company with quite promptitude and should have recovered the amount. No dues can be shifted on the present petitioner. The petitioner has relied on the doctrine of acceptance sub silentio. It is also challenged on the ground that the sale proceed received from M/s. Mahendra Metal are already distributed amongst the members of consortium and now the clock cannot be put back by the petitioner. 10. By filing written submission, Ms. Nandita Dubey, learned counsel further submits that the financial institution is neither “employer” nor “occupier”: under the EPF Act and, therefore, no liability can be directed to be shouldered by the institution. By relying on section 8B of the EPF Act, it is stated that the section does not empower recovery officer to issue the certificate against any other creditor who also has recovered its dues from the defaulting establishment/employer. It is further argued that in view of (2010)6 SCC 193 (Eureaka Forbes Ltd. v. Allahabad Bank), the public officers are answerable both for their inaction and irresponsible action. Emphasize is placed on the similar view taken by Supreme Court in (2011)9 SCC 354 (Delhi Airtech Services Private Limited and another v. State of Uttar Pradesh and another); (2008)1 SCC 643 (Everest Wools (P) Ltd. v. U.P. Financial Corporation), and (2004)13 SCC 53 (State of Andhra Pradesh v. Food Corporation of India). On the strength of these judgments it is emphasized that the respondent EPF Organisation was sleeping over its right and, therefore, it should be presumed that they have waived their right to recover the contribution. Lastly reliance is placed on (2009)6 SCC 791 (Basanti Prasad v. Chairman, Bihar School Examination Board and others), this judgment is also relied to submit that the doctrine of waiver would be applicable and the contribution cannot be realised from the financial institution. Lastly reliance is placed on (2009)6 SCC 791 (Basanti Prasad v. Chairman, Bihar School Examination Board and others), this judgment is also relied to submit that the doctrine of waiver would be applicable and the contribution cannot be realised from the financial institution. In para 14 of the written submission, it is mentioned that if respondents want, they could recover their dues from the properties of owner/employer of the establishment which are more than substantial as against the PF dues or by his arrest and detention in prison as provided under section 8B of the EPF Act. Writ Petition No.1024/2008 : 11. This petition is filed by Textile Mazdoor Congress. This petition was filed when the respondent No.5 M/s. C.T. Cotton Industry was functional. Admittedly, during the pendency of this petition, the said industry was closed down and it is purchased by the petitioner of Writ Petition No.1177/2012. In this petition, the petitioners have prayed for various reliefs including the relief of reinstatement of certain terminated workers, implementation of provisions of Minimum Wages Act and Payment of Wages Act etc. 12. Shri Prashant Sharma, learned counsel for the petitioner-Union fairly submits that relief 7(i) now does not survive. So far reliefs 7(ii), (iii), (v) and (vi) are concerned, Shri Sharma fairly submits that certain litigations are pending before the statutory authorities/Courts constituted under the provisions of Minimum Wages Act and Payment of Wages Act and those Courts may be directed to expedite and conclude the proceedings. This prayer is not opposed by the other side. Therefore, it is directed that if petitioner files copy of this order before the Authorities/Courts aforesaid where the matters of payment of wages of the employees are pending, the said Courts shall expedite the hearing and conclude it expeditiously preferably within 8 months from the date of production of the order. 13. Shri Prashant Sharma submits that the petition survives for relief 7(iv). Learned counsel further submits that as per settled legal position, the first charge on the assets is regarding the EPF contribution of the employees. The said amount of employees cannot be permitted to be swallowed by the petitioners in other cases and no amount of delay or lethargy on the part of EPF Organisation can result into forfeiture of the said amount of EPF contribution. The said amount of employees cannot be permitted to be swallowed by the petitioners in other cases and no amount of delay or lethargy on the part of EPF Organisation can result into forfeiture of the said amount of EPF contribution. Learned counsel submits that the EPF contribution is the first charge on the establishment/property and it cannot be waived. He relied on (2008)8 SCC 705 (Goetze (India) Limited v. Employees’ State Insurance Corporation) (para 9). 14. Shri R.K. Goyal, learned counsel appearing for EPF Organisation in these matters, submits that EPF Act is a social welfare legislation for providing social security to the employees working in any establishment on which aforesaid Act is applicable. It provides compulsory deduction of provident fund from the employees and contribution from the employer which needs to be deposited in workers account of EPF office. The Act also provide for providing insurance and pensionary benefits to the employees. The C.T. Cotton Yarn Ltd. was covered under the EPF Act and was allotted Code No. MP 9734. The said company was a big defaulter of EPF contribution of its employees and, therefore, the amount was accumulated. Various notice for recovery/warrants were issued to the said company which are collectively filed as Annexure R-1. It is the case of EPF Organisation that factory of C.T. Cotton Yarn Ltd., including the movable property plant and machinery were attached on 23.11.2006 by the squad of Enforcement Officers and delivered on supurdnama delivered to the then factory Manager Shri Mahendra Sharma. Notice was also affixed on the factory premises to show that the property has been attached for recovery of provident fund dues to the tune of Rs.1,32,72,872/- and interest and damages. Certificate and paper cuttings to show the same are filed by the EPF Organisation as Annexure R-2 collectively. The petitioner in Writ Petition No.766/2012 approached before the Appellate Authority for Industrial and Financial Reconstruction (AAIFR) and in those proceedings also, the EPF Organisation submitted affidavit showing details of amount of provident fund dues. 15. The respondent organisation has a right to recover the amount of provident fund as per section 11 of the EPF Act. Shri R.K. Goyal, learned counsel appearing for EPF Organisation submits that no due publicity was given by the financial institution before sale of the immovable. 15. The respondent organisation has a right to recover the amount of provident fund as per section 11 of the EPF Act. Shri R.K. Goyal, learned counsel appearing for EPF Organisation submits that no due publicity was given by the financial institution before sale of the immovable. The notices were published in such newspapers which have no wide publicity at Gwalior and, therefore, it cannot be said that the EPF Organisation has waived its statutory right to recover the amount in question. 16. Shri Rishabh Shah, learned counsel for the petitioner, in Writ Petition No.1177/2012 relied on a judgment of this Court reported in 2012(2) DRTC 513 (M.P.) (Writ Petition No.1419/2011) (R.K. Traders Kalasadakhurd, Dhar v. Chief Engineer), decided on 17.3.2011. He also relied on 2012(1) DRTC 403 (Madras) (L.K. Ravindranath v. Authorized Officer). Lastly, he placed reliance on a Kerala High Court judgment in Writ Petition (C) No.36175/2005 (F) (EPF Organization v. Deputy Collector and others). By placing reliance on these judgments, Shri Rishabh Shah, learned counsel for the petitioner submits that in absence of any statutory provision under EPF Act, no contribution or recovery can be made from the petitioner. It is submitted that as per Kerala High Court judgment in EPF Organisation (supra), the amount of contribution can be realized from the financial institution. 17. Shri R.K. Goyal, learned counsel for the EPF Organisation relied on (2010)3 SCC 463 (Angad Das v. UOI). 18. No other point is pressed by the parties. 19. I have heard the learned counsel for the parties at length and perused the record. 20. The following questions are required to be answered : (1) Whether the petitioner in Writ Petition No.1177/2012 is a bona fide purchaser? (2) Whether unpaid statutory contribution under the EPF Act for the employees of erstwhile industry M/s. C.T. Cotton Yarn Ltd. can be directed to be paid by the petitioner of Writ Petition No.1177/2012 to the EPF Organisation? (3) Whether the EPF Organisation can ask the statutory contribution of erstwhile M/s. C.T. Cotton Yarn Ltd. from IFCI Ltd.? (4) Whether delay and inaction on the part of EPF Organisation in not proceeding for sale immediately after attachment amounts to waiver of the claim? (5) In the facts and circumstances of the case, who is liable to fulfil the statutory requirement of EPF contribution? As to Question No.1 : 21. (4) Whether delay and inaction on the part of EPF Organisation in not proceeding for sale immediately after attachment amounts to waiver of the claim? (5) In the facts and circumstances of the case, who is liable to fulfil the statutory requirement of EPF contribution? As to Question No.1 : 21. The petitioner in Writ Petition No.1177/2012 is an auction purchaser. It is the case of petitioner that at no point of time, he was informed by the financial institution or by the PF Organization that any charge or contribution is outstanding against the erstwhile M/s. C.T. Cotton Yarn Ltd. It is specifically pleaded in the writ petition that when the petitioner inspected the industry premises, no notice etc. was found there which indicates that the machine etc. were attached by the PF Organization. These averments of writ petition were not denied by the respondents. The procedure adopted by financial institution under the SARFAESI Act is not doubted and, therefore, it cannot be said that the petitioner is not a bona fide purchaser. In the considered opinion of this Court, the petitioner in Writ Petition No.1177/2012 is a bona fide purchaser. As to Questions No.2, 3 and 5 : 22. In the peculiar facts and circumstances of this case, the question is as to who is responsible to pay the unpaid statutory contribution under the EPF Act for the employees of erstwhile industry M/s. C.T. Cotton Yarn Ltd. The stand of PF Organization is that the financial institution is responsible for the same and it is bound to pay the same. In para 6(b)(h) of Writ Petition No.766/2012, the financial institution has pleaded as under : “6(b) Because, the land and building of the establishment/Company is still available and yet to be sold, the respondents as per the provisions of EPF Act shall recover their dues from the sale of immovable property of the establishment. In para 6(b)(h) of Writ Petition No.766/2012, the financial institution has pleaded as under : “6(b) Because, the land and building of the establishment/Company is still available and yet to be sold, the respondents as per the provisions of EPF Act shall recover their dues from the sale of immovable property of the establishment. (h) Without prejudice to the above, it is submitted that land and building of the M/s. C.T. Cotton Yarn is still available as yet to be auctioned, the respondents could recover their dues from the same if they want or from the employer of the establishment as provided under the EPF Act, but it seems that the respondents do not want to take any efforts to recover their dues by sale or auction of the properties remaining of the establishment but want to depend upon others for the same and to extract anyhow from the petitioner.” 23. The IFCI Ltd. has mainly taken a stand that it is neither “employer” nor “occupier” and, therefore, not liable to pay the contribution under the EPF Act. Apart from this, it is stated that under section 6B also, no recovery can be made from it. Lastly it is stated that because of continuance inaction by PF Organization it should be presumed that right to recover the contribution is waived. The PF Organization attached certain property and affixed a notice of attachment on the said property. In my opinion, the financial institution was also under an obligation while taking over the industry when loans were not paid to enquire regarding the unpaid dues of the erstwhile industry. In other words, it is a matter of common knowledge that whenever an industry runs, it is bound to fulfil certain statutory requirements like payment of tax regarding water supply, electricity dues, ESI and provident fund contribution etc. The financial institution has not taken any steps to enquire about it. The news was published in two newspapers which have no wide circulation in Gwalior and, therefore, PF Organization cannot be blamed in not raising objection with financial institution. After taking over the M/s. C.T. Cotton Yarn Ltd., the over all, ultimate and effective control over the industry was with IFCI Ltd. Almost similar situation arose before the Kerala High Court in Writ Petition (C) No.36175/2005 and 21344/2010. After taking over the M/s. C.T. Cotton Yarn Ltd., the over all, ultimate and effective control over the industry was with IFCI Ltd. Almost similar situation arose before the Kerala High Court in Writ Petition (C) No.36175/2005 and 21344/2010. By judgment dated 6.12.2010, the Kerala High Court held that the liability to pay statutory contribution under the EPF Act would be on Kerala Financial Corporation (KTC). It is relevant to mention the facts of the said case. M/s. Star Refinaries Private Ltd. was financed by KFC Ltd. by mortgaging the property. Admittedly, the provisions of EPF Act were applicable on the said industry. The company defaulted the payment of statutory contribution to the said organisation. After an enquiry contemplated under section 7A of the EPF Act, the order was passed to pay an amount of Rs.3,27,743.25. The said payment was not made and consequently an attachment order was passed by the PF Organization. The industry did not pay the loan to KFC and, therefore, KFC initiated proceedings under the State Financial Corporation Act and Revenue Recovery Act. Lastly the property was auctioned and it was purchased by M/s. Meron Bio Products Pvt.Ltd. The question before the Kerala High Court was as to who will pay the unpaid PF contribution. The Kerala High Court opined as under : “12. Then what remains is the claim of the PF Department, which has filed Writ Petition (C) No.36175/2005. The claim raised by the EPF has to be considered with reference to section 11(2) of the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952. Section 11 of the Act provides for priority of payment of contributions over other debts. Section 11(2) reads as under; (2) Without prejudice to the provisions of sub-section (1), if any amount is due from an employer [whether in respect of the employee’s contribution (deducted from the wages of the employee) or the employer’s contribution], the amount so due shall be deemed to be the first charge on the assets of the establishment, and shall, notwithstanding anything contained in any other law for the time being force, be paid in priority to all other debts. 13. 13. A reading of this provision shows that if any amount is due from an employer, the amount so due shall be deemed to be first charge over the assets of the establishment, and shall, notwithstanding anything contained in any other law for the time being force, be paid in priority to all other debts. The conflicting claims between the KFC and the PF Department was reconciled by this Court in the judgment in Recovery Officer and Assistant Provident Fund Commissioner v. Kerala Financial Corporation [ 2002(2) KLT 723 ], the relevant portion of which reads as under : 10. The contention of the first respondent based on the overriding effect of section 46B of the SFC Act has no substance in our judgment. Undoubtedly, the intention of Parliament in enacting section 46B in the year 1956 was to ensure that a State Financial Corporation could quickly and effectively recover the amounts due by taking possession of the property of the defaulter instead of having resort to the cumbersome method of recovery through a Court of law. While this was the law, Parliament amended section 11 of the EPF and M.P. Act by specifically enacting sub-section (2) thereof, declaring that the amount due as contribution to the Employees Provident Fund has first charge on the assets of the establishment and that, notwithstanding anything contained in any other law for the time being in force, it shall be paid in priority against all other debts. In fact, the second facet of section 11(2) of the EPF and M.P. Act goes one step further than what is provided in section 46B of SFC Act. The reason for this is obvious. While the State Financial Corporation would have to be helped to recover the debts due to it from a defaulting debtor, the Provident Fund payable to workers is of greater moment, since it is a matter of terminal social security benefit made available by statute to the working class. Taking into consideration that EPF and M.P. Act is a social benefit legislation, and the evil consequences of Provident Fund dues being defeated by prior claims of secured or unsecured creditors, the Legislature took care to declare that irrespective of when a debt is created, the dues under the EPF and M.P. Act would always remain first charge and shall be paid first out of the assets of the establishment. We are also not impressed by the contention of the first respondent that upon usage of non obstante clause in section 46B of the SFC Act sub-section (2) of section 11 of the EPF Act is of subsequent date. No doubt, both section 46B of the SFC Act and section 11(2) of the EPF and M.P. Act declare their intent by usage of the non obstante clause. But, since section 11(2) of the EPF and M.P. Act has been enacted later, we must ascribe to the Parliament the intention to override the earlier legislation also. It is, therefore, clear that section 11(2) of the EPF and M.P. Act overrides all provisions of other enactments including section 46B of the SFC Act. 11. We are supported in our conclusion by the judgment of the Supreme Court in Andhra Pradesh State Financial Corporation v. Official Liquidator [ (2000)7 SCC 291 ]. This was also a case arising under the SFC Act, 1951. The Corporation therein had exercised its powers under section 29 of the Act in respect of a debtor company which was under liquidation. The Corporation claiming to be a secured creditor filed two applications under section 446(1) of the Companies Act read with sections 29 and 46 of the SFC Act for staying outside the liquidation proceedings. The learned Company Judge allowed these applications on the specific condition that the Corporation should undertake to discharge its liability due to the workers under section 529A of the Companies Act and also inform the Official Liquidator by advance notice about the proposed sale of the Company’s properties and further obtain the Company Court’s permission before finalising the tender. This order of the Company Judge was upheld by the Division Bench of the Andhra Pradesh High Court. An appeal was carried thereagainst by the State Financial Corporation to the Supreme Court. The Supreme Court considered the reason for enactment of the SFC Act as against the reason for amendment of section 529A of the Companies Act. This order of the Company Judge was upheld by the Division Bench of the Andhra Pradesh High Court. An appeal was carried thereagainst by the State Financial Corporation to the Supreme Court. The Supreme Court considered the reason for enactment of the SFC Act as against the reason for amendment of section 529A of the Companies Act. The Supreme Court pointed out that, though the SFC Act of 1951 was a special Act for grant of financial assistance to industrial concerns with a view to boost industrialisation and to enable recovery of amounts advanced and the Companies Act was also an Act dealing with companies including winding up such companies, the proviso to sub-section (1) of the section 529 and section 529A being a subsequent enactment, the non obstante clause in section 529A prevails over section 29 of the SFC Act. Hence, the Supreme Court held that statutory right to sell the property under section 29 of the SFC Act had to be exercised with the rights of pari passu charge to the workmen specifically created by the proviso to section 529 of the Companies Act. Under the proviso to sub-section (1) of the section 529, the liquidator shall be entitled to represent the workmen to enforce the above pari passu charge. The judgment of the Company Court was upheld. While upholding the judgment of the Company Court, it was pointed out by the Supreme Court that State Financial Corporation could not stay outside the winding up proceedings. It was also held that section 529A of the Companies Act imposes upon the Company Court the duty to ensure that the workmen’s dues are paid in priority to all other debts in accordance with the provisions of the above section. The Legislature amended the Companies Act in 1985 with a social purpose, viz., to protect the dues of the workmen. If conditions are not imposed to protect the right of the workmen, there is every possibility that a secured creditor may frustrate the pari passu right of the workmen under the said provision of law. 14. The Legislature amended the Companies Act in 1985 with a social purpose, viz., to protect the dues of the workmen. If conditions are not imposed to protect the right of the workmen, there is every possibility that a secured creditor may frustrate the pari passu right of the workmen under the said provision of law. 14. Therefore, in view of the aforesaid statutory provision and the judgment of this Court, which was relied on by the apex Court in Central Bank of India v. State of Kerala and others [ (2009)4 SCC 94 ], not only that the PF dues are a charge on the property but also the priority of claim of the PF Department over the dues to KFC has to be upheld and I do so. Therefore, KFC should pay the amount due to the PF Department from out of the sale proceeds. 15. In the result, Writ Petition (C) No.21344/2010 is liable to be dismissed and I do so. 16. It is directed that from out of the sale proceeds now available, the Kerala Financial Corporation shall disburse the amount due to the EPF Department by virtue of order dated 13.3.2010 passed by it under section 7A of the EPF Act. Writ Petition (C) No.36175/2005 will stand disposed of with this direction.” (Emphasis supplied) In the light of this judgment, it is clear that the contribution cannot be recovered from the auction purchaser who is a bona fide purchaser. The ultimate control on the affairs was in the hands of financial institution. The pleadings of financial institution is reproduced which shows that still there exists property (movable and immovable) of the erstwhile employer from where recovery of contribution can be made. 24. In the light of aforesaid judgment, the said contribution can be recovered only from IFCI Ltd. 25. The apex Court in catena of judgment has held that EPF Act is a welfare legislation. This EPF Act is introduced to provide a helping hand to the employees and to provide them fund and pension etc. at december of career/life. The contribution is paid by the employees and added by the employer. It is the duty of the employer to pay the same to the PF Organisation. This EPF Act is introduced to provide a helping hand to the employees and to provide them fund and pension etc. at december of career/life. The contribution is paid by the employees and added by the employer. It is the duty of the employer to pay the same to the PF Organisation. The apex Court in following cases has held that the Statutory PF contribution is the first charge and deserves to be recovered by PF Organization on first priority : (1) (2009)10 SCC 123 [Maharashtra State Cooperative Bank Ltd. v. Assistant Provident Fund Commissioner and others] (paras 30 & 31). (2) AIR 2010 SC 868 [Maharashtra State Cooperative Bank Ltd. v. Assistant Provident Fund Commissioner and another] (paras 20, 21 and 29). (3) (2011)10 SCC 727 [Employees Provident Fund Commissioner v. Official Liquidator of Esskay Pharmaceuticals Limited] (paras 14, 15 and 22). (4) AIR 2012 SC 11 [Employees Provident Fund Commissioner v. O.L. of Esskay Pharmaceuticals Ltd.] (para 42). 26. In the light of aforesaid, I am of the considered opinion that the PF Organisation has a right to recover this amount as a first charge from IFCI Ltd. So far the stand of the IFCI is that amount received from sale proceed is already distributed amongst the members of consortium, in the considered opinion of this Court, this cannot be a ground to escape from the statutory liability to repay the same. It is for the IFCI Ltd. to repay the amount by recovering it from members of consortium or by selling the remaining land or property of the erstwhile industry M/s. C.T. Cotton Yarn Ltd. Merely because amount received from sale is distributed by the leader of the consortium, will not be of any help to the financial institution. Thus, in my considered opinion, the IFCI Ltd. is under a legal obligation to fulfil requirement of the PF contribution. As to Question No. 4 : 27. The PF Organization attached the movable property (plant and machinery) of erstwhile employer on 23.11.2006 and it was delivered on supurdnama to the Factory Manager. Thereafter, no action was taken to realise the amount of contribution. I find force in the argument of Ms. Nandita Dubey that in view of the judgments of Supreme Court, the statutory officers were bound to act with due diligence and in quite promptitude. 28. Thereafter, no action was taken to realise the amount of contribution. I find force in the argument of Ms. Nandita Dubey that in view of the judgments of Supreme Court, the statutory officers were bound to act with due diligence and in quite promptitude. 28. In my considered opinion, the PF organization ought to have taken immediate steps after attaching the property to sale it or ensure that the amount due is recovered immediately. After attaching the property, the authorities went in slumber and no further action was taken. Thereafter, IFCI Ltd. took over the industry and after due process of law sold it to the auction purchaser. Only thereafter, the PF organization awoke from its slumber and issued notice to the petitioners of Writ Petition No.1177/2012 and 766/2012. This continuous inaction on the part of the authorities of PF organization cannot be appreciated. The said authorities have utterly failed to recover the amount of contribution in quite promptitude. 29. In the opinion of this Court, they should have taken effective and immediate steps after the attachment to recover the said amount. The paper formalities cannot justify their inaction. After attachment as per the scheme of the EPF Act, they should have taken further steps with promptness to realise the contribution. Had it been done immediately the amount would have been recovered from the erstwhile employer, this anomalous situation would not have arisen. Thus, to great extent, inaction of PF organization is the foundation for the present complication. However, this observation of this Court would not mean that because of said inaction, the right of the employees is extinguished or is waived. 30. In my considered opinion, hard earned money and PF benefits of the employees cannot be treated to be waived. The apex Court in (2008)8 SCC 705 (Goetze (India) Ltd. v. Employees State Insurance Corporation), has taken this view. As per the scheme of EPF Act, it cannot be held that the PF contribution of the employees is waived because of inaction or delay on the part of PF organization. The said amount/contribution is the first charge and shall continue on the establishment and the property. Section 11(2) of the EPF Act reads as under : “11. Priority of payment of contributions over other debts. The said amount/contribution is the first charge and shall continue on the establishment and the property. Section 11(2) of the EPF Act reads as under : “11. Priority of payment of contributions over other debts. -- (1) xxx xxx (2) Without prejudice to the provisions of sub-section (1), if any amount is due from an employer [whether in respect of the employee’s contribution (deducted from the wages of the employee) or the employer’s contribution], the amount so due shall be deemed to be the first charge on the assets of the establishment, and shall, notwithstanding anything contained in any other law for the time being in force, be paid in priority to all other debts.” A bare perusal of said section makes it clear that the said contribution/liability continues on the assets and, therefore, IFCI Ltd. is under a legal obligation to fulfil the said requirement. The PF organization is required to properly lubricate its administrative mechanism so that such situations do not arise in future. 31. On the basis of aforesaid analysis and judgments, I am of the considered opinion that the liability to pay contribution has not come to an end because the erstwhile employer M/s. C.T. Cotton Yarn Ltd. is closed down and property is auctioned. IFCI Ltd. is under a legal obligation to pay the same. The auction purchaser is under no obligation to fulfil the aforesaid statutory requirement. 32. On the basis of aforesaid analysis and judgment of Kerala High Court (supra), it is clear that the liability to pay contribution is now on the shoulder of IFCI Ltd. The judgment of apex Court referred in para 25 above also shows that the first charge would be on PF contribution and those benefits cannot be treated to be either waived or extinguished. Accordingly, this Court is of the opinion that the IFCI Ltd. is bound to fulfil the requirement of payment of outstanding PF contribution to the PF Organization so that the employees can get the benefit of social benefit legislation, i.e., EPF Act. Consequently, Writ Petition No.1177/2012 is allowed. The impugned orders therein are set aside. Writ petition No.1024/2008 is disposed of with the direction to the PF Organization to realise the PF contribution from IFCI Ltd. in accordance with law and disburse it to the eligible employees in accordance with EPF Act. Consequently, Writ Petition No.1177/2012 is allowed. The impugned orders therein are set aside. Writ petition No.1024/2008 is disposed of with the direction to the PF Organization to realise the PF contribution from IFCI Ltd. in accordance with law and disburse it to the eligible employees in accordance with EPF Act. Writ Petition No.766/2012 is dismissed and petitioner IFCI Ltd. is directed to pay the PF contribution to the PF Organization expeditiously. The petitioner in Writ Petition No.1024/2008 is directed to produce the copy of this order before the authorities/Courts where the cases of employees for payment of wages etc. are pending. On production of this order, the said authorities/Courts shall expedite the proceedings and try to decide the matters expeditiously, preferably within eight months. In the facts and circumstances of the case, the parties shall bear their own costs.