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2016 DIGILAW 350 (GUJ)

Prabhat Hospital Private Ltd. v. Union of India

2016-02-12

PARESH UPADHYAY

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JUDGMENT : Paresh Upadhyay, J. 1. Challenge in this petition is made by the Establishment to the order passed by the Assistant Provident Fund Commissioner at Rajkot dated 28.4.2003, under section 7A of the Employees' Provident Fund and Miscellaneous Provisions Act, 1952, directing the petitioner to deposit the dues under the Act. The said order is confirmed by the Employees' Provident Fund Appellate Tribunal at New Delhi in ATA No. 432(5) 2003 vide order dated 3.5.2010. Rule. 2. Heard learned advocates. 3.1. Mr. Anuj Trivedi, learned advocate for the petitioners has submitted that the impugned orders are illegal, arbitrary and the same needs to be interfered with. It is submitted that, the provisions of the Act is not applicable to the petitioner. For this purpose, reliance is placed on the language of section 1(3)(b)of the Act. It is submitted that, the petitioner has never employed 20 or more employees. It is submitted that this factual aspect is born out from the record itself and therefore, the impugned orders need to be quashed and set aside. 3.2. Without prejudice to the above noted bone contention, it is alternatively submitted that the Directors are not to be considered as 'employees'. It is further submitted that they are to be treated as 'employer'. It is submitted that, on this aspect also, the authorities have misdirected themselves. 3.3. It is further submitted that, even if it is assumed that the contentions as noted above are not available to the petitioner, then also there is over-lapping of three persons - the Directors, for the purpose of arriving at the figure of 20, and on that count also the impugned orders are unsustainable on facts. 3.4. It is further submitted that, the entire case is based on the inquiry report of the officers about the applicability of the Act to the petitioner, and a copy thereof is not supplied to the petitioner. It is submitted that, thus the proceedings are taken out against the petitioner in gross violation of principles of natural justice. 3.5. Reliance is placed on the decision of Hon'ble the Supreme Court of India in the case of Srikanta Datta Narasimharaja Wodiyar v. Enforcement Officer, Mysore, 1993 (67) FLR 73 (SC). 3.6. It is submitted that the impugned orders be quashed and set aside. 4.1. On the other hand, Ms. 3.5. Reliance is placed on the decision of Hon'ble the Supreme Court of India in the case of Srikanta Datta Narasimharaja Wodiyar v. Enforcement Officer, Mysore, 1993 (67) FLR 73 (SC). 3.6. It is submitted that the impugned orders be quashed and set aside. 4.1. On the other hand, Ms. E. Shailaja, learned advocate for the respondents has raised the preliminary objection about the maintainability of this petition, contending that the Board of Trustees need to be party respondent. Reliance is placed on the decision of Hon'ble the Supreme Court of India in the case of Organo Chemical Industries v. Union of India, 1979 (39) FLR 309 (SC). 4.2. Without prejudice to the above, it is submitted that the authorities have taken into consideration the material supplied by the petitioner itself and the authorities have not committed any error either in applying the Act or in arriving at the amount demanded from the petitioner. It is submitted that cogent reasons are recorded in the impugned orders and therefore no interference be made by this Court. It is submitted that this petition be dismissed. 5. Having heard learned advocates for the respective parties and having gone through the material on record, this Court finds as under. 6.1. First, the preliminary objection of the respondents against the maintainability of this petition. In this regard, it needs to be noted that, the challenge in this petition is to the order passed by the Assistant Provident Fund Commissioner, as confirmed by the Tribunal. The authorities which passed the impugned orders, are party respondents before this Court. The petition cannot be termed to be suffering from the vice of non-joinder of necessary party. This contention therefore is rejected. The decision of Hon'ble the Supreme Court of India, as relied by learned advocate for the respondent in the case of Organo Chemical Industries (supra) was dealing with the challenge to some of the provisions of the Act itself and therefore the observations of the Apex Court are relevant. The present one is the case where an individual order passed by the authority is challenged by the concerned Establishment and the said authority is party respondent and there is appropriate contest also from the said respondent. 6.2. Further there are earlier rounds of litigation as well. Reference needs to be made to the last order of this Court (Coram: Honourable Mr. 6.2. Further there are earlier rounds of litigation as well. Reference needs to be made to the last order of this Court (Coram: Honourable Mr. Justice Akil Kureshi) recorded on Civil Revision Application No. 313 of 2012 dated 2.7.2015. Paras 13 and 14 thereof read as under: "13. For all these reasons, the impugned order of the civil Court is set aside. Civil Revision Application is allowed. Civil Suit No. 163 of 2010 is dismissed. 14. Obviously I have not barred the plaintiff from securing his remedies to challenge the judgment of the Tribunal which surely the same cannot be done by filing civil suit and that I have held." 6.3. For all these reasons, this petition is held to be maintainable. 7. Having held that this petition is maintainable in its present form, now the case of the petitioner need to be examined on merits. 7.1. So far the bone contention of the petitioner, with regard to non-applicability of the Act to it is concerned, reference needs to be made to section 1(3) of the Act, which reads as under: "1.(1)... (2)... (3) Subject to the provisions contained in section 16, it applies- (a) to every establishment which is a factory engaged in any industry specified in Schedule I and in which twenty or more persons are employed, and (b) to any other establishment employing twenty or more persons or class of such establishments which the Central Government may, by notification in the official Gazette, specify in this behalf; Provided that........" 7.2. It is not in dispute that, section 1(3)(b) is the relevant provision in the facts of this case. As per the said provision, there is condition precedent to the applicability of the Act, that there should be not less than 20 employees working with the establishment. Whether in the petitioner establishment, there were at least 20 employees or not, is a question of fact. There is material on record, which suggests that, going by the calculation made by the department itself, there were not 20 employees, as claimed by the department. In this regard, reference needs to be made to the inquiry report relied by the authorities which is annexed with the affidavit-in-reply of the respondents, and other annexures thereto [at pages: 408 to 416]. In this regard, reference needs to be made to the inquiry report relied by the authorities which is annexed with the affidavit-in-reply of the respondents, and other annexures thereto [at pages: 408 to 416]. Annexure-B to the affidavit-in-reply [at page: 412/414] is the wage register of the petitioner establishment for the month of January, 1998, which is relied by the authorities to hold that the Act is applicable. The said register indicates the name of 12 persons. In the inquiry report [at page: 408-411], which is stated to have been pursuant to the visit dated 17.11.1999 and which was submitted to the office on 7.12.1999, this register is taken as the first entry making available 12 persons, for the 20 which the department wanted [at page: 409 top]. They still needed 8 more names. For this purpose, one letter is claimed to have been obtained from the petitioner on 17.11.1999 [at page: 416], which reads as under: "To the officer of Squad. With reference to your visit I to inform you that our hospital is about June, 91 Besides supplying the xerox copy of month on September, 97 and January 98 and a copy of memorandum the following part time casual workers are deployed. 2. Sweepers 3. Securities We are three Directors. Thanking You Sd/-" 7.3. The above figures are reproduced, as it is by the department, on the top of page: 409 [in the inquiry report]. Thus, the figure of 20 is arrived at in the following manner: "12 As per Pay roll of January, 1998 2. Sweeper 3. Security 3. Director as per letter of establishment ... 20" 7.4. In the above calculation, the error which creped up is that there is overlapping of three persons. The names included in the wage register, at serial Nos. 7,8, 9 and 10, are the names of the Directors. The statement of the petitioner that they have three Directors is taken by the department as three more persons as Directors. If these three persons are excluded, which need to be, the figure of 20 would become 17. The establishment thus gets excluded from the applicability of the Act as claimed by it. 7.5. At this juncture, it needs to be noted that, the inquiry report in which the above noted erroneous calculation is reflected by the department is not supplied to the petitioner. The establishment thus gets excluded from the applicability of the Act as claimed by it. 7.5. At this juncture, it needs to be noted that, the inquiry report in which the above noted erroneous calculation is reflected by the department is not supplied to the petitioner. The submission with regard to the impugned order being in violation of principles of natural justice assumes further significance in this factual background. The petitioner has, in terms, submitted to the authorities time and again that the very calculation of the figure of 20 is wrong, and there is no answer by the department to it. 7.6. For the above reasons, the principal contention of the petitioner that there are not 20 employees and therefore the Act is not applicable to it, needs to be and is accepted. 8.1. In view of what is held above, the other contentions raised on behalf of the petitioner may not be required to be gone into, however one of the contentions, which still would make the case of the petitioner stronger is that, whether the Directors could be included, for the purpose of calculation of 20 employees. 8.2. In this regard, reference needs to be made to the definition of "employees" and "employer". Relevant portion of section 2(e) and (f) of the Act, reads as under: "2.(e) "employer" means: (i) (ii) in relation to any other establishment, the person who, or the authority which, has the ultimate control over the affairs of the establishment, and where the said affairs are entrusted to a manager, managing director or managing agent, such manager, managing director or managing agent. (f) "employee" means any person who is employed for wages in any kind of work, manual or otherwise, in or in connection with the work of an establishment and who gets, his wages directly or indirectly from the employer, and includes any person," 8.3. On conjoint reading of the above, including the decision of Hon'ble the Supreme Court of India in the case of Srikanta Datta (supra), as relied by learned advocate for the petitioner, this Court finds that, the Directors could not have been included by the department, for the purpose of arriving at the figure of 20 employees, which they have included twice, to make it 20. Since this petition needs to be and is allowed on the basis of the findings recorded in para: 8 above, this aspect is not deliberated further. 8.4. It is noted that, there are other contentions also, raised by the petitioner but for the reasons recorded in para: 9.3 above, other contentions are not gone into. 9. For the reasons recorded above, this petition needs to be allowed. 10. At this juncture, it is noted that, learned advocate for the petitioner has stated that, the petitioner has paid some amount to the department, pursuant to the impugned orders. Further, some amount is claimed to have been deposited with this Court and with the Court below, which is further claimed to have been lying as it is. For this reason, it needs to be directed that, the amount which is paid by the petitioner to the department, pursuant to the impugned orders, shall be refunded to the petitioner by the department within reasonable time. Further, the amount which is claimed to have been deposited with this Court and with the Court below, and which is further claimed to have been lying as it is, needs to be permitted to be withdrawn by the petitioner. 11. It is noted that, various orders are passed qua the impugned orders, which are on record. They are in (i) Regular Civil Suit No. 163 of 2010 in the Court of Additional Senior Civil Judge, Rajkot, (ii) Special Civil Application No. 12842 of 2010 dated 28.2.2011, (iii) Special Civil Application No. 8568 of 2011 dated 16.4.2012 and (iv) Civil Revision Application No. 313 of 2012 dated 2.7.2015. For the reasons recorded above, the following order is passed. 11.1. This petition is allowed. 11.2. The impugned orders are quashed and set aside. 11.3. It is directed that, the amount which is paid by the petitioner to the respondent department, pursuant to the impugned orders, shall be refunded to the petitioner by the department, within a period of three months from today. 11.4. It is directed that, the amount which is claimed to have been deposited by the petitioner, with this Court and with the Court below, and which is further claimed to have been lying as it is, pursuant to the impugned orders shall be permitted to be withdrawn by the petitioner, by the concerned Registry, after due scrutiny and in the prescribed procedure. 11.5. 11.5. Rule made absolute to the aforesaid extent. No order as to costs.