VAIDYANATHAN, J.           The petitioner Management has come forward with W.P.No.18194 of 2020, contending that the EPF department had ordered a proclamation of sale notice dated 06.11.2020, as there was a default in payment of Provident Fund. —-The Management shall pay the 1st instalment to the PF Department on or before 20.06.2021 and the 2nd instalment on or before 10.08.2021. In case the amount is not paid as scheduled, there is no need for the Bank to wait for further orders and the Bank can straightaway sell the property and collect the money due to them, by inviting public auction and the balance amount, if any, to be paid to the PF Department.

W.P.Nos.19301 & 18194 of 2020

and WMP.Nos.23890, 23891 & 22598 of 2020

 

W.P.No.19301 of 2020

 

Petitioner Respondent
THE AUTHORIZED OFFICER
THE SOUTH INDIAN BANK LTD, REGIONAL OFFICE, NO.43, GROUND FLOOR, HAMEEDIA CENTRE, HADDOWS ROAD, NUNGAMBAKKAM, CHENNAI-6
ASSISTANT PF COMMISSIONER AN
D RECOVERY OFFICER, EMPLOYEES PROVIDENT FUND ORGANISATION, REGIONAL OFFICE, STEEL PLANT ROAD, DALAVAIPATTI, SALEM 636 302
M/S.JAIHIND SPINNING MILLS L
IMITED,, NO.235, MINT STREET, PARK TOWN, CHENNAI 600 003
Prayer: To recall the letter dated 30.11.2020 sent through email on 01.12.2020 to the petitioner Bank.

 

W.P.No.18194 of 2020

Petitioner Respondent
M/S.JAI HIND SPINNING MILLS
LTD, PMP NAGAR, PACHAL VILLAGE, PUDCHATIRAM(PO), NAMAKKAL-637 018, REP BY ITS DIRECTOR
THE ASSISTANT PROVIDENT FUND COMMISSIONER, REGIONAL OFFICE, SALEM, EMPLOYEES, PROVIDENT FUND ORGANISATION, S.J.PLAZA, SWARNAPURI, SALEM-636004

THE ASSISTANT PROVIDENT FUND
COMMISSIONER AND, RECOVERY OFFICER, REGIONAL OFFICE, STEEL PLANT ROAD, DALAVAIPATTI, SALEM 636 302

 

Petitioner Respondent
M/S.JAI HIND SPINNING MILLS
LTD, PMP NAGAR, PACHAL VILLAGE, PUDCHATIRAM(PO), NAMAKKAL-637 018, REP BY ITS DIRECTOR
THE ASSISTANT PROVIDENT FUND
COMMISSIONER, REGIONAL OFFICE, SALEM, EMPLOYEES, PROVIDENT FUND ORGANISATION, S.J.PLAZA, SWARNAPURI, SALEM-636004
THE ASSISTANT PROVIDENT FUND
COMMISSIONER AND, RECOVERY OFFICER, REGIONAL OFFICE, STEEL PLANT ROAD, DALAVAIPATTI, SALEM 636 302
Prayer: directing 2nd Respondent to accept the representation of the petitioner dated 29.3.2019 without insisting on any condition and to further grant reasonable instalments to remit the sum of Rs.97,17,826/- order in terms of proclamation of sale Notice dated 6.11.2020 in proceedings No.CB / SLM / 34925 / RECY / KI /2020 of the 2nd respondent.

 

  1. VAIDYANATHAN, J.

The petitioner Management has come forward with W.P.No.18194 of 2020, contending that the EPF department had ordered a proclamation of sale notice dated 06.11.2020, as there was a default in payment of Provident Fund contribution to the extent of Rs.97,17,826/- and that the Management has requested the EPF Authorities to accept the amount in instalments. It is further stated that during the pendency of the writ petition, a sum of Rs.10,00,000/- has been paid and the Management is willing to pay the balance amount in 15 instalments, which works out to Rs.6,00,000/- per month. It is further stated that an appeal, challenging the interest and damages is pending before the EPF Tribunal and that the action of the EPF department, in claiming the exorbitant amount towards interest and damages, is not correct. Since the matter is pending before the Tribunal, the Management is not canvassing the said point before this Court at present.

 

 

  1. The learned counsel appearing for the Provident Fund submitted that it is true that there is a non-remittance of Rs.97,17,826/- as on 06.11.2020 and that the Management has also paid a sum of Rs.10,00,000/- during the pendency of the Writ Petition. According to the EPF department, the total amount works out to Rs.2.65 Crores. He further submitted that the Bank has approached this Court by way of W.P.No.19301 of 2020, stating that the EPF has no priority over the claim of the Bank. According to the Bank, when the properties of the Management has been sealed and taken over by the Bank pursuant to the SARFAESI Act and that the Management has become NPA as early as in 2017 and that more than Rs.17 crores is due as on that date to the Bank putting another seal over the property attached by the Bank by the Provident Fund department is illegal. He further submitted that even without any increase in the amount, which is without prejudice to the contention of the Bank, the Bank has been asked by the EPF authorities to pay the entire amount to the PF department.

 

  1. Mr.M.L.Ganesh, learned counsel appearing for the writ petitioner/Bank contended that keeping one more seal over and above the Bank’s attached property is illegal and the demand is also highly arbitrary. He would further submit that the issue whether another seal can be put up over and above the attached property by the Bank by the PF authority was the subject matter of W.P.No.8207 of 2021 which was taken up before the Division Bench, pursuant to the reference made by this Court (Justice M.Govindaraj) and the same is pending before the Division Bench.

 

  1. Learned counsel for the Bank further contended that the Management has defaulted in payment of PF dues and also interest of the loan availed from the Bank and the interest of both the Bank and EPF Departments have to be necessarily safeguarded. The contention of the EPF Authorities that the bank will at first pay the amount to EPF Department and thereafter start recovering the money from the Management, cannot be accepted, as the Bank has no role in the PF dues and no amount can be attached for the dues payable by the company. Unless or otherwise the account is operated by the Bank, that alone can be attached and not any other account more so the loan account. He also contended that that SARFAESI proceedings are pending and therefore, the Writ Petition filed by the Bank may be allowed as prayed for.

 

  1. In reply it is submitted by the Management that the amount due to the Bank was approximately Rs.10,00,00,000/- at one particular point of time and the Management has offered one time settlement of Rs.7.5 Crores, which was not accepted and ultimately, the negotiation failed and the Management is willing to pay any reasonable amount as one time settlement, but not the amount demanded by the Bank.

 

  1. Heard all the parties.

 

  1. Since a detailed adjudication is required in this case with regard to various averments raised by the parties supra, in order to give a quietus to the issue, as an interim measure, the following interim directions are issued:
  2. i) The Management of Jaihinth Spinning Mills is expected to pay PF dues of Rs.97,00,000/- less Rs.10,00,000/- already paid, in 15 equal instalments, which will be without prejudice to the rights of the EPF Department and the Management and the said payment will be subject to the outcome of the appeal pending before the Central Government Industrial Tribunal/Appellate Tribunal. The Management shall furnish different unencumbered properties (worth about Rs.2.5 Crores in respect of PF Department and Rs.15 Crores worth property to the Bank), which can be retrieved depending upon the outcome of the writ petition and the appeal before the Tribunal;

 

  1. ii) With regard to the dues payable to the Bank, the Management shall pay a sum of Rs.7.5 Crores within a period of two months from the date of receipt of a copy of this order, which will be without prejudice to the rights of the Management and the Bank;

 

iii) The Management shall furnish the aforesaid different unencumbered properties of not less than Rs.20 Crores in value towards collateral security for payment of dues to the Bank and PF Department, hand over both the documents of unencumbered properties to the Bank and upon compliance of the above conditions, the Management will be permitted to run the mill and no further encumbrance shall be created on the unencumbered one to be furnished and also the property that was already attached by the Bank and the EPF Department;

 

  1. iv) The seals put by the PF department and the Bank shall be removed, on complying the conditions mentioned supra. On payment of first instalment to the PF department and a sum of Rs.7.5 crores to the Bank, the mill can be opened and can start its functioning;

 

  1. v) In case the amount due to the Bank and the PF Department is not paid or honored as per the conditions stipulated supra, it is open to the PF authorities and the Bank to proceed further and sell the unencumbered properties that are going to be furnished, by proclamation of sale and dispose of the same, which cannot be questioned by any person;
  2. vi) The Management shall pay the 1st instalment to the PF Department on or before 20.06.2021 and the 2nd instalment on or before 10.08.2021. In case the amount is not paid as scheduled, there is no need for the Bank to wait for further orders and the Bank can straightaway sell the property and collect the money due to them, by inviting public auction and the balance amount, if any, to be paid to the PF Department.

 

List these matters for hearing on 30.06.2021.for reporting compliance of payment of 1st instalment and furnishing of documents, pertaining to unencumbered properties mentioned supra.

 

22.04.2021

dpq

Note: Issue order copy on 17.05.2021

 

 

 

 

 

S.VAIDYANATHAN,J.,

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W.P.Nos.19301 & 18194 of 2020

and WMP.Nos.23890, 23891 & 22598 of 2020

 

 

 

 

 

 

 

 

 

 

 

 

22.04.2021

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