- (1.) An interesting question in regard to the liability of the transferee of an Industrial unit to pay provident fund due for the period prior to transfer arises in this case. In the present case, this question arises where the transfer of the Industrial Unit is not a voluntary one on the basis of an agreement between the two concerns, but is an outcome of a sale by an auction where all the liabilities prior to transfer were specifically agreed to be that of the Liquidator. The counsel for the Petitioner, therefore, would maintain that the transferee would have no liability of the dues of provident fund payable prior to transfer. The counsel for the Regional Fund Commissioner, however, submits that this liability has been rightly fastened due to the provisions of Section 17-B of the Employees Provident Fund and Misc. Provision Act, 1952 (for short ''the Act''). The extent of liability as created by Section 17-B of the Act, thus, is an issue requiring determination in this case. First the facts
(2.) M/s Goindwal Cooperative Spinning Mills Limited was registered as a society with the Registrar of Cooperative Societies and was allotted a provident fund code under the provisions of the Act. Due to heavy losses suffered by this concern, the Unit was closed down permanently. In fact, Registrar Cooperative Societies had issued an order winding up the Society and had appointed official liquidator to settle the claim of debtors and creditors. On 11.1.2006, the official liquidator put this concern to sale by auction. The present Petitioner was the highest bidder with the offer of Rs. 536 lacs and purchased this Unit as a composite unit. An agreement to sell was entered into between the Petitioner company and the official liquidator. The detailed terms of the agreement have been placed on record as Annexure P-3.
(3.) Some of the important conditions of this agreement may need a notice as these would have a bearing on the issue being decided. As per the general terms and conditions, the buyer of the assets was barred from using the name of the Mill as the liquidator had transferred the title of the assets only and not the Mill with liability and its good will. Clause 8 of the general terms in this regard is as under: The buyer of the assets is barred from using the name of the mill after purchase because the Liquidator has transferred the title of the assets only and not the mill with liabilities and its good will.;