SPEEDCRALTS PRIVATE LTD Vs. REGIONAL PROVIDENT FUND COMMISSIONER BIHAR

JUDGEMENT

(1.) The petitioner, a private limited company, has approached this Court by this application under Articles 226 and 227 of the Constitution of India praying to quash Annexures 1, 3, 4, 4-A and 5 to this writ application. Annexure '1' is a notice dated 5.3.1975 issued by the Regional Provident Fund Commissioner, Bihar, calling upon the petitioner to take immediate action to comply with the statutory requirements of the Employees Provident Fund and Family Pension Fund Act, 1952 (hereinafter referred to as 'the Act') and to deposit the outstanding dues in respect of the old employees as well as all the eligible employees and to submit statutory returns within 15 days of the receipt of the notice. Annexure 3 is another notice dated the 23rd April, 1974 issued by the Provident Fund Inspector (Grade 1), Bihar, Patna, calling upon the petitioner to prepare and submit the returns detailed in the notice. Annexures 4 and 4/A again are notices dated the 27th April, 1974 and 18th May, 1974 respectively issued by the Regional Provident Fund Commissioner, Bihar, Patna under section 7 (A) of the Act calling upon the petitioner to appear before him on the dales specified in the two notices so that the amount due from the petitioner may be determined. Annexure 5 also is a notice issued by the Certificate Officer under section 7 of the Public Demands Recovery Act informing the petitioner that a sum of Rs. 35,928.44 is outstanding against the petitioner towards arrears of provident fund. The petitioner therefore, through this notice (Annexure '5') was directed either to deposit the aforesaid amount by 18.6.1974 or to show cause as to why steps should not be taken under the Public Demands Recovery Act to realise the amount.

(2.) Although the point involved in the case is simple, the facts as stated in the petition and in the counter-affidavit are somewhat lengthy beginning from 1950. I shall omit unnecessary details and will refer only to such of the facts anci events which have bearing on the facts in issue and have been relied upon by the parties.

(3.) There was an establishment known as M/s Hindustan Bicycle Manufaciuring Industrial Corporation Ltd. (hereinafter referred to as 'the Hindustan Bicycle Corporation'). It took about 30 acres of land in Mauza Phujwani Sharif from the State of Bihar for a period of 50 years by an indenture of lease dated 5th September, 1950. The lease was effective from 13th July, 1939 and also contained a renewal clause The Hindustan Bicycle Corporation erected a factory over the aforesaid land and started production of bicycles and bicycle pares. The Hindustan Bicycle Corporation, later on, ran into difficulty and by an agreement dated 9th April, 1956, as further modified by a supplementary deed dated the 4th June, 1958, sold the entire factory with all its assets including movables and immovables properties and the lease-hold right over the factory land to another company, namely, M/s Hindustan Vehicles Limited (hereinafter referred to as 'the Vehicles Company) for a sum of Rs, 31,00,000/-. The said Vehicles Company wanted to modernise and improve the quality of the cycle being manufactured, but as it did not have requisite amount to invest for improvement in the factory, it approached respondent no. 4, the Bihar State Financial Corporation (hereinafter referred to as 'the Financial Corporation') for a loan of Rs. 10,00,000/-. Respondent no. 4 sanctioned a loan of Rs. 10,00,000/- for expansion of the Vehicles Company. The Vehicles Company, therefor, executed a registered English mortgage deed on 5th January, 1959 in favour of the Financial Corporation with respect to all its assets existing and further free from all liabilities and encumbrances. According to the agreement, the Vehicles Company had to repay the loan to the Financial Corporation within 10 years, the first instalment was to be paid after two years from the date of advance together with interest at rate of 6 per cent per annum payable half-yearly on 30th September, and 31st March every year which was subject to the rebate of half per cent for punctual payment of instalments. Unfortunately the Vehicles Company could not make payment of the instalments as stipulated. The Board of Directors of the Financial Corporation, therefore, resolved in their meeting held on 27th February, 1965 to recall the loan under section 30 of the State Financial Corporation Act, 1951. As the Vehicles Company had failed to discharge the liability to the Corporation, a miscellaneous case being Case No. 66 of 1965 was filed by the Financial Corporation under section 31 (1)(a) and (c) of the State Financial Corporation Act, 1958 in the Court of the District Judge, Patna on 25.6.1965 for recovery of the dues of the Financial Corporation which then amounted to Rs. 9,95,446.68. The assets of the Vehicles Company, that is, the plant and machinaries, building, etc. were also attached by the District Judge at the instance of the Financial Corporation on 13th September, 1965. While the miscellaneous case was pending before the District Judge, the Central Government intervened in the matter. The Central Government was of the opinion that the affairs of the Vehicles Company were being managed in a manner which was highly detrimental to public interest it, therefore, took over the management of the factory in exercise of the powers conferred under section 18 (A) of the Industrial (Development and Regulation) Act, 1951, for a period of five years under a Notification dated 24th September, 1965. Sri U. N. Rai was thereafter appointed as an authorised Controller by the Central Government for controlling the management of the said Vehicles Company, who took over charge on 27.9.1965 on which day the factory again went into production. In a meeting held on 27th October, 1965, the Board of Directors of the Financial Corporation resolved that since the management of the Vehicles Company had been taken over by the Central Government, steps should be taken to have the order of attachment withdrawn so that the authorised Controller could run the factory. It was further resolved in that meeting that the legal proceedings for the dues of the Financial Corporation should be continued. In pursuance of this resolution, an application praying to withdraw the order of attachment was made before the District Judge in the miscellaneous case. The prayer was allowed and the order of attachment as passed on 13.9.1965 was withdrawn, by order dated 15.11.1965. In spite of best efforts and the facilities available the authorised controller also could not run the factory after November, 1966. According to the petitioner, the authorised controller laid off the entire workmen and the staff, except a few, and finally the Management closed down the factory completely in the year 1969. The petitioner further claims that all the employees were retrenched after payment of retrenchment compensation as provided by law.