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M/S L.M.L. Ltd. v. Employees State Insurance Corporation And Others - WRIT - C No. 12139 of 2006  RD-AH 5402 (7 March 2006)
Civil Misc. Writ Petition No. 12139 of 2006
M/s L.M.L. Limited vs. Employees State Insurance Corp. & others
Hon'ble Vineet Saran, J
By an order dated 6.1.2006 passed by Respondent no.2 under section 48-A of the Employees' State Insurance Act, 1948 (for short ''the Act') it was determined that an amount of Rs. 85,93,000/- was due to be paid by the petitioner towards contribution of Employees' State Insurance for the period 1.4.2001 to 30.9.2003 plus interest. Thereafter, on 2.2.2006, the Respondent no.2 issued instructions to the Respondent no.3 for recovery of the amount from the petitioner. In pursuance thereof on the same date, i.e. 2.2.2006, the Recovery Officer, Employees' State Insurance Corporation, Respondent no.3, issued a recovery notice requiring the petitioner to deposit a sum of Rs. 85,93,000/- plus interest of Rs.45,31,454/-, totaling Rs. 1,31,24,454/-, within 15 days of the receipt of the notice. The contention of the petitioner is that the said notice was served on the petitioner on 6.2.2006. Before expiry of the said period, on 17.2.2006 the petitioner instituted a suit under section 75 of the Act before the Employees State Insurance Court/Civil Judge (Senior Division), Kanpur Nagar. Along with the suit, the petitioner filed an application under section 75 (2-B) of the Act for staying the operation of the order dated 6.2.2006 as well as for waiver of the fifty per cent of the amount due to be deposited at the time of filing the appeal. On the said stay/waiver application, the Employees State Insurance Court fixed 24.2.2006 as the next date. In the meantime, on 21.2.2006 the Respondent no.3 issued a letter for seizing the bank account of the petitioner in H.D.F.C. Bank and withdrew a sum of Rs. 1,16,00,000/- from the H.D.F.C. bank account of the petitioner. On the next day i.e. 22.2.2006, the Respondent no.3 withdrew a further amount of Rs. 15,95,154/- from the H.D.F.C. bank account of the petitioner. As such, recovery of Rs. 1,31,95,154/- has been made from the petitioner. Aggrieved by the aforesaid order and the action of the respondents, the petitioner has filed this writ petition with the following reliefs:-
"i) Issue a suitable writ, order or direction in the nature of certiorari quashing the order dated 6.1.2006 passed by Respondent no.2 and notice dated 2.2.2006 issued by Respondent no. 2 and 3.
ii) Issue a writ, order or direction in the nature of mandamus commanding the respondents no. 2 and 3 to immediately refund the amount of Rs. 1,31,24,454/- illegally withdrawn from the bank accounts of the petitioner on 21.2.2006 and 22.2.2006 and further direct the respondents no. 2 and 3 to immediately withdraw the similar notices issued to various other banks of in which the petitioner's accounts are being operated.
iii) Issue any other suitable writ, order or direction which this Hon'ble Court may deem fit and proper in the circumstances of the case.
iv) Award cost of the writ petition in favour of the petitioner."
I have heard Sri Shashi Nandan, learned Senior Advocate assisted by Sri B.C.Rai, learned counsel for the petitioner, as well as Sri J.N.Tiwari, learned Senior Advocate assisted by Sri Rajesh Tiwari, learned counsel for the contesting respondent nos. 2 and 3 and have perused the record. Counter and rejoinder affidavits between the contesting parties have been exchanged and with consent of the learned counsel for the parties, this writ petition is being disposed of at this stage.
The contention of the petitioner is that against an order passed under section 45-A of the Act, the petitioner would be entitled to file a suit before the Employees State Insurance Court after depositing only fifty per cent of the disputed amount as provided under sub-section (2-A) of section 75 of the Act. The proviso to the said sub-section further provides that an application for stay of the order and waiver of the amount to be deposited can be filed. It has thus been urged by the petitioner that since stay and waiver application had been filed by the petitioner, which was pending determination, and 24.2.2006 was the next date fixed, the respondent-authorities ought not to have recovered the amount prior to the said date. The further contention of the petitioner is that since the notice dated 2.2.2006 itself provided that the petitioner was to deposit the amount within 15 days of the receipt of the notice and it has categorically been stated that the said notice was received by the petitioner on 6.2.2006, the withdrawal of the amount on 21.2.2006 had been made prior to the expiry of the said period of 15 clear days from the date of receipt of the notice and as such the same would be illegal. It was also contended that vide Notifications dated 24.6.2004 and 14.6.2005 issued by the Governor under the provisions of U.P. Industrial Undertaking (Special Provisions for Prevention of Unemployment) Act, 1966 (for short ''the Act of 1966') the petitioner-company was declared as a relief undertaking and it was provided that for a period of one year from the date of Notification all the contracts, assurances of property, agreements, settlements, awards, standing orders or other instruments, except those entered into under the Acts mentioned in the Schedule, in force under any law whatsoever to which the undertaking is a party or which may be applicable to the undertaking, immediately before the date of its declaration as a relief undertaking shall be suspended in operation. It has thus been urged that in view of such provisions also the recovery could not have been made from the petitioner, which was declared as a relief undertaking. It was lastly submitted that because of the said recovery of about Rs.1.31 Crores having been made from the bank account of the petitioner, the petitioner-company is unable to pay the salary of its over 6000 employees and is thus facing a virtual lock out.
Sri Tiwari, learned Senior counsel appearing for the contesting respondents has, however, submitted that the matter is already pending before the Employees State Insurance Court and as such it would be appropriate that the said Court, which is seized of the matter, may pass appropriate orders with regard to the recovery which has already been initiated. It has further been submitted that one notice dated 2.2.2006 was served on the petitioner personally on the same date and another notice, which was sent by registered post, was received by the petitioner on 6.2.2006 and even if it is presumed that the notice was received by the petitioner on 6.2.2006, then too the respondent-Corporation would have the right to recover the amount on 21.2.2006. It was lastly submitted that since the Employees' State Insurance Act is not named in the schedule to the Act of 1966, as such the Act would not be applicable to the present case even after issuance of the Notifications dated 24.6.2004 and 14.6.2005. It has been submitted that even otherwise, under section 4(1)(b) of the said Act the liability of the petitioner can be determined and be enforced by the respondent Corporation.
It is not disputed that the Notifications under the Act of 1966 have been issued by the Governor declaring the petitioner company to be a relief undertaking. The last notification was issued on 14.6.2005, which is still in force. As such the petitioner would be entitled to the reliefs and concessions in pursuance of the said Notification. However, considering the nature of the order which is proposed to be passed, I am not inclined to delve into this question and am leaving it open to the competent authority to decide the same.
Considering the fact that the petitioner has already filed a suit under section 75 of the Act, which is pending consideration before Employees State Insurance Court, and further that the application for waiver/stay was also filed on which 24.2.2006 was the date fixed, and prior to that, on 21.2.2006 a substantial amount had already been withdrawn which was certainly not after 15 clear days of the receipt of the notice by the petitioner (which was on 6.2.2006), in my view the recovery made by the respondents in pursuance of the said notice was not justified. However, keeping in view that section 75 (2-B) of the Act provides that the suit shall not be entertained unless the plaintiff has deposited with the Court fifty percent of the amount due from him as claimed by the Corporation, in my view, before its suit is entertained, the petitioner would be liable to deposit fifty per cent of the assessed amount of Rs. 85,93,000/-, which comes to approximately Rs. 43 lacs. In such view of the matter, the recovery/withdrawal of the amount from the bank account in a hurried manner, even prior to the expiry of the period given in the notice being unjustified and illegal, the petitioner would be entitled to refund of the balance amount recovered from the petitioner which was over and above Rs.43 lacs. However, the said amount of Rs.43 lacs shall also be subject to the orders passed by Employees State Insurance Court on the waiver/stay application filed by the petitioner, which is pending determination.
In such view of the matter, this court is not inclined to entertain the first prayer of the petitioner with regard to quashing of the order dated 6.1.2006, regarding which the suit is already pending before Employees State Insurance Court.
As regards the second prayer, this writ petition is partly allowed, with a direction that the amount which has been recovered from the petitioner, over and above Rs.43 lacs, shall be refunded to the petitioner forthwith, within a period of two weeks from today, and the petitioner shall be permitted to operate its bank account from which the money had been recovered.
Accordingly, this writ petition stands partly allowed, to the extent indicated above. Costs easy.
Dt/- March 7, 2006
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