Small Gauges Ltd. and ors. Vs. V.P. Ramaiah, Regional Provident Fund Commissioner - Court Judgment

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labour and industrial - provident fund - section 7a of employees provident fund and miscellaneous provisions act, 1952(act) - inquiry conducted by provident fund authority under section 7a of act against petitioners - thereafter petitioners were ordered to contribute provident fund dues - hence, present petition - court observed that copies of inquiry held under section 7a of act not furnished to petitioners - it is part and parcel of principle of audi-alteram partem that other party must have opportunity to defend - held, copies of inquiry be given to petitioners - petition allowed - section 10: [swatanter kumar, c.j., a.p. deshpande & smt. nishita mhatre, jj] admission to professional colleges - technical courses - publication of brochure on basis of which candidates seek admission to various institution keeping in mind their merit and preference of colleges held, for ensuring adherence to proper appreciation of an academic course, it is essential that the method of admission is just, fair and transparent. the first step in this direction would be publication of a brochure on the basis of which the applicants are supposed to aspire for admission to various institution keeping in mind their merit and preference of college. brochure, firstly has to be in conformity with law and the statutory scheme notified by the competent authority. it is a complete and composite document as it deals with the scheme for conducting their entrance examinations, declaration of results, general instructions and method of admission, etc. this brochure is binding on the applicants as well as the authorities. this brochure or admission notification issued by the state or other competent authority cannot be altered at a subsequent stage particularly once the process of admission has begun. there is hardly any exception to this accepted rule of law. section 10: [swatanter kumar, c.j., a.p. deshpande & smt. nishita mhatre,jj] admission to professional colleges - technical courses - approval to additional seats or to start new course - cut off dates held, the settled principle of law is that merit of the applicant is the primary criteria which would determine his rank as well as the college where he would be entitled to admission. this rule should not be frustrated as it will tantamount to entirely upsetting the object of admissions based on merit oriented method and would cast cloud on the fairness and transparency of the method of admission. one of the ways in which merit can be defeated is allowing increase in the intake strength or commencement if new colleges beyond cut-off date and admissions beyond the last date specified in the notification/calendar issued by the concerned authorities. this can be illustrated by giving an example. college a which is running a professional course like engineering or mba etc. has an intake capacity of 60 seats which has duly been notified in the information brochure. however, after the cut-off date, approval is granted by the aicte and thereafter, the process is taken up by the state and the intake capacity of the college is increased by 30 more seats. these seats would obviously, not be notified in the information brochure and the candidate who are meritorious and for whom college a; be the college of reference could not get seats or give preference as the seats were limited. none had the proper knowledge about the increase in intake of seats though at a much subsequent stage and may be even after the last date of admission is over either by themselves or under the order of the court even it is put on the internet or given in the newspaper, the candidates of higher rank or meritorious candidates would not be able to avail of that benefit because they have already submitted the testimonial, have paid their fees and the courses have commenced. in that situation, for variety of reasons, they may not be able to take admission in the institution of their higher preference while the candidates of much lower merit will be admitted to that course. besides defeating the merit, it has been commonly noticed that the late admissions made by the colleges directly effect notified candidates who have questioned it more than often as their admission process is not so just, fair and transparent which has given rise to the litigation. it is also a kind of back door entry method. another serious consequence that result from such admissions is shortening of the academic courses in an undesirable manner. it is expected of other candidate selected to a professional course that he or she would complete the course in its entirety and not by missing more than a month or so in joining the said course. this results in lowering the excellence of education as well as harms the academic standard of professional education. admission to professional colleges: [swatanter kumar, c.j., a.p. deshpande & smt. nishita mhatre, jj] technical courses - held, in process of admission to professional colleges relating to technical courses, primarily three institutional bodies are involved. (i) all india technical council for technical education, (ii) state of maharashtra through director of technical education and (iii) university to which such institution is affiliated the role of all these institutions in distinct and different but for a common object. primary of the rule of all india council for technical education (aicte) is now well settled but that certainly does not mean that role of the state government and for that matter the university is without any purpose or of no importance. the council is the authority constituted under the central act with the responsibility of maintaining education standards and judging upon the infra-structure and facilities available for imparting such professional education. its opinion is of utmost importance and shall take precedence over views of the state as well as that of the university. the concerned department of the state and the affiliating university has a role to pay but it is limited in its application. they cannot lay down any guidelines or policies which would be in conflict with the central statute or the students laid down a by the central body. state can frame its policy for admission to such professional courses but such policy again has to be in conformity with the directives issued by the central body. while the state grants its approval and university its affiliation for increased intake of seats or commencement for a new course/college, its directions should not offend and be repugnant to what has been laid down in the condition of approval granted by the central authority or council. what is most important is that all these authorities have to work ad idem as they all have a common object to achieve i.e. of proper imparting of education an ensuring maintenance of proper standards of education, examination and ensuring proper infrastructure for betterment of educational system. only if all these authorities work in a co-ordinated manner and with co-operation they would be able to achieve the very object for which all these entities exist admission to professional courses: [swatanter kumar, c.j.,a.p. deshpande & smt. nishita mhatre, jj] admission schedule - interference by courts held, all the expert bodies viz. aicte as well as directorate of education in consultation with the departments of the state regulating the process of admission and maintenance of standards of education had notified a legal binding document specifying dates and schedule for various matters in relation to admission of students and commencement of courses. there has to be so compelling circumstances and grounds before the court to interfere with the prescribed schedule. it is neither so arbitrary nor so perverse, keeping in view the essential features relating to imparting education to professional courses that it should invite judicial chastisement to the extent of laying down entirely new schedule. merely because there has been some delay on the part of either of these authorities to timely grant of either of these authorities to timely grant or decline approval and permission to commence a course per se would not be sufficient ground for disturbing the notified schedule and timely commencement of courses. - she submits that unless the petitioners are furnished with the reports and the deposition of the enforcement officer, it would not be possible for them to effectively defend themselves at the enquiry being conducted against them. the basic tenets of the principle of audi alteram partem require that a person should not be condemned without giving him a hearing. the respondent shall ensure that the petitioners are furnished with all relevant documents which have been filed by them before the commissioner well in advance in order to avoid any prejudice to the petitioners.nishita mhatre, j.1. the order challenged in this petition is dated 24.4.1995 and has been passed by the regional provident fund commissioner, pune. it has been held that there is functional integrality between the petitioners and therefore, all the units must be clubbed together in order to ascertain the liability of payment of provident fund. it has been found that all the petitioners are liable to contribute to the provident fund scheme framed under the employees provident fund and miscellaneous provisions act, 1952 w.e.f. 31.3.1982. an amount of rs. 2,23,536.40 has been claimed from the three petitioners as dues payable for the months of april 1982 to february 1995.2. the petitioners have challenged this order primarily on the five grounds: (i) that the claim for provident fund contributions has been made belatedly; (ii) that there was no functional integrality between the three petitioners; (iii) that the documents on which reliance is placed by the department in the enquiry conducted under section 7a of the act have not been furnished to the petitioners; (iv) that dues have been claimed from a date which was prior to the date when they came into existence and; (v) that since the excise department had concluded that the 3 petitioners had separate identities and there was no functional integrality between them, the findings of the excise authority ought to have weighed with the respondent herein while passing the impugned order.3. to ascertain whether the contentions raised on behalf of the petitioners can be accepted it would be necessary to advert to a few facts. petitioner no. 1 (for short, 'small gauges ltd.') commenced its business of 8' gauges in 1977. the 3rd petitioner came into existence in 1977 and was doing the job work and thread grinding work. the manufacturing activities of petitioner no. 2 commenced from 1980 and was also engaged in doing job work and manufacturing special gauges. a code number was allotted by the provident fund authorities to the small gauges ltd. from october 1983 and accordingly, it has been deducting the contributions from the salaries of the employees and depositing the same alongwith a matching contribution of its own from october 1983. a show-cause notice was issued to all the petitioners under section 7a of the act calling upon the petitioner no. 1 to remit provident fun contributions in respect of the employees working with petitioner nos. 2 and 3 for the period from january 1979 to june 1991. the enquiry under section 7a was concluded and petitioner no. 1 was held liable to pay rs. 103,484 as provident fund dues in respect of the petitioner nos. 2 and 3. this amount was determined on the basis that petitioner nos. 2 and 3 were branches/departments of the petitioner no. 1.4. on receipt of the order, correspondence ensued between petitioner no. 1 and the respondent. an application was also made for review of the order. at the same time, petitioner no. 1 requested the respondent to furnish the depositions of the workmen referred to in the impugned order. an attachment notice was issued under section 8f(3) of the act. the respondent however refused to accede to the request of the petitioners for reviewing the order. a writ petition was consequently filed by the petitioner being writ petition no. 2747 of 1993. minutes were filed in this petition and the court disposed of the petition in terms of the minutes of order. petitioner no. 1 was directed to deposit the entire amount determined by the impugned order with the respondent. the petitioners were also directed to furnish the relevant documents on record for the period for which the contributions were claimed. several documents were filed by the petitioner no. 1 and the amount stipulated in the minutes of the order filed before this court in the writ petition was also deposited with the provident fund authorities. additional documents including the partnership deed, balance sheets and profit and loss accounts were also filed by the petitioners. the petitioners informed the respondent that some of the documents which they had been called upon to produce had been seized by the excise department and, they were unable to produce them till such time as the excise department released the documents.4. the petitioners were given a hearing by the respondent. objections with regard to clubbing of the petitioners nos. 2 and 3 with petitioner no. 1 were submitted on 5.3.1993. further objections were also submitted on 23.12.1993. the area enforcement officer visited the establishments of the petitioners on 5.4.1994. a report was submitted by the enforcement officer on 5.9.1994 and 29.9.1994. 2 further reports were submitted by him on 12.1.1995 and 14.3.1995 after visiting the premises in january and march 1995. copies of the reports were not furnished to the petitioners except for the report dated 5.9.1994. thereafter, the enforcement officer visited the premises of the petitioner once more when the petitioners furnished further documents including purshis, muster rolls, etc. to him. another report was submitted by the enforcement officer a copy of which has not been given to the petitioners. a statement of the outstanding dues which was prepared by the enforcement officer on submission of the report has also not been furnished to the petitioners. the deposition of the enforcement officer was recorded by the respondent and a copy of which again was not furnished to the petitioners.5. the impugned order has been passed on 24.4.1995 in which it has been held that petitioner no. 1 is required to pay rs. 74942/- for the period from february 1982 to october 1983. it was held further that the petitioner nos. 2 and 3 are branches/departments of petitioner no. 1 and, therefore, were covered by the provisions of the act from april 1982 onwards. the entire amount of rs. 2,23,536.40 was sought to be recovered from petitioner no. 1.6. the learned counsel for the petitioners has drawn my attention to the fact that the impugned order has been passed without furnishing the reports of the enforcement officer filed after his visit to the establishments. his deposition recorded on 10.4.1995 has also not been furnished to the petitioners. she points out that this contention has been raised in the petition and there is no denial of this fact by the respondent. she submits that unless the petitioners are furnished with the reports and the deposition of the enforcement officer, it would not be possible for them to effectively defend themselves at the enquiry being conducted against them. the learned counsel has also drawn my attention to the order passed by the joint commissioner of central excise, pune which indicates that there was no evidence to show that the petitioners did not each have an independent existence. it was held that there was no functional integrality between them all. the learned counsel has also relied on several judgments in support of her submission that the three units could not be clubbed together as there was no functional integrality between them. reliance has been placed on the judgment of a learned single judge of this court in sunder transport and anr. v. the regional p.f. commissioner 1999 iii llj 503; judgment of the supreme court in the case of regional provident fund commisioner and anr. v. dharamsi morarji chemical co. ltd. 1998 i llj 1060.6. in my view, the order under section 7a of the epf act cannot be sustained inasmuch as it has been passed without furnishing the reports and other documents relied on by the enforcement officer in support of the claim made against the petitioners. unless the report, the depositions and the documents are furnished to the petitioners, these documents cannot be relied on by the respondent to pass orders against the petitioners. the basic tenets of the principle of audi alteram partem require that a person should not be condemned without giving him a hearing. such a hearing must be meaningful and effective and not a farce. all documents relied on by the department in support of its claim against the petitioners must be furnished to the petitioners before any conclusion is arrived at on the basis of those documents.7. therefore, the enquiry held against the petitioners and the impugned order are vitiated. it is not necessary for me to dwell upon the other submissions raised by the learned counsel for the petitioners as i find it appropriate to remand the matter to the respondent for a fresh hearing. the respondent shall ensure that the petitioners are furnished with all relevant documents which have been filed by them before the commissioner well in advance in order to avoid any prejudice to the petitioners. moreover, the claim against the petitioner no. 1 is with respect to the period from january 1979 to june 1991. however, the impugned order directs the petitioners to pay the amounts for the period upto 1995. in my opinion, unless the show-case notice calls upon the petitioners to contribute to the scheme upto 1995, an order directing them to do so cannot be passed. there is no material on record to indicate that a second show-cause notice was issued for a period subsequent to january 1979 to june 1991. all these factors will have to be borne in mind by the commissioner while deciding the matter on remand.8. the respondent has not filed any affidavit to controvert the pleadings in the petition although an opportunity to do so was given to him. in these circumstances, in my opinion, the following order would meet the ends of justice:i) the impugned order dated 24.4.1995 passed by the respondent under section 7a of the epf act is set aside.ii) the proceedings are remanded to the respondent for hearing the petitioners again.iii) all documents on which the enforcement officer wishes to rely, including his inspection reports and any evidence led earlier shall be furnished to the petitioners. if such documents are not furnished, no reliance can be placed by the commissioner on those documents while passing orders under section 7a of the act.iv) the petitioners shall appear before the regional provident fund commissioner, pune on 6.10.2008 at 11.30 am.v) the amount which has been deposited in this court pursuant to the earlier orders shall continue to be deposited in this court pending final decision in the section 7a enquiry by the respondent on remand.9. writ petition is disposed of accordingly. no order as to costs.