Assistant Provident Fund Commissioner v. Vijaya Bank and Ors

RAJIV SAHAI ENDLAW, J

MAY 26, 2016

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*IN THE HIGH COURT OF DELHI AT NEW DELHI % Date of decision: 26th May, 2016 + W.P.(C) No.4970/2016 & CM No.20687/2016 (for stay). ASSISTANT PROVIDENT FUND COMMISSIONER. Petitioner Through: Mr. Pankaj Garg, Mr. Milind Garg and Mr. A.S.M. Tripathi, Advs. versus VIJAYA BANK AND ORS ..... Respondents Through: Mr. Vaibhav Dang, Adv. for R-1 with Mr. Surender Singh, Law Officer. CORAM:- HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW CM No.20686/2016 (for exemption). 1. Allowed, subject to just exceptions. 2. The application stands disposed of. W.P.(C) No.4970/2016 & CM No.20687/2016 (for stay). 3. The petition impugns the E-Auction Sale Notice dated 20th April, 2016 of the respondent no.1 Vijaya Bank (Bank), in pursuance to the provisions of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002, of the two properties at Noida of the respondent no.3 M/s. G.K. Products Pvt. Ltd. and respondent no.4 M/s. Well Computer Exim Pvt. Ltd. (Companies) who had stood as guarantors for the financial assistance granted by the respondent no.1 Bank to the respondent no.2 Creative Home Fashions Pvt. Ltd. (Company). The respondents no.5 to 9 are stated to be Directors in each of the respondents no.2 to 4 Companies. 4. It is inter alia the claim of the petitioner Assistant Provident Fund Commissioner that the petitioner has a charge over the properties being auctioned on account of Provident Fund (PF) dues owed by the respondent no.2 Company. 5. The respondent no.1 Bank had attempted sale of the aforesaid properties as far back as in the year 2011 and which sale has been held up since then for the reason of the said objection of the petitioner. 6. Earlier, the petitioner passed orders dated 20th January, 2012 prohibiting the respondent no.1 Bank from auctioning the said properties, compelling the respondent no.1 Bank to file W.P.(C) No.1726/2012 in this Court impugning the said orders of the petitioner. The said writ petition remained pending in this Court till 30th July, 2014 when it was allowed, reasoning that the respondents no.3&4 Companies are separate juridical entities than the respondent no.2 Company which is stated to owe PF dues to the petitioner and that the assets of the respondents no.3&4 Companies cannot be proceeded against for recovery of PF dues of the respondent no.2 Company. The contention of the petitioner then also, of the respondents no.2 to 4 Companies being one and the same entity, was rejected and it was held that the three were separate Companies incorporated under the Companies Act, 1956 and that the petitioner had not commenced any proceeding where this issue had been adjudicated. It was further noted that no proceedings even had been initiated by the petitioner against the respondents no.3&4 Companies and the petitioner could not assume that the three were the same. It was further noted that under Section 8F(3) of the Employees" Provident Funds and Miscellaneous Provisions Act, 1952 (PF Act) though the petitioner was authorised to recover its dues from third parties which owed the said dues to the entity owing PF to the petitioner but the same had also not been done and it had not been established that the respondents no.3&4 Companies owed any money to the respondent no.2 Company which was stated to be owing PF dues to the petitioner. 7. The petitioner preferred LPA No.23/2016 against the aforesaid judgment allowing the writ petition of the respondent no.1 Bank but which LPA was dismissed vide order dated 13th January, 2016 affirming the reasoning given by the learned Single Judge. 8. Taking a cue from the aforesaid reasoning, the Recovery Officer of the petitioner claims to have issued a notice dated 22nd March, 2016 to the respondent no.1 Bank and to the respondents no.2 to 9 to show cause why the corporate veil should not be lifted and to have vide a very well written and reasoned order dated 17th May, 2016, after considering the reply of the respondent no.1 Bank to