In WP(MD) No.22547 of 2022- Bee gently draws honey from flower, Authority must adopt similar approach: Madras HC restrains EPFO from appropriating more than Rs 15 lakh per month from Kanyakumari Medical Mission’s bank accounts to satisfy provident fund dues
Justice G.R.Swaminathan [30-09-2022]

Read Order: M/s.Kanyakumari Medical Mission Vs. The Employees Provident Fund Organization And Ors 

Tulip Kanth

Madurai, October 7, 2022:  In a matter involving payment of provident fund dues, the Madurai Bench of the Madras High Court has held that while the Medical Commission and the CSI Institute of Technology can be two separate entities for the purpose of assessment, they are to be treated as constituent parts of a single establishment for the purpose of recovery under Section 8 of the Employees' Provident Fund and Miscellaneous Provisions Act, 1952.

The contesting parties before the Single-Judge Bench of Justice G.R.Swaminathan were the Kanyakumari Medical Commission and Employees’ Provident Fund Organization. The Commission is running a number of hospitals as well as paramedical educational institutions. The petitioner and its constituent institutions come under the purview of The Employees' Provident Fund and Miscellaneous Provisions Act, 1952. A separate code has been allotted for them. 

Considering that the petitioner had been paying the contributions for their employees regularly, recovery for the provident fund dues of the seventh respondent( CSI Institute of Technology) was effected from the petitioner's bank account. It was the Commission’s stand that it was illegal and the action was proposed to be initiated for obtaining refund. 

While so, the impugned order came to be passed under Section 8F of the Act  directing the Central Bank to transfer a sum of over Rs 90 lakh lying in the account of the petitioner to satisfy the provident fund dues of the seventh respondent. A copy of the said communication was given to the petitioner by their banker. Challenging the same, this writ petition had been filed.

At the outest, the Bench considered the characteristics of the Commission and opined that  the petitioner was not an independent legal entity or a juristic personality. The Bench held that both the petitioner and the CSI Institute come under the Kanyakumari Diocese of Church of South India.

The Bench extensively referred to the provisions of the Act and said, “As per Section 2(e) of the Act, the authority which has the ultimate control over the affairs of the establishment would be the employer. As per Section 8B, only after proceeding against the movable or immovable property of the establishment, proceedings can be taken against the property of the employer for recovery of the shortfall.”

Noting both the petitioner and the seventh respondent are not having any legal character, and so they can be treated only as parts of the diocese, the Bench asserted, “For the purpose of assessment, they can be separate entities. But for the purpose of recovery, they will be considered and treated only as constituent parts of a single establishment, namely, Kanyakumari Diocese of CSI.”

It was also clarified that the amount lying in the bank account of the petitioner-institution also belongs to CSI, Kanyakumari Diocese and when the first respondent had taken recovery action, it must be construed as taking action only against the establishment concerned.

“CSI, Kanyakumari Diocese is an umbrella organization whose limbs are the petitioner and the seventh respondent. They would constitute a single establishment for the purpose of recovery”, clarified the Bench.

Observing that the petitioner is running a number of hospitals and it must pay salary to the doctors and other staff, the Bench held that the first respondent cannot sweep the petitioner's bank account dry. 

Mentioning that the first respondent must utilize its power in a reasonable manner, the Bench said, “If a sledge hammer approach is adopted, it will bring the day-to-day running of the institution to halt. The authority must milk the cow not butcher it. A bee or a butterfly gently draws the honey from the flower. It does not pluck it. The authority must adopt a similar approach.”

Taking into consideration that the institutions in question are having properties and it is always possible to effect full recovery of the PF dues, the Bench restrained the first respondent from appropriating more than a sum of Rs 15 lakh per month from the petitioner's bank accounts.