Employees Provident Fund and Miscellaneous Provisions Act, 1952 – s.11(2) – Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 – s.35 – Default by the Establishment, covered under the ambit of EPF Act, 1952 in payment of provident fund dues – Axis Bank claimed first charge by referring to s.35, SARFESI Act – Employees’ Provident Fund Organisation (EPFO) re-asserted its priority u/s.11(2) of the PF Act – Appellant-EARC contended that the EPFO has first charge over the property auctioned, whether by the appellant or by the Axis Bank – Whereas, the Axis Bank argued that in view of s.35 of the SARFAESI, the dues of the Bank being secured would have a priority over the sales taxes and other dues payable to the Government or local authority and thus, the EPFO would be entitled to recover anything from the Axis Bank only after its dues are fully satisfied – High Court dismissed the writ petition filed by the appellant: Held: Appellant did not implead Axis Bank as a party-respondent before the High Court – Admittedly, Axis Bank by sale of one of the property of the Establishment has realised an amount of Rs.12 crores approximately whereas, appellant by sale of the other two properties has realised only Rs.7 crores approximately – Further, it is also admitted that the appellant had already paid Rs.75 lakhs and had in fact given an undertaking that it will pay Rs.78,42,579/- in full and final discharge of its liability – According to the appellant, the balance payment of Rs.1,30,52,221/- approximately may be recovered from the Axis Bank – It would be appropriate that the High Court first deals with the issues raised by Axis Bank that it has first charge and priority over and above the EPFO to satisfy its dues from the secured property in view of s.35 of the SARFAESI Act – High Court will examine the priority of first charge amongst the EPFO and the secured creditors i.e. the Axis Bank and other two Banks, namely, State Bank of India and the State Bank of Travancore (now taken over by SBI) in view of s.11(2) of the PF Act – Impugned order set aside – Writ Petition restored, to be decided afresh after impleading the Axis Bank as a respondent and after affording due opportunity of exchanging pleadings and hearing to all the parties to the said proceedings. [Paras 8, 10-12]
As published in the Supreme Court Reports, Supreme Court of India. Headnotes prepared by: Divya Pandey. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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