ALCHEMIST ASSET RECONSTRUCTION COMPANY Vs. REGIONAL PROVIDENT FUND COMMISSIONER-II

JUDGEMENT

(1.) The petitioner No. 1 is a company registered under the provisions of the Companies Act and also registered with Reserve Bank of India as an Asset Reconstruction Company under Sec. 3 of the Secularization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (For short, 'SARFAESI Act, 2002). The petitioner has filed the present Writ Petition under Article 226 of the Constitution of India challenging the order of attachment dtd. 20/1/2023, 27/1/2023 and 8/2/2023 issued by the Regional Provident Fund Commissioner-II Bilaspur- respondent No. 1 herein for recovery of dues of M/s. Hitech Equipment and Spares Pvt. Ltd. By the impugned order the recovery of Rs.42,58,208.00 has been ordered which is assessment of dues of the employees towards Employees Provident Fund for the period from August 2007 to March 2012 under Sec. 7A of the Employees Provident Fund Act (For short, 'EPF Act,'). By the order dtd. 27/1/2023 the respondent has directed for recovery of interest under Sec. 7Q of EPF Act for the same period amounting to Rs.1,06,78,755.00 and by the order dtd. 8/2/2023 the interest as well as the damages under Sec. 14B of the EPF Act for the same period to the tune of Rs.1,67,08,755.00 has been ordered to be recovered.

(2.) The brief facts as reflected from records are that partnership firm known as Rajesh Engineering and Castings having its partners namely Shri Prakash Chand Rateria and Late Shri Mahabir Singh Rateria had availed loan from UCO Bank which was secured by the Factory Land of the partnership firm along with certain personal properties of Mr. Mahavir Prasad Rateria, Vikram Rateria, Manish Rateria, Prakash Chand Rateria and Aruna Rateria. Since the firm was Rajesh Engineering was unable to pay its debt, proceedings under SARFAESI Act, 2002 was initiated and as per assignment agreement dtd. 30/3/2017, the petitioner company being asset reconstruction company has cleared the debts by providing financial assistance. It has also been contended that by the impugned order (Annexure P/1) the respondent has issued for recovery of Provident Fund dues of M/s. Hitech Equipment and Spares Pvt. Ltd. wherein it has been mentioned that as per Sec. 8(b) of the EPF Act, Shri Mahavir Prasad Rateria or Manish Rateria and Vikram Rateria are liable for payment of dues and it has come to notice that ALMCHEMIST ARC is in the process of auctioning their property. It has been contended that the respondent No. 1 is wrongly proceeded against the present petitioner as property of Mr. Mahavir Prasad Rateria and Vikram Rateria whose properties have been taken under SARFAESI Act, 2002 by the petitioner AARC and their loan has been cleared as per the assignment agreement dtd. 30/3/2017, therefore, the petitioners being secured creditors have priority over the claim of the respondents for PF dues. As such, the impugned order against the present petitioners is nonest without jurisdiction and would pray for quashing of the impugned order (Annexure P/1).

(3.) Learned counsel for the petitioners would submit that in view of the amendment made in Sec. 26 E of the SARFAESI Act, 2002, the claim put by the Provident Fund Authority, is not sustainable as priority has to be given to secured creditors and would pray for quashing of the impugned order.