2026 LLR 224
BOMBAY HIGH COURT
Hon'ble Mr. M.S. Sonak, J.
WP No. 618/2012, Dt/– 23-12-2025
Shri Digamber S. Bandodkar
v.
The Regional Provident Fund Commissioner and Anr.
EMPLOYEES PROVIDENT FUND – Criminal prosecutions against Directors – Tenability of – A show cause notice and an order concerning warrant was issued against the petitioner for non-payment of PF dues – It was contended by the authorities that the petitioners were incharge of and responsible to the companies – The determination of provident fund dues was not challenged – Held, there is evidence that the petitioners are not only the Directors of the companies but also incharge of and responsible for the conduct of their business – All efforts were made by the respondents to recover the assets of the company but such recovery could not be made as the assets of the companies were siphoned off or frittered away – Held, a Director of a company shall be held liable to pay the due amounts if he falls within the definition of “employer” under the provisions of the statutes – Even if the petitioners had resigned, the resignation was not before the period over which the dues had accumulated – The petitions are dismissed – The amount deposited by the petitioners can be appropriate towards PF dues. Paras 14 to 30
For Petitioner: Mr. Arunkumar Nigalye, Advocate.
Respondents: Mr. Vishnu P.S. Langawat, Advocate.
IMPORTANT POINTS
Note: This judgment is still relevant as it enumerates general principles pertaining to provident fund related law.
JUDGMENT
M.S. Sonak, J.–1. Heard Mr. Arunkumar Nigalye, learned Counsel for the Petitioners and Mr. Vishnu P.S. Langawat, learned Counsel for the Respondents.
2. The learned Counsel for the parties state that a common order can dispose of both the Petitions because the issues of law and fact in both the Petitions are substantially the same. However, Writ Petition No. 618 of 2012 is treated as the lead Petition.
3. The Petitioners challenge the Show Cause Notice dated 03-08-2012 and the order dated 30-08-2012 concerning the warrant issued against the Petitioners for non-payment of Provident Fund dues.
4. Mr. Nigalye submits that Provident Fund dues, if at all, are recoverable from the Company M/s. Pushparti Packs Pvt. Ltd. and M/s. Sagun Extrusions Ltd. He submits that the Respondents, without making serious efforts to recover the dues from the Companies, are proceeding against the Petitioners, who are only the Directors of the said Companies. He submitted that this is impermissible. He relied on Transport Corporation of India Limited and Ors. v. R.M. Gandhi and Ors. , 1991 Lab IC 2017; Employees' State Insurance Corporation v. S.K. Aggarwal and Ors., (1998) 6 SCC 288; Vimalkumar Ravji Shah v. Employees Provident Fund Organisation, Solapur and Ors., 2009 SCC OnLine Bom 633 and Suresh Tulsidas Kilachand and Ors. etc. v. Collector of Bombay and Ors. etc., 1984 Lab IC 1614, in support of his contentions.
5. Mr. Nigalye submitted that for some of the periods for which the dues pertain, the Petitioners had ceased to be Directors of the Companies. He submitted that these aspects have not been considered and therefore the impugned notice/orders warrant interference.
6. Mr. Nigalye submitted that the criminal cases initiated against the Petitioners have already been dismissed. Even this aspect has not been considered before issuing the impugned notice or making the impugned orders.
7. For all the above grounds, Mr. Nigalye submitted that both these Petitions may be allowed and the amounts deposited by the Petitioners in this Court be refunded to the Petitioners.
8. Mr. Langawat, the learned Counsel for the Respondents – Regional Provident Fund Commissioner, Goa Region, submitted that the Petitioners were in charge of and responsible to the Companies. Their case of having resigned as Directors cannot be accepted and has not been substantiated. In any event, even according to the Petitioners, for most of the periods for which the dues pertain, they were admittedly the Directors of the two Companies.
9. Mr. Langawat submits that under the Provisions of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 (‘PF Act', for short), including section 14B thereof, the Respondents are entitled to recover the Provident Fund dues from the Petitioners, who were in charge of and responsible to the Companies for the conduct of business of the Companies.
10. Mr. Langawat submitted that the Respondents made efforts to recover the dues but found that the Companies' assets had been siphoned off by the Petitioners, thereby leaving no substantial assets from which the Provident Fund dues could be recovered. He submitted that, in contrast, the Petitioners are well-to-do and have also deposited the dues in this Court.
11. Mr. Langawat submitted that the Petitioners should not be allowed to defraud workers who are entitled to their Provident Fund dues by adopting such strategies. He submitted that the Writ Court should also not assist the Petitioners in defrauding the workers by failing to pay their Provident Fund dues. He submitted that the scope of criminal prosecution and proceedings for enforcement of civil liabilities are quite different and, therefore, the Petitioners cannot take any advantage of some orders in the criminal proceedings.
12. Mr. Langawat relied on Menezes Chemicals (Goa) Pvt. Ltd. v. Ramendra d. Mayenkar and Ors ., WP No. 779/2019, decided on 15-01-2021 and Harish F. Shah v. Employees Provident Fund Organization , (2012) 1 CLR 619 to support his contentions.
13. The rival contentions now fall for determination.
14. In this case, the determination of the Provident Fund dues by orders dated 14-05-2001 has not been challenged.
15. For securing interim relief, at least in one of the Petitions, the Petitioners deposited an amount of Rs. 7,00,000/- (Rupees Seven Lakhs only), and there is a reference to the Petitioners' offering a Bank Guarantee. Based upon this, the Petitioners have secured interim relief restraining further recoveries.
16. There is evidence that the Petitioners are not only the Directors of the two Companies but also in charge of and responsible to the Companies for the conduct of their business. Mr. Langawat submitted that the Petitioners were the promoters of the Company and in complete charge of its management and affairs.
17. The contention that the Respondents have made no efforts to recover the dues from the assets of the Company is not substantiated. Mr. Langawat contended that all efforts were made, but it was found that the assets of the Companies were siphoned off or frittered away. The dues are now in the range of Rs. 7,00,000/- (Rupees Seven Lakhs only) to Rs. 8,00,000/- (Rupees Eight Lakhs only), with interest thereon as specified in the statute.
18. The fact that some criminal prosecutions against the Petitioners failed cannot absolve them of their civil liabilities. Criminal prosecutions must be adjudged by applying the test of proof beyond a reasonable doubt. However, civil liabilities are usually determined by applying the preponderance of the evidence test.
19. There is no concrete evidence about the Petitioners' resignations. In any event, it is not as if the Petitioners had resigned before the entire period over which the dues have accumulated. Such disputed questions, in any case, cannot be adjudicated in a Writ Petition, which is a summary proceeding.
20. The reliance on S.K Aggarwal (supra) is not quite appropriate. In any event, that was a case dealing with criminal prosecution. The observations in the said decision, made in the context of the provisions of sections 405 and 406 of the Indian Penal Code, 1860 and the Employees' State Insurance Act, 1948, cannot be torn out of context and applied to the fact situation in the present Petition, which is quite different.
21. The same is the position with the decision of this Court in Suresh Tulsidas Kilachand and Ors. (supra). This was again in the context of the provisions of the Employees' State Insurance Act. Even this decision has been considered in S.K. Aggarwal (supra), and for the same reason, based upon this decision, the Petitioners in the fact situation in which they are placed cannot derive any advantage from the same.
22. The Transport Corporation of Indian Limited and Ors . (supra) was again in the context of criminal prosecution. Learned Single Judge of this Court has held that it is not enough to make a bald allegation in the complaint, but facts essential to constitute the offence falling under section 14A(2) had to be alleged. In the absence of such necessary factual allegations, no prosecution can be launched. Again, we are not concerned with any criminal trial, and this is also a case in which the Petitioners have made bald allegations of severing ties with the Company. This decision, therefore, does not assist the Petitioners.
23. The Facts in Vimalkumar Ravji Shah (supra) are also not like the fact situation in the present case. Even this decision refers to S.K. Aggarwal and Ors. (supra) and Suresh Tulsidas Kilachand and Ors . (supra).
24. In Menezes Chemicals (Goa) Pvt. Ltd. (supra), this Court, when exercising its extraordinary jurisdiction under Article 226 of the Constitution, did not interfere with the Recovery Certificate issued against the Director of the Company, who oversaw and managed the affairs of the Company. This Court held that writ jurisdiction is to be exercised to promote justice, and the Directors cannot be allowed to stall the recovery proceedings on the grounds urged.
25. In Harish F. Shah (supra), the Division Bench of the Gujarat High Court, comprising S.J. Mukhopadhaya, C.J. and J.B. Pardiwala, J., as their Lordships then were, held that a Director of a Company shall be held liable to pay the due amount if he falls within the definition of employer under the provisions of the statute. The fact situation in the said decision was quite similar to that in the present matter. This decision incidentally explains how the Hon'ble Supreme Court has also distinguished the various judgments now relied upon by Mr. Nigalye.
26. This decision also refers to another Division Bench decision of the Punjab and Haryana High Court in Sobhag Textile Limited v. Regional Provident Fund Commissioner, Haryana and Anr ., (2000) 3 RSJ 178, where the Division Bench of the Punjab and Haryana High Court has observed as follows:
“Sub-section (1) of section 8B of the 1952 Act prescribes alternative modes of recovery of the arrears on the basis of certificate issued by the authorised officer. Attachment on sale of movable or immovable property of the establishment or, as the case may be, and arrest of the employer and his detention in prison are two of the three modes which can be adopted by the Recovery Officer. Proviso appearing below clause (c) of section 8B(1) of the 1952 Act lays down that attachment and sale of any property of the employer can be taken only if the amount due cannot be recovered from the properties of the establishment. However, there is nothing in the said proviso from which it can be inferred that respondent No. 2 is not entitled to have recourse to the mode prescribed in clause (b) of section 8B(1) before taking recourse to the sale of property under section 8B(1)(a) and in the absence of any such embargo, it is not possible to agree with Shri Grover that the notice issued by respondent No. 2 should be declared illegal, arbitrary and unjustified.”
27. Thus, for all the above reasons, these Petitions deserve to be dismissed and are hereby dismissed. No costs.
28. The amounts deposited by the Petitioners can now be appropriated towards the Provident Fund dues. If the Petitioners do not pay the outstanding amounts within two months from today, the Bank Guarantee may be encashed. In any event, the interim relief granted in these Petitions is now vacated, and the Respondents will be free to recover the balance dues in accordance with the law.
29. The Rule in both these Petitions is discharged. The interim orders, if any, are vacated.