The Court of Appeal held that in the case of a recovery of Employees’ Provident Fund dues, from a Company under liquidation, that the Commissioner General of Labour must seek to recover the same from the Liquidator of the Company and not from its Directors.
Court of Appeal President Justice S.Sriskandarajah made this order pursuant to a Writ Application filed by one-time non Executive Director of Samuel, Sons and Company Limited. It was a case pertaining to Samuel, Sons and Company Limited, which was under liquidation.
President’s Counsel Sanjeeva Jayawardena with Rajeev Amarasuriya instructed by Sudath Perera Associates appeared for the Petitioner. State Counsel Nirmalan Wigneswaran appeared for the Respondents. The Court held that the said Company, for the purposes of the provisions of the Employees Provident Fund Act, ceased to be the employer.
The Court also held that the liquidator of the company become the employer in terms of the Law and ruled that therefore the notice for the recovery of Employees’ Provident Fund dues issued to a Director of the Company had no force or effect.
Petitioner in his Writ application complained to Court that two notices for the recovery of Employees’ Provident Fund said to be due in respect of employees of Samuel, Sons and Company Limited had been directly issued to him and that recovery was sought to be made against him personally, as opposed to the company itself.
He further complained that he was a Director of the Company only for t he li mited period 1/4/2002 to 31/3/2004, and that too only in a non executive capacity, and that these notices should not have been issued against him.
Counsel for the Petitioner submitted to Court that it was settled law that the 1st Respondent, the Commissioner General of Labour, when taking steps for the recovery of the Employees’ Provident Fund under the provisions of the Fund Act No. 15 of 1958, as amended, has to first have regards to Section 17 of the EPF Act.
He further submitted that only thereafter, if he is of the opinion, that it is not expedient to recover under Section 17, that he could consider proceeding against the employer under Section 38(1) thereof, and further, if it is impracticable or inexpedient to proceed against either Section 17 or under Section 38(1), that then the Commissioner could proceed against the employer under Section 38(2) thereof.
Furthermore, the issue was raised that under the relevant Section, the Commissioner could not proceed against a Director of the Company, to recover the said sum as the primary liability is on the Company to pay the said sum.
Accordingly, the Court of Appeal issued Writs of Certiorari quashing the two purported notices issued to the Petitioner, in his capacity of a Director, for the recovery of Employees’ Provident Fund dues of the said Company.