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Issues: Whether recovery proceedings for provident fund dues under the Employees' Provident Fund and Miscellaneous Provisions Act, 1952 are barred by section 22(1) of the Sick Industrial Companies (Special Provisions) Act, 1985 when the employer is a sick industrial company pending before the BIFR.
Analysis: The provident fund scheme was held to be a social welfare measure intended to secure employees' retirement and other benefits, and the contributions deducted from wages as well as the employer's contribution were treated as part of the employees' legitimate statutory entitlement. Section 22(1) of the Sick Industrial Companies (Special Provisions) Act, 1985 was construed in the light of its object of protecting sick industrial companies from coercive recovery that would undermine rehabilitation, but not so as to permit the employer to withhold workers' statutory dues. The Court also noted that Parliament had inserted a limited relaxation in section 14B of the Employees' Provident Fund and Miscellaneous Provisions Act, 1952 by permitting waiver or reduction of damages in specified cases of sick industrial companies, which showed that the immunity under the sick companies law was not intended to extend to the underlying provident fund contributions themselves.
Conclusion: Section 22(1) of the Sick Industrial Companies (Special Provisions) Act, 1985 does not bar recovery of provident fund dues under the Employees' Provident Fund and Miscellaneous Provisions Act, 1952, and the proceedings were maintainable.
Final Conclusion: The statutory provident fund dues of workmen were held to remain recoverable notwithstanding pendency of sickness proceedings before the BIFR, and the employer could not resist recovery by invoking section 22 of the sick companies legislation.
Ratio Decidendi: Section 22(1) of the Sick Industrial Companies (Special Provisions) Act, 1985 does not extend to employees' provident fund contributions and allied statutory dues, because such dues are protected social security entitlements and not liabilities whose suspension is necessary for rehabilitation.
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