Calcutta High Court
Hindusthan National Glass And … vs Amit Das And Others on 3 August, 2026
Author: Arindam Mukherjee
Bench: Arindam Mukherjee
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IN THE HIGH COURT AT CALCUTTA
ORDINARY ORIGINAL CIVIL JURISDICTION
Present :
THE HON'BLE JUSTICE ARINDAM MUKHERJEE
IA NO. GA/1/2026
IA NO. GA/2/2026
IA NO. GA/3/2026
IN
CS/40/2026
HINDUSTHAN NATIONAL GLASS AND INDUSTRIES LIMITED
VS.
AMIT DAS AND OTHERS
For the Plaintiff : Mr. Jishnu Saha, Sr. Adv.,
Mr. Sakya Sen, Sr. Adv.,
Mr. Rishav Banerjee, Adv.
Mr. Ishaan Saha, Adv.,
Mr. Shiv Ratan Kakrania, Adv.
Mr. Tanuj Kakrania, Adv.
Ms. Kiran Sharma, Adv.,
Ms. Shreya Goenka, Adv.,
Ms. Surabhi Mehta, Adv.
Ms. Shadma Manzar, Adv.
..... Advocates
For the Defendant No.1 : Mr. Biswaroop Bhattacharya, Adv.,
Mr. Arik Banerjee, Adv.,
Mr. Shourjyo Mukherjee, Adv.
Mr. Biswaroop Acharya, Adv.,
Ms. Neelanjana Ghorui, Adv.,
Ms. Anusmita Bhattacharya, Adv.
......Advocates
For the Defendant No.2 : Mr. Ratnanko Banerji, Sr, Adv.,
Mr. Shaunak Mitra, Adv.,
Ms. Urmila Chakraborty, Adv.
Mr. Pujon Chatterjee, Adv.
.....Advocates
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For the Defendant No.3 : Mr. S. N. Mookerjee, Sr. Adv.,
Mr. Anirban Ray, Sr. Adv.,
Mr. Shaunak Mitra, Adv.
Mr. Dhruv Chaddha, Adv.,
Ms.Urmila Chakraborty, Adv.,
Mr. Tanish Ganeriwala, Adv.,
Ms. Yamini Mookherjee,
Mr. Arjun Ray, Adv.,
Mr. Pujon Chatterjee, Adv.
........Advocates
For the Defendant No.4 : Mr. Anuj Singh, Adv.,
Mr. Pujan Chatterjee, Adv.,
Mr. Soumabho Ghosh, Adv.,
Mr. Sutosom Bhattacharyya, Adv.
........Advocates
For the Defendant No.5,6,7 : Mr. Anindya Kumar Mitra, Sr. Adv.,
and 8 Mr. Soumya Majumder, Sr. Adv.,
Mr. Puspal Chakroborty, Adv.,
Mr. Victor Chatterjee, Adv.,
Ms. Sanjukta Dutta, Adv.,
Mr. Aman Agarwal, Adv.
.......Advocates
For the Defendant No.9 : Mr. Jishnu Choudhury, Sr. Adv.,
Mr. Vikram Wadehra, Adv.,
Mr. Yubaraj Bhattacharyya, Adv.
......Advocates
For the SFIO : Mr. Dhiraj Kr. Trivedi, Ld. ASG,
Ms. Aparna Banerjee, Adv.,
Mr. Tirtha Pati Acharyya, Adv.,
Mr. Pushpendra Kumar, Sr.P.P
Ms. Anupriya Sengupta,Adv.,
Mr. Irshad Ahmed, Adv.
.......Advocates
For the Respondents No.13 : Mr. Ritzu Ghoshal, Sr.Adv.,
Mr. Sankarsan Sarkar, Adv.,
Mr. Shayak Mitra, Adv.,
Ms. Shreyashi Maity, Adv.
...... Advocates
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For the Respondent no. 15 : Ms. Parna Roy Choudhury, Adv.
Mr. Suvendu Bandhopadhyay, Adv.
........ Advocates
:
For the Respondent No.19 Mr. Arnab Basu Mullick, Adv.
........ Advocate
For Respondent no.31, SBI : Mr. Debashis Saha, Adv.
Funds Management Limited. Mr. Avirup Roy Sanyal, Adv.,
Mr. Jyotishman Sarkar, Adv.
.......Advocates
For the Provident Fund : Mr. Shiv Chandra Prasad, Adv.,
Authorities (defendant no.36) Mr. Avijit Tewary, Adv.
........ Advocates
Heard on : 28th July, 2026
Judgment on : 3rd August, 2026
Arindam Mukherjee, J:
1. In a suit for money claim with relief for declaration and injunction
instituted on 11th June, 2026, the plaintiff has taken out an
application being G.A.7 of 2026 inter alia for injunction. The
application was moved ex parte on June, 16 2025 when an ad interim
order was passed which was subsequently corrected on 18th June,
2026. The defendant no. 3 and defendant nos. 5 to 8 have taken out
their respective vacating applications being G.A. 2 of 2026 and G.A.3
of 2026.
Brief Facts:
1. The Plaintiff company, Hindustan National Glass & Industries Limited
(HNGIL), is currently under the management of Independent Sugar
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Corporation Limited (INSCO) following a successful resolution process
under the Insolvency and Bankruptcy Code, 2016 (IBC) approved by
an order dated 14th August, 2026 passed by the National Company
Law Tribunal (in short, “NCLT”)
2. Prior to this takeover, HNGIL operated an Exempted Provident Fund
through a trust known as the ‘HNG Group Companies Provident Fund
Institution’ for its employees. (hereinafter for the sake convenience
referred to as the said Trust).
3. Upon assuming control of the plaintiff company in September 2025,
the new management conducted an internal review and audit with
regard to the said Trust. This investigation said to have revealed
massive financial irregularities perpetrated by the erstwhile trustees
(Respondents 2-8) and a former employee of HNGIL (Respondent 1).
On the basis of the above facts, the plaintiff company instituted the
suit and filed an injunction application therein. The facts pleaded in
the plaint and those alleged in the said injunction application
persuaded this Court to hold that a prima facie, case has been made
out by the plaintiff which was sufficient for passing on ex parte an ad-
interim order of injunction dated 16th June, 2026 restraining the
defendants from using the bank accounts and processing any
transaction – against the Respondent nos. 1 to 8, 10, 11, 12 and the
banks and financial institutions. Further, an investigation by Serious
Fraud Investigation Office (in short, ‘SFIO’) was also directed. The
plaintiff was further directed to comply with the provisions of Order 39
Rule 3 of the Code of Civil Procedure, 1908 (in short, ‘CPC‘). The order
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dated 16th June, 2026 was subsequently corrected by an order dated
18th June, 2026.
4. After service of the application, the defendant nos. 1 to 8 have
appeared and opposed the continuance of the ad interim order dated
16th June, 2026 as corrected by the order dated 18th June, 2026.
The defendant nos. 3 has filed an application for vacating the order
dated 16th June, 2026 as corrected by the order dated 18th June,
2026 being G.A. 2 of 2026 intera lia taking several grounds for the
same. Although, the defendant no. 3 claims to have filed this
application but on a perusal of the same, it appears to have been
made also on behalf of defendant no. 2 and 4. The defendants no. 5
to 8 have also taken out an application for vacating the order dated
16th June, 2026 as corrected by the order dated 18th June, 2026
being G.A. 3 of 2026.
Submissions on behalf of defendant no. 1.
i. It is submitted by the defendant no. 1 that no copy of the
application or the plaint has been served on the said respondents.
The plaintiff, according to the respondent no.1, has failed to
comply with the provisions of Order XXXIX Rule 3 of `CPC‘ despite
there being a specific direction in the order and that the statute
also mandates such service. It is, therefore, prayed by the
defendant/respondent no.1 that the ad interim order of injunction
passed on 16th June, 2026 as corrected by order dated 18th June,
2026 should be vacated. For non-compliance of a mandatory
provision.
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ii. In elucidating the objection regarding non-compliance of the
provisions of Order XXXIX Rule 3 of CPC, the Respondent No. 1
has referred to the Judgment reported in (1993) 3 SCC 161 and
2025 SCC Online 1674. By relying upon the said two judgments it
is submitted by the Respondent No.1 that the provisions of Order
XXXIX Rule 3 of CPC is mandatory in nature as held by the
Hon’ble Supreme Court. Only by serving a copy of the application
will not amount to compliance with such mandatory provisions.
The plaint has to be served separately from the application even if
a copy of the plaint is annexed to the application as in the instant
case.
iii. It is further submitted that assuming without admitting that on the
plaint being annexed to the application amounts to compliance of
the Provisions of Order XXXIX Rule 3 of CPC then also in the
instant case, the plaint has been annexed without the annexures
and as such there is no compliance of the mandatory provisions.
iv. It is also the case of the respondent no. 1 that the plaintiff has no
cause of action as against the said respondent to file and maintain
the suit. The plaintiff company through its present management
after taking over the company appears to have conducted an audit
of the accounts through an Auditor/ Chartered Accountant
engaged by them. The documents on the basis whereof the said
auditor formed his opinion is not known to the respondent no. 1.
The present management of the plaintiff company has attempted to
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fasten liability on the Respondent No.1 on the basis of such
documents but the same were not given to the said respondent to
allow him to respond or contrive of and are also not disclosed with
the application. The respondent no. 1 was never given an
opportunity to give his comments in this regard, even after the
auditors report was prepared. The Respondent No.1 refers to Page
863 being Annexure AG to this application appearing in Volume VII
thereof and the corresponding pleadings in Paragraph 59 at Page
15 of the application in Volume I in this regard. The Respondent
No.1, therefore, submitted that the ad interim order dated 16th
June, 2026 as corrected by the Order dated 18th June, 2026
should be vacated.
Submission by Respondent no. 2.
a. It is submitted by the respondent no. 2 that the said respondent has
been served with a copy of the application on 22nd June, 2026, but
no copy of the plaint has been served. It is further submitted by the
said respondent that even on merits the ex parte ad interim order
dated 16th June, 2026 as corrected by order dated 18th June, 2026 is
required to be discharged and/or vacated. The learned senior advocate
representing the said respondent has drawn the attention of the court
to various documents including the advice said to have been given by
the learned advocate for the plaintiff to his client for filing the suit to
demonstrate that there is no allegation as against the said respondent
contained either in the plaint or in the application.
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b. It is the case of the respondent no.2 who is incidentally one of the
promoter of the plaintiff company, its director till the change in
management and also the trustee of the exempted trust fund that
there is no allegation that the money required to be deducted from the
employees, staff and workers of the plaintiff company were not
deducted or along with the employers’ contribution was not deposited
with the trust fund on regular basis as required under the statute.
There is also no allegation that the employees, who had
superannuated or in the case where their family members became
entitled to the terminal benefits the same were not so paid. The
resolution plan, so far as the provisions contained therein on being
approved cannot be further questioned in a collateral proceeding
unless an appeal has been preferred against the same. In the instant
case the plaintiff has concealed the fact that an appeal challenging the
acceptance of the resolution has been filed by the erstwhile
management of the plaintiff company including the respondent no. 2
which is now pending before the National Company Law Appellate
Tribunal, (in short, NCLAT) .
c. It is also the case of the respondent that at the present pursuant to
the First Information Report (in short, FIR) having been lodged, there
are two agencies; one who under the statute pursuant to the FIR is
entrusted to investigate and the other in terms of the order dated 16th
June, 2026 as corrected by the order dated 15th June, 2026. There
may be a conflict in the process of investigation. Although, the
respondent no. 2 is not feared to face the investigating agencies, yet
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that part of the order directing SFIO to carry out the investigation
should be vacated for such reason. The respondent no.2 also draws
attention to the averment in the plaint and the reliefs also to show
that the plaintiff never came before the court for protecting the
interest of the employees but to shield any liability that may have
been fastened to the plaintiff pursuant to the take-over.
It is also the case of the respondent no.2 that despite specific direction
in the order dated 16th June, 2026 the mandatory provisions of Order
39 Rule 3 of CPC has not been complied with. On that ground alone,
the ex parte ad interim order is required to be vacated.
Submission by Respondent no. 3
A. It is submitted by the respondent no. 3 that the said respondent has
already filed a vacating application being IA No. GA/2/2026 wherein
apart from the merits, the said defendant/respondent has taken the
plea of non-service of the plaint as one of the grounds for vacating the
ad interim order dated 16th June, 2026 as corrected by order dated
18th June, 2026. The defendant no. 3 also objects to the
supplementary affidavit filed by the plaintiff/petitioner being taken on
record. It is the case of the said defendant that the issue of vacating
or contriving of with the ad interim order shall be on the basis of the
documents already on record and as such the supplementary affidavit
of the plaintiff should not be considered at this stage.
B. In course of argument, the learned Senior Advocate for the respondent
no. 3 has referred to paragraph 10A at page 19 of the supplementary
affidavit filed by the plaintiff and then had referred to pages 27 and 29
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of the said supplementary affidavit. By relying upon these documents,
it is submitted by that prior to filing of the suit a specific criminal
complaint on the selfsame allegations has been made on the basis
whereof a First Information Report (in short, FIR) is said to have been
registered. The complaint was made by one Rohit Agarwal, who has
also verified the plaint and affirmed the instant application. The said
Rohit Agarwal was aware of the complaint and as such ought to have
disclosed such fact. Having not done so it is suppression of material
fact for which the ad interim order should be set aside. Furthermore,
once such FIR is registered it is within the purview of the authority to
whom the complaint has been made to investigate into the same and
bring it to a logical conclusion. The complaint made is based on the
allegation of misappropriation and defalcation of trust fund. Since a
competent authority is already in seisin of the matter SFIO is not
required to be directed to further investigate. Moreover, according to
the said respondent SFIO is empowered to investigate into the affairs
of the company under Section 212 of the Companies Act, 2013 and
not into the affairs of the trust fund which is independent and stands
outside the ambit of the assets belonging to the company. Assuming
without admitting that there has been a defalcation then also it is also
submitted that the plaintiff’s money has not been defalcated for the
recovery of which a civil suit like the instant one can be maintained
that too during the pendency of the criminal case. The alleged
defalcation, if any is in respect of trust fund to which the plaintiff has
no right to seek recovery and as such the civil suit cannot be
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maintained on the basis of such allegations. Mr. Mookherjee
thereafter placed paragraphs 64, 66 to 68 of the plaint to show the
allegation on the basis whereof the plaintiff has come to Court and
submitted that the same does not relate to either the respondent no. 3
or any of the trustees. It is further submitted that none of these
allegations concern the respondent no.3, a managing trustee of the
trust fund. There is also no allegation that the amount required to be
deposited as per the provisions of the Employees’ Provident Fund and
Miscellaneous Provisions Act, 1952 (in short, PF Act) to the trust fund
has not been deposited. There is also no allegation that the amount
which fell due to an employee, staff or worker of the plaintiff company
on his superannuation or death as retiral benefit or the terminal
benefit have not been paid between 2021 to 2025. Mr. Mookherjee has
also placed reliance on page 352 of the application in Volume-III
thereof to draw the attention of the court to the financial statement
contained therein to contend that no deficit far less defalcation of the
trust fund has taken place. It is also the case of respondent no. 3 that
records reveal that the assets of the trust far exceed its liabilities.
C. The respondent no.3 has further relied upon the resolution plan
pursuant to which the order dated 14th August, 2025 was passed by
NCLT. The said order is at page 190 (annexure-D – Volume-II of the
application). Keeping side by side the resolution plan and the order
dated 14th August, 2025, it was argued that the resolution plan
submitted by the present management of the plaintiff company
actually intended to extinguish the claims and/or dues of the
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employees, staff and workers of the plaintiff company, which on being
approved becomes binding on the employees in view of the provisions
of Section 31 of the IBC. The trigger date as contained in page 39 of
the resolution plan has also been informed to the Court to give the
date from which the present management has become liable for the PF
dues. The suit has been filed to avoid any penal consequence against
the present management of the plaintiff company for default in paying
the statutory dues in the garb of allegations against the trust and the
trustees which are untrue on the face of record. Referring to
paragraphs 43, 45, 48 and 49, it is submitted by Mr. Mookherjee that
there is no allegation as against the said respondent of having received
any siphoned off money from the trust. No particulars of bank account
of the respondent no.3 has also been provided alleging that money
said to have been siphoned off from the trust fund has been parked
into the said account. It is also the case of the respondent no.3 that
the allegation regarding change of management of the trust fund
during the pendency of CIRP also does not hold good in respect of the
respondent no.3 as the said respondent was not present in the
meeting dated 16th December, 2023 and his leave of absence was
granted as specifically recorded in the minutes of the meeting which is
at page 796, Volume-VI of the application.
D. Mr. Mookherjee has also referred to page 799 and annexure AA at
page 815, annexure AD at page 844 and page 944 annexure AK to
demonstrate that there is no allegation as against the respondent no.3
and as such the plaintiff has no cause of action to file and maintain
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the suit as against the said respondent. In that view of the matter, no
interim or ad interim order can or could be passed against the
respondent no.3. The order directing investigation by SFIO, however,
acts as a prejudice to the interest of the respondent no.3 in the
absence of any specific allegation against the said respondent and, as
such, the said part of the order directory investigation by SFIO should
be vacated or in the alternative the same for the time being should be
stayed.
Submission by Respondent no. 4
I. It is submitted by the respondent no. 4 that that the ad interim
order of injunction dated 16th June, 2026 as corrected by order
dated 18th June, 2026 should be vacated in the facts and
circumstances of the instant case. The respondent no. 4 further
submits that there is no allegation as against the said respondent
for siphoning out of funds. Referring to paragraphs 32, 34, 38 and
page 754 of Volume-III of the application, it is submitted by Mr.
Singh that the respondent no.4 was all along been shown and
treated as an employee of the plaintiff company. As an employee,
the respondent no.4 was entitled to get a car as per the prevailing
scheme of the plaintiff company. The amount of Rs.35 lakhs
alleged to have been taken away by the respondent no.4 was
permitted by the said respondent as per a scheme of the plaintiff
company by which a motor car was purchased and given to the
respondent no. 4 as an employee. On repayment of the purchase
price, the said car had become an asset of the respondent no. 4.
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The car was never a part of the asset of the plaintiff company or
the trust and as such the question of taking away or retaining the
same in an un-authorised manner cannot and does not arise.
II. It is also the case of the respondent no. 4 that assuming without
admitting that the amount was not repaid under the scheme then
also such fact and figure ought to have been shown in the
resolution plan. It was not shown in the resolution plan as nothing
was due. The resolution plan is a conclusive one and cannot be
reopened in this proceeding by the plaintiff alleging the car to be an
asset of the plaintiff company wrongfully taken away by the
respondent no.4. It is also submitted by respondent no.4 that the
said respondent was absent in the meeting held on 12th December,
2023 wherein the management of the trust was altered which,
according to the plaintiff, is in violation of the statutory provisions
during the pendency of CIRP. The leave of absence was specifically
recorded in the minutes and as such the respondent no. 4 cannot
be handed up for the same.
In the light of the aforesaid submissions and by adopting the
submissions made on behalf of respondent nos.2, 3, 5 to 8 and
respondent no.1, it is submitted by the respondent no.4 that the
plaint discloses no cause of action as against the respondent no.4
and the plaintiff also does not have any cause of action to file and
maintain the suit against the respondent no.3. in such situation no
order, in interim or ad interim form, can be passed or continued
against the respondent no.4.
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Submission on behalf of Respondent no. 5 to 8
1. It is submitted by the respondent no. 5 to 8 that the application to
which the plaint is annexed has been served, but the annexures to the
plaint are not annexed to the application. Assuming without admitting
that service of the application with a copy of the plaint annexed
thereto is substantial compliance of the provisions of Order 39 Rule 3
of CPC then also service of a copy of the plaint as an annexure to the
application without the annexures of the plaint is not a proper service
in compliance with the provisions of Order XXXIX Rule 3 of CPC. The
ex parte ad interim order dated 16th June, 2026 as corrected by the
order dated 18th June, 2026 is, therefore, liable to be vacated and/or
discharged on that ground alone. It is further submitted, that no copy
of the order has been served and, as such, his clients were unable to
appreciate the scope of the order. Furthermore, on the facts of the
instant case there is no necessity of passing of any interim order in
favour of the plaintiff/petitioner.
2. On behalf of the Respondent Nos. 5 to 8, it is also submitted that the
plaintiff has no cause of action as against either of the Respondent
Nos. 5, 6, 7 and 8 inasmuch as the money of which defalcation is
complained of is not the money of the plaintiff company. It is at the
highest the money of the employees, staff and workers of the plaintiff
company which was to be deposited with the trust fund in compliance
of the statutory provisions. It is further submitted by the said
Respondent Nos. 5 to 8 that if the money does not belong to the
plaintiff, the plaintiff cannot have any grievance about its alleged
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defalcation or shortfall. The plaintiff, therefore, cannot file and
maintain the suit. The Order dated 16th June, 2026 as corrected by
the Order dated 18th June, 2026 as a consequence thereof, should be
vacated on this ground alone.
3. The respondent nos. 5 to 8 submit that the relief claimed in the suit
cannot be granted to the plaintiff. Assuming without admitting that
the plaintiff has a cause as against the defendant nos. 1 to 14 then
also the relief(s) claimed in the suit cannot be granted. By referring to
prayer (a) of the plaint appearing at page 933 of the application and
paragraph 67 of the plaint at page 928 of the application, it is
submitted that the money claimed by the plaintiff does not belong to
the plaintiff. The genesis of the money is deduction from the
employees added to the employer’s contribution towards the provident
fund which is kept in a trust fund. The trust is a separate entity. The
money in the trust fund is that of the employees, staff and workers of
the plaintiff company. Once the money is deducted from the
employees and with the employer’s contribution is deposited in the
trust fund, it loses the character of the money belonging to the
plaintiff. Since the plaintiff is not entitled to the money, no relief as in
prayer (a) on the basis of the pleading as in paragraph 67 of the plaint
can be given to the plaintiff. Similarly, the prayer (b) read with
paragraph 68 of the plaint cannot be also granted to the plaintiff. The
allegation of the plaintiff is that the trustees have defalcated and/or
swindled out money belonging to the plaintiff, is a completely incorrect
statement on the face of the record. Assuming without admitting that
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the trustees have misappropriated the fund then also the said money
can be recovered at the instance of the workers, staff and employees of
plaintiff and has to be either put into the trust fund or with the
balance money lying in the trust in case of the exemption being
revoked is to be deposited with the provident fund authorities and not
to the plaintiff as claimed under any circumstances. The suit
according to the respondent no. 5 to 8 also suffers from misjoinder
and non-joinder of parties. The trust wherein the money was being
deposited had several trustees which comprised of representatives of
the employer and the employee. Neither the employer’s representative
nor the employees’ representative have been made parties to the suit.
Furthermore, the allegation as to misappropriation of fund spreads
over from 2021-22 to 2025-26. During this period, several trustees
have changed. All these trustees were required to be made parties but
only some of them and not have been made so. Any action against the
trust has to be against all the trustees. It is well-settled principle of
law that an action where all the trustees have not been made parties
to a suit like that framed in the instant case is bound to fail. The
respondent nos. 5 to 8 has also referred to page 796 of the application
to submit that Manoj Bhaskaran, who was admittedly a trustee, was
not made a party to cite as instance of non-joinder of parties. No
interim order in aid of the reliefs claimed in the suit, for the reasons
aforesaid, according to the respondent nos. 5 to 8 can or could be
passed in favour of the plaintiff.
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4. The respondent nos. 5 to 8 also submit that the plaintiff has not only
suppressed the material fact but has given an incorrect picture of the
fact regarding cancellation of the exemption granted to the trust. By
referring to the provisions of the Employees’ Provident Fund and
Miscellaneous Provisions Act, 1952 (in short ‘PF Act‘), it is submitted
that the exemption is granted by the appropriate government. The
appropriate government in the instant case is the central government
who granted the exemption by issuing a notification. A notification
dated 11th January 2011 is placed before the Court to demonstrate
that the central government had given the exemption. It is also the
case of the respondent nos. 5 to 8 that the exemption, if had to be
cancelled, can only be done by the central government on issuing a
further notification. The PF authorities or any other authority not
being the central government can cancel the same. No such
cancellation has taken place as yet and as such, the question of
passing an order treating the exemption to have been cancelled,
cannot be passed or be continued.
5. The respondent nos. 5 to 8 also submit that no suit at the instance of
the plaintiff can or could be maintained inasmuch as the right to take
any action against the trustees if at all, is with the PF authorities in
case of defalcation or misappropriation of fund. The veracity of the
allegation is required to be scrutinized by the PF authorities to find
out whether the plaintiff as the employer had deposited the correct
amount from time to time as per the statutory provision. Unless the
ascertainment takes place, it cannot be said that the plaintiff
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company as the employer had deposited the correct sum and that
such sum has been misappropriated by the trustees. The respondent
nos. 5 to 8 also submit that while approving the Resolution Plan the
NCLT was informed by the PF authorities that a sum of Rs.5,27,500/-
was the shortfall amount. By an order passed by the NCLT in the
application of the PF authorities, the said sum of Rs.5,27,500/- had
been made over to the PF authorities and as such, there is no further
dues. Moreover, the case that the plaintiff is trying to run is contrary
to the record as in the Resolution Plan there has been no amount
shown to be due from the trustees to the plaintiff company whom the
plaintiff company was under CIRP. The respondent nos. 5 to 8 has
also referred to the provisions of Section 36 of the IBC in this regard.
It is also the case of the respondent nos. 5 to 8 that no order for
investigation by the SFIO can or could have been passed in the facts
of the case. There is no pleading or prayer for such a relief. In absence
of pleading and specific claim, no order in aid of the final relief
claimed in the suit, can or could be passed at the interlocutory stage.
The respondent nos. 5 to 8 refers to Section 212 of the Companies
Act, 2013 to demonstrate that only the central government on the
happening of certain events can direct investigation by SFIO. The
Court is not empowered to do so. The Court can in an appropriate 6
case request the central government to enquire and if necessary,
direct investigation through SFIO, provided such pleading is made
and relief is claimed in the suit. The suit is also bad as no notice
under Section 80 of the Code of Civil Procedure, 1908 (in short, CPC)
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had been issued to PF authorities though they have been impleaded
as a party defendant. In the light of the arguments advanced, the
respondent nos. 5 to 8 submit that the interim order dated 16th June,
2026, as corrected by the order dated 18th June, 2026 should be
vacated.
Submission on behalf of respondent no. 9.
It is submitted that the respondent no. 9 was the Resolution
Professional (in short, RP) appointed by the National Company Law
Tribunal (in short, `NCLT), Kolkata Bench. The said respondent is
neither a necessary nor a proper party to the suit. Although no orders
have been passed against the said respondent but the said respondent
prays and further intends to make an application for expunging his
name from the array of the defendants.
Submission on behalf of respondent no. 13.
On behalf of the respondent no.13, it is submitted that the said
respondent was engaged as the statutory auditor of the plaintiff
company for the years 2018-19, 2019-20, 2021-22 and 2024-25. The
statutory auditor (respondent no.13) did not personally visit the office
of the Provident Fund Authorities to scrutinise the records. The
statutory auditor also did not personally go and scrutinise the
accounts at the premises of the plaintiff but only acted on the basis of
the particulars, documents and accounts provided by the plaintiff
which was collected by his team and scrutinised at the office of the
statutory auditor. The statutory auditor, therefore, claims to be
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neither a necessary nor a proper party to this proceeding. No order
can or could be passed against the said statutory auditor. It is further
submitted that the name of statutory auditor be deleted and/or
expunged from the array of defendants.
Submission on behalf of respondent no. 15.
On behalf of the respondent No. 15 it is submitted that the said
respondent has been served with the copy of the application. The
learned Advocate, however, on instruction submits that the second
volume of the application has not been served on her client. However,
in compliance with the order dated 16th June, 2026 as corrected by
order dated 18th June, 2026, the said bank has stopped operation of
the accounts as also passed necessary directions so that the
securities, if any of the respondent no. 1 to 8 are not dealt with.
Submission on behalf of respondent no. 31.
It is submitted on behalf of the respondent No.31 and submits that no
relief has been claimed against the said respondent. In the order there
is also no direction upon them.
Submission on behalf of respondent no. 36.
It is submitted on behalf of the respondent No.36, the Employees
Provident Fund Organisation (in short, ‘EPF’) submits that the plaintiff
had on 16th June, 2026 as recorded in the order had made an
incorrect submission. The trustees of the Exempted Provident Fund
Trust of the plaintiff company did not deposit the amount as required
under the provisions of Section 17(5) of the Employees Provident Fund
and Miscellaneous Provisions Act, 1952 (hereinafter referred to as the
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PF Act) read with condition No. 28 of Para 27AA of the Scheme framed
under the PF Act. Despite the exemption being recalled by the
appropriate Government, it is also the case of the said respondent
that only after the present management of the plaintiff company
corresponded with the EPFO authorities it came to the notice of the
EPFO authorities that there has been a deficit/shortfall in the funds
required to be deposited towards employees contribution along with
the employers contribution for the financial year 2025-2026 and for a
further period of one month. It, however, appears that EPFO authority
has taken no steps as against the trustees for having not complied
with the provisions of Section 17(5) of the PF Act.
In course of argument, the PF authorities have relied upon the
following judgments :
i. [1998] 6 SCC 35; (Jiyajeerao Cotton Mills Employees’ Provident
Fund Institution v. Dev Kumar Holani & Ors.)
ii. [2025] SCC OnLine Bombay 1754; (Dalmia Cement (Bharat)
Ltd. & Ors. v. Central Board of Trustees, Employees Provident
Fund Organisation.)
By relying upon paragraph 9 of Jiyajeerao Cotton Mills Ltd. [supra] it is
submitted by learned advocate representing the PF authorities that
the Hon’ble Supreme Court while considering the scheme of 1952
along with the amendments thereto did not hold that the scheme is
ultra vires to any statutory provision. The only finding of the Hon’ble
Supreme Court is that the amendments to the scheme are required to
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be notified which has been subsequently done by an order publishedby the concerned Ministry. The learned advocate for the PF Authorities
has also placed before the court an order of the Government of India,
Ministry of Labour and Employment dated 5th April, 2016 to contend
that the exemption was extended in terms of paragraph 27A of the
1952 Scheme to the plaintiff company with effect from 04.02.2005. a
copy of such order is taken on record.
By referring to Dalmia Cement it is submitted by PF authorities that
as late as in 2025 the Division Bench of the Bombay High Court did
not find any infirmity or anomaly in the provisions of the scheme to
hold that the same are not binding. It is further submitted by PF
authorities that in view of such legal position clause 29 of Appendix A
to the 1952 scheme is binding. Once there has been a transfer of any
nature the exemption stands withdrawn or revoked.
However, the fact remains that no notification has been placed by the
PF authorities withdrawing or revoking the exemption though the
exemption was granted by way of a notification which has been relied
upon by respondent nos.5 to 8.
It is further submitted by respondent no. 36 that The PF authorities
have placed before Court the print out of Form RM-2 being the annual
audited returns of the trust fund filed with such authority wherein the
employers’ and the employees’ contribution as per the provisions of
the Employees’ Provident Fund Miscellaneous Provisions Act, 1952 (in
short, PF Act) were to be deposited in respect of the plaintiff company.
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By submitting five such returns received by the PF authorities ondifferent dates of December, 2023 which are taken on record it is
submitted that there was no shortfall in the amount required to be
deposited as per the provisions of PF Act with the trust fund till the
financial year 2023-24. The only deficit was the surcharge amount
which has been recorded pursuant to orders of National Company
Law Tribunal (in short NCLT). It is further submitted by the PF
authorities that until returns for the financial year 2024-25 and 2025-
26 are not submitted and the details of the accounts relating to the
trust fund showing the amount deposited are not provided, it will not
be possible for the PF authorities to comment whether there has been
any shortfall or deficit subsequent to the financial year 2023-24. It
will also not be also possible for the PF authorities in such facts and
circumstances to assertively say as to whether there has been any
siphoning of fund from the said trust account which can only be
computed if there is any difference between the money now lying in
the trust fund and the money with interest that should be in the trust
fund on the date of take over is noticed. It is also the case of the PF
authorities that in terms of paragraph 27AA and clause 16 and 29 of
Appendix A of the Scheme of 1952 the exemption granted to the
plaintiff company for depositing the employees’ and employers’
contribution as per the statutory provisions with the exempted trust
fund automatically stands revoked once there has been an acquisition
or transfer of any kind. In the instant case, the plaintiff company on
being taken over by another entity in terms of the resolution plan
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approved by the NCLT under the provisions of Insolvency andBankruptcy Code, 2016 will amount to acquisition or at least a
transfer of any kind. This will automatically attract the provisions of
clause 16 and 29 of Appendix A read with paragraph 27AA of the
1952 Scheme for which the funds lying with the trust are required to
be transmitted to the Employees’ Provident Fund Organisation (in
short, EPFO) in terms of the statutory provisions. The money lying
with the trust on having not been transmitted to the EPFO is clear in
violation of the statutory provisions. It is the further case of the PF
authorities that the employer is liable for any deficit or shortfall in the
amount which was required to be deposited after deduction with such
trust fund along with applicable interest and penalty co-extensively
with the trustees and the trust.
On behalf of PF authorities provisions of Sections 16, 17 and 18 of the
PF Act has also been placed before this court to elucidate the
responsibility of the employer and that of the trust apart from a writ
petition filed by the plaintiff company before the High Court at Punjab
and Haryana which has now been withdrawn by the present
management of the plaintiff company.
It is also the case of the PF authorities that there has been financial
loss for consecutive 10 years from 2012-2013 which is evident from
the report of a third party auditor engaged by the PF authorities. A
copy of the said report has been placed before the Court is taken on
record. The report also suggests that the exemption should have been
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withdrawn with effect from 1st April, 2015. It is the further case of the
PF authorities that serious fraud has been committed in this matter
and as such the order of investigation by SFIO is not only justified but
should be continued. The PF authorities also say that the ad interim
order dated 16th July, 2026 as corrected by the order dated 18th
June, 2026 should not be vacated as any money which may be found
to be siphoned off cannot be received and will cause serious detriment
to the interval of the employees of the plaintiff company.
Submission on behalf of the plaintiff.
It is submitted by the plaintiff that admittedly the copy of the plaint is
annexed to the interlocutory application. It is also the case of the
plaintiff that the defendants/respondents have been made aware that
a suit has been filed. It cannot, according to the plaintiff, therefore be
contended that the defendants/respondents were not aware about the
statements made in the plaint. The annexures to the plaint are
separately annexed to the application and, as such, it cannot also be
said that the defendants/respondents were not aware or could not
look into the annexures to the plaint for making submissions. It is an
admitted position that a copy of the application has been served along
with the copy of the plaint annexed thereto. It may be correct that the
plaint has not been separately served but there has been substantial
compliance of the provisions of Order 39 Rule 3 of the Code of Civil
Procedure, 1908 (in short, CPC) and, as such, the order should not be
vacated on such ground as contended by the defendants/respondents.
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It is further submitted that there has been no suppression of any
material fact. The allegation made by the respondents that the
particulars of the police complaint were not disclosed in the plaint
though the suit was instituted subsequent to the registration of FIR
does not hold good if the events are chronologically taken note of. The
plaint was verified and affirmed so as the application, on 8th June,
2026. On the same day the police complaint was lodged at around
4.30 pm with the police station which will be evident from the
endorsement on the receipt copy annexed to the supplementary
affidavit filed in this application. The police complaint and the FIR
were made and registered after affirming the plaint. By referring to
paragraph 61 it is submitted that a clear indication has been given in
the plaint that the plaintiff shall rely upon the FIR or any complaint
that may be made as the plaint was contemplating to make such
complaint. There is, as such, no suppression of fact far less
suppression of material fact.
In course of argument, the plaintiff has further made the following
submissions:
The First Information Report (in short, `FIR’) in terms of the complaint
made by the plaintiff on 8th June, 2026 was registered on 18th June,
2026 i.e. subsequent to institution of the suit by presenting the plaint
and passing of the order dated 16th June 2026 and 18th June, 2026.
In this regard the plaintiff has referred to page 63 of the
supplementary affidavit in support of the date and time when the FIR
was registered. The plaintiff says that neither the fact of making of the
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complaint nor the registration of the FIR can or could have beenincluded in the plaint due to their respective filing and/or registering
dates and time since the plaint and petition were verified and affirmed
on 8th June, 2026. The FIR was, in fact, registered after the initial
order dated 16th June, 2026 was passed which was corrected by the
order dated 18th June, 2026. The plaintiff at the earliest opportunity
has brought such facts to the notice of the Court by filing the
supplementary affidavit which was affirmed on 30th June, 2026,
apart from making a statement in the plaint which demonstrate the
fact that the plaintiff was contemplating to make a complaint. There
is, as such, no suppression of any fact far less material fact which
requires the ad interim order of injunction to be discharged and/or
varied under the provisions of Order XXXIX Rule 4 of the Code of Civil
Procedure, 1908 (in short, `CPC‘).
The plaintiff then submits that the contention of the respondent nos.
1, 2,3 and 5 to 8 that the plaintiff does not have any cause of action to
file and maintain the suit or the plaint does not disclose any cause of
action is untenable apart from the fact that there is no application for
rejection of plaint on such ground. On a holistic reading of the plaint
it will appear that the plaintiff company being an “establishment”
under the Employees’ Provident Funds and Miscellaneous Provisions
Act, 1952 (in short, `PF Act‘) was granted the exemption for
maintaining the trust fund for the purpose of depositing the
employees contribution after deducting the same as per the provision
of PF Act along with the employers contribution and other statutory
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charges as applicable. In the event there is a shortfall in the amountrequired to be deposited in the trust fund as per the statutory
provision it is the liability of the plaintiff as the employer and an
“establishment” under the PF Act to make good such shortfall along
with the applicable interest and penalty as per the statutory
provisions. The plaintiff, therefore, remains liable to the employees as
also the PF authority and the appropriate Government who had
granted the exemption to the plaintiff company. The plaintiff then says
by referring to page 796 that the defendant nos. 5, 6,7 and 8
continued to remain as trustees along with the defendant Nos. 2, 3
and 4 even after reconstitution that took place on 16th December,
2023. The said defendants, therefore, cannot absolve their
responsibility and liability as trustees just by contending that there is
no shortfall without giving the amount which is now lying with the
trust fund or was there with the trust on the triggered date from
which the Resolution Plan approved by the National Company Law
Tribunal (in short, `NCLT’) in respect of the plaintiff company become
operated. The pleadings in paragraphs 61, 63 and 64 of the plaint
according to the plaintiff clearly disclose the reasons for which the
plaintiff has come to Court.
The respondent Nos. 1, 2, 3 and 5 to 8 according to the plaintiff in
course of their submissions have not denied or disputed their
involvement with the trust. They have also submitted that there has
been no default in depositing the money with the trust fund but none
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of them have come forward to show the amount presently lying withthe trust fund though the respondent Nos. 2 to 8 even after
reconstitution of the trust in 2023 continued to remain to be the
trustees. The balance-sheet of the trust which has been shown to
contend that there is no shortfall in the trust fund and that the asset
of the trust exceeds its liabilities is dated 16th March, 2026.
Subsequent thereto on audit as stated in the plaint was conducted
wherefrom the plaintiff has come to know of the shortfall of over Rs.20
crores in the trust fund. In course of tracing out such deficit, the
plaintiff has come to know about money belonging to the trust lying
with the defendant No.1 and the trustees being the defendants Nos. 2
to 8, the particulars whereof as far as available to the plaintiff as on
the date of filing the plaint has been provided. Further details which
came to the notice and knowledge of the plaintiff have been included
in the supplementary affidavit affirmed on 30th June, 2026. The
plaintiff then refers to notice of revocation of exemption dated 15th
April, 2026 appearing at pages 289-290 of Volume-III of the petition to
submit that the Ministry of Labour and Employment, Government of
India through the Regional Provident Fund Commissioner-1, EPFO
Regional Office, Howrah, has revoked the exemption and have directed
the plaintiff company through its present Directors to deposit the
entire money lying with the exempted trust fund with the Office of the
Employees’ Provident Funds Organization, (in short, `EPFO’). This
notice in itself has given rise to a cause of action in favour of the
plaintiff. The plaintiff has to deposit the entire amount which has been
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deducted from the employees as per the provisions of the PF Act alongwith the employers’ contribution and other charges. If there is any
shortfall in such deduction or deposit, the same has to be made good
by the plaintiff. The PF Authorities in course of their submissions
have produced audited returns of the trust fund till 2023-2024. There
is no audited document in respect of the financial years 2024-2025
and 2025-2026. Any shortfall for these periods has to be accounted
for by the plaintiff as the employer. The plaintiff, therefore, is entitled
to collect the deposit or have the shortfall collected and deposited with
the EPFO failing which the amount has to be paid by the plaintiff. The
Resolution Plan approved by the NCLT in view of the provisions of
Section 36 of the PF Act has not taken into consideration the
provident fund dues. The plaintiff, therefore, due to misdeeds of the
trustees will be saddled with the liability of shortfall in the deposited
money. The plaintiff, therefore, is entitled to proceed against the
respondent nos. 1 to 8 who were admittedly trustees during the
financial years 2024-2025 and 2025- 2026 or beneficiaries
thereunder. This is plaintiff’s cause of action which is clearly stated
in the plaint. It is therefore, incorrect to allege that the plaintiff has no
cause of action or the plaint discloses no cause of action. The plaintiff
also says that the arguments advanced by the respondent nos. 1,2,3,4
and 5 to 8 are technical in nature to confuse the Court if possible in a
desperate attempt to avoid the rigors of being proceeded with. The
plaintiff also says that the order of appointing Serious Fraud Investing
Office (in short, `SFIO’) is also justified in the facts and circumstances
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of the instant case. In this context the plaintiff has relied on ajudgment reported in 2023 SCC OnLine Del 8197 (R.K. Gupta and
Others- Versus- Union of India Through Ministry of Corporate
Affairs and Another) to further contend that in an appropriate case
even if it is not prayed the hands of the Court are not fettered to
appoint SFIO since it can be appointed to investigate by the
appropriate Government. The plaintiff further says that “affairs of the
company” as provided under Section 212 of the Companies Act, 2013
cannot be given a restrictive meaning particularly in the facts and
circumstances of the instant case. The affairs of the plaintiff include
the deduction and deposit of the employers contribution which is
shown in the balance sheet of the company for each year and
statutorily required to be deposited with the exempted trust, the
exemption whereof has been granted to the plaintiff company as an
establishment under the PF Act. The affairs of the trust though
managed by the trustees some of whom are the Directors of the
Company or employees representative as the custodian of the fund
cannot be delinked from the affairs of the company. There is also no
embargo on SFIO in investigating the matter even if a complaint has
been lodged with the jurisdiction police authorities.
In reply the defendant no. 1 and 3 has submitted that the banks have
frozen the accounts which are not part of the order dated 16th June,
2026 as corrected by the order dated 18th June, 2026. It is further
submitted that freezing of these accounts are causing hardship to the
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wife and the children of the said respondents. On behalf of therespondent no.1 a chart is handed over showing four accounts
maintained with IndusInd Bank Limited, the defendant no.19. On a
perusal of the chart it appears that the first account bearing
no.152006070400 is a Savings bank account maintained in the name
of the defendant no.1. The second and the fourth account respectively
bearing no.159007352466 and 201036334059 are in the name of
Tania Das as the first account holder while Amit Das, the defendant
no.1 is a joint account holder. The bank account bearing no.
201036334059 appears to be an overdraft account while the other one
bearing no. 159007352466 is a savings bank account. The bank
account bearing no.158017475547 is a savings bank account with
Ankita Das as the first account holder while the defendant no.1 is one
of the joint account holders. It is submitted on behalf of the
respondent nos.1 and 3 that apart from the bank accounts which are
maintained only in the name of the defendant no.1, the operation of
other bank accounts should be allowed.
The prayer for a specific direction as sought for by the defendants no.
1 and 3 to allow operation of the other bank accounts is opposed by
the plaintiff. The Respondent No.1 has also submitted that the
submissions made by the EPFO authority are not the reflection of true
and correct fact. In this regard, the Respondent No. 1 has referred to
an Order dated 14th August, 2025 passed by the NCLT in an
application filed by the Provident Fund Authorities being
IA/2002/2024.
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It is submitted by the plaintiff that although the first bank account is
exclusively in the name of the defendant no.1, the defendant no.1 is
the joint account holders of the other accounts. One of the accounts
being overdraft account cannot also form part of the dispute. Unless
specific particulars of the accounts are provided by way of an affidavit,
the Court should not take cognizance of this part of the submissions
made on behalf of the respondent nos.1 and 3. On behalf of the
IndusInd Bank, the respondent no.19 it is submitted that initially the
account apart from that mentioned in Annexure ‘AK’ appearing at
page 944 of the application was not frozen. The other accounts were
frozen in view of letters issued to the bank. The bank has, however,
not produced the letters to ascertain the background under which the
other accounts were said to be implicated. These aspects will be
considered at a subsequent stage when fuller and better particulars
are available.
Points for consideration:
After hearing the respective submissions of the parties and
considering the materials on record, the following points fall for
consideration to decide as to whether the interim order dated 16th
June, 2026 as corrected by the order dated 18th June, 2026 should be
continued or modified or vacated:
(i) Whether there has been compliance of the requirement of Order
XXXIX Rule 3 of the CPC ?
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(ii) Whether the plaintiff has a cause of action to file and maintain the
suit ?
(iii) Whether the plaint discloses any cause of action ?
(iv) Whether jurisdiction of this Court is ousted in view of the
provisions of the PF Act ?
(v) Whether the suit is barred for mis-joinder and non-joinder of
necessary and proper parties ?
(vi) Whether there is any suppression of fact for which the ex parte
ad interim order is required to be varied and/or discharged?
(vii) Whether investigation by SFIO can or could have been ordered
or be continued ?
Discussion and Analysis:
Before taking up the aforesaid points for consideration, I find after
considering the submissions made by the parties that the respondent
nos.1 to 8 have made elaborate arguments to persuade this Court to
vacate the interim order by pointing out the alleged flaws in the
plaintiff’s case without themselves trying to prima facie satisfy the
Court that the allegation of defalcation or misappreciation of trust
fund is false as the money deducted and depreciated are lying in the
trust fund.
The defendant ns.3 and defendant nos.5 to 8 have respectively filed
vacating applications being GA 2 of 2026 and GA 3 of 2026 but the
said application also do not contain any document to show that this
was the deduction from this number of employees, staff and workers
and this is the employer’s contribution and the same is lying with the
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trust fund. No attempt has been even made to show the facts andfigures after the year 2022-2023 upon which PF authorities have
admitted to have received the audited accounts. Although, the learned
Senior Advocate for the defendant nos.5 to 8 insisted to record that
the argument advanced by the said defendants was only restricted to
vacating of the order and not for the purpose of arguing the vacating
application but on a comparative analysis of the entire argument
advanced by the defendant no.5 and the grounds of challenge
summarised in paragraph 24 of their application being GA 3 of 2026 it
is apparent that there subsists no further point in the said vacating
application which requires to be considered separately. The same is
the situation with the vacating application made by the defendant
no.3 being GA 2 of 2026 (paragraph 23 thereof) which has been noted
hereinabove. The said application being GA 2 of 2026 can also be
construed to have been made on behalf of the defendant nos.2 and 4
from the statement made in paragraph 1 and the affidavit thereof.
In the above facts and circumstances, on the completion of the
arguments it was made clear to the learned Senior
Advocates/Advocates representing the parties that the vacating
applications will be considered to have been heard in course of
hearing of the plaintiff’s injunction application being GA 1 of 2026 in
which the defendant nos.1 to 8 have opposed the continuance of the
interim order.
Analysis of point (i)
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On the issue of compliance and/or non-compliance of theprovisions of Order XXXIX Rule 3 of CPC, there is no dispute that the
said provisions are mandatory in nature. The judgments cited by
defendant no. 1 in this context also speaks of the same, however the
ratio laid down therein has to be applied in the facts of the instant
case. The object of the said provisions is to permit the defendant(s) to
appear on the returnable date and oppose the ex parte ad interim
order that may have been passed at the instance of the plaintiff(s) in a
well-versed manner. The application and the plaint are, therefore,
required to be served so that the defendants are not only put to notice
about the institution of the suit but are made aware about the
pleadings in the plaint and the averments in the application so that
the defendant(s) can make appropriate submissions after considering
the plaintiff’s case in the plaint and in the application on the
returnable date. The copy of the plaint is directed to be served under
the said rules because it takes some time to serve a copy of the plaint
along with the Writ of Summons by which time the hearing of the
interlocutory applications may be concluded, particularly keeping in
mind that the application may not contain all the facts of the plaint.
In the instant case, the allegations are that a copy of the plaint and
the petition were not served beyond the timeframe provided under the
said rule. The ex parte ad interim order was obtained on 16th June,
2026 which was corrected on 18th June, 2026 but the application was
served after 24 hours from the date of the passing of such order. The
second grievance is that a copy of the plaint has not been served.
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After considering the submissions made by the plaintiff and thedefendants it is an admitted position that a copy of the plaint is
annexed to the interlocutory application which has been admittedly
served on the defendant nos.1 to 8 who are opposing the same. The
annexures contained in the plaint are not annexed as part of the
plaint as a complete annexure to the application but the annexures to
the plaint have been separately annexed to the application with
corresponding pleading. The plaintiff, therefore, has made substantial
compliance of the provisions of Order XXXIX Rule 3 of CPC. None
of the defendants while opposing the application was found to have
been taken by surprise while arguing the matter, on the contrary they
have argued copiously. So far as the timeframe is concerned, it is
correct that the copy of the application was served beyond the
timeframe but on that ground alone the ad interim order cannot be
vacated when a copy of the application has been served much before
the returnable date. It was open to the defendants to ask for a
complete set of the plaint once they received the copy of the
application with a copy of the pliant annexed thereto without
annexures. None of the defendants have done so. On the contrary,
the defendants no. 1 to 8 strenuously argued for vacating the order on
that ground alone.
Analysis of point no. (ii) and (iii)
On the ground of cause of action the pivotal argument of the
defendant nos. 1 to 8 is that the money of which defalcation has been
alleged is not the money of the plaintiff and as such the plaintiff
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cannot file and maintain a suit for recovery of the same even ifdefalcation has taken place. The money lying with the Trust according
to defendant nos. 1 to 8 is that of the employees, staff and workers of
the plaintiff company. The misappropriation of such money if at all
can only be raised by the employees, staff and workers of the plaintiff
company as they will be the only sufferer. Apart from that the PF
Authorities can haul up the defendant nos.1 to 8 for having
misappropriated the funds required to be maintained as per statutory
provisions. The PF Authorities have been before the NCLT where they
had alleged only of a shortfall of Rs.5,27,500/- towards surcharge
payable as per statute which has been duly paid in terms of the orders
passed by NCLT. There is, as such, no shortfall far less
misappropriation of money as alleged by the plaintiff. Moreover, the PF
Authorities have produced the audited balance-sheet of the Trust up
to the Financial Year 2022-2023 and have clarified without any
ambiguity that there was no short fall in the funds of the Trust. The
Resolution Plan approved by NCLT also did not contain any
stipulation as to the money owned by the defendants nos. 1 to 8 to the
plaintiff. The allegation of the plaintiff regarding misappropriation or
defalcation of trust fund, therefore, is bereft of any truth and should
not be considered as per the defendants nos. 1 to 8. The plaintiff is
not entitled to recover any money from the defendant nos. 1 to 8.
On a conjoint reading of various paragraphs of the plaint, it is also
apparent, according to the defendant nos.1 to 8, that the plaint
discloses no cause of action. The plaintiff has no right to sue and no
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relief as claimed by the plaintiff can be granted to it. Although, theground that the plaintiff has no cause of action or that the plaint does
not disclose any cause of action are grounds available under Order VII
Rule 11(a) of the CPC for which the defendants are required to take
out an application but these points were allowed to be urged and are
considered since the vacating applications made by the defendant
no.3 and defendant nos.5 to 8 contains this point on an elaborate
manner.
On a plain reading of the plaint it is apparent that the plaintiff
company went before the NCLT and underwent a Corporate Insolvency
Resolution Process (in short CIRP). In the Resolution Plan submitted
by the present management of the plaintiff (INSCO) there were
stipulations as to an extinguishment of the claims of the staff,
employees and workers of the plaintiff company as pointed out by the
defendant no. 1 to 8 but the NCLT did not consider the same or gave
any finding to that effect save and except kept the dues of the
workers, employees and staff outside the purview of the Resolution
Plan in view of the provisions of Section 36 (4) (iii) of IBC which
specifically excludes such claims from the ambit of the Resolution
Plan as a consequence thereof the Resolution Plan approved by NCLT
has no binding effect under the provisions of Section 31 of IBC. The
present management pursuant to the order dated 14th August, 2025
passed by the NCLT took over the plaintiff company as per the
approved Resolution Plan and thereafter appointed auditors to find
out the money lying with the Trust fund from which the benefits to the
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employees, staff and workers of the plaintiff company are to defrayed.Since the Resolution plan did not take in account the money lying in
the trust fund, there was no embargo on the plaintiff company
carrying out such exercise. In course of such audit, the auditors
reported shortfall and apprehended defalcation. This prompted the
plaintiff to proceed further to collect particulars and institute the suit
for realising such money from the defendants no. 1 to 8 who were
charged with such allegation. The defendant nos.1 to 8 in course of
their lengthy argument have time and again tried to point out the
lacunae of the plaintiff’s case and its flaws but themselves did not
come with any account to show that the amount which was deposited
by the plaintiff company with the Trust is lying with the Trust and
there has been no misappropriation or defalcation. This was also not
an impossible task as the audited balance-sheet for the financial year
2022-2023 was available and has been submitted with the PF
Authorities which has also been produced by the PF authorities. It is
clear from such audited accounts that there is a no shortfall till up to
2022-2023. Only the final position for 2023-2024 and 2024-2025 and
2025-2026 up to August, 2026 was required to be placed before the
Court and explained. It may be correct that the assets of the Trust
exceeds the liabilities but that does not give right to any of the
trustees or those associated with the Trust to siphon out money. The
prima facie case of the plaintiff that the auditors have reported
defalcation of trust fund which gives rise to a cause in favour of the
plaintiff to recover such money was not even attempted to be
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dislodged. It is a different issue whether the plaintiff is entitled to getback the money or a decree in favour of the plaintiff if it is ultimately
found that the trust fund is misappropriated. An enquiry, therefore,
is prima facie necessary to find out the veracity of the plaintiff’s
allegation. It cannot be contended at this stage that the plaintiff has
no cause of action or the plaint does not disclose any cause of action
in absence of any prima facie cogent material from the side of the
defendant nos. 1 to 8 dispelling the allegations outrightly. At the end
of the day it is the plaintiff company who is “establishment” under the
PF Act to whom the exemption has been granted. The trust may be a
separate entity but has been specifically constituted for the purpose of
depositing the money collected from the employees, staff and workers
of the plaintiff company along with the employers contribution as
required under the P.F. Act. The employees , staff and workers have
no privity of contract with the trust. Their relationship is with their
employer, the plaintiff. Only the statutory mandate commands the
trust to pay the money to the employees, staff and workers. The claim
is therefore lodged with the employer who certifies the correctness of
the claim and makes a demand on the trust who in turn pay the
employees, staff and workers. Any shortfall in the money has to be,
therefore, accounted for by the plaintiff company as in the eyes of the
PF Authority, the plaintiff is the establishment who has been granted
the exemption and is required to comply with the statutory required.
I am, therefore, unable to agree with the contention of the
defendant nos. 1 to 8 that the plaintiff has no cause of action to file
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and maintain the suit or the plaint does not disclose any cause ofaction.
Analysis on point no. (iv)
The Provident Fund Authorities are authorized under Section 7A
and 13 of the PF Act to conduct enquiry which shall be deemed to be a
judicial proceeding within the meaning of Section 1963 and 228 and
for the purpose of Section 196 of the Indian Penal Code. The authority
is also given the powers under CPC and Code of Criminal Procedure
for even conducting search and seizure. The scope of enquiry,
however, gets restricted in view of the provisions of Section 7A(1) and
Section 13(2) of the PF Act. The PF authority in a case where
defalcation is alleged against the trustees of the exempted provident
fund trust account conduct a full-fledged investigation like an
investigating agency. It is also to be borne in mind that for the instant
case, the plaintiff company has several units in different states in
under the aegis of separate regional provident fund commissions.
Keeping in mind the legal provisions as also the practical
inconvenience, the arguments advanced by the defendants no. 1 to 8
that the suit is barred in view of the provisions of the PF Act cannot be
accepted. The interim order, therefore, cannot also be vacated on such
ground.
Analysis on point no. (v).
On the issue of mis-joinder and non-joinder of parties it is correct
that a trust is represented by its trustees and as such the trust has to
either sue or can be sued through the trustees. Assuming without
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admitting that all the trustees who were associated with the trust forthe period 2021-2025 have not been made a party as contended by
the defendant nos. 1 to 8 but on a plain reading of the plaint it is
apparent that specific allegation has been made against some of the
trustees who have been made parties to the suit. It may be so that the
plaintiff is of the view that the other trustees who were associated with
the trust from time to time may not have been part of the
misappropriation of fund and as such have not been made parties.
In such circumstances, at this stage, the suit cannot be held to be
barred for non-joinder and mis-joinder of necessary and proper
parties. The ad interim order also cannot be vacated on this ground
alone.
Analysis on point no. (vi).
Elaborate arguments have been made by the defendant nos. 1 to 8
to demonstrate that the plaintiff has suppressed facts for which the ad
interim order is required to be varied and/or discharged. It is the case
of the defendants no. 1 to 8 that the plaintiff was required to state in
the plaint that it had lodged a police complaint prior to institution of
the suit on the selfsame allegation and that a FIR has been registered
on the basis of such complaint. It is also urged that the plaintiff has
made a mis-statement about the exemption granted to the plaintiff
company with regard to the provident fund of the employees, staff and
workers and thereby have suppressed the true and correct facts while
it obtained the ex parte ad interim order. It is now settled position of
law that an order can be vacated or discharged under the provisions of
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Order XXXIX Rule 4 of CPC if there is a suppression of fact by whichthe plaintiff obtains the ex parte ad interim order. The suppression as
qualified by the Supreme Court in various judgments in such a case
has to be material suppression. The test as to whether a suppression
is of material fact it is to be seen that on such facts having been
brought to the notice of the Court at the time of passing the order
would have persuaded the Court from not granting such order. In the
instant case the plaintiff has specifically pleaded in the plaint and the
application that they intend to lodge a complaint regarding the
defalcation of trust fund. The plaint and the petition were respectively
verified and affirmed on 8th June, 2026 and were filed with the Central
Filing Department of this Court as required on the same date. The
complaint was lodged on the same date i.e., 8th June, 2026. The time
endorsed in the document disclosed by the plaintiff in its
supplementary affidavit gives an indication that the same was lodged
after the plaint and the petition were affirmed and filed in the Central
Filing Department of this Court. The FIR was lodged on 18th June,
2026 which is admittedly after the suit was instituted upon
presentation and admission of the plaint and the orders dated 16th
June, 2026 and 18th June, 2026 were passed. At the highest, the
plaintiff can be accused of not bringing to the notice of the Court
about filing of the complaint on 16th June, 2026 or 18th June, 2026
when the application was moved or the order was corrected even if
this fact was brought to the notice of the Court it would not have
persuaded the Court to retrieve the ad interim order of injunction.
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There can be as such no suppression far less material suppression.That apart and in any event a criminal case and a civil suit even if
emanates from a common cause can be proceeded parallelly unless
there is any legal embargo. The criminal investigation pursuant to the
complaint will either lead to a filing of charge-sheet on the allegation
bring prima facie establishes or a final report (FRT) will be filed. The
subsequent action in such the criminal proceedings will be as per
applicable law which will end in either holding the accused guilty or
they will be acquitted. The money if any which is defalcated or
misappropriated cannot be realised from the accused by imposing
punishment under the applicable criminal law. In order to recover the
money a civil suit has to be instituted and as such the two
proceedings are permitted to continue simultaneously. So far as the
cancellation of exemption is concerned, there is at least more than one
document which shows that the PF Authorities have cancelled the
exemption. As to whether the cancellation is in accordance with law
or that the PF Authorities have exceeded their jurisdiction in
cancelling the same when the exemption was granted by the Central
Government relates to validity of the notice and the authority of the PF
Authorities. This cannot be the subject matter of this suit or can be
decided in this proceeding where plaintiff has alleged defalcation. This
fact is also apparent when we find that the erstwhile management of
the plaintiff company of which some of the defendants no. 1 to 8 were
part of had filed a writ petition challenging the notice issued by the PF
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authorities in revoking the exemption before the Punjab and HaryanaHigh Court in connection with its Rohtak unit.
Analysis on point no. (vii)
The defendant nos. 1 to 8 have strenuously argued that the order
directing investigation by SFIO could not have been passed either in law or
on the facts of the case and as such should be vacated. The main thrust of
the argument is that SFIO can be directed to investigate into the affairs of
the company in view of the provisions of Section 211 and 212 of the
Companies Act, 2013 and that can be directed only by the Central
Government. Assuming without admitting that there has been defalcation
of the trust fund then also the same does not form part of the affairs of the
plaintiff company for which investigation by SFIO could be directed.
Moreover, a complaint before a competent authority to investigate has been
made by the plaintiff in relation to the self-same set of allegations. An FIR
has been registered and as such the investigation is in progress. At this
stage SFIO cannot be invited to make investigation on the same issue.
Furthermore, the PF Authorities under the provisions of Section 7A of the PF
Act have wide powers to investigate and take appropriate measures against
and erring establishment. The matter relates to defalcation of money of the
provident fund trust. It is, therefore, well within the jurisdiction of the PF
Authorities to investigate the same. While considering the arguments
advanced by the defendant nos. 1 to 8 one cannot lose sight of the fact that
the plaintiff is the “establishment” before the PF Authorities has six units
spread over India. The exempted provident fund trust is where the statutory
deductions from the salary and wages of the employees, staff and workers of
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all the six units of the plaintiff company with employer’s contribution has tobe deposited. All the employees, staff and workers of the plaintiff company
are to get their retiral and/or terminal benefits from a single trust fund.
Moreover, a unit in a particular zone is under the control of the Regional
Provident Fund Authorities of that zone. The exemption is, however, granted
to the plaintiff company as an establishment under the PF Act and not to
the separate units. The plaintiff company is, therefore, subject to different
Regional Provident Fund Authorities where it has a unit. It is apparent from
the record that the Regional Provident Fund Authority, Northern Zone had
issued notice revoking the exemption in connection with the Rohtak unit of
the plaintiff company at Haryana which was challenged by the company
prior to the present management took over the same in the High Court of
Punjab and Haryana and not before this Court within the jurisdiction
whereof the plaintiff’s registered office is situated. In such a fact scenario for
the PF Authorities to proceed against the plaintiff company there has to be a
coordinated action from all the Regional Offices wherein the records of a
particular unit is situated. It is also evident from the documents produced
by the PF authorities that the Regional Provident Fund Commission has to
request the Central Board of the Provident Fund authorities in taking an
action against the plaintiff company. It may so happen that after an
enquiry/investigation there is no shortfall in respect of the contribution of a
particular unit. The Regional Provident Fund Authority of that zone in such
a case may not find it necessary to proceed against the plaintiff or the
exempted trust fund in connection with such unit. At the same time on a
preliminary investigation if the SFIO funds that there is no truth in the
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plaintiff’s allegation then no further proceeding will take place against thedefendants no.1 to 8. The power of the provident fund authorities to carry
out investigation under the statutory provisions are also limited. The
provident fund authorities at the highest can impose penalty and recover
interest on the deficit amount and recover the same from the establishment
to replenish any shortfall in the deposit. The provident fund authorities are
not empowered to carry out a full fledged enquiry in case of alleged
defalcation. If the PF authorities do not find any shortfall at the first
instance they may not proceed for further enquiry unless non-payment is
reported. The police authorities in West Bengal can investigate into the
allegation of defalcation very conveniently within the State of West Bengal.
However, there are five other units in different States the Police Authorities
of this State may not find it convenient to investigate outside the State of
West Bengal when the documents are spread over several States under the
jurisdiction of the different regional provident fund commissions
In the aforesaid facts and circumstances, an agency like SFIO is a more
preferred agency for the purpose of investigation.
So far as the contention of the defendant nos. 1 to 8 that investigation by
SFIO can only be directed by the Central Government is also unacceptable.
The powers of the High Court being a Court of record with the authority to
exercise constitutional jurisdiction cannot be fettered by referring the
provisions of Section 212 of the 2013 Act. In an appropriate case if the
Court finds that an investigation is required where the business of the
plaintiff company is spread out Pan India, the Court can always direct SFIO
to carry out the investigation. The authority granted under Section 212 of
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the 2013 Act to the Central Government does not require the Court torequest the Central Government to engage SFIO to investigate into the
affairs of the plaintiff company as that will lead to the Central Government
sitting on appeal over the order of the High Court while it orders
investigation by SFIO. The object of the provisions of Section 212 of the
2013 Act is to provide a check and balance from frivolous complaint being
made by one set of directors or share-holders against the other to spoil the
functioning of a company as it is often found allegation of fraud levelled to
invite SFIO to investigate. This does not curtail the powers of the High Court
to order investigation by SFIO in an appropriate case. Furthermore, the
exemption under the PF Act is granted to the “establishment” being the
plaintiff company in the instant case. The plaintiff company under the
statutory mandate is required to deduct the requisite amount from the
salary and wages of its employees, staff and workers and deposit the same
with its contribution (employer’s contribution) to the exempted trust fund.
The deduction and the employer’s contribution is reflected in the books and
accounts of the plaintiff company. The allegation of the plaintiff is
defalcation of such money. To adjudicate defalcation it is to be also seen
whether the correct amount was deducted and with the employer’s
contribution was deposited in the trust fund from time to time. The money
deducted and the employer’s contribution, therefore, forms part of the
affairs of the plaintiff company. Even if the money on being deposited with
the trust fund changes its identity and character then also the issue of
deduction and employer’s contribution remains as affairs of the plaintiff
company being the exempted establishment for which investigation by the
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SFIO under the provisions of Section 212 of the 2013 Act can also bedirected. In a supplementary proceedings under Section 94 of CPC, the
Court is empowered to pass interim orders for the ends of justice. Since the
matter relates to the social security benefits of employees, staff and workers
of the plaintiff company which not only has statutory approval but is also
recognised under the constitutional framework this Court feels to be in the
facts of the case to direct investigation by SFIO for the ends of justice.
Furthermore, the Court can appoint an expert under the provisions of
Section 45 of the Evidence Act, 1872 (now Section 39 of Bharatiya Sakshya
Adhiniyam, 2023) to come to a conclusive finding as to the variety of the
allegations. Investigation by SFIO can in such a case be treated to be an
expert today.
Analysis of other issues:
So far as the submissions made by the respondent no. 9 and 13 are
concerned, on a plain reading of the plaint, it cannot be held at this stage
that the said defendants are neither a necessary nor a proper party. The
prayer for expunging their respective names made without any specific
application, for such purpose are considered and rejected at this stage.
This Court is also not required to clarify the scope of the interim order
with regard to the bank accounts which the respondent no. 1 and 3 claimed
to be not their accounts but the accounts maintained in the name of their
family members as it appears from the accounts on which particulars are
provided clearly shows that either the respondent no. 1 or the respondent
no. 3are joint holders of such account. Even if, the respondent no. 1 and 3
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are not the first account holder, as joint account holders can operate theaccount.
Conclusion
In the aforesaid facts and circumstances, I do not find any potential
substance in the argument of the defendant nos. 1 to 8 to either vacate or
vary or discharge or modify the order dated 16th June, 2026 as corrected by
the order dated 18th June, 2026 which has been further extended from time
to time.
The applications being GA/2/2026 and GA/3/2026 do not require any
further consideration independently as the contents thereof has been
elaborately argued by the parties. GA/2/2026 and GA/3/2026 are,
accordingly, dismissed.
The application being GA/1/2026 requires to be heard on affidavits.
Let affidavit-in-opposition be filed by 3rd September, 2026. Affidavit-in-
Reply thereto, if any, be filed by 30th September, 2026.
Let this matter appear in the monthly list of October, 2026.
The interim order initially passed on 16th June, 2026 and corrected by
the order dated 18th June, 2026 which is in subsistence till 3rd August, 2026
is extended till disposal of GA/1/2026.
Urgent photostat certified copy of this judgment and order, if applied
for, be supplied to the parties on priority basis after compliance with
all necessary formalities.
(Arindam Mukherjee, J.)
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Stay of operation of the order is prayed for by the respondent nos. 1 to
8, the prayer is considered and rejected.
(Arindam Mukherjee, J.)
53
