Attempts by third parties to forestall recovery by the provident fund and Employees State Insurance Corpn out of the assets of an establishment could not be legally established. The long arm of the High Court could not go to the rescue of such parties, the Madras High Court has held.

Mr Justice K. Chandru, who heard a writ petition from the Indian Overseas Bank, Salem, challenging an order dated March 31, 2008 of Recovery Officer, ESI Corpn, asking for clearance by M/s Jawahar Mills Ltd, which was sought to be purchased by one M/s Haritex, Coimbatore of dues to the Corporation, ruled that the petitioner had no legal or statutory right to thwart the impugned proceedings.

The contention of petitioner-bank was that the purchaser of the mills gave bank guarantee towards ESI and PF dues. When they failed to pay dues to the ESI, the petitioner was directed to pay out of the bank guarantee the sum towards the ESI dues.

Aggrieved by the said order, the petitioner-bank filed the writ petition. While the petition was pending, the Bank came up with second petition seeking to challenge an order dated August 28, 2008 by the PF Dept.

The contention of the Indian Overseas Bank in both petitions was they were holding bank guarantee issued by M/s South Indian Bank, Coimbatore on account of purchaser of M/s Jawahar Mills. The said bank guarantee could be invoked only by order of this Court. The order of attachment made against the bank account was clearly illegal.

Both PF and ESI departments submitted that they had clearly informed that they had prior charge over properties of Jawahar Mills, and purchaser of the mills was bound to honour the past dues.

The Judge ruled that even though the bank was a third party to the claims, but since they were in possession of bank guarantee furnished towards dues payable to the departments, the bank was entitled to be proceeded with for the amounts due to PF and ESI.

The petitioner could not invoke writ jurisdiction of this Court under Art 226 of Constitution to forestall the recovery of amount from the mills. If the petitioner bank had any claim over the property, that claim was only subordinate to claims payable to PF and ESI departments.

In the light of the above, the writ petitions would stand dismissed, the Judge ruled.

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