CHAPTER 21
MINISTRY OF SHIPPING
Central Inland Water Transport Corporation Limited
21.1.1 Loss due to default in complying with the
statutory provisions and failure to take timely action.
The Company failed to comply with a specific action plan
suggested to them, and which had the approval of Ministry, to liquidate
their dues under the provisions of the Employees Provident Fund Scheme, 1952
and other statutory provisions. As a result, three vessels of the Company,
reusable value of which was assessed at Rs.1.76 crore were sold in public
auction at a price of Rs.21 lakh resulting in loss of Rs.1.55 crore
Central Inland Water Transport Corporation Limited (Company)
was operating its own Provident Fund Scheme, as per relaxation granted under
para 79 of the Employee’s Provident Fund Scheme 1952. However, the relaxation
was revoked with effect from 1 July 1999 due to various irregularities and
failure to keep the commitments made from time to time towards depositing
further instalments of provident fund (PF) dues. The Employee’s Provident Fund
Organisation (EPFO) issued a number of certificates for recovery of outstanding
amount of Rs.3.69 crore for the period from October 1996 to December 1999 along
with a notice of demand to the Company as defaulter (February 2001). EPFO issued
(February 2001) orders attaching the movable and immovable properties of the
Company. Management thereupon, made no protest but instead, requested (March
2001) the Recovery Officer, EPFO to initiate proceedings for “Sale Proclamation
Notice” in respect of 21 attached vessels. Attachment of the Bank Account was,
however, revoked and sale of immovable property was kept in abeyance on the
advice of the Central Office of EPFO.
The Company was advised (March 2001) by EPFO to come up with
a specific action plan to liquidate the dues, which they did not do. Again the
Regional Provident Fund Commissioner, Kolkata came up with a liberal payment
plan of Rs.17 lakh per month (including the current PF contribution) to be
effected from April 2001. Management, however, did not comply with this
directive even after Ministry’s intervention, who advised (July 2001) the
payment of monthly instalments should be made by the Company from the non-plan
fund received from the Government of India or from their internal accrual. The
Company had received Rs.21 crore towards non-plan loan (reimbursement of cash
loss) from the Government during the period from March 2001 to February 2002
therefore, it could have easily paid the outstanding PF dues in instalments out
of this non-plan loan. It chose not to do this. The Recovery Officer finally
proposed for sale of three vessels in public auction (August 2001). The reserve
price fixed by the Recovery Officer of EPFO for the three vessels was Rs.16.50
lakh (scrap value) as against the reassessed reusable value of Rs.1.76 crore.
The vessels were sold in October 2001 to a private party for Rs.21 lakh.
Management while admitting the fact (April 2002) that the
vessels were not scrap and that the Company had suffered a loss of Rs.1.55 crore
contended that such loss was suffered due to the action of EPFO.
The contention of Management is not tenable in as much as
they could have avoided the auction of the ships if they had complied with the
payment action plan even after the intervention by Ministry. In fact they
appeared eager to sell the remaining attached ships rather in hurry. A series of
flawed decisions, therefore, by the Company resulted in a loss of Rs.1.55 crore
(Rs.1.76 crore minus Rs.21 lakh) in the sale.
The matter was referred to Ministry in May 2002, their reply
was awaited (September 2002).
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