HON’BLE SRI JUSTICE A.V.SESHA SAI WRIT PETITION No.20866 of 2005 Date : 30-07-2014 Between:
The Regional Provident Fund Commissioner, Barkatpura, Hyderabad and another.
… Petitioners and The Employees Provident Fund Appellate Tribunal, 7th Floor, Skylark Building, No.60, Nehru Place, New Delhi – 110 019 and another.
… Respondents HON’BLE SRI JUSTICE A.V.SESHA SAI WRIT PETITION No.20866 of 2005 O R D E R:
This writ petition is directed against the order of the Employees Provident Fund Appellate Tribunal, New Delhi, first respondent herein, passed in ATA.No.540(1)2004 dated 08.02.2005.
2. Heard Sri R.N.Reddy, learned counsel for the petitioners and Sri K.Sudershan, learned counsel for the second respondent apart from perusing the material available on record.
3. The provident fund authorities pressed into service the provisions of the Employees’ Provident Fund & Miscellaneous Provisions Act, 1952 (hereinafter called ‘the Act’) and initiated action under Section 14- B of the Act for the delay in payment of the dues by the second respondent herein. The Regional Provident Fund Commissioner-I, Hyderabad, petitioner No.1 herein, after holding enquiry, passed an order vide proceedings No.AP/SRO/WGL/P.D.CELL/WL/11957/00- 01/457 dated 31.08.2008, levying a total amount of Rs.11,77,737/- as damages on belated remittances during the period March, 1998 to February, 1999 as per the rates prescribed in the Act.
4. Felt aggrieved by the said order of the Regional Provident Fund Commissioner-I, Hyderabad an appeal in ATA.No.540(1)2004 was preferred by the second respondent herein before the Appellate Tribunal and the Appellate Tribunal passed an order dated 08.02.2005, modifying the order of the Regional Provident Fund Commissioner-I, Hyderabad by ordering reduction of demand by 40%.
5. Challenging the said order passed by the Appellate Tribunal, New Delhi, the present writ petition has been instituted by the provident fund authorities.
6. A counter affidavit is filed by the second respondent herein, denying the averments and allegations made in the writ affidavit and in the direction of justifying the impugned order passed by the Appellate Tribunal.
7. Contentions of Sri R.N.Reddy, learned Standing Counsel for the petitioners:
7.1. Having categorically found that the employer should have complied with the provisions of the Act from 01.11.1983 instead of waiting for 8 years on the flimsy ground of non-allotment of code number, more so, when code number has already been allotted to it, the Appellate Tribunal erred in interfering with the order passed by the primary authority, levying the charges.
7.2. The Appellate Tribunal failed in considering the fact that nothing prevented the second respondent herein from depositing the deducted provident fund contributions with the petitioners’ organization instead of depositing in a bank which is impermissible and inadmissible in law. The Appellate Tribunal, having found in favour of the , ought not to have reduced the liability without assigning any reasons. The appellate Tribunal failed to consider the counter affidavit filed by the petitioners herein and had the contents of the said counter affidavit been considered, the order impugned in the present writ petition would not have emanated.
7.3. The order passed by the Appellate Tribunal is totally one without jurisdiction. In support of his submissions and contentions, the learned Standing Counsel for the writ petitioners places reliance on the judgment of the Hon’ble apex Court in the case of REGIONAL PROVIDENT FUND COMMISSIONER V.
[1]
S.D. COLLEGE, HOSHIARPUR AND OTHERS and the
order of this Court in W.P.No.14772/1999 dated 26.07.2012.
8. Contentions of Sri K.Sudershan, learned counsel for the second respondent:
8.1. The order of the Appellate Tribunal is strictly in conformity with the provisions of the Act.
8.2. There is absolutely no willful default in not depositing the provident fund dues in time.
8.3. The Appellate Tribunal is conferred with the jurisdiction under the Act to confirm, modify or reduce or annul the order appealed against and the said power includes the power to pass such orders thereon as it thinks fit.
8.4. Since the Appellate Tribunal passed a reasoned order, the same does not warrant any interference of this Court under Article 226 of the Constitution of India and there are no valid grounds made out by the petitioners herein which warrant interference of this Court under Article 226 of the Constitution of India.
9. In the light of the pleadings, submissions and contentions available on record, the issue which this Court is called upon to answer is:
Whether the Appellate Tribunal is justified in ordering reduction of damages to 40% and whether the same is sustainable and tenable and whether the same is in conformity with the provisions of the Act?
10. The material available before this Court clearly discloses that the provident fund authorities brought the petitioner under the purview of the Act vide coverage intimation dated 07.07.1982 with effect from 01.04.1982 and allotted Code No.AP/11957 and there is absolutely no dispute for the said aspect.
11. The Employees’ Provident Fund & Miscellaneous Provisions Act, 1952 is a welfare legislation intended for safeguarding and protecting the interest of the employees covered by the Act and this Act is a piece of social legislation brought in by the Parliament with the sole object of improving the conditions of service of the employees in factories and other establishments and the authorities brought the second respondent under the coverage of the enactment as long back as in the year 1982 and the second respondent also started deducting the provident fund. It is also to be remembered at this juncture that this enactment is a social security statute and the intention of the legislature behind the said enactment is to ensure a better future for the employees concerned on their retirement and the benefit for the dependants in the event of premature death of the employee. These aspects are required to be borne in mind while dealing with the matters of this nature. Section 6 of the Act imposes an obligation on the employer to contribute for this fund. Section 14-B of the Act which is relevant for the purpose of the present controversy empowers the provident fund authorities to recover the damages in the event of contravention of the provisions of this statute.
12. In the instant case, the Regional Provident Fund Commissioner-I, Hyderabad after duly taking into consideration the explanation offered on behalf of the employer and the second respondent herein and while turning down the reasons sought to be assigned by the employer, passed the impugned order dated 31.08.2000 in accordance with the provisions of the Act. The appellate Tribunal, on the appeal filed by the second respondent herein passed an order, ordering reduction of the demanded amount by 40% while limiting the liability of the second respondent employer to 60%. The contention of the learned counsel for the second respondent that there is no willful default in depositing the amount with the provident fund authorities, in the considered opinion of this Court, is neither sustainable nor tenable in the eye of law. The provisions of Section 14-B of the Act refers to only a default and the consequential penalty by way of damages. Therefore, the default need not be a willful default on the part of the employer. One of the reasons shown by the Appellate Tribunal in the impugned order for interfering with the order passed by the primary authority is that the employer was having its own fund and transferred the amount lying therein together with interest to the provident fund authorities after receiving the communication dated 14.02.1991 and the same cannot be sustained nor it can be countenanced in view of the law laid down by the Hon’ble apex Court and this Court.
13. At this juncture it may be apposite and appropriate to refer to the judgment of the Hon’ble apex Court in the case of REGIONAL PROVIDENT FUND COMMISSIONER (supra 1). In the said judgment, the Hon’ble apex Court at paragraph 11 of the judgment held as under:
“11. Thereby the employer is under a statutory obligation to deposit the amount to the credit of the Fund every month. In the event of any default committed in that behalf, Section 14-B steps in and calls upon the employer to pay damages by way of penalty, the maximum of which is the accumulated arrears. The Regional Provident Fund Commissioner is given discretion only to reduce a percentage of damages and he has no power to waive penalty altogether. In this case, admittedly, after the judgment, there was no reason for the respondent to deposit the amount with the University. We can understand that, since there was a scheme framed by the University and the respondent was under an obligation to comply with the scheme, they can' have a feeling of doubt as to whether they should abide by the scheme framed by the University or under the Act. Since they had filed the writ petition in this Court, this Court gave direction on January 29, 1988 directing the respondents to deposit the contribution with the appellant. Thereby the respondents have a statutory obligation to deposit the amount from February 1988 onwards. Therefore, there is no justification whatsoever to deposit and keep depositing the amount in the University account after the judgment of this Court. The mere fact that the University has given permission to redeposit the amount with the appellant does not enable the respondents to take shelter thereunder for non-deposit of the amount in the Fund.”
14. In W.P.No.14772/1999 this Court held as under:
“On an interactive analysis of the provisions of Section 14-B of the Act and Paragraph 32-A of the 1952 Scheme, it is clear that the rates of damages that may be recovered by way of penalty, the competent authority is specified in paragraph 32- A of 1952 Scheme. The provision is in the nature of mandatory instruction as to how the discretion, conferred by Section 14-B must be applied. From the provisions of paragraph No.32-A of the 1952 Scheme, different rates of damages as a percentage of arrears per annum, are enumerated. These constitute the proper measure of penalty by way of damages that must be recovered for delayed payment.
The remittance of the Provident Fund and other statutory dues by an employer and within the stipulated time is part of the legislative scheme of the beneficent legislation, enumerated in the several provisions of the Act. It would be pejorative to the interest of the employees covered by the provisions of the Act and would contribute to the dislocation of the regularity of the Provident Fund management if the periodicity of remittances is not maintained on jejune considerations of presumed difficulties or organizational problems of employers. It is for this reason that discretion has been conferred on the competent authority under Section 14-B to levy penalty by way of damages. It is not mere damages that is required to be recovered but damages are also intended to be in the nature of a deterrent (penalty) to delinquent employers, to desist from the practice of not remitting Provident Fund and other statutory dues in time.
On the above analysis, this Court is of the considered view that no case for deviation from the norms and guidelines enumerated in paragraph 32-A of 1952 Scheme is made out in the case warranting exercise of appellate intervention by the 1st respondent.
The impugned order of the Appellate Tribunal dated 03.12.1998 in ATA/1(23)/98 is unsustainable and is quashed.
The order passed by the petitioner dated 21.05.1998 in proceedings No.AP/GT/11597/PD/KST/98 is restored.”
15. In the instant case, the appellate Tribunal without assigning any cogent and convincing reasons and obviously not in conformity with the principles laid down in the above referred judgments, passed the impugned order, ordering reduction by 40%. This Court is of the opinion that there is absolutely no justification on the part of the appellate authority in doing so if the same is tested in terms of the object and intention of the legislature behind enacting the said law. The facts and circumstances of the present case and the ratio laid down in the judgments referred to above drive this Court towards an irresistible conclusion that the order impugned in the present writ petition cannot stand for judicial scrutiny.
16. For the aforesaid reasons and having regard to the principles laid down in the above referred judgments, writ petition is allowed and the order passed by the Employees Provident Fund Appellate Tribunal, New Delhi in ATA.No.540(1)2004 dated 08.02.2005 is hereby quashed and consequently the order issued by the Regional Provident Fund Commissioner-I, Hyderabad vide proceedings No.AP/SRO/WGL/P.D.CELL/ WL/11957/00-01/457 dated 31.08.2008 is hereby restored. As a sequel, miscellaneous petitions if any, also stand disposed of. No costs.
A.V.SESHA SAI, J Date:30.07.2014 grk 138 HON’BLE SRI JUSTICE A.V.SESHA SAI WRIT PETITION No.20866 of 2005 Date : 30-07-2014 grk
[1] (1997) 1 SCC 241