Civil Appeal No 1363 of 1974
Appeal by special leave from the judgment and order dated the 20th May 1971 of the Patna High Court at Patna in CWJC No 306 L N Sinha and Girish Chandra for the appellants section N Mishra B P Singh and A K Srivastava for the respondents
9 L522SCI76 366 The Judgment of the Court was delivered by RAY CJ
This appeal by special leave turns on the question whether the Coal Mines Provident Fund Commissioner is to hear an employer before making an order requiring the employer to pay damages under section 10F of the Coal Mines Provident Fund and Bonus Scheme Act 1948 hereinafter referred to as the Act
The employer being the respondent to this appeal was directed by a letter dated 34 January 1969 to pay provident fund contributions amounting to Rs 582121 for the months of July to September 1968 and damages at the rate of 25 per cent on the above dues amounting to Rs 14555O
The employer was required to pay damages under the provisions of section 10F of the Act
The employer filed an objection explaining the circumstances under which there was delay in the payment of provident fund contributions
The employer prayed that damages might not be imposed at the rate of 25 per cent for the delay in payment
The employer paid the provident fund contributions
The employer was informed that damages charged on the delayed payments of provident fund contribution could not be waived
The employer thereafter filed an application in the High Court for an order that the demand notice be quashed
The High Court acceded to the application of the employer
The High Court gave two reasons
First that the computation of amount of damages should arise upon consideration of facts and circumstances and a mechanical computation of damages is not contemplated
Second the authorities should have given opportunity to the employer to 
represent the case
The High Court did not accept the contention of the employer that section 10F of the Act suffered from the vice of excessive delegation
The provision contained in section 10F of the Act are as fol lows Where an employer makes default in the payment of any contribution or bonus or any charges payable by him under any scheme framed under this act or where any person who is required to transfer provident fund accumulations in accordance with the provisions of section 3D makes default in the transfer of such accumulations the Central Government may recover from such employer or person as the case may be such damages not exceeding twenty five per cent of the amount of arrears as it may think fit to impose
 The Central Government under sub section 1 of section 10 C of the Act is authorised to delegate any power exercisable by it under the Act or any Scheme framed thereunder to the Coal Mines Provident Fund Commissioner or any other officer
The Central Government in exercise of the power conferred under section 10C1 of the Act by notification dated 1st October 367 1966 directed that powers exercisable by it under sections 10A and A 10F of the Act and specified in column 1 of the Table attached to the notification shall subject to the conditions specified in the corresponding entry in column 2 of the Table attached be exercisable by the Coal Mines Provident Fund Commissioner appointed under section 3Cl of the Act
There is a Schedule attached to the notification where sliding scale of damages has been fixed by the Central Government under section 10F of the Act
The Schedule attached to the notification is as follows Sliding rate of recovery of damages under section 10F of the Coal Mines Provident Fund and Bonus Scheme Act 1949
 C SNo of Period of defaultault  duting one over over over over over the year
month one two three four five or less month months months months months up to up to up to up to two three fourfive months months months months 2 3 4 5 6 7 Ist default 2 of S of 18 of 15 of 20 of 25 of arrears alTears alTears arrears arTears arrears 2nddefault S  IO  15  20  25  2S  3rd default IO  IS  20  2S  2S  2S  4thdefault IS  20  2S  2S  2S  2S 5th default 20  2S  2S  2S  2S  2S  6th or subsequent 2S  2S  2S  2S  2S  2S  default li Under section 78 of the Act the Coal Mines Provident Fund Commissioner or any other officer authorised in that behalf by the Central Government may by order determine the amount due from any employer under any provision of this Act or any scheme framed thereunder and for this purpose may conduct such enquiry as he may deem necessary
Section 783 also contemplates giving of reason able opportunity to represent the case
The High Court held that the provisions of section 78 are attracted in the case of an order relating to determination of damages for delay in payment of contribution under the Act
The Solicitor General contended that section 78 of the Act does not apply for two reasons
First section 78 of the Act would be applicable only where liability is to be determined
Neither liability to pay nor default in payment is disputed in the present case
Second under section 10F of the Act the amount of damages is quantified and a 368 personal hearing is not necessary because the employer has said everything in his representation and an order for payment of damages is not one of punishment
The provisions contained in section 78 of the Act indicate first that the Coal Mines Provident Fund Commissioner may determine the amount due from the employer and second for this purpose he may conduct such enquiry as he may deem necessary
Therefore an enquiry is contemplated
Section 783 speaks of reasonable opportunity being given to an employer to represent his case
The provisions in section 10F of the Act also indicate that determination of damages is not a mechanical process
The words of importance in section 10F of the Act are such damages not exceeding 25 per cent of the amount of arrears as it may think fit to impose
Here the two important features are these
First the words of importance are damages not exceeding 25 per cent
These words show that the determination of damages is not an inflexible application of a rigid formula
Second the words as it may think fit to impose in section 10F of the Act show that the authorities are required to apply their mind to the facts and circumstances of the case
This Court in The India Sugars and Refineries Ltd vs Amravathi Service Co op
Society Ltd  Anr etcl said that situations in which a duty will arise to act judicially according to the natural justice cannot be exhaustively enumerated
A duty to act judicially will arise in the exercise of a power to deprive a person of legitimate interest or expectation that addition price would be paid
The facts which point to an exercise of powers judicially are the nature of the interest to be affected the circumstances in which the power falls to be exercised and the nature of the sanctions if any involved
When a body or authority has to determine a matter involving rights judicially the principle of natural justice is implied if the decision of that body or authority affects individual rights or interests
Again in such cases having regard to the particular situation it would be unfair for the body or authority not to have allowed a reasonable opportunity to be heard
See State of Punjab vs K R Erry  Sobhag Rai Mehta2 The High Court was correct in holding that an opportunity should have been given to the employer to be heard before the damages were determined
The appeal is therefore dismissed with costs
section RAppeal dismissed


Summary:
Section IOF of the Coal Mines Provident Fund and Bonus Scheme Act 1948 is a penal section under which for default in the payment of any Provident Fund contribution the Central Government may recover from such employer or person as the case may be such damages not exceeding 25 of the amount of arrears as it may think fit to impose
ln respect of tho period from July to September 1968 the respondent employer was asked to pay a sum of Rs 145550 as damages being 25 of the arrears of Provident Fund contributions by the appellant to which he filed an objection explaining the delay
The employer  request for waiving the damages was negatived
The writ application of the employer against that order was allowed by the High Court on two grounds viz i that the computation of damages should arise upon consideration of the facts and circumstances and ii the authorities should have given an opportunity to the employer to represent the case
Dismissing the appeal by special leave the Court  HELD  I  The provisions contained in a 78 of the Act indicate first that the Coal Mines Provident Fund Commissioner may determine the amount due from the employer and second for this purpose he may conduct such enquiry as he may deem necessary
Therefore an enquiry is contemplated
Section 78 3  speaks of reasonable opportunity being given to an employer to represent his case
The provision in section 10F of the Act also indicates that determination of damage is not a mechanical process
The words of importance in section 10F of the Act are such damages not exceeding 25 per cent of tho amount of arrears as it may think fit to impose
Here the two important features are these First the words of importance are damages not exceeding 25 show that the determination of damages is not an inflexible application of the rigid formula
Second the words as it may think fit to impose in section 10F show that the authorities are required to apply their mind to the facts and circumstances of the case
368A C 2 When a body or authority has to determine a matter involving rights judicially the principle of natural justice is implied if the decision of that body or authority affects individual rights or interest
368E E Indian Sugars  Manufacturers Ltd vs Amravati Services Co operative Society Ltd Anr
r1976 2 SCR 740 and State of Punjab vs K R Erry k Sobhag Rai Mefta   applied