ORDER [ENTITY], J.
1. The petitioner challenges the several orders passed by the respondents seeking recovery of damages under [SECTION] of the [ACT] (Hereinafter referred to as the 'Act', for brevity).
2. The facts of the case are as follows:
The petitioner is engaged in the manufacture of beedies. Prior to 31.5.1977 provisions of the Act were not applicable to the beedi industries. The Government of India by a Notification dated 17.5.1977 extended the provisions of the Act to beedi industries with effect from 31.5.1977. The petitioner had challenged the vires of the Notification by way of a Writ Petition in [CASE NUMBER] before this Court. This Court by an order dated 4.1.1978 granted an order of stay in favour of the petitioner. However, the petitioner had voluntarily complied with the provisions of the Act and paid the contributions, periodically, with effect from 1.8.1978, notwithstanding the order of Stay granted by this Court. The writ petition was ultimately disposed of on 8.2.1985, wherein it was observed that the petitioner shall be entitled to be heard in the matter as per [SECTION] of the Act. Accordingly, an enquiry was held under [SECTION] and there was a determination of the dues from the period 31.5.1977 to 31.7.1978 amounting to Rs. 1,06,249.50 P. This was complied with by the petitioner. Thereafter, in the year 1996 the respondent had issued a notice under [SECTION] of Act for the period February 1977 to July 1978 and on 2.4.1997, the petitioner was directed to pay damages amounting to Rs. 2,77,651/- for the said period. This was challenged by a Writ Petition in [CASE NUMBER]. This Court, by an order dated 16.2.1999 remanded the matter to the authorities for re-examination and upon the said re-examination, the competent authority, by an order dated 30.8.2000, passed an order levying damages of Rs. 1,99,771.50 P. for the said period with 12% interest per annum. This was challenged in appeal before the tribunal. The appeal was allowed in part and the matter was remitted to the Commissioner for a fresh determination of the amount due. Pursuant to such remand, recovery proceedings were initiated and a sum of Rs. 1,99,771.50 P. was recovered from the petitioner, under protest, and the petitioner is before the Court, challenging these proceedings.
3. Shri [ENTITY], Senior Advocate appearing for M/s. Kasturi Associates for the petitioner would submit that the petitioner had voluntarily complied with the provisions of the Act, notwithstanding the order of Stay dated 4.1.1978 and when the matter was pending before the High Court, the second respondent could not have passed an order levying damages and interest in respect of the period, during which the petition was before the Court, as the non compliance, if any, was in. the belief that the petitioner was not liable and the question of paying contributions was determined only upon conclusion of the proceedings before this Court and therefore, there is no justification in the levy of damages and interest during the said period. He would further submit that on a overall view, it is possible to contend that the department has reopened the case after nearly 19 years, to initiate proceedings on the footing that there was default in paying the contribution from February 1977 to July 1978. Therefore, the authorities have acted arbitrarily without applicable of mind. Further., the authorities have proceeded to recover the amounts claimed even before determination of the same as directed by the Appellate Tribunal and he would submit that having regard to the law laid down by the Supreme Court in the case of [PRECEDENT]. , to contend that inordinate delay in the authorities seeking to recover the money purportedly under [SECTION] of the Act, was bad in law and would have to be struck down on that count.
4. Shri [ENTITY], Standing Counsel, for the respondent, would on the other hand submit that the pendency of the proceedings before this Court, challenging the Notification and on that footing to have refrained from making contribution in respect of the said period, was not a tenable contention, since ultimately, the challenge was rejected by this Court. On the face of it, therefore, the contribution had to be made on the date of determination, namely, as on 11.4.1988. The petitioner having taken its own time to make contribution, the authorities under the Act have proceeded in terms of the statutory provisions in levying the damages for the relevant period. There is no provision under the Act under which, the levy of damages could be, reduced under its discretion nor is there any provision for waiver, given the present circumstances. The authorities would be failing in their duty, if such damages are not levied on default. The question, whether the recovery is barred by limitation does not arise, as the Act does not prescribe any period of limitation for recovery of damages. And the counsel would further submit that in so far as the case in Hindustan Times Limited Supra, which is relied on by the petitioner is concerned, the very judgment lays down circumstances under which a party can claim that recovery proceedings would be hit by delay and laches limitation even though no period of limitation is prescribed. The petitioner not falling under any of those categories could not rely on the said judgment to hold that recovery is not possible.
5. On these rival contentions, the facts not being in serious dispute, the question of law whether in a situation such as this. Limitation even though not prescribed under the Act, could be applied. The judgment of the Supreme Court in the case of Hindustan Times Limited supra, lays down as follows:
21. It is true that a principle has been laid down in [PRECEDENT] while dealing with suo motu revisional jurisdiction that though there is no period of limitation prescribed for exercise of that power, still such a power must be exercise within reasonable time. The said judgment has been applied in matters relating to [SECTION] of the [ACT] in a large number of cases, which were all referred to recently in [PRECEDENT] . In our view, this line of cases cannot ordinarily apply to monies withheld by a defaulter, who holds them in trust.
While specifically dealing with the [SECTION] of the Act, the Supreme Court has held as follows:
22. The reason is that while in the above cases decided by this Court the exercise of powers by the authority at a very belated stage was likely to result in the deprivation of property which rightly and lawfully belonged to the person concerned, the position under [SECTION] of the Act of an employer is totally different. The employer who has defaulted in making over the contributions to the Trust Fund had, on the other hand, the use of monies which did not belong to him at all. Such a situation cannot be compared to the above line of cases which involve prolonged suspense in regard to deprivation of property. In fact, in cases under [SECTION] if the Regional Provident Fund Commissioner had made computations earlier and sent a demand immediately after the amounts fell due, the defaulter would not have been able to use these monies for his own purposes or for his business. In our opinion, it does not lie in the mouth of such a person to say that by reason of delay in the exercise of powers under [SECTION], he has suffered loss. On the other hand, the defaulter has obviously had the benefit of the "boon of delay" which "is so dear to debtors", as pointed out by the Privy Council in [PRECEDENT]. In that case, it was observed that equitable consideration were out of place in matters of limitation and the strict grammatical construction alone was the guide. Sir [ENTITY] stated:
Nor in such a case as this is the judgment-debtor prejudiced. He may indeed obtain the boon of delay, which is so dear to debtors, and if he is virtuously inclined there is nothing to prevent his paying what he owes into Court. (emphasis supplied) The position of the employer in case of default under [SECTION] is no different. And ultimately has laid down:
29. From the aforesaid decisions, the following principles can be summarised:
The authority under [SECTION] has to apply his mind to the facts of the case and the reply to the show-cause notice and pass a reasoned order after following principles of natural justice and giving a reasonable opportunity of being heard; the Regional Provident Fund Commissioner usually takes into consideration the number of defaults, the period of delay, the frequency of default and the amounts involved; default on the part of the employer based on plea of power-cut, financial problems relating to other indebtedness or the delay in realisation of amounts paid by the cheques or drafts, cannot be justifiable grounds for the employer to escape liability; there is no period of limitation prescribed by the legislature for initiating action for recovery of damages under [SECTION] The fact that proceedings are initiated or demand for damages is made after several years cannot by itself be a ground for drawing an inference of waiver or that the employer was lulled into a belief that no proceedings under [SECTION] would be taken; mere delay in initiating action under [SECTION] cannot amount to prejudice in as much as the delay on the part of the Department, would have only allowed the employer to use the monies for his own purposes or for his business especially when there is no additional provision for charging interest.
However, the employer can claim prejudice if there is proof that between the period of default and the date of initiation of action under [SECTION], he has changed his position to his detriment to such an extent that if the recovery is made after a large number of years, the prejudice to him is of an "irretrievable" nature; he might also claim prejudice upon proof of loss of all the relevant records and/or non-availability of the personnel who were, several years back in charge of these payments and provided he further establishes that there is no other way he can reconstruct the record or produce evidence; or there are other similar grounds which could lead to "irretrievable" prejudice; further, in such cases of "irretrievable" prejudice, the defaulter must take the necessary pleas in defence in the reply to the show-cause notice and must satisfy the authority concerned with acceptable material; if those pleas are rejected, he cannot raise them in the High Court unless there is a clear pleading in the writ petition to that effect.
In the present case on hand, the petitioner has taken recourse to proceeding to challenge the vires of the Notification, under which contribution was claimed from the petitioner. This was a right available to the petitioner under the [ACT]. The petitioner cannot be said to have defaulted on account of having taken recourse to the proceedings which has been entertained by this Court and has ultimately been decided only in the year 1995 and thereafter, the respondent has proceeded to determine the contribution as on 11.4.1988. Therefore, it can be said that any delay in making the contribution from 11.4.1988 could be held against the petitioner. Admittedly, the contribution as determined, has been paid over a period of two years between 11.4.1988 and 1990, The dates are not forthcoming from the record. However, it is not in dispute that this liability has been discharged during this period. There is no explanation forthcoming in so far as the authorities not having initiated proceedings to recover damages on this amount immediately thereafter. It is only after 1996, that proceedings have been initiated. It cannot therefore be said that the department was justified, on the principles laid down in the judgment of Hindustan Times Limited supra that the respondent could recover damages for the entire period ranging from 1977 to the date of the order determining the damages, that is, 30.8.2000 and thereafter, to proceed to recover the amount even before the determination, as directed by the appellate tribunal.
6. The proceedings would therefore have to be set at naught in view of this much-unexplained delay on the part of the respondent. However, in so far as the petitioner is concerned, it cannot be said that the petitioner was justified in having delayed the payment of contribution amount determined as on 11.4.1988, up to the date on which the amount of Rs. 1,06,249.50P. has been paid. The petitioner is certainly liable to pay damages for this period of delay between 11.4.1988 to 1990.
7. Accordingly, the respondent is at liberty to determine the amount of damages as the petitioner would be statutorily liabe to pay for the period between 1988-90 during which the amount of Rs. 1,06,249.50P. was paid and to deduct the same from the amount already said to have been recovered from the petitioner and to give the benefit of the balance to the account of the petitioner.