IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE T.R.RAMACHANDRAN NAIR TUESDAY, THE 8TH APRIL 2008 / 19TH CHAITHRA 1930 OP.No. 31085 of 2001(A) ----------------------- PETITIONER: ------------------- THE PALAKKAD DISTRICT CO-OPERATIVE BANK LTD; PALAKKAD, REP: BY ITS GENERAL MANAGER. BY ADV. SRI.S.M.UNNIKRISHNAN SRI.H.SIVARAMAN RESPONDENTS: ---------------------- 1) UNION OF INDIA, REP: BY THE SECRETARY TO GOVERNMENT, MINISTRY OF LAW, JUSTICE AND COMPANY AFFAIRS, GOVERNMENT OF INDIA, NEW DELHI. 2) THE REGIONAL PROVIDENT FUND COMMISSIONER, SUB REGIONAL OFFICE, EMPLOYEES PROVIDENT FUND ORGANISATION, BHAVISYA NIDHI BHAVAN, PB NO.1806, ERANCHIPALAM (PO), KOZHIKODE:6. BY ADV. SRI.MATHEWS J.NEDUMPARA, ADDL.CGSC SRI.THOMAS MATHEW NELLIMOOTTIL,SC, P.F. THIS ORIGINAL PETITION HAVING BEEN FINALLY HEARD ON 08/04/2008, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: OP.No. 31085 of 2001(A) Order on CMP.No.50585/2001 in OP.No.31085/2001-A. Dismissed. 8.4.2008. Sd/- T.R.Ramachandran Nair, Judge. APPENDIX Petitioner's Exhibits:- P1: Copy of the Judgment in OP.No.4400/1996-W dated 1.4.1998. P2: Copy of the order of stay passed by this Hon'ble Court dated 1.3.1996. P3: Copy of the show cause notice dated 15.5.2001 from the 2nd respondent. P4: Copy of the statement damages levied from the 2nd respondent dated 29.8.2001. P5: Copy of the representation dtd.14.9.2001. Respondents' Exhibits:- Nil. ( true copy ) PA to Judge. kvs/- T.R.RAMACHANDRAN NAIR, J. ======================= O.P.No.31085 of 2001-A. ======================= Dated this the 8th day of April, 2008. J U D G M E N T The petitioner is challenging Ext.P4 by which the Regional Provident Fund Organisation ordered payment of damages to the tune of Rs.3,38,898/- by invoking Section 14B of the Act. 2. The petitioner is a District Co-operative Bank. The Employees Provident Fund and Miscellaneous Provisions Act was amended by Ordinance No.13/1995 which was issued as per notification dated 16.11.1995. As a consequence of the amended provision a new clause was introduced which required contribution to be payable by the employers to the newly created pension fund. The above amendment was challenged by various unions of the district Banks in Kerala including the unions functioning in the petitioner Bank. Ext.P2 is the interim order O.P.No.31085 of 2001-A. -: 2 :- passed by this Court in CMP.No.7768/1996 staying the operation of the ordinance. The petitioner is the 13th respondent therein. There were interim orders in force in other writ petition also. 3. It is admitted on both sides that the stay was vacated on 5.8.1997. Ext.P1 is the judgment in OP.No.4400/1996 rendered on 1.4.1998. After the stay was vacated the petitioner sought legal advice from the Advocate General as per letter dated 21.8.1997 and based on the advice received the petitioner remitted the entire contribution to the pension fund for the period from 16.11.1995 to 30.11.1997 on 12.1.1998. The total amount thus paid stood as Rs.12,30,703/-. Long after the Provident Fund Organisation by a notice dated 15.5.2001 proposed to impose damages under Sec.14B of the Act. The petitioner submitted a detailed objection by way of Ext.P5 to the above show cause notice. A reading of Ext.P5 would show that the petitioner pointed out therein that in the light of the order of stay issued by this Court no remittance was made during the period in which the interim order was in force. After the order O.P.No.31085 of 2001-A. -: 3 :- of stay was vacated the amount was paid. 4. Heard both sides. The learned counsel for the petitioner submitted that the entire action taken under Sec.14B cannot be sustained in the light of the factual position as noted above. By referring to Sec.14B of the Act, the learned counsel for the petitioner brings to my notice that there cannot be an automatic imposition of damages especially in a mechanical manner. If, as a matter of fact, the explanation offered by the petitioner was a possible one, nothing prevented the authority from dropping the proposal to impose the damages. It was pointed out that unlike an establishment doing other business, the petitioner is a co-operative Bank which is serving the public. 5. The learned counsel also relied upon the decisions of this Court in Cannanore Shop v. Regional P.F. Commissioner (1992 (2) KLT 95), Mohammed Haneefa v. Union of India (1978 KLT 143) and Regional Provident Fund Commissioner v. Bharath Plywood & Timber Products (P) Ltd. (1979 KLT 653) to O.P.No.31085 of 2001-A. -: 4 :- contend that the authority is required to apply its mind to the facts and circumstances of each case rather than imposing damages in a mechanical manner. 6. The order passed by the Employees' Provident Fund Appellate Tribunal in ATA.No.339 (7) 2003 involving another District co-operative bank was also placed for perusal. Therein, in similar circumstances damages which were imposed by the authority for the period covered, by the interim order of stay of operation was modified and the damages have been revised by 40%. 7. The Standing Counsel for the Organisation relied upon the decision of the Apex Court in Konoria Chemicals & Industries Ltd. v. U.P.State Electricity Board (1997 (5) SCC 772) to contend for the position that even if there was an interim order passed by this Court liability to pay damages cannot be disputed. The learned Standing Counsel relied upon para.11 of the above judgment. O.P.No.31085 of 2001-A. -: 5 :- 8. The facts leading to this case are not disputed. The liability to pay contribution arose consequent of an amendment of the Act. The said amendment was under challenge in various writ petitions before this Court and the order of stay was vacated only on 5.8.1997. Therefore, for the period covered by the interim order of stay, it cannot be said that the petitioner was a defaulter. Going by the dictum laid down in Cannanore Shop v. Regional P.F. Commissioner (1992 (2) KLT 95) the authority was bound to consider the relevant facts, whether the employer is in the habit of making payment regularly, nature, number and frequency of the defaults, the period of the delay involved, amounts involved and all other consideration have to be taken into account. The authority is required to apply its mind on the facts and circumstances of the case. 9. In Mohammed Haneefa v. Union of India (1978 KLT 143) this Court held that in quantifying damages under Se.14-B, the concerned authority has to pay due regard to the various O.P.No.31085 of 2001-A. -: 6 :- circumstances under which the default was committed. Mechanical manner of calculation of damages without taking into account the circumstances under which the petitioner could not make the payment in time is not warranted. Tested in the light of the above legal principles, I am of the view that the petitioner Bank cannot have any liability for payment of damages during the period the interim order of stay passed by this Court was in force. The contention raised in the counter affidavit, that the petitioner has obligation to pay damages, irrespective of the order of stay is therefore not sustainable. It cannot be disputed that the contribution payable for the period from 16.11.1995 to 30.11.1997 was remitted on 12.1.1998. The Organisation was also a party to the writ petitions before this Court. These facts ought to have been appreciated in the correct legal perspective while deciding imposition of damages. The imposition of damages is only compensatory and it cannot be said to be a penalty at all. Therefore Ext.P4 on that ground cannot be sustained and it is O.P.No.31085 of 2001-A. -: 7 :- declared that the petitioner cannot be made liable for damages during the period the interim order of stay was in force in the writ petition. 10) Then the further question is whether by the remittance of contribution for the period 16.11.1995 to 30.11.1997 on 12.1.1998, the petitioner can be said to be liable for damages ie. for the period from 5.8.1997 to 12/1997. The petitioner has got a case that the petitioner was having correspondences with the then Advocate General to get advice as to whether the amount can be remitted. It is also stated that after getting legal advice the amount was remitted on 12.1.1998. There is no finding in Ext.P4 about the sufficiency of the said explanation. It is clear that the explanations especially for the delay from 5.8.1997 to 12/1997 should have been considered by the authority. 11) Ext.P4 is therefore quashed. It is declared that the petitioner is not liable to pay damages for the period upto 5.8.1997, the date on which the interim order of stay was vacated by this O.P.No.31085 of 2001-A. -: 8 :- Court. Regarding the liability if any for imposition of damages from the said date till December, 1997, the first respondent is directed to reconsider the matter. Since Ext.P4 has already been quashed the authority shall issue a fresh notice, in the event of any proposal to impose damages for the period from the date stay was vacated till 12/1997. The petitioner shall be given adequate opportunity to submit explanation also in the matter. With the above directions, the writ petition is disposed of. T.R.RAMACHANDRAN NAIR, JUDGE. kvs/-