1 BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT DATED: 09.09.2011 CORAM: THE HONOURABLE MR.JUSTICE VINOD K.SHARMA W.P.(MD).No.5924 of 2011 And M.P.(MD).No.1 of 2011 A 2731, The National Co.Op. Sugar Mills Ltd., B.Mettupatti - 625 502 Vadipatty Taluk Madurai District Tamil Nadu State through its Special Officer : Petitioner Vs. 1. The Presiding Officer Employees Provident Fund Appellate Tribunal Scope Minor, Core - II, 4th Floor Lakshmi Nagar District Centre Lakshmi Nagar Delhi 110 092 (East Delhi) Camp Coimbatore 2. The Assistant Provident Fund Commissioner Employees' Provident Fund Organization Regional Office, Lady Doak College Road Madruai - 625 002 3. The Recovery Officer Employees' Provident Fund Organization Regional Office, Lady Doak College Road Madurai - 625 002 : Respondents PRAYER: Writ Petition is filed under Article 226 of the Constitution of India praying to issue a Writ of Certiorarified Mandamus calling for the records from the file of the first respondent herein in ATA No. 464(13) 2007 dated 28.12.2010 and to quash the same and also direct the third respondent to refund the collected amount from the petitioner's Bank Account. For Petitioner : Mr.P.Chandrabose For RR 2 & 3 : Mr.G.R.Swaminathan R1 : Tribunal O R D E R The petitioner has challenged the order passed by the Assessing Officer, under Section 14 (B) of the Employees' Provident Fund and Miscellaneous Provisions Act 1952, [herein-after referred to as the "Act"] and that of Employees Provident Fund Appellate Tribunal. https://hcservices.ecourts.gov.in/hcservices/ 2 2. The petitioner is the Co-operative Sugar Mills situated in the backward area of Madurai District. Keeping in view of the continuous losses, the petitioner applies for permission for layoff under Section 25 M (1) of the Industrial Disputes Act 1947. The permission was granted for layoff vide order, dated 28.06.2003. The layoff was also held to be justified vide award, dated 28.06.2006 by the learned Industrial Tribunal, Chennai. The employees were paid 50% of the wages as layoff compensation. 3. On account of non deposit of contribution by the petitioner, the proceedings under Section 7A were taken, in which, the layoff compensation paid by the petitioner was also taken to be part of wages. The petitioner in compliance with the order passed by the Assessing Officer deposited the said amount. 4. Thereafter, the proceedings under Section 14(B) of the Act were initiated against the petitioner, on the ground of delay in deposit of contribution, wherein a positive stand was taken that the damages under Section 14(B) could not be imposed on the amount paid as layoff compensation as it did not form part of the wages. 5. In support of this plea, the petitioner placed reliance on the Commissioner's Circular, dated 13.10.1957, excluding layoff retrenchment compensation as forming part of basic wages. This contention was rejected by recording that as this ground was not raised in the proceedings under Section 7A of the Act. It is not open to the petitioner for the first time to raise this plea in a proceeding under Section 14-B of the Act. 6. The learned counsel for the petitioner challenged the impugned order on the ground that the proceedings under Section 14-B are not executory proceedings, as held by the authorities, but independent proceedings, which are to be adjudicated, in the quasi judicial manner. The authority is to apply its mind to the facts of the case, and thereafter, come to a conclusion as to whether the damages are to be levied or not. 7. The impugned order on the face of it, is perverse and not sustainable in law. 8. The question to be decided by the authorities, was "whether layoff compensation falls within the definition of "wages", so as to attract the action for non deposit of contribution, and to impose damages". At present this Court is not concerned with the order passed under Section 7A, as it has already attained finality having not been challenged. 9. At the same time, once the circular issued by the Commissioner, specifically excluded the layoff compensation from basic wages, it was not open to the respondent, to impose damages under Section 14(B) of the Act on the amount deposited towards contribution under Section 7A of the Act. The claim of contribution on lay off compensation had no legal backing, therefore the delay in deposit of the contribution would not attract Section 14(B) of the Act. The damages can only be imposed for delay in deposit of contribution which are legally due, and not those which are paid wrongly though were not payable. https://hcservices.ecourts.gov.in/hcservices/ 3 10. The learned counsel for the respondent, contended that the circular issued by the Commissioner excluding layoff compensation from wages cannot be the basis to challenge order under 14-B of the Act as the layoff compensation falls under definition of basic wages under Section 2 (B) of the Act. 11. This contention again is misconceived, as Section 2(B) does not include layoff compensation on wages. The circular issued by the Commissioner, was binding on the authorities under the Act. The layoff compensation therefore cannot attract the provisions of Section 14(b) of the Act. 12. The Learned counsel for the respondent also contends, that while reckoning the service of the employees, the period of layoff is also reckoned as the service therefore, the layoff compensation forms part of the wages, as it will amount to the remuneration paid for the service, as the employees is not required to perform the duty actually, as it is for employer to get or not to get work from the employee. Though the proposition canvassed can not be disputed, but at the same time the amount which does not form part of wages can not attract Section 7-A or 14-B of the Act. The proposition when tested in view of provisions of the Act, it cannot be accepted, as the contribution are to be paid on the basic wages, which does not include layoff compensation, in view of the circular by the Department. 13. For the reasons stated herein above, the impugned orders on the face of it are arbitrary and out come of colourable exercise of powers, therefore, are hit by Article 14 of the Constitution of India, thus, cannot be sustained in law. 14. Consequently, the Writ Petition is allowed. The impugned orders are set aside. 15. Connected Miscellaneous Petition is closed. No costs. SD/- Assistant Registrar (AE) /True copy/ Sub Assistant Registrar(C.S) To 1. The Presiding Officer, Employees Provident Fund Appellate Tribunal Scope Minor, Core - II, 4th Floor, Lakshmi Nagar District Centre Lakshmi Nagar, Delhi 110 092 (East Delhi) Camp Coimbatore 2. The Assistant Provident Fund Commissioner Employees' Provident Fund Organization Regional Office, Lady Doak College Road, Madruai - 625 002 3. The Recovery Officer, Employees' Provident Fund Organization Regional Office, Lady Doak College Road, Madurai - 625 002 vsg W.P.(MD).No.5924 of 2011 And M.P.(MD).No.1 of 2011 09.09.2011 TR : 26.09.2011: 3p/4c https://hcservices.ecourts.gov.in/hcservices/