1 W.P.3026.11 IN THE HIGH COURT OF JUDICATURE AT BOMBAY BENCH AT AURANGABAD WRIT PETITION NO. 3026 OF 2011 Water & Land Management Institute(Walmi) Post Box No.504 Kanchanwadi,Aurangabad Taluka and District Aurangabad Through its Administrative Officer. ...PETITIONER VERSUS 1. The Union of India, Through its Secretary, Ministry of Labour, Shrambhavan, New Delhi. 2. The Assistant Provident Commissioner, Sub-Regional Provident Fund Office, Aurangabad, Taluka and District Aurangabad. ...RESPONDENTS ... Mr.R.S.Deshmukh,Advocate for petitioner. Mr.K.B.Choudhari,Advocate for respondent No.2 ... CORAM: S.S. SHINDE, J. DATE : 14TH SEPTEMBER, 2011 ORAL JUDGMENT : 1. Rule. Rule made returnable forthwith. With consent of the learned counsel for the parties, the matter is taken up for final hearing at the stage of admission. Heard learned counsel 2 W.P.3026.11 appearing for petitioner and Learned counsel appearing for the respondent No.2. 2. Learned counsel appearing for petitioner argued on the basis of written arguments, which are filed on record. It is submitted on behalf of petitioner that when the hearing of the appeal has taken place at Camp Office, Mumbai, the impugned Order conveys that the hearing has taken place at Nashik and when the Appeal was argued by the Advocate for petitioner Institution, the name of its employee Mr. P.D. Kulkarni is being shown as Advocate for appellant, which attitude and approach shows as to how mechanically and casually the appeal is heard and decided. . It is further submitted that the learned Lower Appellate Tribunal has passed a very cryptic impugned order, which is absolutely nothing to do with the merits and grounds and contentions raised in the Appeal Memo, and thus, has miserably failed to pass the reasonable order. He further submits 3 W.P.3026.11 that, from the impugned order it can be seen that, the learned lower Appellate Tribunal has not even taken pains to go through the detailed contentions and grounds raised by the petitioner Institution in its Appeal Memo, but has passed the impugned order in a haste and also in a most casual manner. . It is further submitted that the learned lower Appellate Tribunal has referred to a reported decision while passing the impugned order, which in fact, has no application to the facts and circumstances in the case in hand, and thus, has resulted into great illegality and perversity. It should have been appreciated that the first and foremost thing to be considered is that the petitioner Institution has established a Trust for the management of its funds and it is also a registered society receiving grant-in-aid from the Government of Maharashtra, which does not include any contribution towards provident fund, and therefore the petitioner-Institution is deemed to be exempted from the cover of the said Act. 4 W.P.3026.11 . It is further submitted that the petitioner Institution on its own was contributing towards the provident fund and was also implementing a scheme, which is more beneficial than the scheme implemented under the said Act. Therefore, it cannot be said that there is any violation of the beneficial provisions of the said Act, and therefore, no damages can be recovered from the petitioner Institution instead the petitioner Institution has suffered losses because of premature encashment of the security deposits invested by them as per the prescribed plan of the Central Government. It should have been further considered that imposition of damages is a quasi- judicial function. . Learned counsel appearing for petitioner further submitted that office of Respondent No.2- Assistant Provident Fund Commissioner, Aurangabad had not even brought it to the notice of the petitioner Institution for a period of 12 years 5 W.P.3026.11 since its inception that it was brought within the purview of the said Act, and therefore, respondent No. 2 cannot even consider the initial period of 11 years while considering the case of damages. It was brought to the notice of the respondent NO.2 that the petitioner Institution is exempted from the purview of the said Act. However, the authority did not even guide the petitioner Institution to approach the State Government to specifically exempt it from the purview of the said Act and due to lack of proper guidance, the petitioner Institution could not take timely action and they cannot be charged with liability such as damages in spite of due diligence on their part. . It is further submitted that, it should have been appreciated by the learned lower Appellate Tribunal that the office of the respondent No.2- Assistant Provident Fund Commissioner, Aurangabad has levied damages in accordance with section 14-B of the said Act, as it stood prior to its 6 W.P.3026.11 amendment by Act 33 of 1988. When the proceedings were initiated for the first time only in the year 1994 and the amendment affected both substantive right as well as procedural law, whereas the law contemplates that the levy of damages is to be governed by the amended provisions of Section 14-B read with para 32-A of the said Act and therefore, the order dated 22.01.2003 deserves to be quashed and set aside. . It is further submitted that, section 32 contemplates that if there is delay in depositing provident fund to the authority, then the authority may recover from the employer by way of penalty, damages at the rates prescribed under the said table below section 32-A. The Petitioner Institution is entitled to the benefit under Section 16(1) (b) & (c) because it is an establishment under the control of the State Government and further that it is implementing a scheme of its own whereby the employees of the petitioner Institution are entitled to the benefit 7 W.P.3026.11 of contributory provident Fund. . It is further submitted that, the office of respondent No. 2- Assistant Provident Fund Commissioner, Aurangabad has failed to appreciate the bonafide steps taken by the petitioner Institution in respect of transferring the amount of contribution to the respondent No.2, and thereby has erroneously passed the impugned order It ought to have held that the petitioner Institution was pursing the proposal of applying the State Pension Scheme to the employees of the petitioner Institution, which was rejected on 31.05.2011, and thereafter immediately the Governing Council of the petitioner Institution has taken decision to transfer the amount to the respondent and accordingly after seeking guidance from the Assistant Commissioner, Bombay E.P.F. regarding transfer of amount invested in securities as well as in financial institutions as the prescribed by the Central Government, the Petitioner Institution has immediately transferred 8 W.P.3026.11 the total amount towards the office of the respondent No.2 - Assistant Provident Fund Commissioner, Aurangabad, and as such, there was no any deliberate or intentional delay on the part of the petitioner Institution. . It is further submitted that, the very purpose of imposing damages under the Act is to penalize the employees who have mis-utilized the funds collected towards the Provident Fund and thereby has caused loss to the employees. However, in the present case, the petitioner Institution has invested the amount in the Government securities and financial institutions as prescribed by the Central Government from time to time and interest received was adjusted in the accounts of employees. Thus, the office of the respondent NO.2-Assistant Provident Fund Commissioner, Aurangabad has failed to consider that no loss is suffered by the beneficiaries of the funds and also there was not a single complaint from the employees. 9 W.P.3026.11 . It is further submitted that the office of the respondent NO.2 - Assistant Provident Fund Commissioner, Aurangabad without application of mind has mechanically passed the order and without any basis, erroneously observed that the beneficiaries have suffered the loss due to delayed payment. It ought to have held that the office of the respondent No. 2 - Assistant Provident Fund Commissioner, Aurangabad has initiated the action under section 14-B in the year 2001 regarding the delayed payment of 1982 and therefore, on the ground of initiating action for delayed payment under section 14-B stands vitiated on the ground of delay. It ought to have held that the damages imposed by the office of the respondent NO.2-Assistant Provident Fund Commissioner, Aurangabad are exorbitant and the petitioner Institution runs on the Government aid, and if such a huge amount of damages is to be paid, total functioning of the institution will be stalled and thereby the employees will have to 10 W.P.3026.11 suffer. . It is submitted that, learned lower Appellate Tribunal ought to have given an anxious thought to the fact that the petitioner Institution was brought within the net of the said Act vide covering letter dated 29.03.1994 w.e.f.01.01.1983. The learned lower Appellate Tribunal has erred in observing that even after 01.01.1983, neither the applicability was challenged nor Provident Fund dues were remitted by the petitioner Institution and hence the amount assessed by the office of the respondent NO. 2 - Assistant Provident Fund Commissioner, Aurangabad vide order dated 30.10.2001 was justifiable and which was also not immediately paid, but should have taken the serious note of the fact that the determined amount was in fact paid against the Notice on 22.01.2001. . It is submitted that the learned lower Appellate Tribunal ought to have appreciated that 11 W.P.3026.11 the Appeal, which is preferred before it is under section 7-1 of the said Act and the schemes framed thereunder against order under section 14-B of the said Act and not an Appeal, which is directed against an order under section 7-A of the said Act. . It is further submitted that the learned lower Appellate Tribunal has in fact committed a great illegality in not granting request of the petitioner Institution for waiver of deposit under Section 7-O of the said Act read with Rule-7(3) of the said Rules. Though, this Hon’ble High Court has been directed to consider the case of the petitioner Institution afresh, the office of the respondent NO.- 2 Assistant Provident Fund Commissioner, Aurangabad has passed the order dated 27.04.2005 under section 14-B of the said Act directing to pay huge amount of damages, mechanically without application of mind, casually and by taking a too technical approach, which has resulted into great miscarriage of justice. 12 W.P.3026.11 . It is further submitted that, the lower Appellate Tribunal ought to have seen that the petitioner Institution has in fact deposited total amount of Rs.4,18,40,688/- towards the damages for not depositing the said funds within time. The learned lower Appellate Tribunal seems to have over looked the crucial fact that the petitioner Institution established by the State Government for imparting training to the Engineers of Irrigation Department of the State Government and is in fact functioning on the basis of grand-in- aid issued by the State Government. . It is further submitted that, the learned lower Appellate Tribunal seems to have not taken into account that the petitioner Institution is not a profit making institution and has no source of income from which it can arrange to deposit the amount as directed by the office of the respondent No.2 Assistant Provident Fund Commissioner, Aurangabad towards the damages. The learned 13 W.P.3026.11 lower Appellate Tribunal failed to see that if the said amount of damages is to be deposited, the petitioner Institution will have to make the arrangement for necessary aid to be given by the State Government for administrative purposes, and due to which there is every likelihood that the whole administration would be collapsed. Hence, he prayed to allow the petition. 3. Learned counsel appearing for respondent also filed written argument on record. Learned counsel appearing for respondent No.2 submitted that the petitioner establishment has been brought within purview of the Employees Provident Fund and Misc. Provisions Act, w.e.f. 1st October, 1983. The petitioner-establishment has committed default from October 1983 to May 2001 in not remitting the provident fund dues. It is submitted that answering respondent, in view of the belated remittances of the provident fund dues concluded the inquiry initiated under sections 7Q and 14B of the Act and fixed the liability to pay an amount 14 W.P.3026.11 of Rs.4,61,14,086/- for the period from October 1983 to September, 2000. . It is further submitted that there is absolutely no dispute about the applicability of the provisions of the Act to the petitioner establishment. Moreover, there is no dispute about the belated remittances of the provident fund dues by the petitioner establishment, and therefore, the defaulting establishment is liable to pay the interest and damages as indicated above. It is further submitted that plea raised by the petitioner – establishment that it has applied to the Pension Scheme sponsored by the State Government and the same has entailed in the delayed remittances of the provident fund dues under the provisions of the Act is liable to be rejected in view of the fact that the provisions of the Act are to be mandatory in nature and those required to be complied with in its true letter and spirit. 15 W.P.3026.11 . It is further submitted that the learned Employees Provident Fund Appellate Tribunal, New Delhi has inter alia correctly observed in para NO.6 of the impugned order dated 11.10.2010 that the applicability of the Act is not disputed. It is also not in dispute that appellant in spite of depositing the money with the Provident Fund deposited the same in the trust and applied for exemption from the Scheme. No document was filed to show that the appellant is in fact exempted from the purview of the Act. Mere filing of the petition is not sufficient to absolve the appellant from its liability. According to the learned Counsel for the respondent, the intention of the legislature behind introducing section 14-B of the Act levying damages has been elaborately discussed by the Hon’ble Supreme Court in the case of Organo Chemicals Industries & another Vs. Union of India and ors. reported in AIR 1979 SC.1803, therefore, this Court may not interfere in the impugned judgment and order. 16 W.P.3026.11 4. Pursuant to the order dated 6th September, 2011, the petitioner has filed affidavit stating therein that the petitioner undertakes to deposit Rs.1,00,00,000/-(Rupees One Crore) within four weeks i.e. on or before 03.10.2011 with the office of respondent No. 2 i.e. The Assistant Provident Commissioner, Sub-Regional Provident Fund Office, Aurangabad. 5. I have given due consideration to the submissions of the learned counsel appearing for the appellant and respondent NO.2, I am of the considered view that order passed by the Appellate Authority cannot be sustained, since it appears that the said order is passed without calling record and proceedings from the respondent- Authority. The various contentions were raised by the appellant before the Tribunal, however, it appears that approach adopted by the appellate authority was mechanical and casual. The order passed by the Appellate Tribunal is very cryptic 17 W.P.3026.11 and really does not deal with merits of the matter. It appears that, the order passed by the Appellate Tribunal is in haste and important points raised by the appellant has not been dealt with. The contention of the appellant that, office of the respondent No.2- Assistant Provident Fund Commissioner, Aurangabad had not even brought it to the notice of the petitioner-Institution for the period of 12 years since its inception that, it is brought within purview of the said Act, is also not considered by the Tribunal. There are other important contentions which are raised by the petitioner. It is not necessary to repeat those contentions. Suffice it to say that the counsel for petitioner has brought to the notice of this Court the various contentions raised by appellant, which are recorded herein before. 6. The right to appeal is valuable right of the party. Therefore, party to the appeal would certainly expect that, the important contentions 18 W.P.3026.11 raised before Tribunal should be dealt with in accordance with law. However, in the present case as stated earlier, the Tribunal has not considered various contentions raised by the appellant and passed cryptic order, which in my considered opinion cannot be sustained, therefore, for the reasons aforesaid, the impugned order is quashed and set aside. The petition is allowed to above extent subject to deposit of Rs.1,00,00,000/- (Rupees One Crore) by the petitioner with respondent NO.2 on or before 3rd October, 2011. It is needless to mention that the amount already deposited, if any, by the petitioner with the authorities and also Rs.1,00,00,000/- (Rupees One Crore), which will be deposited by the petitioner, will remain with authorities till disposal of the appeal. The Appeal being No. being ATA No.440(9)/2005 is restored to its original file before Employees Provident Funds Appellate Tribunal, camp at Nashik. Appellate Authority to dispose of the appeal as expeditiously as possible within six months from today. It is made clear 19 W.P.3026.11 that this Court has not expressed any opinion on merits and the parties are free to agitate all contentions on merits before the Appellate Authority. 7. Rule is made absolute in the above terms and the petition is allowed to above extent. The Civil Application, if any, stands disposed of accordingly. Sd/- [S.S. SHINDE, J.] MTK