IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE V.K.MOHANAN THURSDAY, THE 28TH MAY 2009 / 7TH JYAISHTA 1931 OP.No. 4593 of 1999(V) -------------------------------- PETITIONER(S): ------------------------- 1. P.K.KARUNAKARAN, S/O. KARUMBAN, MADATHIL VEEDU, CHEEPUNKAL P.O., AYMANAM VILLAGE , KOTTAYAM. 2. M.S.SAJI KUMAR, S/O.SREEDHARAN, MAMPALATHU VEEDU, KODIMATHA, KOTTAYAM. BY ADV. MR.K.REGHU KOTTAPPURAM RESPONDENT(S): ------------------------- 1. THE CHIEF WELFARE FUND INSPECTOR, THE KERALA TODDY WORKERS WELFARE FUND BOARD, THIRUVANANTHAPURAM. 2. THE WELFARE FUND INSPECTOR, THE TODDY WORKERS WELFARE FUND BOARD, KOTTAYAM. ADV. SRI.K.K.BABU, SC,KTWWF BOARD SRI.A.K.JOHN, SC, KTWWF BOARD SRI.K.D.BABU,SC,KTWWFB(TODDY WORKERS WE FOR R1 & R2 THIS ORIGINAL PETITION HAVING BEEN FINALLY HEARD ON 28/05/2009, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: ORDER ON CMP. NO.7893/1999 IN OP. NO.4593/1999 DISMISSED 28.05.2009 SD/- V.K.MOHANAN, JUDGE APPENDIX PETITIONER'S EXHIBITS P1:- COPY OF THE FINAL DETERMINATION ORDER VIDE NO.K1/25,26/97-98 DT. 31.12.98. P2:- COPY OF THE CIRCULAR DT. 13.8.98 ISSUED BY THE 2ND RESPONDENT. P3:- COPY OF THE AMENDMENT NOTIFICATION VIDE NO.4059/LOG 12/96/LAW DT. 26.3.1996. P4:- COPY OF THE INTERIM ORDER OF STAY DT. 25.1.99 IN VMP. 3311/99 IN OP. 1999/99. P5:- COPY OF THE ANOTHER ORDER OF STAY DT. 5.2.99 IN CMP. NO.5141/99 IN OP. 3010/99. TRUE COPY P.S. TO JUDGE TSS V.K.MOHANAN, J. ---------------------------------------------- O.P. No.4593 OF 1999 ---------------------------------------------- Dated 28th May, 2009. JUDGMENT The first petitioner herein is one of the licencees to conduct Toddy Shop Nos.25 and 26 under the Kottayam Range during the financial year 1997-98 and it was the 2nd petitioner who actually run the said shops and paid wages and other benefits to the workers. It is an admitted case of the petitioners that they are bound to pay contribution towards welfare fund under the Toddy Workers Welfare Fund Act 1969 and the Toddy Workers Welfare Fund Scheme. It is also the case of the petitioners that they are liable to pay advance contribution before the 5th day of every succeeding month under section 8(A)(2) of the Act. In the above section it is incorporated that if the contribution is not paid on or before the due date, the Welfare Fund Inspector shall issue notice to the defaulters showing the amounts of arrears and if the amount is not paid within 7 O.P.4593/99 -:2:- days on receipt of such notice, it may be recovered. According to the petitioners, as per the 1969 Act and under section 9 therein, interest payable for the delayed payment is 9%. But on an amendment brought to section 9, it is made mandatory that interest under such circumstances will be at the rate of interest being levied in accordance with Kerala Abkari Act from time to time. According to the petitioners, the said amendment is against the structure, scope and frame work of Toddy Workers Welfare Fund Act and Scheme. Now the petitioners were served with Ext.P1 which was issued on the basis of Ext.P2 circular on the strength of the amendment brought under section 9 of the Act. Therefore they approached this Court by filing this Writ Petition with a prayer to quash Ext.P1 and P2 and also with a prayer to issue a writ of certiorari or any other appropriate writ or order or direction calling for the records of the case leading to amendment to section 9 of the Act by Act of 1996 and O.P.4593/99 -:3:- strike down the amended Section 9 of the Act of 1996. It is also prayed for a declaration that the levy of interest on the amount determined by the 2nd respondent under the Toddy Workers Welfare Fund can only be from the date of determination order and that there cannot be any retrospective penal interest for the belated payment allegedly under para 38(1) of the Scheme as it is done in Ext.P1. In short, all the contentions in this writ petition are raised on the legal ground that the amended section 9 is ultra vires of the Act and the same is not constitutionally sustainable. 2. During the hearing of the matter, the learned Standing Counsel for the respondents cited a decision of this court reported in Lalitha Sasi v. State of Kerala (2005 (4) KLT 957) and submitted that the question raised in this writ petition has already been considered by this Court and it has upheld the constitutional validity of Section 9 mentioned. O.P.4593/99 -:4:- 3. I have gone through the materials available on record and also the decision of this Court cited supra and also heard the counsels appearing for the parties. 4. In paragraph 2 of the above decision, this Court has held : “It is obvious from S.69 of the Abkari Act that Legislature for all practical purposes treats Rules and Notifications issued under the delegated powers as part of the statute and will have the same force of law as statutory provisions. xx xx xx Therefore, when the Legislature substituted S.9 of the Act incorporating interest rate from the Abkari Act, it should be assumed that the legislature intended R.7(30) of the Rules as part of the Abkari Act and it is the said Rule that is incorporated to the Act by reference. Any other hypothesis will make the amendment meaningless and the Court cannot assume that the Legislature made a futile exercise in the legislative process. Therefore, the argument of petitioners that R.7(30) of the Abkari Shops Disposal Rules is not part of Abkari Act, is rejected”. Besides the above, this court has further held that rate of interest for belated payment is a matter of O.P.4593/99 -:5:- legislative policy and this Court has no authority to fix uniform rate of interest in all similar statutes. 5. This Court further held in para 4 of the above decision: “The next ground raised by petitioners is against discrimination inasmuch as rate of interest in several other welfare legislations for belated payment is much less than 18% per annum made applicable under the impugned amendment. Petitioners have made specific reference to S.13 of the Abkari Workers Welfare Fund Act, which provides for interest for belated payment of welfare fund contribution for abkari workers who are employed in Foreign liquor shops and Bar Hotels at 12% per annum. It is further contended that the rate of interest under the Toddy Workers Welfare Fund Act for belated payment of contribution upto the amendment was only 9% per annum. Counsel appearing for respondents on the other hand contended that the rate of contribution for abkari workers is 10% as against 8% provided for toddy workers. I do not think this distinction will justify difference in rate of interest in regard to belated payment after default. The interest payable under S.9 of the Act is also for belated payment after default. However, the rate of interest for belated payment is a matter of legislative policy and this Court has no authority to fix uniform rate of interest in all similar O.P.4593/99 -:6:- statutes. The allegation of discrimination is also not established inasmuch as both statutes cover different kind of employees and beneficiaries though similar. Instead of a revision of interest for belated payment in the Toddy Workers Welfare Fund Act in line with the Abkari Workers Welfare Fund Act (S.13), I feel what is required is an upward revision of interest, in the Abkari Workers Welfare Fund Act for prompt compliance of statutory obligations. It is not known whether the Government is contemplating any such amendment to that statute which is quite old. The provision for interest for belated payment is mainly not for compensating the beneficiary organization for delayed payment, but essentially to act as a deterrent against delayed payment. It is to be noticed that S.8A of the Toddy Workers Welfare Fund provides for collection advanced contribution which is to be adjusted against final determination under S.8 of the Act. Moreover toddy shop contractors keep on changing on a year to year basis, and therefore delayed determination and recovery will lead to prejudice to the organization in as much as recovery itself may be out of question if undue delay happens. Therefore the provision for interest for belated payment should be deterrent and should act as a disincentive against delay in payment. If the petitioners argument is accepted, and interest is reduced the same will only encourage default and delay in payment which will defeat the objects and purpose of the Act. Therefore, I feel the legislature O.P.4593/99 -:7:- rightly increased the old rate to 18% for early recovery. Moreover it is to be noticed taxing statutes like Income Tax Act and Sales Tax Act provide for rate of interest for belated payment ranging from 18% to 24% per annum. Therefore, I am of the view that interest for belated payment after default should never be a lower rate and should be kept deterrently high to encourage compliance with statutory provisions and should not be low to act as a incentive for default. In the circumstances, petitioners challenge against increase of interest to 18% as arbitrary and discriminatory is only to be rejected and I do so”. In the light of the above decision, I am of the opinion that there is no merit in the writ petition and accordingly the same is dismissed. V.K.MOHANAN, JUDGE kvm/- O.P.4593/99 -:8:- V.K.MOHANAN, J. O.P.NO.4593 OF 1999 JUDGMENT Dated: 28.5.2009.