^^ COURT OF CHHATTJSGARH AT BILASPUR W.P.No.17of1996 PETmONER: M/s Chhotaial Keshavram Cow Brand Bidl Manufacturer. Versus RESPONDENTS: Union of india and others. ORDER FOR CONSIDERATiON MR. JUSTiCE R,,N. CHANDRAKAR 3 ^r^y t. Sd/- JUDGE 20-4-2009 Sd/- R.N. Chandrakar Judge POST FOR ORDER ON ^ f^PRIL. 2009 \ 'i Sd/- Dhirendra Mishra Judge :-ffr^^^ u 9% COURT OF CHHATTISGARH AT WLPJMa17of1996 PETiTiONER: M/s Chhotala! Keshavram Cow Brand Bldl Manufacturer, Kamtee Line, Rajnandgaon, a partnership firm registered under the provisions of indlan Partnershjp Act, 1932, through its partner iVlanoj Kumar Patel. Versus RgSPQNDE^NTS: 1. 2. 3. 4. Union of Indla, through the Secretary, iViinlstry of Labour, New Deihi. The Centrai Provident Fund Commissioner, New Delhl. The Regional Provident Fund Commlssloner-li (Shri J.K. Koli), Madhya Pradesh, indore. Shri K.A. Dwivedi, Regiona! Provldent Fund Commissloner and Recovery Ofricer, Madhya Pradesh, indore. Present: Shri Parag Kotecha, counsel for the petitioner. Shri S.K. Berwai. Centra! Govt. Standing Counse! for respondent No.1 . Shri Pradeep Saxsna, counse! for respondents No.2 and 3. Dlyjs|on._Be?iGh: Hon. Shri Dhirendra_M»shra._& Hon. Shri R,N. Chandrakar. JJ, OR D E R (Passed on ^ f+~Aprii, 2009) The foiiowlng order ofthe Court was passed by Dhlrendra Nishra, J. i. The petltioner by the instant petition has prayed for the following substantla! reiiefs: "(1) The Hon'bie Court be pieased to quash the order dated 18-12- 1995 passed by the respondent No.3 ^document No-15) by issuing a writ of certlorari. ^ Ai (2) The Hon'bSe Court be pieased to order striking down paragraph 32-A of Employees Provident Fund Scheme,1952, as inserted by Empioyees Provident Fund (Second Amendment) Scheme, 1991, published In Gazette of indla, vlde notifjcation No.GSR- 521, dated 16-8-1991." 2. The case of the petltloner, in brief, Is that the petltioner flrm 's engaged in the buslness of manufacturing Bidis. The State Government vide notiflcation dated 17-11-77 made the provjsions of Empioyees Provldent Fund and MIscesianeous Provisions.Act, 1952 (forshort 'the A.ct'5 appSicabie to the Bldl Industries aiso. The petltioner as wel! as some others engaged In manufacturing of Bidj Impugned the above notification by fliing petitions Nos.3605 to 3609 of 1978 before the Supreme Court,. The Supreme Court passed interim order restrainlng the respondents from Implementlng the provlsions of the Provident Fund Scheme in respect of Home Workers. Respondent Mo.1 vide his communlcatson dated 21st Novembsr, 1978 Informed the President of Bldi Udyog1 Sangh thaf'the Court has restrajned from 'mplementlng the provlsions of the Provident Fund Scheme In: respect of Bi-di industries. !t Is, therefore, proposed to awalt the declslon of the Supreme Court. In vlew of the above fact, the Act was not impiemented by the Qmployers and the provident fund was neither coliected from the Bidi workers nor the contributlon was deposlted by the empioyers. However, the writ petitlons VA/ere dlsmissed on 25-9-1'985. 3. To resoive the probiem about arrears of dues towards the provldent fund from June, 1977 to September,1985, a tripartlte meetlng between Vne repressntatives of the employers, workmen and the officers of the Provldent Fund Commissionerwas.held underthe Chairmanshlp ofthe / / v^ Union Labour Secretary on 2-9-1987. As per ths minutes of the meetlng, arrears were to be deposlted In 48 Instaliments after one month from the date of flnsl assessment of the dues. The petltjoner foltowlng the decision taken in tripartlte meeting started deposlting the dues from OGtober, 1985. A demand of a sum of Rs.4,51,130/- towards the Provident Fund dues was raised on 28-10-198.8 wjthout adjusting the amount aiready deposlted by the petitioner. In these clrcumstances, the petitloner flled M.P. No.3814/1988 In the Hlgh Court and Interlm order was passed in hls favour whereby the petitioner.was directed to pay Rs.10.000/- every month from December, 1988 onwards towards the amount under demand. !n response to further demapd raised by the department, the petitioner communicated the CQmmissiQner, Regionai Provident Fund Offlce; Jndore that he has already dsposlted Rs.12,65,488/- and also annexed the details of payment through Bank chaJlan. H'owever, the petltioner was again sen/ed wit'n a show cause notice of Document-13 dated 8-9-1994 caliing upon him to show cause as to why pena'lty and damages should not be imposed for the delay In depositing the Provident Fund. The petitioner replled to the above show cause notice Issued under Section 14-B ofthe EPF Act. on 15-2-1995. However, the Regiona! Provident Fund Commissloner vide impugned order dated 18-12-1995 imposed damages of Rs.,3,40,739/- under Section 14-B of the Act for the delay 'n deposltlng the Provident Fund for a period from June,1977 to February1993. 4. At the outset, Shri Parag Kotecha, iearned counse! appearing for the petltioner submitted that he is not pressing his chaltenge to the ^\ ConstJtutlona! Vaiid'ty of para 32-A of the Employees' Provident Funds Scheme, 1952, as inserted by the Emp!oyees Provident Funds (Second Amendment) Scheme, 1991, in view of the judgment of the Hon'bie Supreme Court in the matter of Organo Chemica! industries and another Versus Unlon of Sndla and others1 whereby Constitutiona! Validity of Sectton 14-B ofthe Act has been upheld. 5. On the other hand, Shri S.K, Beriwsi, learned Centra! Go\/t. Standlng Counsel for respondent No.1 and Shri Pradeep Saxena, searned counsei for respondents No.2 & 3 submltted ths.t the petitioner estabilshment did not comply with the provisions of the Act In respect of Home Workers. The dues payabie by the petitioner establishment for the period from June, 1977 to September, 1985 were determined and the petitioner, wlthout disputing the assessment, started depositlng the same in the monthly instaliments of Rs.10,000/- from December, 1988. Section 14-B of the Act confers powers upon the Central Provident Fund Commissioner or any other officer authorized by the State Government to recover from the empioyer by way of penalty/ damages in the event of defau!t In payment of charges payable under the provislons of the Act or any scheme: framed thereunder. The Centrai Government in exercise of power conferred under Sectlon 5 of the Act has framed Employees Provident Funds Scheme, 1952. Para- 32-A of the aforesaid scheme makes the provision for recovery of damages for defauit In payment of any contributlon. The pet'tloner establishment was served with a show cause notice dated 8-9-1994 (Document-13). After considering the reply dated 15-2-95 submitted (1979) 4 Supreme Court Cases 573 ^s^" %fa^2y^ y 1"^ by the petjtloner, penalty by way of damages was imposed vlde impugned order (Document-15). The damages were levied at the iower rates for the period from June, 1977 to November, 1985, during which the matter was pending before the Courts. The damages for the period from November, 1985 onwards were Jevied at the rate as prescribed undsr Para-32-A of the EPF Scheme. Members of the Employees Provident Fund 3re entitied for interest from the due date Irrespective of the fact thst the employer has deiayed in remJtting the contribution. Section 7-A of the Act is applicabie where the dues are determlned. 6. !n the instant case, since the petitioner has not questloned the ilabillty towards EPF, enquiry as contempjated under Section 7-A Is not requlred, as the demand under the impugned order has been made towards the damages under Section 14-B for delay In deposltlng the provldent fund. 7. We have heard learned counsel for the parties. s. Undisputed facts in the present case are that the notification issued by the State Government maklng the provisions of the Act appiicable to the Bidi industries was questioned by way of a petition under Article 32 of the Constitution before the Supreme Court; the Supreme Court by interim order restrained the respondents from implementing the proyjslons of the Provident Fund Scheme in respect of HomeWorKers of Bidi industries; the petltion was finaiiy dismlssed on 25-9-1985; after the dismissal of the petition, the petitioner estabiishment started deposlting the arrears of the Provident Fund as per the decision of trlpartlte agreement and as per the interim order passed by the High ^^ 6 lb% Court of Madhya Pradesh from 1985 on the basis of amount determined as payabie towards EPF under the Act by the respondents; the petitloner was served with a show cause notice dated 8-9-1994 under Section 14-B for imposition of damages for delay in deposlting the provldent fund; in rep'y to the said show cause notice, the petltioner adm'tted delayed payment of dues and tooka defence that the deiay was not intentiona!, the same occasioned due to interim order passed by the Supreme Court; the petltJoner started depositing the levied dues afte-r the decision of the Supreme Court, as per the understanding arrived at in a trlpartlte meeting and aiso in view of the Interim order passed by the High Court In a writ petltlon flled by the petitloner; the delay In payment aiso occasioned due to financla! hardship and hindrance in work due to dispute amongst the parties; the Regiona! Provident Fund Commlssioner after considering the reply submltted by the petltloner passed the Impugned order taklng note of the fact that the deiay up to 1985 was unlntentional due to unceilainty prevalilng m the neld did not impose any penaity up to 1985 and levied damages beyond th.at period. 9. Shri Parag Kotecha, refemng to the order dated 5-1-1998 passed by the Presiding Officer, EmpEoyees' Provident Fund Appeliate Tribuna! In the matter of iVJ/s Sable Waghire & Co. Nizamabad Versus Regionai Provldent Fund Commlssioner, Mizamabad, argued that in the slmllar sltuation where the deiay occasioned due to interim order passed by the Courts, it was held that the empioyer establishment are not Jiabie to pay anv damaaes. \^ 'o. After carefui!y going through the above order, jt Is observed that the Appeiiate Tribuna! consldering the fact that the applicablljty of the Act Itself was In dispute and there were stay orders from the Supreme Court and the High Court and aiso considering that the employees were themseSyes biamabie for getting injunction from the Hon'ble High Court that thelr share of the provident fund should not be recovered. it has been held that the appe!!ants are not liabie to pay any damages for deiay in payment. ii.In the matter of Organo Cliemlcai (Supra), a.fter upholding the constitutional vaiidity of Section 14-B of the Act whereby discretion to award damages has been conferred upon the competent authority, it has been held that the power conferred under the sald provision to award damages is dejimited and if the Court finds that Commissjoner Is traveliing beyond, blow wilj fall. Section 14-B Is good for these reasons. 12. In the. matter of HJndustan Times Ltd. Versus Union of Indla and others2, it has been speclflca!!y he!d that:- "The Act does not contain any provision prescribing a period of limitation for assessment or reeovery of damages. !nitlai!y, it was provlded that the arrears couid be recovered in the same manner as arrears of iand revenue. But by Act 37 of 1953 Sectlon 1 4-B was amended providing for a speda! procedure under Sectlon 8-B to 8-G. By Act 40 of 1973 Section 11 was amended by making the amount a flrst charge on the assets of the estabiishment If the arrears of employee's contributjon were for a period of more than 6 (1998) 2 Supreme Court Cases 242 ^ \pb months. By Act 33 of 1988, the charge was extended to the empioyee's share of contribution as well. fn spite of a!i these amendments, over a period of more than thirty years, the ieglslature dld not think fit to make any provlsion prescribing a period of llmitatjon. This is signjficant and it Is c!ear that 11 Is not the legislatlye intention to prescrlbe any period of iimjtation for computlng and recoverlng the arrears. As the amounts are due to the Trust Fund and the recovery is not by sult, the provislons of the Indlan Limitatlon Act, . 1963arenotattracted." -?3. It has been further held that'- "Deiay in inltiating action under Section 14-B cannot amount to prejudtee Inasmuch as the deiay on the part of.the department, wouid have only aiSowed the empioyer to use the monles for his own purposes or for his buslness especlaily when there is no additional provision for charging jnterest." i4. Regardjng deiay of 14 years In injtiatlng actlon under Section 14-B, It has been heid that It did not vitiate the consequentia'i order or damages, as there was no p!ea of any irretrievable prejudice elther In the repiy to the show cause notice or in the v^rit petition. i5. In the Instant case, the provisions of the Act were made appiicable by the State Government to the Home Workers of Bidi Industries a!so from the year 1977, how/ever, the respondents were restrained from enforclng 'the provislons of the above notlflcatjon by the Supreme Court, the petltton was subsequently dismissed In the year 1985, indlsputabiy, a member of the Empioyees Provldent Fund Scheme is 11 v&& ent'tled for Interest from the date the Provident Fund became due to depositlon, meaning thereby that the respondents are iegally bound to pay Interest to the empjoyees jrrespectlve of whether the empioyer has deposited the same or not. The Tribuna! considering the fact that there was uncertalnty about the appiicatlon of the Act itself till 1985 dld not impose sny penalty or damages for the period up to 1985 and oniy Imposed interest which is payab!e to the employees as per the provisions of the Act and Scheme. The petitioner without disputlng the Ijabl!lty towards payment of provident fund started deposjting the same on instaiiments as per the decision of the tripartite meetlng., Section 14-B read wlth para 32-A of the EPF Scheme confers power upon the competent authority to impose damages by way of penalty for deiay In depositing the provident fund. In the instant case, the petitioner has not been abte to estabilsh that the delay in imposition of penaity has caused them any Irretrievable prejudice, as the same has neither been j3!eaded nor proved. i6. Reiying upon the aforesaid judgmsnts ofthe Supreme Court, we are of the opinlon that there js no substance in the petition, ths same deserves to be and is accordlngly dlsmissed. There shall be no orders as to costs. ^_ Sd/- Dhirendra Mishra Judge Sd/- R.N. Chandrakar Judge Barv'e