IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD (Special Original Jurisdiction) FRIDAY, THE FIRST DAY OF AUGUST TWO THOUSAND AND EIGHT PRESENT THE HON'BLE MR JUSTICE V.ESWARAIAH WRIT PETITION No.7858 of 1999 Between: The Regional Provident Fund Commissioner Nizamabad District ..... PETITIONER AND 1 The Employees 'Provident Fund Appellate Tribunal, 7th Floor, Skylark Buildings, 60, Nehru Place, New Delhi- 110019 2 M/s Prabhudas Kishoredas Tobacco Products Limited rep by its Manager and G.P.A. Holder Sri Natwar Bhai Gajulpet, Nizambad District .....RESPONDENTS Petition under Article 226 of the constitution of India praying that in the circumstances stated in the Aﬃdavit ﬁled herein the High Court will be pleased to to issue a Writ, Order or direction especially one in the nature of Writ of Certiorari calling for the records relating to the order of the 1st respondent Tribunal in ATA/1(36)/98 dt. 8/2/99 and quash the same as illegal and unjust and pass. Counsel for the Petitioner:MR.R.N.REDDY Counsel for the Respondent No.: MR.B.G.RAVINDER REDDY The Court made the following: Form-NIC-OGS/WP{MUK} THE HON'BLE MR JUSTICE V.ESWARAIAH WRIT PETITION No.7858 of 1999 O R D E R: The Regional Provident Fund Commissioner, Nizamabad questions the order of the Employees’ Provident Fund Appellate Tribunal, New Delhi (hereinafter referred to as ‘Tribunal’) in case No.ATA/1(36)98, dated 08.02.1999 in allowing the appeal of the 2nd respondent while setting aside the orders of the petitioner-Regional Provident Fund Commissioner dated 26.12.1996 with regard to levying of damages to the extent of Rs.2,29,850/- passed under Sec.14B of the Employees’ Provident Fund and Miscellaneous Provisions Act, 1952 (hereinafter referred to as “the Act”) as illegal and arbitrary and contrary to the provisions of the Act and Rules made thereunder. 2. It is the case of the petitioner that the 2nd respondent has failed to pay the contribution under the provisions of the Act and the Schemes framed thereunder for the period from January, 1993 to May, 1995, as such the petitioner issued proceedings dated 26.12.1996 levying the damages of an amount of Rs.2,29,850/- on account of the delayed remittance made by the 2nd respondent namely M/s.Prabhudas Kishoredas Tobacco Products Limited, Nizamabad for the period from January, 1993 to May, 1995 under Sec.14B of the Act. It is stated that the employer though liable to pay the variable dearness allowance (hereinafter referred to as ‘VDA’) with effect from 1st April every year, due to negotiations the payment to the employees as well as the provident fund contributions were delayed. Under the Act and the provisions of the Scheme, the 2nd respondent has to pay the employee the contribution amount together with interest thereon at the rates ﬁxed by the Government irrespective of the fact whether the contributions are remitted by the employer within the time or not. In the instant case, VDA is due from 1st April, and therefore, the provident fund contribution is also due from 1st April and the employee is eligible to get interest on provident fund contributions from 1st April onwards. Accordingly, the petitioner levied damages on belated remittances for the period from January, 1993 to May, 1995 at the rates prescribed in the Scheme framed under the Act. Aggrieved by the said order of the petitioner, the 2nd respondent ﬁled appeal before the 1st respondent-Tribunal and the Tribunal by the impugned order dated 08.02.1999, set aside the order of the petitioner on the ground that the arrears of DA became payable only from the date of the settlement and as per the conditions of the agreement and therefore, the order of the petitioner levying the damages cannot be sustained. 3. The facts of the case are that the Government of Andhra Pradesh issued Notiﬁcation in G.O.Ms.No.22 WDCW & L dated 05.02.1992 published in A.P.Gazette, Part-I, Extraordinary dated 30.03.1992, for the ﬁrst time making liable the employee for the payment of cost of living allowance in respect of the persons with reference to their basic wages. The cost of living allowance shall be notiﬁed by the Commissioner of Labour for every six months i.e.1st April and 1st October. Questioning the said notiﬁcation, the 2nd respondent herein and many others ﬁled W.P.No.6243/1992 on the ﬁle of this Court and obtained interim suspension and thereafter the said writ petition was dismissed, against which Writ Appeal No.104/1994 was ﬁled. It is stated that during pendency of the writ appeal before the Division Bench of this court, the Union Leaders of the employees representing 90% of the workers and their associations made an attempt to amicably settle the issue and after several meetings it was opined that amicable solution on the question of VDA has to be found out since VDA payable on the basis of drawn wages are found to be diﬃcult and workers also dissatisﬁed since there will be variation between the worker and worker and therefore it was required to be converted on the piece rate basis of 1000 beedies as is the practice in the neighbouring beedi manufacturing States and also in view of the fact that the basic wages as well as other beneﬁts such as bonus, leave with wages, national festival and other holidays are paid on the basis of production of 1000 beedies for the last several years and this method is found to be suitable to the workers’ aspirations. It is also found that the Government orders are silent for the wage earners between Rs.176/- to Rs.499/-. The Union felt that the missing link could be adjusted. It is stated that after several meetings the matter was admitted for the conciliation on 26.09.1994, and both the parties with the assistance of the Conciliation Oﬃcers discussed various issues prevailing in beedi industries, and in the interest of the beedi workers and also in the interest of the beedi industries, it was agreed by both the parties about the pattern which has to be followed by the neighbouring beedi manufacturing States of Maharashtra and Karnataka, and accordingly, an agreement was arrived at on 20.07.1993 and as per the settlement of the agreement, it was agreed that the VDA payable to the beedi workers for a speciﬁed price for 1000 beedies with eﬀect from 01.01.1993 to 31.03.1994 and the increased VDA has to be paid by 31.08.1994, and as per the terms of the second settlement agreement dated 29.10.1994, the VDA arrears for the period from 01.04.1994 to 31.09.1994 will have to be paid in two equal instalments, and ﬁrst instalment shall be paid in November, 1994 and another instalment shall be paid on or before 15.01.1995. There is no dispute that as per the said settlement, the amounts have been paid within the stipulated time. 4. Thus, it is the case of the respondents that pursuant to the said two settlement agreements, the VDA amounts are payable and prior to the said settlements no VDA amounts due and payable, and in fact, the notiﬁcation issued by the Government was never implemented and the VDA amounts are not calculable as per the aforesaid G.O.Ms.No.22, which was published on 30.03.1992, and therefore, there cannot be any demand of VDA amount prior to the settlement and so also any levy of damages. 5. The learned counsel for the petitioner submits that as per the Scheme of the Act and under Sec.6 of the Act, the contributions are liable to be paid by the employer in respect of any amount payable by it to the employees and therefore, the contribution of the provident fund is not on the actual payment, but on the amounts payable to the employee. It is stated that as per para-30 of the scheme the payment of the contributions shall be made on the amounts payable by the employer to the employee irrespective of any actual payment or not. 6. I have considered the rival contentions of both the counsel. 7. In the instant case, the petitioner Department is not demanding the contribution amount or the interest as per the rates stipulated in the G.O. As a matter of fact, the rates stipulated in the G.O.are not workable and the employees and their union associations as well as the 2nd respondent establishment after several deliberations, discussions, meetings, the issue was referred to conciliation and before the conciliation oﬃcer amicable settlements have been arrived at to the satisfaction of both the parties and therefore, it cannot be said that prior to settlement the said VDA was due and payable by the employer. Even now it is not the case of the Department that it is the statutory duty of the employer to contribute the provident fund based on the rates mentioned in the G.O., but in fact the Department has accepted the contributions pursuant to the settlement alone and there was no delay in payment of the contributions in so far as the VDA is concerned, and if that be so, when there was no statutory liability on the part of the 2nd respondent to pay the VDA prior to the period prescribed in the settlements, the G.O. issued by the Government cannot constitute a basis either for payment of the VDA or for levying the damages on the alleged delayed payment. Therefore, I am of the opinion that no VDA amount was due and payable pursuant to the settlement arrived at among the parties in the interest of the employees and the employer, and therefore, it cannot be said that the said VDA amount was payable from the date of issuance of the G.O by the Government. If that be so, the amounts are payable only pursuant to the settlement arrived at among the parties, but not from the date of issuance of the G.O. 8. In view of the aforesaid facts of the case, I am of the opinion that the Tribunal has considered elaborately the rival contentions and rightly held that as per paras-30, 38, 40 and 60 read with Sec.6 of the Act and Scheme framed thereunder, the VDA amount was became payable and the statutory liability arose only pursuant to the settlements which were already paid, and therefore, it cannot be said that there were any arrears pursuant to the said order of the Government. Accordingly, the Tribunal has rightly held that Sec.6 of the Act and para-30 of the Scheme framed thereunder were erroneously applied to the facts of the case, as the 2nd respondent is not liable to pay any amounts prior to the settlement. 9. For the foregoing observations, I do no see any illegality or otherwise to interfere with the impugned order of the Tribunal. 10. The Writ Petition is, accordingly, dismissed. No order as to costs. ___________________ V.ESWARAIAH,J Dated: 01.08.2008 Dsr ..... REGISTRAR // TRUE COPY // SECTION OFFICER To 1 The Employees 'Provident Fund Appellate Tribunal, 7th Floor, Skylark Buildings, 60, Nehru Place, New Delhi- 110019 2.2CCs to 3.2CD copies