IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE S.SIRI JAGAN WEDNESDAY, THE 23RD DECEMBER 2009 / 2ND POUSHA 1931 WP(C).No. 12165 of 2007(W) -------------------------- PETITIONER(S): --------------- THE HINDUSTAN ORGANIC CHEMICALS LTD, AMBALAMUGAL, ERNAKULAM, REPRESENTED BY ITS CHIEF PERSONNEL & ADMINISTRATION MANAGER. BY ADV. SRI.U.K.RAMAKRISHNAN, SENIOR ADVOCATE SRI.P.V.LOHITHAKSHAN SMT.P.VIJAYAMMA SMT.UMA GOPINATH RESPONDENT(S): --------------- 1. THE REGIONAL PROVIDENT FUND COMMISSIONER EMOLOYEES PROVIDENT FUND ORGANIZATION, SUB REGIONAL OFFICE, BHAVISHYA NIDHI BHAVAN, KALOOR, KOCHI-17. 2. THE ASST.PROVIDENT FUND COMMISSIONER, EMPLOYEES PROVIDENT FUND ORGANIZATION, SUB REGIONAL OFFICE, BHAVISHYA NIDHI BHAVAN, KALOOR, KOCHI. 3. THE EMPLOYEES PROVIDENT FUND APPELLATE TRIBUNAL, NEW DELHI- 110 019. ADV. SRI.S.GOPAKUMARAN NAIR, SC, P.F. THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 23/12/2009, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: W.P.(C).No. 12165/07. APPENDIX PETITIONER(S)' EXHIBITS P1. COPY OF THE ORDER DTD.27.2.96 IN O.P.No. 3250/96. P2. COPY OF THE ORDER DTD.22.8.96 OF THIS COURT. P3. COPY OF THE ORDER DTD.30.12.97 OF THIS COURT. P4. COPY OF THE ORDER DTD.5.8.97 OF THIS COURT. P5. COPY OF THE JUDGMENT IN O.P.No. 3250/96 AND CONNECTED CASES. P6. COPY OF THE JUDGMENT DTD.17.1.01 ON O.P.No. 23043/97 OF THIS COURT. P7. COPY OF THE SHOW CAUSE NOTICE DTD.5.3.01. P8. COPY OF THE REPLY STATEMENT. P9. COPY OF THE NOTICE DTD.19.8.04 BY R2. P10. COPY OF THE ORDER DTD.4.2.05 BY R2. P11. COPY OF THE ORDER DTD.4.5.05 BY R2. P12. COPY OF THE BALANCE SHEET FOR 2003-04. P13. COPY OF THE ORDER DTD.23.3.05 OF THIS COURT IN W.P.(C).No. 9684/05. P14. COPY OF THE MEMORANDUM OF APPEAL DTD.16.4.05 TO R3. P15. COPY OF THE ORDER DTD.4.5.05 OF R3. P16. COPY OF THE COUNTER AFFIDAVIT BY R1 BY R3. P17. COPY OF THE REPLY AFFIDAVIT. P18. COPY OF THE LETTER DTD.2.11.05 TO R1. P19. COPY OF THE LETTER DTD.19.1.06 OF R2. P20. COPY OF THE LETTER DTD.4.3.06 TO R1 P21. COPY OF THE PETITION DTD.29.8.05 BEFORE R3. P22. COPY OF THE ORDER DTD.24.5.05 OF THE ASST.PROVIDENT FUND COMMISSIONER. P23. COPY OF THE ORDER DTD.22.2.07 BY R3. sdk+ ///True copy/// P.A. to Judge S.SIRI JAGAN, J. ================== W.P.(C).No. 12165 of 2007 ================== Dated this the 23rd day of December, 2009 J U D G M E N T The petitioner is a Central Government company engaged in the business of manufacture of phenol and hydrogen peroxide. The employees of the petitioner company are covered under the Employees' Provident Funds and Miscellaneous Provisions Act, 1952. But the petitioner was exempted from the provisions of the Act under Section 17 thereof in so far as they were having a separate provident fund trust in respect of their employees. By ordinance No.13 of 1995, the Central Government amended the Employees' Provident Funds and Miscellaneous Provisions Act by introducing the Employees' Pension Scheme, 1995, which replaced the existing Employees' Family Pension Scheme, which was in force till the amendment. As per the Employees' Pension Scheme, an Employees' Pension Fund was to be constituted in accordance with the amended provisions and a part of the contributions representing 8.33 per cent of the employees' pay was to be remitted by the employer to the Employees' Pension Fund within 15 days of the close of every month. The Central Government was also to contribute 1.16 per cent of the pay of the members to the Pension Scheme to be credited to the fund. The employees of the petitioner company challenged the amendment by filing writ petitions, viz. O.P.No.3250/1996 and O.P.No. 23043/1997. O.P.No.3250/1996 was filed by the regular employees of the company and the other original w.p.c.12165/07 2 petition was filed by ex-servicemen who were employed by the petitioner company. In O.P.No.3250/2006 this Court granted a stay of operation of the Ordinance introducing the Employees' Pension Scheme, on 27.2.1996, by Ext.P1 order, for a limited period. That stay was extended until further orders, by Ext.P2 order. But that stay was vacated on 5.8.1997, by Ext.P4 order. In the meanwhile, the petitioner credited contributions payable by them in accordance with the amened provisions in a separate account bearing interest. After the stay was vacated on 5.8.1997, the entire amounts credited to the account maintained by the petitioner along with interest accrued thereon were transferred to the Provident Fund Organization. In O.P.No.23043/1997 a stay was granted by Ext.P3 order on 30.12.1997. That stay continued till January, 2001 when the original petition itself was disposed of. Thereafter, the amount accruing in the account separately maintained by the petitioner was transferred to the Provident Fund Organization on 22.3.2001 (interest was transferred subsequently after obtaining permission from the Provident Fund Organization). Thereafter, in respect of the regular employees, for delay in remittance of contributions for the period 12/95 to 1/98 and in respect of the ex- servicemen employed, for delay in remittance for the period from 11/95 to 1/2000, respondents 1 and 2 initiated proceedings for recovery of damages under Section 14B of the Employees' Provident Funds and Miscellaneous Provisions Act, which ended in Ext.P10 order w.p.c.12165/07 3 directing the petitioner to pay damages amounting to Rs.20,04,909/-. For delay in payment of the damages, interest amounting to Rs.93,043/- was demanded by Ext.P11 order. The petitioner challenged the said orders before the Employees Provident Fund Appellate Tribunal by filing an appeal, which was dismissed by Ext.P23 order. The petitioner is challenging Exts.P10, P11 and P23 orders in this writ petition. 2. The petitioner's contention is that as held by this Court in Indian Telephone Industries Ltd. v. Astt. P.F Commnr. & Ors. [2006 (3) KLT 698] imposition of damages is not automatic and damages would be attracted only if there is deliberate failure on the part of the employer to pay contributions under the Act, for deciding which the circumstances which contributed to the delay in payment have to be taken into account. According to the petitioner, there was no voluntary laches on the part of the petitioner in paying contributions in accordance with the amened provisions of the Act. By order of this Court, the petitioner was prevented from paying contributions. Therefore, the petitioner did the next best thing, keeping the contributions payable by the petitioner in a separate account bearing interest. After this Court vacated the stay orders, the amount was paid in one case within five months and in the other case within two months, which cannot be stated to be deliberate delay in payment. The delay occurred only because of unavoidable delay in getting orders of w.p.c.12165/07 4 the Court and taking appropriate steps to transfer the amount standing in the account to the Provident Fund Organization. They would, therefore, contend that there is no deliberate delay in paying contributions, which would attract damages under S.14B. 3. A statement has been filed by the 1st respondent seeking to controvert the contentions of the petitioner. According to respondents 1 and 2, liability to pay contributions is statutory and for delay in payment, liability for damages is also statutory. Once there is delay, damages have to be calculated as per clause 32A of the Employees Provident Fund Scheme, depending on the extent of delay. Here the statutory liability has not been discharged by the petitioner. Therefore, respondents 1 and 2 were perfectly justified in imposing damages in accordance with the provisions of the Act and Scheme, is the contention raised by respondents 1 and 2. They would further submit that even assuming that they could not have paid contributions because of stay, there was in fact delay even after vacating the stay and, therefore, they cannot escape from the liability to pay damages under Section 14B. 4. I have considered the rival contentions in detail. 5. The facts are not disputed before me. The amended provisions were challenged by the petitioner and there was stay of operation of the provisions by this Court. Therefore, the petitioner could not have, under law, paid the amount since, had they done so, w.p.c.12165/07 5 they would have been hauled up for contempt by this Court. As rightly pointed out by the counsel for the petitioner, in Indian Telephones Industries' case (supra) this Court has held that imposition of damages under Section 14B is automatic only if there is deliberate intention not to pay contributions, for deciding which question, all the attendant circumstances leading to the delay in payment have to be taken into account. That judgment stands confirmed in W.A.No.2182/2006. That being so, that judgment is binding on me. Therefore, what I have to consider in this case is as to whether there was deliberate non-payment of contributions by the petitioner in defiance of law. Admittedly, the amending provisions were stayed by this Court in the writ petition filed by the employees. During the period of stay, the petitioner could not have paid the amount. That being so, it cannot be said that there was deliberate defiance of law in non- payment of the contributions within time. On the other hand, the petitioner was only obeying the orders of this Court, which they were bound to do under law. The petitioner had in fact done the next best thing by keeping the contributions in a separate account bearing interest. Admittedly, the amounts in the said account and the interest accrued thereon have also been transferred to the Provident Fund Organization shortly after the stay was vacated. As such, at least till the date of vacating the stay, there was no fault on the part of the petitioner attracting Section 14B of the Act. Therefore, I do not think w.p.c.12165/07 6 that for the delay in payment till that date any damages are payable by the petitioner. In fact in identical cases, the 2nd respondent- Assistant Provident Fund Commissioner himself had passed Ext.P22 order exonerating another employer from paying damages on the ground the since there was stay by this Court, there was no fault on the part of the employer attracting Section 14B of the Act and levied damages only to the extent of interest on the amount. In this case, the petitioner themselves had paid the interest also. That being so, I am of opinion that at least for the period upto the date when the stay was vacated, the petitioner is not liable to pay damages. However, I find that after vacating the stay, there was some delay in payment, for which nominal damages should be paid by the petitioner. Instead of remanding the matter to the 2nd respondent for fixation of damages for that short delay, in order to avoid a further protracted litigation, I fix the damages payable on that count at Rs.2 lakhs. The same shall be paid within one month. The writ petition is disposed of as above. Sd/- sdk+ S.SIRI JAGAN, JUDGE ///True copy/// P.A. to Judge w.p.c.12165/07 7 . Therefore, I do not think that for the delay in payment till that date any damages are payable by the petitioner. In fact in an identical case the 2nd respondent-Assistant Provident Commisisner, had passed Ext.P22 order exhonrateing another employee from damages on the ground that sicne there was say by this court, there was no deliberate defiance of law by the employer