Case: Coal Mines Provident Fund Commissionerdhanbad &amp; Other Vs. J. Lala &amp; Sons

This appeal by special leave turns on the question whether the Coal Mines Provident Fund Commissioner is to hear an employer before making an order requiring the employer to pay damages under section 10F o f the Coal Mines Provident Fund and Bonus Scheme Act, 1948 (hereinafter referred to as theemployer being the respondent to this appeal was directed by a letter dated 3/4 January, 1969 to pay provident fund contributions a mounting to Rs. 5821.21 for the months of July to September, 1968 and damages at the rate of 25 per cent on the above dues amounting to Rs. 1455.5O. The employer was required to pay damages under the provisions of section 10F of theemployer filed an objection explaining the circumstances under which there was delay in the payment of provident fund contributions. The employer prayed that damages might not be imposed at the rate of 25 per cent for the delay in payment. The employer paid the provident fund contributions. The employer was informed that damages charged on the delayed payments of provident fund contribution could not be waived.The employer thereafter filed an application in the High Court for an order that the demand notice be quashed. The High Court acceded to the application of the employer. The High Court gave two reasons. First, that the computation of amount of damages should arise upon consideration of facts and circumstances and a mechanical computation of damages is not contemplated. Second, the authorities should have given opportunity to the employer to . represent the case.The High Court did not accept the contention of the employer that section 10F of the Act suffered from the vice of excessive delegation.

Court's reasoning:
The provisions contained in section 78 of the Act indicate first that the Coal Mines Provident Fund Commissioner may determine the amount due from the employer, and, second, for this purpose he may conduct such enquiry as he may deem necessary. Therefore, an enquiry is contemplated. Section 78(3) speaks of reasonable opportunity being given to an employer to represent his case . The provisions in section 10F of the Act also indicate that determination of damages is not a mechanical process. The words of importance in section 10F of the Act are "such damages not exceeding 25 per cent of the amount of arrears as it may think fit to impose". Here the two important features are these. First, the words of importance are "damages not exceeding 25 per cent". These words show that the determination of damages is not an inflexible application of a rigid formula. Second, the words "as it may think fit to impose" in section 10F of the Act show that the authorities are required to apply their mind to the facts and circumstances of theCourt in The India Sugars and Refineries Ltd. v . Amravathi Service Co-op. Society Ltd. &Anr. etc. ([1976] 2 S.C.R. 740) said that "situations in which a duty will arise to act judicially according to the natural justice cannot be exhaustively enumerated. A duty to act judicially will arise in the exercise of a power to deprive a person of legitimate interest or expectation that addition price would be paid. The facts which point to an exercise of powers judicially are the nature of the interest to be affected, the circumstances in which the power falls to be exercised and the nature of the sanctions, if any involved". When a body or authority has to determine a matter involving rights judicially the principle of natural justice is implied if the decision of that body or authority affects individual rights or interests. Again, in such cases having regard to the particular situation it would be unfair for the body or authority not to have allowed a reasonable opportunity to be heard. (See State of Punjab v. K. R. Erry & Sobhag Rai Mehta. ([1973] 2 S.C.R. 405.)The High Court was correct in holding that an opportunity should have been given to the employer to be heard before the damages were