AI Structured Summary
Not yet generated for this judgment
Judgment
KIRTI SINGH, J. (ORAL)
The present writ petition has been filed under Article 226/227 of the Constitution of India seeking quashing of the order dated 29.9.2025 (Annexure P-11) passed by the Presiding Officer of the Central Government Industrial Tribunal-cum-Labour Court-I, Chandigarh, whereby the order dated 21.10.2019 (Annexure P-7) and the order dated 25.10.2019 (Annexure P-8) passed by the Assessing Authority under Section 14-B and 7Q of the Employees Provident Fund and Miscellaneous Provisions Act, 1952 (for short ‘the Act’), respectively have been set aside.
As per the pleaded facts, on publication of a news item in the newspaper ‘The Tribune’ regarding the death of one Krishna, stated to be an employee of respondent No. 1-establishment, the department constituted a squad to inspect the establishment. Upon inspection, the establishment was found to be covered under the Act and Provident Fund Code No. PN1326498 was provisionally issued to it w.e.f. 08.06.2015. Thereafter, proceedings under Section 7-A of the Act were initiated for finalization of the date of coverage and the Area Enforcement Officer was directed to verify the records of the respondent-establishment. On the basis of the inspection report dated 23.02.2017, it was found that 178 employees were engaged by the respondent-establishment on 08.06.2015 and that the respondent-establishment was coverable from 01.04.2000. Accordingly, Provident Fund dues amounting to Rs.15,04,537/- were determined against the respondent-establishment for the period from April 2000 to June 2015. The date of coverage of the respondent-establishment was shifted to April 2000 as per AEO report, which was duly accepted by the authorized representative of respondent No. 1-establishment. On the conclusion of the inquiry, the order dated 27.03.2017 under Section 7-A of the Act was passed and respondent No. 1 deposited the entire amount on 21.7.2017. Subsequently, the petitioner issued a notice dated 08.11.2017 under Sections 14-B and 7Q of the Act, demanding an amount of Rs. 14,41,965/- towards damages under Section 14-B of the Act and Rs. 11,05,517/- towards interest under Section 7Q of the Act. The respondent-establishment submitted its reply to the afore said notice. After the proceedings under Section 14-B of the Act were initiated, both the parties were provided opportunity of hearing. After considering the reply and documents submitted by both parties, the competent authority passed order dated 21.10.2019 (Annexure P-7) under Section 14-B of the Act, determining damages of Rs. 14,41,965/- against the respondent-establishment. Further, the interest amounting to Rs.11,06,517/-under Section 7Q of the Act was also demanded for the relevant period vide demand letter dated 25.10.2019 (Annexure P-8). Aggrieved against the said orders, respondent No. 1-establishment preferred an appeal before respondent No. 2. Vide impugned order dated 29.09.2025 (Annexure P-11), the learned Tribunal allowed the appeal and set aside the aforesaid orders. Aggrieved thereby, the petitioner has approached this Court by way of the present writ petition.
Learned counsel for the petitioner submits that the impugned order dated 29.09.2025 passed by the learned Tribunal is illegal and arbitrary, as the learned Tribunal has failed to properly appreciate the facts and material available on record. It is submitted that the learned Tribunal, while relying upon the judgment passed by the Bombay High Court in Shrirampur Education Society versus Regional Provident Fund Commissioner,writ petition No. 803 of 2001, has held that no damages or interest could be levied upon the respondent-establishment in respect of the employees' share for the pre-discovery period on the ground that the establishment had not deducted the employees' share of Provident Fund. It is submitted that the said finding is erroneous, as the liability of the establishment to deposit the Provident Fund contribution cannot be avoided merely on the ground that the employees' share was not deducted. Learned counsel further submits that the learned Tribunal has failed to consider the judgment of the Hon'ble Apex Court in case titled as Organo Chemical Industries and others versus Union of India and others,(1979) 4 SCC 573 wherein it has been held that while assessing damages, the Regional Provident Fund Commissioner is required to take into account not only the loss caused to the beneficiaries but also the default committed by the employer in making the contributions. It has further been submitted that the learned Tribunal did not consider the fact that the respondent-establishment has been in default to deposit the contributions for the period from April 2000 to June 2015. Thus, the respondent-establishment was liable to deposit both the employer's as well as employees' share of contribution after its coverage under the Act. It is also argued that the learned Tribunal has allowed the appeal by considering the circular dated 17.06.2004 issued by the Ministry of Labour and Employment, Government of India, relating to levy of damages for the pre-discovery period. It is submitted that the said circular had already been withdrawn in the year 2009. Therefore, the benefit of the withdrawn circular could not have been extended to the respondent-establishment for the entire default period. Learned counsel while placing reliance on the judgment passed by the Hon'ble Madras High Court in Nadar Mahajana Sangam S. Vellaichamy Nadar College versus The Assistant Provident Fund Commissioner and another, W.P. (MD) No. 16771-2016, submits that the benefit of the said circular would not be available in respect of damages payable for the period after 13.02.2009. Learned counsel further submits that the learned Tribunal has wrongly considered that the Provident Fund Code was effective from 11.06.2015. However, it failed to consider that the liability under the Act arises from the date on which the establishment becomes coverable under the Act and not from the date on which the Provident Fund Code is formally allotted. Learned counsel also contends that the learned Tribunal has erred in holding that there was no delay in deposit of the assessed Provident Fund dues merely because the respondent-establishment voluntarily deposited the amount on 31.7.2017 after passing of the assessment order dated 27.03.2017. It is submitted that in the inspection report, it was found the respondent-establishment was covered under the Act from April 2000, whereas the assessed amount was deposited only after passing of the assessment order dated 27.3.2017. Thus, there was a delay in payment of the statutory dues for the intervening period i.e. April 2000 to 31.3.2017. It has also been argued that under Section 7Q of the Act, the employer is liable to pay simple interest at the prescribed rate on any amount due from him under the Act from the date on which the amount became due till the date of its actual payment. Since the amount became due from April 2000 and was actually deposited only thereafter, the respondent-establishment was liable to pay interest for the period of delay. Moreover, the learned Tribunal has held in the impugned order that there was a delay of 17 years in initiating the damage proceedings, hence the demand is not sustainable. However, the learned Tribunal has failed to consider that the Limitation Act, 1963 is not applicable to the Labour Court and to the recovery by the concerned authority under Section 14-B of the Act. Therefore, it is prayed that the impugned order deserves to be quashed and set aside.
I have heard learned counsel for the petitioner and perused the judicial file.
The principal contention raised by learned counsel for the petitioner is that the learned Tribunal, while setting aside the orders dated 21.10.2019 and 25.10.2019 passed under Sections 14-B and 7Q of the Act, has failed to appreciate the statutory liability of respondent No.1-establishment and has proceeded on certain erroneous propositions of law.
A perusal of the impugned order reveals that the learned Tribunal has recorded a categorical finding that the assessing officer had not examined the case of respondent No.1-establishment from the perspective of the financial difficulty pleaded by it and that, consequently, the orders dated 21.10.2019 and 25.10.2019 were non-speaking and stood vitiated for want of a reasoned consideration of the objection raised. Thus, the finding of the learned Tribunal essentially concerns the manner in which the statutory power under Sections 14-B and 7Q was exercised by the assessing authority.
Still further, a perusal of the record shows that respondent No.1 had, in its reply to the notice dated 08.11.2017 and in the subsequent proceedings, pleaded financial difficulty as a ground against the imposition of damages and interest. Whether financial hardship, by itself, constitutes a ground for waiver or reduction of the statutory levy under Section 14-B is a distinct question from whether such a plea, once raised, was required to be considered and dealt with by the competent authority before liability was fastened upon the establishment. The mere fact that an opportunity of hearing was afforded, or that the written reply was taken on record, does not establish that the plea was actually examined. A quasi-judicial authority exercising power having civil consequences is required to disclose due application of mind to the objection raised. This requirement is a basic facet of natural justice and, as settled by Hon’ble the Supreme Court in Siemens Engineering & Manufacturing Co. of India Ltd. versus Union of India, (1976) 2 SCC 981, and therefore a quasi-judicial order must be supported by reasons.
Adverting to the case in hand, the petitioner has not been able to point out from the orders dated 21.10.2019 and 25.10.2019 any consideration, even briefly, of the plea of financial difficulty raised by respondent No.1. The mere recording of general conclusions regarding default cannot substitute for a determination as to why that specific plea was liable to be rejected. It is this deficiency which constitutes the foundation of the learned Tribunal's order.
The issue before the Tribunal was not merely whether the establishment was, in principle, liable to comply with the Act from the date on which it became statutorily coverable. That aspect had already been determined in the proceedings under Section 7-A, where the date of coverage was shifted to April, 2000 and the provident fund dues were determined. The subsequent proceedings under Sections 14-B and 7Q involved the distinct question of fastening the consequences contemplated by those provisions, for which the competent authority was required to exercise its statutory power upon consideration of the circumstances and objection placed before it.
Insofar as the reliance upon Organo Chemical Industries and others versus Union of India and others, (1979) 4 SCC 573, is concerned, learned counsel submits that while assessing damages under Section 14-B, the competent authority is required to take into consideration not only the loss caused to the beneficiaries but also the default committed by the employer. There can be no quarrel with the said proposition.
However, the said judgment does not advance the petitioner's case. The learned Tribunal has not proceeded on the premise that the default of the employer is irrelevant for the purposes of Section 14-B. Its finding is that the specific plea of financial difficulty raised by the establishment was not considered before the liability was imposed. The proposition that the authority is entitled to levy damages upon an employer who has defaulted is distinct from the requirement that, before exercising that power, the authority must consider the defence raised by the employer. Organo Chemical Industries (supra) does not dispense with such requirement.
Even if the proposition canvassed by learned counsel regarding the statutory liability of the employer is accepted, the same would not, by itself, warrant interference with the impugned order. The finding of the learned Tribunal regarding non-deduction of the employees' share cannot be construed as laying down an absolute proposition that such non-deduction, in every circumstance, would extinguish the statutory liability of the employer.
The petitioner has also assailed the reliance placed by the learned Tribunal upon the circular dated 17.06.2004 in the context of levy of damages for the pre-discovery period. It is not in dispute that the said circular was withdrawn with effect from 13.02.2009. Learned counsel, relying upon Nadar Mahajana Sangam S. Vellaichamy Nadar College versus The Assistant Provident Fund Commissioner and another, W.P. (MD) No. 16771-2016, submits that the benefit of the said circular could not have been extended to the period subsequent to its withdrawal. The said submission has also been considered. There can be no dispute that, upon its withdrawal with effect from 13.02.2009, the circular could not ordinarily furnish the basis for extending its benefit to a period subsequent thereto. The learned Tribunal, while extending the benefit of the circular to the entire pre-discovery period, does not appear to have specifically adverted to this aspect. This, however, does not affect the ultimate conclusion reached by the learned Tribunal. The order under challenge was not founded solely upon the applicability of the said circular; the consideration which principally weighed with the learned Tribunal was that the assessing authority had failed to consider the plea of financial difficulty raised by respondent No.1 and had not recorded adequate reasons for rejecting the same.
Likewise, the submission regarding delay in deposit of the provident fund dues and consequential liability to pay interest under Section 7Q does not answer the fundamental infirmity noticed by the learned Tribunal. Whether interest was leviable and, if so, for what period, required determination by the competent authority upon consideration of the plea raised by the establishment. The existence of statutory liability cannot dispense with the requirement of a reasoned determination.
Viewed cumulatively, the petitioner has failed to demonstrate that the finding recorded by the learned Tribunal regarding non-consideration of the plea of financial difficulty raised by respondent No.1 is either perverse, contrary to the record or otherwise unsustainable in law. The observations of the learned Tribunal with regard to the circular dated 17.06.2004 and the delay in initiation of proceedings under Section 14-B, even if found to be legally unsustainable to the extent noticed hereinabove, do not dislodge the aforesaid finding which independently supports the impugned order
It is well settled that the powers of this Court under Articles 226 and 227 of the Constitution of India are supervisory in nature and are not to be exercised as a regular appellate jurisdiction over the orders passed by a statutory Tribunal. Interference is warranted only where the order under challenge suffers from patent illegality, perversity, jurisdictional error or such other material infirmity as would justify exercise of the supervisory jurisdiction. In the present case, no such infirmity has been demonstrated in the finding of the learned Tribunal regarding non-consideration of the plea of financial difficulty raised by respondent No.1.
Accordingly, the petitioner has failed to make out any ground for interference with the impugned orders. The finding of the learned Tribunal that the orders dated 21.10.2019 and 25.10.2019 were passed without due consideration of the plea of financial difficulty raised by respondent No.1 and without recording adequate reasons for rejecting the same remains unassailed.
For the foregoing reasons, no ground is made out for interference with the impugned order dated 29.09.2025 passed by the learned Central Government Industrial Tribunal-cum-Labour Court-I, Chandigarh. Consequently, finding no merit in the present writ petition, the same is dismissed.
Pending miscellaneous application(s), if any, shall also stand disposed of.