DCM Limited vs State of Haryana and Others

Adarsh Kumar Goel, J.—This petition seeks quashing of notices dated 14.1.2004, 31.1.2004, 12.8.2004, 27.6.2005, 10.8.2005, .24.9.2005, Annexures P.1, P.2, P.4, P.6, P.8 and P.9 seeking to recover fee under the Haryana Rural Development Fund Act, 1986 (for short, ''the Act) for the years 1991-92 to 1993-94.

Case of the petitioner is that vide minutes dated 19.5.1992, Annexure P.10, a decision was taken that in case of cotton lint and maize, market fee will not be levied in the State of Haryana if the same had already been paid in the originating State. Accordingly from 30.7.1993, there was an amendment to the Haryana Rural Development Fund Rules, 1987 and HRDF fee was exempted on agricultural produce brought for processing from outside the State. However, on 14.1.2004, the petitioner received notice Annexure P.1 requiring it to deposit an amount of Rs. 8,53,772/- on account of HRDF fee, which was followed by further notices. The demand was barred by limitation under Article 113 of the Schedule to the Limitation Act, 1963 and was also against statutory obligation u/s 5(3) of the Act which required the burden of fee to be passed on to the purchaser, implying thereby that the demand could not be raised for the first time alter a long period which may prejudice the right of the petitioner for passing on the burden to the next purchaser.

In the reply, explanation given for the delay is pendency of some litigation in mis Court and in the Hon''ble Supreme Court.

We have heard learned Counsel for the petitioner as there is no appearance for the contesting respondents.

Learned Counsel for the petitioner submitted that the recovery will be barred by limitation under Article 113 of the Schedule to the Limitation Act and if the said period is not held to be applicable, recovery beyond reasonable time was not permissible. It was further submitted that no proper procedure for assessment had been taken and objections of the petitioner have not been considered. Reliance has been placed on following judgments of the Hon''ble Supreme Court:

i) The Kerala State Electricity Board, Trivandrum Vs. T.P. Kunhaliumma, On applicability of Article 137 of the Schedule to the Limitation Act.

ii) State of Kerala and Ors Vs. V.R. Kalliyanikutty and Anr,

New Delhi Municipal Committee Vs. Kalu Ram and Another, .

On recovery being time-barred. It was submitted that the above judgments have been followed by this Court in Municipal Committee Vs. Jaswant Rai and Others, , Hari Narain and Others Vs. Subhash Chander and Others, and by the Kerala High Court in Dat Pethe and Another Vs. District Collector, Ernakulam and Others, . It was further submitted that judgment of the Hon''ble Supreme Court in Ms Hindustan Times Limited v. Union of India and Ors. AIR 1998 S.C. 688 was not applicable.

We are unable to accept the plea of limitation raised on behalf of the petitioner in view of judgment of the Hon''ble Supreme Court in M/s Hindustan Times Limited, which in our opinion applies to the present case. The judgments relied upon by the petitioner are distinguishable as the same relate to period of filing suit or other proceedings. Reference may be made to observations in Paras 18 to 21 and 28:

Now the Act does not contain any provision prescribing a period of limitation for assessment or recovery of damages. The monies payable into the Fund are for the ultimate benefit of the employees but there is no provision by which the employees can directly recover these amounts. The power of computation and recovery are both vested in the Regional Provident Commissioner or other officer as provided in Section 14B. Recovery is not by way of suit. Initially, it was provided that the arrears could be recovered in the same manner as arrears of land revenue. But by Act 37/53 Section 14B was amended providing for a special procedure u/Sections 8B to 8G. By Act 40/73 Section 11 was amended by making the amount a first charge on the assets of the establishment if the arrears of employee''s contribution were for a period of more than 6 months. By Act 33/88, the charge was extended to the employee''s share of contribution as well.

In spite of all these amendments, over a period of more than thirty years, the legislature did not think fit to make any provisions prescribing a period of limitation. This in our opinion is significant and it is clear that it is not the legislative intention to prescribe any period of limitation for computing and recovering the arrears As the amounts are due to the Trust Fund and the recovery is not by suit, the provisions of the Indian Limitation Act, 1963 are not attracted.

In Nityananda, M. Joshi and Others Vs. Life Insurance Corporation of India and Others, , it has been held that the Limitation Act, 1963 has no application to Labour Courts and, in our view that principle is equally applicable to recovery by the concerned authority u/s 14B. Further in Bombay Gas Co. Ltd. Vs. Gopal Bhiva and Others, , it has been held that in respect of an application u/s 33(c)(2) of the Industrial Disputes Act, 1947, there is no period of limitation. In that context, it was stated that the Courts could not imply a period of limitation. It was observed (at p. 757 of AIR):

It seems that where the legislature has made no provision for limitation, it would not be open to the Court to introduce any such limitation on the grounds of fairness or justice

The above decisions have been recently accepted in Mukri Gopalan Vs. Cheppilat Puthanpurayil Aboobacker, (at Pp. 3398-3400) to which one of us (Majmudar, J.) was a party while dealing with the applicability of Section 29(2) of the Limitation Act, 1963 to Courts or Tribunals. We may also point out in this connection that several High Courts have rightly taken the view that there is no period of limitation for exercise of the power u/s 14B of the Act.

It is true that a principle has been laid down in The State of Gujarat Vs. Patil Raghav Natha and Others, , while dealing with suo motu revisional jurisdiction that though there is no period of limitation prescribed for exercise of that power, still such a power must be exercised within reasonable time. The said judgment has been applied in matters relating to Section 6 of the Land Acquisition Act in a large number of cases, which were all referred to recently in Ram Chand and Others Vs. Union of India (UOI) and Others, . In our view, this line of cases cannot ordinarily apply to monies withheld by a defaulter, who holds them in trust.

The reason is that while in the above cases decided by this Court the exercise of powers by the authority at a very belated stage was likely to result in the deprivation of property which rightly and lawfully belonged to the person concerned, the position u/s 14B of the Act of an employer is totally different. The employer who has defaulted in making over the contributions to the Trust Fund had, on the other hand, the use of monies which did not belong to him at all. Such a situation cannot be compared to the above line of cases which involve prolonged suspense in regard to deprivation of property. In fact, in cases u/s 14B if the Regional Provident Commissioner had made computations earlier and sent a demand immediately after the amounts fell due, the defaulter would not have been able to use these monies for his own purposes or for his business. In our opinion, it does not lie in the mouth of such a person to say that by reason of delay in the exercise of powers u/s 14 B, he has suffered loss. On the other hand, the defaulter has obviously had the benefit of the ''boon of delay'' which "is so dear to debtors", as pointed out by the Privy Council in AIR 1932 165 (Privy Council) . In that case, it was observed that equitable considerations were out of place in matters of limitation and the strict grammatical construction alone was the guide, Sir Dinshaw Mulla stated:

Nor in such a case as this is the judgment debtor prejudiced. He may indeed obtain the boon of delay, which is so dear to debtors and if he is virtuously inclined there is nothing to prevent his paying what he owes into Court.

The position of the employer in case of default u/s 14B is no different.

From the aforesaid decisions, the following principles can be summarised. The authority u/s 14B has to apply his mind to the facts of the case and the reply to the show cause notice and pass a reasoned order after following principles of natural justice and giving a reasonable opportunity of being heard; the Regional Provident Fund Commissioner usually takes into consideration the number of defaults, the period of delay, the frequency of default and the amounts involved; default on the part of the employer based on plea of power-cut, financial problems relating to other indebtedness or the delay in realisation of amounts paid by the cheques or drafts, cannot be justifiable grounds for the employer to escape liability; there is no period of limitation prescribed by the legislature for initiating action for recovery of damages u/s 14B. The fact that proceedings are initiated or demand for damages is made after several years cannot by itself be a ground for drawing an inference of waiver or that the employer was lulled into a belief that no proceedings u/s 14B would be taken; mere delay in initiating action u/s 14B cannot amount to prejudice inasmuch as the delay on the part of the department, would have only allowed the employer to use the monies for his own purposes or for his business especially when there is no additional provision for charging interest. However, the employer can claim prejudice if there is proof that between the period of default and the date of initiation of action u/s 14B, he has changed his position to his detriment to such an extent that if the recovery is made after a large number of years, the prejudice to him is of an "irretrievable" nature; he might also claim prejudice upon proof of loss of all the relevant records and/or non-availability the personnel who were, several years back in charge of these payments and provided he further establishes that there is no other way he can reconstruct the record or produce evidence; or there are other similar grounds which could lead to ''irretrievable" prejudice; further, in such cases of "irretrievable" prejudice, the defaulter must take the necessary pleas in defence in the reply to the show cause notice and must satisfy the concerned authority with acceptable material; if those pleas are rejected, he cannot raise them in the High Court unless there is a clear pleading in the writ petition to that effect."

(Underlining supplied)

As regards passing of burden of fee, the same does not depend on assessment and the plea of prejudice is without any basis.

We, thus, do not find any legal bar to assessment and levy of HRDF fee. However, we direct the assessing authority'' to give hearing to the petitioner and pass a fresh order on merits in accordance with law.

The petition is disposed of.