AI Structured Summary
Not yet generated for this judgment
Judgment
Heard Mr. G.N. Sahewalla, learned senior counsel, assisted by Mr. A.K. Sahewalla for the petitioners and Mr. N.C. Das, learned senior counsel,
assisted by Ms. A. Das, learned counsel for the respondent Nos.1, 2 and 3 and also heard Mr. A. Chakraborty, learned Government Advocate for the
respondent Nos.4 and 5.
The petitioner No.1 is a company duly registered under the Companies Act, 1956 and the petitioner No.2 is the Tea Garden run by the petitioner
No.1/company, engaged in the business of manufacture of black tea since the last several years. In between the period of 1998 to 2008, the
management of the Tea Estate had faced severe financial crisis and was unable to deposit the employer’s along with the employees contribution
to the Assam Tea Employee’s Provident Fund Organization (ATEPFO), which was earlier known as Assam Tea Plantation Provident Fund and
Pension Fund Scheme. The amount so defaulted was forwarded to the Collector/Deputy Commissioner, Jorhat by respondent No.2 for recovery of
dues as per Section 15 of the Assam Tea Plantation Provident Fund and Pension Fund Scheme (Amended) Act, 1958 (hereinafter referred to as Act,
1958) and by the letter dated 30.04.2009, requested to initiate recovery proceedings of the defaulted amount for the period from 08.04.2007 to
01.11.2008. Similarly, on 31.08.2007, due to non-payment of dues, the respondent No.2 forwarded to the Collector/Deputy Commissioner, Jorhat for
recovery of dues under the said Act, 1958 to initiate recovery proceedings as per the mode of recovery of arrear land revenue for the defaulted period
of 23.12.1998 to 24.03.2007. The Bakijai Officer of the Office of the Deputy Commissioner, Jorhat, registered Bakijai Case No.PF/BC/1/2007-08, for
realization of an amount of Rs.73,76,032.00 for the period from 08.04.2007 to 01.11.2008 and Bakijai Case No.PF/BC/2/2007-08 was also registered
for realization of Rs.2,38,23,023.00 for the period from 23.12.1998 to 24.03.2017 and both the said Bakijai cases were proceeded against the
petitioners. The said Bakijai proceedings were directed to be concluded within a period of 6 (six) months from the date of order, i.e., from 06.01.2005,
passed by this Court in WP(C) 5720/2014, preferred by the present respondent No.2, i.e. the Board of Trustees, ATEPFO. As per the said direction
of this Court, on 12.08.2015, the petitioner No.2 duly issued the cheque for payment of the pending dues of the petitioners and thereafter on
13.08.2015, all the pending dues in the form of public demand were duly deposited by the petitioners and on 26.08.2015, the Bakijai Clearance
Certificates were issued in favour of the petitioner No.2.
The petitioner No.2 received notice dated 08.09.2015 issued by the respondent No.2 thereby informing that the petitioner No.2 is liable to deposit 15
percent statutory interest on the defaulted amount deposited against provident fund and the respondent No.2 directed the petitioner No.2 to make
payment of an amount of Rs.2,94,21,497.77 as the interest for the period of 13.12.1998 to 24.03.2007, the principal amount already recovered by
Bakijai Case No.PF/BC/2/2007-8 and an amount of Rs.70,85,582.87 as the interest for the period from 08.04.2007 to 01.11.2008, the principal amount
also recovered through Bakijai Case No.PF/BC/1/2007-18.
Being aggrieved, the petitioners have filed the WP(C) No.5896/2017 for quashing the impugned notices bearing Memo No.PF/(L)/2015/S-248/6257-
59, dated 08.09.2015 against the claim of interest amounting Rs.2,94,21,497.77 and for further direction for refund and an order to adjust the amount
already paid by the petitioner in pursuant to the impugned notice dated 08.09.2015. Similarly, WP(C) No.5902/2017 is also preferred challenging the
notice dated 08.09.2015, bearing No. PF/(L)/2015/S-248/6257-59, with similar prayer as that made in the above writ petition against the claim of
Rs.70,85,582.87. Both the writ petitions are taken up for disposal at the admission stage by this common order.
This Court, upon motion, was satisfied to pass an interim order dated 22.09.2017, thereby directing the respondents not to make recovery in respect
of any amount which were covered under the certificate dated 26.08.2015 and 31.08.2007, i.e., on the certificate amount in earlier Bakijai
proceedings. In order to vacate the said interim order dated 22.09.2017, the respondent Nos.2 and 3, as the applicants, preferred two interlocutory
applications which were registered as I.A.(Civil) No.560/2018 in WP(C) 5196/2017 and I.A. (Civil)515/2018 in WP(C) 5902/2017. The said
interlocutory applications are also taken up together.
Mr. Sahewalla, learned senior counsel submits that Section 16 of the Bengal Public Demand Recovery Act, 1913 (hereinafter referred to as Act,
1913), mandates for imposing interest upon the public demand to which the certificate relates at the rate of six and a quarter per centum per annum
and the petitioners paid the said interest while liquidating the certificate amount under the Bakijai cases, which accrued against the outstanding of the
defaulted amount. Thereafter the respondents cannot claim for the interest at the rate of 15 percent per annum, over the arrear defaulted dues, which
were subsequently paid through Bakijai proceedings. While discharging the certificate amount of earlier period, the petitioner paid the interest thereon
as per Section 16 of the said Act of 1913 and as such if the petitioners are forced to pay the interest at the rate of 15 percent per annum over the
arrear defaulted dues, it would amount to payment of interest on interest over the said arrear defaulted amount which was covered by the respective
certificate amount already liquidated and the same is against the public policy. So, he submits for quashing of the said demand notice dated 08.09.2015.
Mr. Das, learned senior counsel for the respondent Nos.2 and 3 submits that on receipt of the demand notice dated 08.09.2015 against statutory
interest, the writ petitioners requested the respondent Nos.2 and 3 that the said amount of Rs.3,65,07,080.64, which is the total amount due as per the
demand notice dated 08.09.2015, would be paid not at a time but by way of 84 (eighty four) installments. The respondent Nos.1 and 2 permit the
petitioners to deposit the total demanded amount by way of 50 (fifty) installments, subject to deposit of equal number of post dated cheques which was
accepted by the petitioners. Out of the said 50 (fifty) number of cheques, the petitioner No.1 deposited 20 (twenty) numbers of post dated cheques,
each amounting to Rs.7,30,142.00 and already 12 (twelve) number of cheques were deposited in the account of the respondent No.2. Such action on
the part of the petitioners amounts to acceptance of the demand made against the statutory interest and now the petitioners cannot turn around and
dispute the said amount of Rs.3,65,07,080.64. These facts are suppressed while the petitioners filed the writ petition. It is further submitted that the
said statutory interest was not included in the earlier demand notices which formed the certificate amount in the earlier two Bakijai cases. Mr. Das
further submits that the interest so charged is a statutory interest and the date of payment is required in order to calculate the interest due which
ceases, on the date of payment made against the defaulted amount. As the employer’s and employees contribution were not paid till initiation of
Bakijai proceedings, so the question of calculation of statutory interest at the rate of 15 percent per annum and inclusion of the same in the earlier
demand of the respondents does not arise at all.
Mr. Das further submits that the amount at the rate of six and a quarter per centum per annum, as stipulated under Section 16 of the said Act, 1913,
cannot be termed to be the interest required to be paid by the present petitioners against the defaulted amount which is totally governed by Section 11
(A) of the Act, 1958. Interest, being statutory interest, the petitioners are bound to pay the same and there is no question of interference by this Court
as sought for, by the petitioners.
Considered the submissions of the learned counsels. Section 3(6) of the Act, 1913 defines “public demand†which is reproduced below:-
“â€Public demand†means any arrear or money mentioned or referred to in Schedule I and includes any amount due to a Bank or financial
institution including any interest which may, by law and or under a written agreement be chargeable thereon up to the date on which a certificate is
signed under Part II†From the aforesaid definition it is seen that it includes interest which may by law or under a written agreement is chargeable on
the demanded amount. Section 16(a) of the said Act, 1913 stipulates recovery of interest upon the public demand to which the certificate relates at the
rate of six and a quarter per centum per annum from the date of signing of the certificate up to the date of realization along with such cost. It is seen
that the said interest at the rate of six and a quarter per centum per annum is mandatory on public demand which is the recoverable amount as per the
Act, 1913.
Section 11 of the Act, 1958 is reproduced below:-
Responsibility of collection of contribution: “Every employer shall be responsible for collection of the contributions, their remittances in
accordance with the provisions of the Scheme and maintenance of necessary records in respect of members of his tea plantation or tea factory and
shall bear the cost thereof.
11.(A). If the employer fails to deposit employer’s contribution together with the employees’ share of contribution within 30 (thirty) days of its
collection, the employer shall be liable to pay interest at the rate of 15 percent per annum on the arrear till it is deposited.â€
It is seen that if there is any default on the part of the employer to deposit his contribution together with employees’ share of contribution
within 30 (thirty) days from its collection, 15 percent interest is to be charged from the employer. Admittedly, there was default on the part of the
petitioner in depositing the aforesaid amount inasmuch as it is the case of the petitioners that the public demand so made under the Act, 1913 was
recovered in the Bakijai proceedings. It cannot be inferred that the said public demand includes the penal 15 percent interest inasmuch as in order to
calculate the interest the period of default is required along with the date of payment as the interest 15 percent is per annum. The said interest is
statutory one which binds the petitioners as they are bound to pay the contributions compulsorily.
Section 4 of the Interest Act, 1978 stipulates that notwithstanding anything contained in Section 3, interest shall be payable in all cases in which it is
payable by virtue of any enactment or other rule of law or usage having the force of law.
In Renusagar Power Co. Ltd.-vs- General Electric Co., reported in AIR 1994 SC 860, the Hon’ble Apex Court, while deciding an issue
whether award of interest on interest (compound interest) is not permissible under the law of New York as well as law in India and whether the same
is contrary to public policy of India held as follows:-
“93………This would show that there is no absolute bar on the award of interest by way of damages and it would be permissible to do so if there
is usage or contract, express or implied, or of any provision of law to justify the award of such interest. Merely because in S.3 (3)(c) of the Interest
Act, 1978, the court is precluded from awarding interest on interest does not mean that it is not permissible to award such interest under a contract or
usage or under the statute. It is common knowledge that provision is made for the payment of compound interest in contracts for loans advanced by
banks and financial institutions and the said contracts are enforced by courts. Hence, it cannot be said that award of interest on interest, i.e.,
compound interest, is against the public policy of India. We are, therefore, unable to accept the contention that award of interest on interest, i.e.,
compound interest is contrary to public policy of India and the award in respect of compensatory damages awarded under item No.2, 4 and 6 cannot
be enforced under S.7(1)(b)(ii) of the Act.â€
Thus, from the discussion made herein above, it is seen that there is no bar in charging interest on interest if it is statutory. Section 4 of Interest
Act, 1978 specifically stipulates notwithstanding anything mentioned in Section 3 of Interest Act, 1978, interest shall be payable in all cases in which it
is payable by virtue of any enactment. Section 11(A) of the Act, 1958 stipulates charging 15 percent interest per annum on any default on the part of
the employer in its contribution along with employee’s share of contribution within 30 (thirty) days from its collection. Section 16 (a) of the Act,
1913 also stipulates statutory interest on the public demand and mandates its levy on the recoverable amount which is public demand. From Section
3(6) of the Act, 1913, it is seen that interest is included in the public demand supposed to be recovered under the provisions of the said Act, 1913. Both
the provisions are impregnated with its statutory force and as such under Section 4 of the Interest Act, 1978, there is no bar in charging and realizing
the same by the respondent Nos.1 and 2. The submissions of Mr. Sahewalla that interest on interest cannot be charged is not acceptable in my
opinion. As a result, there is no merit in the writ petitions which are accordingly dismissed.
The petitioners are bound to pay the said interest of 15 percent per annum raised through the demand notice bearing Memo No.PF/(L)/2015/S-
248/6257-59, dated 08.09.2015 and the respondents, more specifically the respondent No.2 is at liberty to take shelter of the lawful mode for its
recovery if the petitioners fail to pay the said demand made by the said notice dated 08.09.2015.
These writ petitions are accordingly disposed of.
The interim order passed earlier, stands vacated.