Nayek Paper Industries Pvt. Ltd. vs The Regional Provident Fund Commissioner

Jayanta Kumar Biswas, J.—This writ Petitioner dated April 11, 1988 was filed challenging the decision dated March 31, 1988 (Annex. F) given by the Regional Provident Fund Commissioner, West Bengal, in a ''proceeding initiated u/s 14B of the Employees'' Provident Funds and Miscellaneous Provisions Act, 1952 (in short the Act 19 of 1952).

The relevant portions of the impugned decision are quoted below:

Sri M.L. Sett and Sri R.N. Panja, authorized representatives of the company appeared before me personally on 24.2.88. They filed a statement iner alia showing the amounts paid towards interest loss, suffered by the fund in accordance with the High Court''s orders of the amounts mentioned as Rs. 1494=63 and Rs. 254=58 paid on 27.7.82 in Account No. 1 and 10 respectively have been reflected from our notice. I accept the claim of the representatives and accordingly delete the amounts from demand.

Further it is also argued by them that there had been some disruption in the banking services, which had resulted in delay. They also stated that load shedding, floods, lock-out had affected them. In this connection it is noted that such floods and lock-out occurred during 79-80 and the period under consideration is beyond March 81. The authorized representative replied that the effects did linger for some time.

The authorized representative replied on Murarka Case. This case will not help as the jurisdic views levy of damages have been firmly laid down in Organo Chemical case by the Supreme Court which states that the levy of damages has penal element in character.

After considering all the points raised by the establishment, I have come to the conclusion as follows:

The establishment had earned handsome profit during the years 80-81 and 81-82, that is Rs. 10.90 lakhs and 11.11 lakhs. The period under review is 81-82.

In other words they had earned a profit of almost about a lakh of rupees a month, yet they had chose to delay the payment of Provident Fund dues, month after month, for varying periods, and upto nine months even. This is after deducting Employees'' share of Contribution. The establishment had even chosen to raise the bogey of contempt of Court for even examining the levy of damages. It would be worth while to note that the establishment while having profits during a current year, yet had gone to High Court to appeal to its inherent kindness to plead, inter alia, loss and gets installment Scheme. The attitude of the employer to statutory obligations is exposed as of utter contempt. Hence utmost penalty must be visited upon them.

Total amount of dues on account of belated payment made for the months between March ''81 and February ''82 comes to Rs. 94,839=44. Damages can be imposed upon the company upto 100% of the said amount according to the Rules. However, having regard to all the facts and extenuation circumstances of the case, I consider that the ends of justice would be met if the damages are imposed at a rate of 100% of the defaulted amounts less than amount of interest paid in pursuant to Hon''ble High Court''s order.

The proceeding initiated u/s 14B was contested by the Petitioners by submitting a written statement dated December 29, 1987. In the written statement the Petitioners raised the following contentions:

(a) For delayed payment of dues under the said Act for the period January to December 1981 we filed a Writ Petition before the Hon''ble High Court at Calcutta with prior Notice to you. Upon the said Writ Petition the Hon''ble Mr. Justice D.K. Sen of the Hon''ble High Court of Calcutta was inter alia pleased to direct us to pay interest @ 8.75 p.a. calculated for the delayed period. The said order was passed inter alia upon hearing the Learned Advocate appearing on your behalf. The said order is still subsisting. You have accepted the said Order and did not file any appeal against the same. Accordingly, for the self same period you cannot impose damage upon us contrary to the said order of the Hon''ble High Court. It will amount to contempt if you proceed in the matter.

(b) According to the scheme of the said Act, damage is levied upon a defaulting employer in order to compensate the loss caused to the Fund. The idea is to recover from the employer the loss of interest which would have accrued to the Fund if the Provident Fund dues were paid in time and invested in Government securities. As a matter of fact there are Circulars issued by the Central Provident Fund Commissioner laying down the guideline for determination of the quantum of damages to show that the wide power of levy up to 100% as conferred by Section 14B may not be misused or abused. We have duly paid interest and 8.75% per annum as directed by the Hon''ble Court. As such, the interest of the Fund is in no way prejudiced and the employees are also amply protected. Hence, imposition of damage over and above the interest already paid will amount to double jeopardy which is not permitted by or provided for in the said Act.

(c) Your proposal for levy of damages after 6 years from the period in question renders us unable to give proper explanation based on relevant facts. We have explained all with full satisfaction at the time of personal hearing before your Honour in the year 1981 before filing Writ Petition in the Hon''ble High Court. At such a distant date it is not possible for us to remember the particular reason for which there had been delay in respect of payment of dues for each contribution period. Broadly speaking, for some periods the payments got delayed because of delay in clearance of cheques by the collecting Banks and the Reserve Bank of India which was beyond our control. Further, at the relevant time we had to pass through a critical and unprecedent labour problem and in view of sabotage by a section of the employees the normal office work was seriously hampered. The recalcitrant employees deliberately created situation, for delay in payment of statutory dues in order to put the employer in trouble. The cumulative effect of all these had resulted in delayed payments.

(d) The delay in most of the cases was marginal and since after May 1982 till date and also prior to March 1981 we had paid all provident Fund dues in proper time upon disbursement of salaries and wages. This clearly establishes bonafide on our part.

(e) The Act is a piece of labour welfare legislation. But it does not mean that because of the illegal and wrongful activities of the labour, the existence of the factory was at stake and for which the employer cannot be penalized for no fault of the employer and that too for the welfare of such labours who were responsible for creating a situation in which the employer could not pay the dues in time. This would be contrary to the spirit and object of the Act.

By order dated June 7, 1988 in presence of the learned advocate for the Respondents directions were given for filing opposition by the Respondents. It is submitted the learned Counsel for the parties that affidavits were exchanged by them, but copies of such affidavits are not available on record from the copy supplied by the learned Counsel for the Respondents, it appears that the opposition was affirmed on July 27, 1988. Similarly, from the copy supplied by the learned Counsel for the Petitioners, it appears that the reply was affirmed sometime in August, 1988.

Mr. Gupta, appearing for the Petitioners, assails the decision given by the Commissioner on a short ground that the discretion conferred on him by the provisions of Section 14B was totally submerged by the authority''s unwarranted anger, and hence the order passed by him imposing nearly 100% damages, although damages could be imposed in a fit case upto 100%, actually stood grossly vitiated by total non-consideration of the grounds of objection taken by the Petitioners in their written statement. He submits that the discretion that was required to be exercised by the authority judiciously, was burnt by his personal anger and the resultant effect was that besides, passing an order without application mind, the authority also made oblique observations regarding order passed by this Court for granting installments to the Petitioners. He submits that the authority simply abused his statutory power.

The learned Counsel appearing for the Respondents submits, by placing reliance on three decisions, that financial problems and/or difficulties are no grounds to justify the default; the employer is under the initial obligation to pay the contributions; and lock-out and similar problems are hardly any justifiable grounds for committing defaults in the payment of statutory dues, like Provident Funds. He relies on: Hindustan Times Limited v. Union of India and Ors. A.l.R. 1998 S.C. 688; Organo Chemical Industries and Anr. v. Union of India and Ors. AIR 1979 S.C. 1803 and Calicut Modern Spg. and Wvg. Mills Ltd. v. Regional Provident Fund Commissioner (1982) Lab.I.C. 1422. By placing reliance on these decisions and referring to the reasons given by the authority in the decision impugned, he submits that the decision does not suffer from any infirmity, so as to warrant interference by this Court sitting in writ jurisdiction.

After hearing the learned Counsel for the parties and perusing the materials on record and the decisions cited at the Bar, I am of the considered view that the decision given by the Commissioner, and as impugned in this writ petition, cannot be sustained.

As rightly pointed out by Mr. Gupta, while giving the decision, the authority instead of considering the objections raised by the Petitioners in their written statement, took into consideration certain imaginary grounds stated to have been taken by the Petitioners to justify the defaults committed by them.

The grounds taken by the Petitioners in their written statement, as noted before, it is apparent on the face of the order passed by the authority, were substantially ignored and overlooked by him. The ground of delay in initiating the proceeding was not considered, even when the Petitioners pleaded a case of suffering irretrieval prejudice for its delayed initiation.

The language employed by the authority in his decision is absolutely unwarranted. The installments were granted by this Court in a proceeding initiated by the Petitioners. His decision contains observations, like by way of defence the Petitioners raised a ''bogey of contempt of Court''. Such observations were absolutely unwarranted, because in the written statement filed by the Petitioner they had taken a plea that in the face of the orders passed by the High Court in the writ proceeding, any interference with the same by the authority might amount to commission of contempt of Court by him. Such a plea, if was found to be without any merit, could have been rejected with all humbleness and dignity.

A quasi judicial authority (as the Commissioner in this case was, for the proceeding) simply overreaches his jurisdiction and power by putting an uncharitable interpretation on a party''s initiating proceeding in the High Court and obtaining order to the disliking of such authority. Reference to Court proceedings and orders, latent or patent, should be made by such authority, if essentially or incidentally required, with due sobriety and dignity, and not by employing any language that leaves room for questioning the propriety thereof.

The decisions cited by the learned Counsel for the Respondents, in my considered view, have no manner of application to the present case, in the context of the issue in dispute.

For the foregoing reasons, I am of the view that the order passed by the authority cannot be sustained, and the same is liable to be set aside.

Accordingly, the writ petition is allowed. The impugned order dated March 31, 1988 (Annex. F) is hereby set aside.

However, I make it clear that this order shall not prevent the authority from proceeding afresh from the stage of hearing the Petitioners for the purpose of passing a fresh order, after considering the objections raised by them in their written statement.

In the facts and circumstances of the case there will be no order as to costs.

Let urgent xerox certified copy of this order, if applied for, be furnished to the learned Counsel for the parties.