Regional
Provident Fund Commissioner Vs. S.D.
College, Hoshiarpur G Ors [1996] INSC 1342
(28 October 1996)
K. Ramaswamy,
G.B. Pattanaik
ACT:
HEAD NOTE:
O R D
E R
Delay
condoned.
Leave
granted.
We
have heard learned counsel on both sides.
These
appeals by special leave arise from the judgment of the Division Bench of the
Punjab & Haryana High Court made on December 6, 1995 in CWP Nos.637 and 692 of 1995.
The
admitted position is that the appellant had applied the provisions of Employees
Provident Fund and Miscellaneous Provisions Act, 1952 (for short, the 'Act') to
the respondent Institution by notification dated March 6, 1982.
Calling
the notification in question the respondent, had filed writ petition in this
Court. This court by judgment dated January 29, 1988 had held that the Act would apply
to the educational institutions and, therefore, they are required to comply
with the notification issued under the Act. This Court had directed thus:
"shri
S.k. Bagga, learned counsel appears for the petitioners. We do not find any
substance in the contention of the petitioners in these cases that the
Employees Provident Funds and Miscellaneous Provisions Act, 1952 (hereinafter
referred to as "the Act") has no application to the educational
institutions, who are petitioners in these cases. We, therefore, dismiss all
these cases.
we
direct that the petitioners shall comply with the Act and the schemes framed thereunder
regularly with effect from 1.2.1988. Whatever arrears they have to pay under
the Act and the schemes in respect of the period between 1.3.1982 and 1.2.1988
shall paid by each of the petitioners within such time as may be granted by the
Regional Provident Fund Commissioner if the petitioners pay all the arrears
payable from 1st March, 1982 upto 1st February 1988 in accordance with the
directions of the Regional Provident Fund Commissioner he shall not levy any
damages for the delay in payment of the arrears.
Having
regard to the special facts of these cases the subscribers(the employees) shall
not be entitled to any interest on the arrears. The writ petitions are disposed
of accordingly. No costs." In spite of the directions issued by this Court
instead of complying with the orders of this Court, the respondents continued
to deposit amounts with the University. The respondents thus, have not with the
law. Consequently, the appellant exercising the Power under Section 14-B of act
levied damages @ 25% of the amount Payable by the respondents The respondents
filed writ petitions against the appellant in the High Court. The High court in
the impugned order has held that the appellant is not liable to levy damages on
the respondents.
Thus
these appeals by special leave.
Section
14-B of Act reads as under:
"14-B.
Power to recover damages.- Where an employer makes default in the payment of
any contribution to the Fund (the family Fund or the Insurance fund) or in to
be transferred by him under sub- section (2) of Section 17) or in the provision
of this act or of any scheme or insurance scheme or under any of the conditions
specified under section 17, the central provident fund commissioner or such
other officer as may be authorised by notification in the Official Gazette in
this behalf may recover such damages, not exceeding the amount of arrears, as
may be specified in the scheme;
Provided
that before levying and recovering such damages, the employer shall be given a
reasonable opportunity of being heard:
Provided
further that the Central Board may reduce or waive the damages levied under
this Section in relation to an establishment which is a sick industrial company
and in respect of which a scheme for rehabilitation has been sanctioned by the
Board for Industrial and Financial Reconstruction established under Section 4
of the Sick Industrial Companies (Special Provisions) Act, 1985, subject to
such terms and conditions as may be specified in the scheme." Shri Randhir
Jain, learned counsel for the respondent, contends the after the judgment by
this Court, the respondents have applied for permission to the University for
withdrawal of the amount. After the receipt of the direction issued by the
University on June 7,
1990, they had redeposited
the amount to the tune of Rs.6,40,122.70 together with other charges in a sum
of Rs.58,736.70. There was no intentional delay on the part of the respondents
in not depositing the amount and therefore the High Court was right in
directing to recover the damages under Section 14-B of the Act. This Court on July 10, 1996 issued notice stating as to why the
respondents are not liable to pay the interest for the failure to pay the
G.P.F. from February 1988 to May 1990 in the light of the admission made by
them in paragraph 6 of their reply letter dated October 26,1994.
Now,
an affidavit has been filed on behalf of the respondents stating that they have
deposited the amount in the University and the amounts was kept in fixed depoits
earning interests @ 11% since a direction was issued to comply with the
direction to redeposit the amount, after premature encashment, they returned it
with 9% interest and the same was deposited and, therefore, they are not liable
to pay the damages that are determined by the Regional Provident Fund
Commissioner under the impugned order as assailed in the writ petition. Having
regard to the contention, the question that arises for consideration is:
whether
the appellant is entitled to recover damages? A reading Section 14-B of the Act
would indicate that the employer is under an obligation under the statute to
comply with the payment of the amount, In the event of his committing default
in the payment of the contribution to the fund or in the payment of any charges
payable under any other provisions of the Act or any scheme or insurance scheme
or any of the conditions specified in Section 17, the Central Provident Fund
Commissioner or such other officer as may be authorised by the Central
Government may, by notification in the official Gazette in this behalf, recover
from the employer by way of penalty, such damages, not exceeding the amount of
arrears, as may be specified in the scheme. The second proviso only lifts the
embargo in the event of the industry becoming sick and it was reconstructed
under the provisions of Section 4 of the Sick Industrial Companies (Special
Provisions) Act, 1985 subject to such terms and conditions as may be specified
in the scheme of rehabilitation. In other words, the Act envisages the
imposition of damages for delayed payments. The Act is a beneficial welfare
legislation to ensure health and other benefits to the employees. The employer
under the Act is under a statutory obligation to deduct the specified
percentage or the contribution from the employee's salary and matching
contribution, the entire amount is required to be deposited in the fund within
15 days after the date of the collection, every month.
Thereby
the employer is under a statutory obligation to deposit the amount to the
credit of the Fund every month. In the event of any default committed in that
behalf, Section 14-B steps in and calls upon the employer to pay damages by way
of penalty the maximum of which is the accumulated arrears. The Regional
Provident Fund Commissioner is given discretion only to reduce a percentage of
damages and he has no power to waive penalty altogether. In this case,
admittedly, after the judgment, there was no reason for the respondent to
deposit the amount with the University. We can understand that , since there
was a scheme framed by the University and the respondent was under an
obligation to comply with the scheme. they can have a feeling of doubt as to
whether they should abide by the scheme framed by the University or under the
Act. Since they had filed the writ petition in this Court, this Court gave
direction on January 29,1988 directing the respondents to deposit the
contribution with the appellant. Thereby the respondents have a statutory
obligation to deposit the amount from February 1988 onwards. Therefore, there
is no justification whatsoever to deposit and keep depositing the amount in the
University account after the judgment of this Court. The mere fact that the
University has given permission to redeposit the amount with the appellant does
not enable the respondents to take shelter there under for non-deposit of the
amount in the Fund.
Under
these circumstances, we do not think that there is any justification in the
contention for waiver of the penalty imposed by the Regional Provident Fund
Commissioner. As held earlier, there is no discretion left to the Commissioner
to totally waive the penalty. What was left to his discretion is the rate at
which it is to be computed by way of penalty. In this case, admittedly, 25% of
the damages was computed as penalty. Since the respondent had deposited the
amount in fixed deposit and it earned 9% interest thereon, the balance amount
is required to be deposited and the respondent is directed to deposit the
balance amount within six weeks from today.
The
appeals are accordingly allowed. The writ petition stands dismissed. No costs.
Back