Coal Mines Provident Fund Commissioner
Dhanbad & Other Vs. J. Lala & Sons [1976] INSC 27 (13 February 1976)
RAY, A.N. (CJ) RAY, A.N. (CJ) BEG, M.
HAMEEDULLAH SINGH, JASWANT
CITATION: 1976 AIR 676 1976 SCR (3) 365 1976
SCC (1) 964
CITATOR INFO :
R 1979 SC1803 (39)
ACT:
Coal Mines Provident Fund and Bonus Scheme
Act 1948 (XLVI of 1948)- Section IOF and 78-Payment of damages payable by the
employer-Whether the Coal Mines Provident Fund Commissioner should give an
hearing to the employer- Meaning of the words "such damages"..
"as ft may think fit to impose".
HEADNOTE:
Section IOF of the Coal Mines Provident Fund
and Bonus Scheme Act 1948 is a penal section under which for default in the
payment of any Provident Fund contribution, the Central Government may recover
from such employer or person as the case may be, such damages, not exceeding
25% of the amount of arrears, as it may think fit to impose. ln respect of tho
period from July to September, 1968, the respondent employer was asked to pay a
sum of Rs. 1455.50 as damages being 25% of the arrears of Provident Fund
contributions by the appellant to which he filed an objection explaining the
delay. The employer' request for waiving the damages was negatived. The writ
application of the employer against that order was allowed by the High Court on
two grounds, viz. (i) that the computation of damages should arise upon
consideration of the facts and circumstances, and (ii) the authorities should
have given an opportunity to the employer to represent the case.
Dismissing the appeal by special leave, the
Court.
HELD: ( I ) The provisions contained in a 78
of the Act indicate first that the Coal Mines Provident Fund Commissioner may
determine the amount due from the employer, and second, for this purpose he may
conduct such enquiry as he may deem necessary. Therefore, an enquiry is
contemplated. Section 78 (3 ) speaks of reasonable opportunity being given to
an employer to represent his case. The provision in s. 10F of the Act also
indicates that determination of damage is not a mechanical process. The words
of importance in s. 10F of the Act are "such damages not exceeding 25 per
cent of the amount of arrears as it may think fit to impose". Here the two
important features are these: First the words of importance are "damages
not exceeding 25% show that the determination of damages is not an inflexible
application of the rigid formula. Second, the words "as it may think fit
to impose" in s. 10F show that the authorities are required to apply their
mind to the facts and circumstances of the case. [368A-C] (2) When a body or
authority has to determine a matter involving rights judicially, the principle
of natural justice is implied if the decision of that body or authority affects
individual rights or interest. [368E-E] Indian Sugars & Manufacturers Ltd
v. Amravati Services Co-operative Society Ltd. Anr. r[1976] 2 S.C.R. 740 and
State of Punjab v. K R. Erry k Sobhag Rai Mefta [1973] 2 S.C.R. 405, applied.
CIVIL APPELLATE JURISDICTION: Civil Appeal
No. 1363 of 1974. Appeal by special leave from the judgment and order dated the
20th May, 1971 of the Patna High Court at Patna in C.W.J.C. No. 306 L. N. Sinha
and Girish Chandra, for the appellants S. N. Mishra, B. P. Singh and A K
Srivastava, for the respondents.
9-L522SCI/76 366 The Judgment of the Court
was delivered by RAY, C.J.-This appeal by special leave turns on the question
whether the Coal Mines Provident Fund Commissioner is to hear an employer
before making an order requiring the employer to pay damages under section 10F
of the Coal Mines Provident Fund and Bonus Scheme Act, 1948 (hereinafter
referred to as the Act).
The employer being the respondent to this
appeal was directed by a letter dated 3/4 January, 1969 to pay provident fund
contributions amounting to Rs. 5821.21 for the months of July to September,
1968 and damages at the rate of 25 per cent on the above dues amounting to Rs.
1455.5O. The employer was required to pay
damages under the provisions of section 10F of the Act.
The employer filed an objection explaining
the circumstances under which there was delay in the payment of provident fund
contributions. The employer prayed that damages might not be imposed at the
rate of 25 per cent for the delay in payment. The employer paid the provident
fund contributions. The employer was informed that damages charged on the
delayed payments of provident fund contribution could not be waived.
The employer thereafter filed an application
in the High Court for an order that the demand notice be quashed.
The High Court acceded to the application of
the employer.
The High Court gave two reasons. First, that
the computation of amount of damages should arise upon consideration of facts
and circumstances and a mechanical computation of damages is not contemplated. Second,
the authorities should have given opportunity to the employer to . represent
the case.
The High Court did not accept the contention
of the employer that section 10F of the Act suffered from the vice of excessive
delegation.
The provision contained in section 10F of the
Act are as follows:- "Where an employer makes default in the payment of
any contribution or bonus or any charges payable- by him under any scheme
framed under this act, or where any person who is required to transfer
provident fund accumulations in accordance with the provisions of section 3D
makes default in the transfer of such accumulations, the Central Government may
recover from such employer or person, as the case may be, such damages, not
exceeding twenty-five per cent of the amount of arrears, as it may think fit to
impose." The Central Government under sub-section (1) of section 10 C of
the Act is authorised to delegate any power exercisable by it under the Act, or
any Scheme framed there under, to the Coal Mines Provident Fund Commissioner or
any other officer.
The Central Government in exercise of the
power conferred under section 10C(1) of the Act by notification dated 1st
October, 367 1966 directed that powers exercisable by it under sections 10A and
A 10F of the Act and specified in column (1) of the Table attached to the
notification shall, subject to the conditions specified in the corresponding
entry in column (2) of the Table attached, be exercisable by the Coal Mines
Provident Fund Commissioner appointed under section 3C(l) of the Act. There is
a Schedule attached to the notification where sliding scale of damages has been
fixed by the Central Government under section 10F of the Act. The Schedule
attached to the notification is as follows:- "Sliding rate of recovery of
damages under section 10F of the Coal Mines Provident Fund and Bonus Scheme
Act, 1949." C S.No. of Period of default , duting one over the year. month
one two three four five or less month months up to up to up to up to two three
four five months 2 3 4 5 6 7 1st default 2% of S% of 18% of 15% of 20% of 25%
of arrears affears alTears arrears arTears arrears 2nddefault S% " IO%
" 15% " 20% " 25% " 2S% " 3rd default IO% " IS%
" 20% " 2S% " 2S% " 2S% " 4thdefault IS% " 20%
" 2S% " 2S% " 2S% " 2S% 5th default 20% " 2S% "
2S% " 2S% " 2S% " 2S% " 6th or subsequent 2S% " 2S%
" 2S% " 2S% " 2S% " 2S% " default li Under section 78
of the Act the Coal Mines Provident Fund Commissioner or any other officer
authorised in that behalf by the Central Government may, by order, determine
the amount due from any employer under any provision of this Act or any scheme
framed there under and for this purpose may conduct such enquiry as he may deem
necessary. Section 78(3) also contemplates giving of reason- able opportunity
to represent the case. The High Court held that the provisions of section 78
are attracted in the case of an order relating to determination of damages for
delay in payment of contribution under the Act.
The Solicitor General contended that section
78 of the Act does not apply for two reasons. First, section 78 of the Act
would be applicable only where liability is to be determined. Neither liability
to pay nor default in payment is disputed in the present case. Second, under
section 10F of the Act the amount of damages is quantified and a 368 personal
hearing is not necessary because the employer has said everything in his
representation and an order for payment of damages is not one of punishment.
The provisions contained in section 78 of the
Act indicate first that the Coal Mines Provident Fund Commissioner may
determine the amount due from the employer, and, second, for this purpose he
may conduct such enquiry as he may deem necessary. Therefore, an enquiry is
contemplated. Section 78(3) speaks of reasonable opportunity being given to an
employer to represent his case. The provisions in section 10F of the Act also
indicate that determination of damages is not a mechanical process. The words
of importance in section 10F of the Act are "such damages not exceeding 25
per cent of the amount of arrears as it may think fit to impose". Here the
two important features are these. First, the words of importance are
"damages not exceeding 25 per cent". These words show that the
determination of damages is not an inflexible application of a rigid formula.
Second, the words "as it may think fit to impose" in section 10F of
the Act show that the authorities are required to apply their mind to the facts
and circumstances of the case.
This Court in The India Sugars and Refineries
Ltd. v. Amravathi Service Co-op. Society Ltd. & Anr. etc.(l) said that
"situations in which a duty will arise to act judicially according to the
natural justice cannot be exhaustively enumerated. A duty to act judicially
will arise in the exercise of a power to deprive a person of legitimate
interest or expectation that addition price would be paid.
The facts which point to an exercise of
powers judicially are the nature of the interest to be affected, the
circumstances in which the power falls to be exercised and the nature of the
sanctions, if any involved". When a body or authority has to determine a
matter involving rights judicially the principle of natural justice is implied if
the decision of that body or authority affects individual rights or interests.
Again, in such cases having regard to the particular situation it would be
unfair for the body or authority not to have allowed a reasonable opportunity
to be heard. (See State of Punjab v. K. R. Erry & Sobhag Rai Mehta.(2) The
High Court was correct in holding that an opportunity should have been given to
the employer to be heard before the damages were determined. The appeal is,
therefore, dismissed with costs.
S. R.Appeal dismissed.
(1) [1976] 2 S.C.R. 740. (2) [1973] 2 S.C.R.
405.
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