Provident Fund Commissioner Vs. M/S. ICT. Rolling Mills Pvt. Ltd.  INSC
596 (22 November 1994)
B.L. (J) Hansaria B.L. (J) Kuldip Singh (J) Hansaria, J.:
1995 AIR 943 1995 SCC (1) 181 JT 1995 (1) 138 1994 SCALE (4)1023
Employees' Provident Funds and Miscellaneous Provisions Act, 1952, hereinafter
the 'Act', was enacted to serve beneficient purpose and it does constitute a
welfare measure, as it seeks to create a fund which could be drawn upon by certain
categories of employees working in factories and some establishments to meet
pressing demands, so also to provide pension after the employees have ceased to
be in service. So the Act has to be construed in such a way, in case two views
be possible, which advances the object. This has been the outlook of the Court
for over three decades by now, as the same was first focused in Regional
Provident Fund Commissioner v. Sri Krishna Metal Manufacturing Company, 1962
(Supp.) 3 SCR. 815 and was reiterated in Regional Provident Fund Commissioner
v. Shibu Metal Works, 1965 (2) SCR 72.
purpose of the aforesaid prologue is to find out as to when power under section
14-B of the Act should be allowed to be used and whether it would in consonance
with the object sought to be achieved by the Act if delay in invoking the power
is allowed to stand in the way. As in the present case we are concerned with
the order of the Regional Provident Fund Commissioner, Maharashtra, (the
Commissioner) levying damages on the respondent for default in payment of the
contribution in exercise of power under Section 14-B, let it be noted what this
Court had said about this section in Organo Chemical Industries v. Union of
India, 1980 (1) SCR 41. In that case this Court was called upon to decide the
constitutionality of section 14-b, which was challenged as violative of Article
14 having conferred unguided power.
rejected the contention. It also spelt out the purpose of imposition of
damages, stating that the same was meant to penalise defaulting employer, as
also to provide reparation for the amount of loss suffered by the employees. It
was pointed out that it is not only a warning to employers in general not to
commit a breach of the statutory requirements, but at the same time it is meant
to provide compensation or redress to the beneficiaries i.e. to recompense the
employees for the loss sustained by them.
There is no dispute in the present case that the respondent had defaulted in
depositing the contributions both its own and as well as of the employees in
time. The Commissioner, after applying his mind to the .period of delay as well
as to the quantum, imposed a sum of Rs. 52,034.80 as damages. The order of the
Commissioner came to be challenged before the Bombay High Court by the
respondent who has set aside the order solely on the ground that the proceeding
was bad because of unreasonable delay in initiating the same. The Court pointed
out that though section 14-B has not laid down any period of limitation, the
power has to be exercised within reasonable time. As the default related to the
period from July 68 to October 77, relating to which proceedings came to be
initiated in 1985, the High Court regarded the delay as unreasonable, and so,
fatal. The Regional Provident Fund Commissioner has preferred this appeal with
the aid of Article 136 of the Constitution.
There can be no dispute in law that when a power is conferred by statute
without mentioning the period within which it 140 could be invoked, the same
has to be done within reasonable period, as all powers must be exercised
reasonably, and exercise of the same within reasonable period would be a facet
of reasonableness. When this appeal was heard by us on 7.9.94 and when this
aspect of the matter came to our notice, we desired an affidavit from the
Commissioner to put on record regarding the point of time when he knew about
the default and to explain the cause of delay. Pursuant to that order the
Commissioner filed his affidavit on 10.11.94, according to which the power of
levying damages came to be delegated to the Commissioner by an order dated
however, large number of establishments were in existence in the State of Maharashtra-the
number of which in 1985 was 22, 189and there was only one Regional Provident
Fund Commissioner having power to levy damages, delay was caused in detection
of the cases of belated payment..
to the affidavit, the default at hand was located on 19.4.85 and the damages
came to be levied by order dated 5.11.86.
aforesaid shows that the delay was of 12 years viewed generally and was of 11/2
years qua the case at hand.
the general period of delay is quite long, unreasonably long, but if it is
borne in mind that in view of large number of establishments in the State of Maharashtra,
default at hand come to notice only in April 1985, the killing effect of delay
gets eroded. We do not, therefore, think if the order merits to be struck down
on the ground of delay, when it is also kept in mind that the delay in default
related even to the contribution of the employees, which money the respondent
(after deducting the same from the wages of the employees) must have used for
its own purpose and that too without paying any interest, at the cost of those
for whose benefit it was meant. Any different stand' would encourage the
employers to thwart the object of the Act, which cannot be permitted.
Mohan, learned counsel for the respondent, pleads that keeping in view what had
been ordered by this Court in Christian Medical College, and Brown Memorial
Hospital v. Regional Provident Fund Commissioner, 1989 (Supp) 2 SCC 95, we may
not sustain the order of the Commissioner. In that case dues were not paid in
time because of some controversy as to whether hospitals arc covered by the
Act. It was, therefore, contended that as the appellants would be complying
with the provisions of the Act and would pay all the arrears, damages for
delayed payment of the arrears may not be approved. This Court, having regard
to the facts of that case, accepted the submission.
facts of the present case are entirely different.
therefore, set aside the impugned judgment of the High Court. But then we state
that the respondent would not be called upon to pay any interest on the damages
as fixed by the Commissioner, if it would pay the entire amount within two
months from today. On the failure of the respondent to so pay, it shall have to
pay interest at the rate of 18% from today till full realisation.
appeal is allowed accordingly. No order as to costs.