Commr. Vs. K.T. Rolling Mills Pvt. Ltd.  INSC 602 (22 November 1994)
B.L. (J) Hansaria B.L. (J) Kuldip Singh (J)
1995 AIR 943 1995 SCC (1) 181 JT 1995 (1) 138 1994 SCALE (4)1023
Judgment of the Court was delivered by B.L. HANSARIA, J. The Employees'
Provident Funds and Miscellaneous Provisions Act, 1952 (hereinafter the 'Act')
was enacted to serve beneficent 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 + From the Judgment and Order dated 12-7-1993 of the Bombay High Court A.
No. 384 of 1993 in W.P. No. 3271 of 1987 182 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 focussed in R.P.F Commr v. Shree Krishna Metal
Manufacturing Co.1 and was reiterated in R.PE Commr v. Shibu Metal Works2.
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 the 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 India3. 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.
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 1968 to October 1977, 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.
can be no dispute in law that when a power is conferred by statute without
mentioning the period within which it 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 1 1962 Supp (3) SCR 815:
AIR 1962 SC 1536: (1962) 1 LJ 427 2 (1965) 2 SCR 72: AIR 1965 SC 1076: (1965) 1
LLJ 473 3 (1979) 4 SCC 573 : 1980 SCC (L&S) 92 : (1980) 1 SCR 61 183
7-9-1994 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 came to know about the default and to explain the cause of delay.
to that order, the Commissioner filed his affidavit on 10-11-1994, according to
which the power of levying damages came to be delegated to the Commissioner by
an order dated 17-10-1973. As, however, large number of establishments were in
existence in the State of Maharashtra the number of which in 1985 was 22,189
and there was only one Regional Provident Fund Commissioner having power to
levy damages, delay was caused in detection of the cases of belated payment.
According to the affidavit, the default at hand was located on 19-4-1985 and the damages came to be levied by order dated 5-11-1986.
aforesaid shows that the delay was of 12 years viewed generally and was of 1
1/2 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 came 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 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. R.PE Commr4, 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 are 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. The facts of the present case are
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.