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M/S Sir Shadi Lal Sugar And General Mills. v. Regional Provident Fund Comm.U.P.Sub Reg.Office - WRIT - C No. 3420 of 1995 [2007] RD-AH 10039 (24 May 2007)


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(Judgment reserved on 15.2.2007)

(Judgment delivered on 24.5.2007)

Civil Misc. Writ Petition No.534 of 1990

M/S Sir Shadi lal Sugar & General

Mills . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Petitioner


Regional Provident Fund Commissioner

U.P. Meerut. . . . . . . . . . . . . . . . . . . . . . .Respondents.

Hon'ble S.U.Khan,J.

Heard learned counsel for the parties.

These writ petitions are directed against the orders of the Regional Provident Fund Commissioner, Meerut, imposing damages under section 14-B of Employees Provident Fund and Miscellaneous provisions Act, 1952 for delayed payment  of contributions towards Provident fund account, Family pension contribution account  and Administrative charges Act by the petitioner.

The damages imposed through order dated 7.4.1989 of Regional Provident Fund Commissioner, Meerut which is challenged in writ petition No. 8714 of 1989 are Rs.4,80,932.80. The petitioner admitted that the payments were late. However, it stated that its financial condition was not good hence delay occurred in making the contribution in the aforesaid accounts. In the impugned order it is mentioned that bad financial condition is no ground to justify delay in making the contribution.

In writ petition No. 534 of 1990 the Regional Provident Fund Commissioner, Meerut through order dated 3.1.1990 imposed the damages of Rs. 6,91,098,15 for delayed payment of contributions from March 1976 to February, 1977 under Section 14-B of the Act. The case of the petitioner in this writ petition is akin to the case taken in writ petition No. 8714 of 1989 viz. financial difficulties.

Writ Petition No. 3420 of 1995 is directed against the order dated 28.12.1994 passed by the Regional Provident Fund Commissioner, Meerut imposing damages to the tune of Rs.2,58,581 under section 14-B of the Act. In this case no defence was taken by the employer before the Regional Provident Fund Commissioner and no evidence was adduced. Hence Regional Provident Fund Commissioner imposed the damages of Rs. 2,58,581/- for delayed deposit of contributions under section 14-B of the Act.

The three orders were passed for three different periods.

Section 14-B of the Act is quoted below:

"14.B.POWER TO RECOVER DAMAGES:- Where an employer makes default in the payment of any contribution to the Fund (the family pension fund) or the Insurance Fund}or in the transfer of accumulations required to be transferred by him under sub section (2) of Section 15 {or sub section (5) of Section 17}or in the payment of any charges payable under any other 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 authorized by the Central Government, by notification in the Official Gazette, in this behalf }may recover {from the employer by way of penalty such damages, not exceeding the amount of arrears, as may be specified in the Scheme}

{Provided hat 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.}"

The Supreme Court in M/s Hindustan Times Ltd. vs. Union of India A.I.R. 1998 S.C. 688 has held that bad financial condition is no defence for delayed deposit.  In the said case it has also been held that delay in initiating the proceedings is not fatal.

However, in the impugned orders it has not been mentioned that at what rate damages have been determined.  Under Section 14-B of the Act 100% damages may be imposed.  It appears that through the impugned orders 100% damages have been imposed.  Delay in making the payment for different months' contribution was of different period varying from one month to several months.  

In para-22 of the counter affidavit filed in first writ petition it has been stated that:

"The rate of damages, period of default and the number of default have been stated in the statement enclosed alongwith order dated 7.4.1989.  The petitioner has deliberately concealed these facts and has not filed Appendix 'D' alongwith order dated 7.4.1989."  

Copy of order dated 7.4.1989 is Annexure-8 to the first writ petition.  It contains the heading Appendix 'D' In any case if copy of complete order had not been annexed alongwith writ petition then it should have been annexed alongwith counter affidavit which was not done.  

Learned counsel for the petitioner-employer has cited an authority of the Supreme Court reported in M/s K.S. Electric Corporation vs. Regional Provident Fund Commissioner, Haryana J.T. 2001 (4) S.C. 542.  In the said authority it was observed  that the Commissioner imposed divergent rates of damages for divergent defaults and in fixation of the rate no rationale was discernible. The Supreme Court in the said authority reduced the damages to 25%.

In the instant case the position is worse.  The Commissioner has not even mentioned the rate of damages in the order.  

As stated earlier it appears that 100% damages have been fixed.

Accordingly, following the aforesaid authority of the Supreme Court  of K.S. Electric Corporation (Supra) damages fixed by the impugned orders are reduced by 80% and it is directed that in each cases petitioner shall pay 20% of the imposed damages.

All the writ petitions are accordingly disposed of.

Dated: 24.05.2007



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