B.S. Patil, J.
1. In this writ petition, the petitioner is calling in question the order dated 12-7-2005 passed by the Employees Provident Funds Appellate Tribunal directing the petitioner to deposit 50% of the amount determined by the Regional Provident Fund Commissioner towards the damages awarded pending disposal of the appeal.
2. The Regional Provident Fund Commissioner-II, Sub-Regional Office, Hubli, by order dated 3-6-2004 directed that for the period from April 1994 to February 2002, the petitioner herein shall pay a sum of Rs. 28,60,448/ towards damages payable for non-payment of contribution to the Employees Provident Fund Accounts within time. The Regional Provident Fund Commissioner has further directed that the amount of damages shall be paid by the employer into the respective Employees Provident Fund Account maintained at the State Bank of India within 15 days of the date of receipt of the order failing which action shall be taken Under Section 8B to 8G of the Employees' Provident Fund Account and Miscellaneous Provisions Act, 1952, (for short 'the Act') to recover the amount without further notice. This order came to be challenged by the petitioner before the Tribunal. Along with the appeal memo, the petitioner filed an application seeking interim stay of the order passed by the Regional Provident Fund Commissioner. The Tribunal has passed the impugned order admitting the appeals for hearing and directing notice to the respondent but refusing to stay the entire liability. An interim order is granted subject to the appellant depositing 50% of the amount determined by the Regional Provident Fund Commissioner. The petitioner is aggrieved by this order.
3. It is the case of the petitioner that it was a medium scale wood industry which had been closed since February 2000. The industry which was started at Talaguppa, a rural area in Shimoga District, was running since 1994 and due to non-supply of raw material and several restrictions imposed by the State Government in this regard it started suffering huge losses. The timber being the essential raw material required to run the industry was earlier being supplied by the Government of Karnataka from the local forest area. But the Government stopped supply of the same in furtherance of its policy to preserve the forest which resulted in the industry starving from the required raw material and having no other source of procuring the same, it could not continue to run the industry profitably for a long period. The previous owners lamely M/s Indian Plywood Manufacturing Company Limited closed the industry with effect from 21-4-1991 and nearly 300 employees in the rural area were forced out of job. The petitioner came forward to start the industry at least in a small scale, using the same machineries and equipments as a result of pressure and persuasion by the local people and for the purpose of ensuring the survival of the starving employees.
4. It is the further case of the petitioner that in this background it took over the management from M/s Indian Plywood Manufacturing Company Limited, during the year 1993 and thus the petitioner company had virtually inherited a sick industry. The Government not only stopped completely supply of timber and other raw materials but at the same time liberalised the import of foreign manufactured plywood at cheaper rates which lead to severe competition and adverse conditions in the market and as a result it was unable to continue the industry. Though all these facts and circumstances were pleaded and placed before the Regional Provident Fund Commissioner, without considering the same the impugned order has been passed directing the petitioner to pay damages in a huge sum is the main contention urged by the petitioner before the Appellate Tribunal. The Tribunal has no doubt entertained the appeal by admitting the same but has refused to grant an absolute stay.
5. Learned Counsel appealing for the petitioner has contended mat the impugned order is illegal and unsustainable as the requirement to deposit 75% of the amount determined by the Employees Provident Fund Commissioner as per Section 7(O) is confined only to an appeal preferred against an order passed Under Section 7A of the Act and not against an order passed Under Section 14-B of the Act levying damages. In this regard, Counsel for the petitioner has placed reliance on the judgment of the Delhi High Court in the case of Old Village Industries Limited v. Assistant Provident Fund Commissioner, Employees' Provident Fund Organisation and Anr. 2005 II LLJ 742. He has next contended that the Tribunal grossly erred in ignoring the various developments that lead to non-payment of contribution within time and in imposing damages Under Section 14-B without considering the predicament in which the petitioner was placed and the financial loss faced by the petitioner.
6. Learned Counsel appearing for the respondent on the other hand has contended that the condition imposed under the provisions of Section 7-0 requiring deposit of 75% of the amount determined by an Officer referred to in Section 7A applied to the orders passed Under Section 14-B directing payment of damages and is not confined to orders passed Under Section 7A alone. In this connection he has relied on several decisions to contend that the text and context of the entire statute and the object behind its enactment has to be kept in mind before interpreting the provisions contained Under Section 7-O of the Act which is a social legislation enacted to secure and safeguard the money due to the employees. He further submits that the hardship which is faced by the company need not be looked into while insisting for deposit of 75% of the amount. At any rate, he submits that in the instant case, the Tribunal has dispensed with the deposit of 50% of the amount and has directed deposit of only 50% pending consideration of the appeal and hence no exception can be taken to the interim order passed.
7. Having heard the Learned Counsel appearing for the parties and after careful perusal of the entire materials placed before me it is seen that although the order under challenge is only an interim order, as certain legal questions are raised, the matter is required to be considered in detail particularly because the Counsel for the petitioner has contended that where an appeal is preferred against the order passed Under Section 14-B, the requirement of depositing 75% of the amount does not arise. In this regard, it is useful to refer to the relevant provisions of the Employees Provident Funds and Miscellaneous Provisions Act, 1952 (for short the Act'). Section 7A of the Act pertains to determination of moneys due from the employers. It refers to some of the authorities, viz., the Central Provident Fund Commissioner, Additional Central Provident Fund Commissioner, Deputy Provident Fund Commissioner, Regional Provident Fund Commissioner or Assistant Provident Fund Commissioner and clothes them with power to pass orders in case any dispute arises regarding the applicability of the Act to any establishment and to determine the amount, if any due from the employer under any provision of the Act, the Scheme (Pension) Scheme or the Insurance Scheme (emphasis supplied). Section 7B of the Act provides for review of orders passed under Section 7A by the same officer who had passed the order on the ground that due to apparent error on the face of the record or for any other sufficient reason the order required to be reviewed. Section 7C of the Act provides power to determine the escaped amount Section 7D of the Act makes provision for constitution of Appellate Tribunals known as Employees' Provident Funds Appellate Tribunal. Section 7-I which is relevant for our purpose is the provision which provides for appeal to the Tribunal. It reads thus,-
7-1. Appeals to Tribunal.-(1) Any person aggrieved by a notification issued by the Central Government, or an order passed by the Central Government or any authority, under the proviso to Sub-section (3), or sub-Section (4) of Section 1, or Section 3, or Sub-section (1) of Section 7A, or Section 7B (except an order rejecting an application for review referred to in Sub-section (5) thereof), or Section 7C, or Section 14B, may prefer an appeal to a Tribunal against such notification or order.
(2) Every appeal under Sub-section (1) shall be filed in such form and manner, within such time and be accompanied by such fees, as may be prescribed.
8. A careful perusal of Section 7-I would disclose that persons aggrieved by the notification issued by the Central Government or by the orders passed by the authorities under Sections 7A, 7B, 7C or Section 14B may prefer an appeal to the Tribunal against the said notification or order. Section 14B of the Act deals with the power to recover damages. It reads thus:-
Section 14B:- Where an employer makes default in the payment of any contribution to the Fund, the (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 provisions 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 the Central Government, by notification in the Official Gazette, in this behalf may recover from the employer such damages, not exceeding the amount of arrears, as it may think fit to impose.
9. It is necessary to note that Section 7-I provides for an appeal to the Tribunal as against an order passed Under Section 14B of the Act. The question now is whether the employer is required to deposit the amount due by way of damages on filing the appeal as per Section 7-O of the Act. Section 7-O mandates that unless the employer has deposited with the Tribunal 75% of the amount due from him, as determined by an officer referred to in Section 7A, no appeal presented by him shall be entertained. Thus, the question would be whether the order levying penalty/damages passed as per Section 14B of the Act cm be said to be the amount due from an employer, as determined by an officer referred to in Section 7A. The officers referred to in Section 7A are the Central Provident Fund Commissioner, Additional Central Provident Fund Commissioner, Deputy Provident Fund Commissioner, Regional Provident Fund Commissioner or Assistant Provident Fund Commissioner. The determination of the dues spoken to under Section 7A by these Officers is the determination of the amounts due from the employer under any provisions of the Act or the Scheme, as the case may be. Whatever be the provisions of the Act under which the dues from the employer are determined, the power is exercisable by the officers mentioned under Section 7A. All such determinations made by these officers are appealable under Section 7I. Can it be said that the damages found due and imposed as per the provisions contained under Section 14B of the Act r/w paragraph 32A of the Scheme is the amount due as determined by the officers mentioned under Section 7A is the point to be answered. As long as the amount is determined by the officer, enumerated under Section 7A and as long as the amount is determined to be due from any employer under the provisions of the Act or the Scheme, the determination is traceable to Section 7A(b). Even if it is determination of the amount of damages due from an employer it is as much a determination made under the provisions of the Act, The levy of damages is also to be done only after giving opportunity to the employer to have his say and by following the procedure prescribed under Paragraph 32A of the Scheme. The moment employer commits default in making prompt payment of the contribution due, he would be liable to pay the damages and naturally the amount of damages has to be determined and the determination made will be appealable as provided under Section 7-I of the Act. The pre-condition for entertaining such an appeal, as provided under Section 7-O of the Act is deposit 75% of the amount. Therefore, the expression amount due as determined under any provisions of the Act and the Scheme would necessarily include the dues arrived at and determined as damages under Section 14-B r/w Paragraph 32-A of the Scheme.
10. The decision relied upon by the Learned Counsel for the petitioner in Old Village Industries Case rendered by the Delhi High Court proceeds on the assumption that power to waive or reduce the amount to be deposited is relatable to the amount determined by the officer under Section 7A of the Act. It further states that the pre-requisite of deposit of 75% of the demanded amount is applicable to an order passed under Section 7A of the Act and not to other provisions. What is significant to note is that Section 7A does not deal with any specific or particular dues in respect of which determination is to be made under Section 7A. In fact no determination in respect of any particular amount is provided under Section 7A. Section 7A is a general provision doming the authorities with the power to determine the money due from the employers under any provision of the Act or the Scheme.
11. Read as a whole, Section 7A only means that the various authorities mentioned therein in Sub-clause (1) will have the authority and the power to determine the amount due from any employer under any provisions of the Act or the Scheme. Therefore, restricting the requirement of depositing the amount while filing the appeal to the determination made under Section 7A of the Act does not arise. Moreover, the language of Section 7-O dealing with deposit of 75% of the amount due on filing the appeal is referable not to any order passed under Section 7A but to the amount found due as determined by an Officer referred to under Section 7A. Reference made to the Officer who determines the dues under Section 7A cannot be taken as reference to dues determined as per Section 7A. Dues are determined as per various provisions of the Act and those dues are determined by the authorities who are listed under Section 7A. What is required to be seen, to make the provisions of Section 7-O, regarding the deposit applicable is to see whether the dues are determined by the authorities mentioned in Section 7A. If it can be said that damages imposed are also amount due from the employer and that such damages are levied after due notice to the employee and after holding an enquiry as contemplated under Section 14-B of the Act and therefore they are dues determined by the Officers referred to in Section 7A of the Act then the employer cannot escape the requirement of depositing the amount due on filing the appeal. Therefore, it cannot be said that the requirement of deposit will not arise, if the employer is to challenge the order passed under Section 14-B of the Act. The order passed under Section 14-B of the Act is as much referable to the expression determination of the amount due under Section 7A(1)(b). For these reasons, I am unable to agree with the proposition laid down in Old Village Industries Case.
12. Coming to the facts of the present case, the Tribunal has come to the conclusion that mere hardship or loss will not entitle the petitioner for waiving the entire amount and that he must deposit 50% of the damages found due on filing the appeal. A perusal of the impugned order does not disclose that the authority has applied its mind to the various fact situation adverted to by the petitioner in the application filed by him seeking grant of interim relief. The proviso to Section 7-O of the Act clothes the Tribunal with the discretion to waive or to reduce the amount to be deposited for reasons to be recorded in writing. The requirements spelt out in the proviso would clearly indicate that the Tribunal has to exercise its discretion judiciously. This is a case where a huge amount of about Rs. 28,00,000/- is sought to be recovered by way of damages. The case of the petitioner is that the Industry was forced to close down, being pushed into serious losses on account of the fact that it was starved of raw materials due to the policy of the State Government to stop supply of timber and other forest materials. The various aspects that are narrated and adverted to by the Petitioner in support of his plea that the heavy damages imposed be waived have not been considered by the Tribunal, The Tribunal has simply brushed them aside stating that loss or hardship suffered by the petitioner cannot be a ground. The reason why the loss is suffered by the petitioner, the bona fides in the contention and the prima facie case made out by the petitioner have to be looked into before exercising the power. In the instant case, no such application of mind by the Tribunal is forthcoming. Hence, in the circumstances of the case, I am of the view that the order passed by the Tribunal requires to be set aside. In the result and for the foregoing, I pass the following order:-