S. Rangarajan, J.
(1) The petitioner (Ajudhia Texlile Mills Ltd.) has, in this Writ Petition, prayed that the orders of the Regional Provident Fund Commissioner, Delhi (Respondent No. 4), issued between 28.6.1963 and 31.10.1963 (copies of which are Annexures B. 1 to B. 4 to this Petition), demanding payment of a sum of Rs. 33,174.99 as damages under section. 14B of the Employees' Provident Funds Act, 1952, should be quashed as being illegal. Admittedly, the petitioner had not paid within the requisite time the employers' contribution for provident fund. The details of the amounts due by way of contribution from the petitioner have been mentioned in the statement of amounts appended to the Writ Petition and these are not in controversy. The extent of delay in respect of making each of those payments have also been shown in the said statement of amounts and about this also there is no controversy. The impugned demands are for damages which were assessed by the Regional Provident Fund Commissioner on the basis of a circular letter emanating from the Central Provident Fund Commissioner, New Delhi, which was originally addressed to the Delhi Administration and forwarded by the Administration to the Regional Provident Fund Commissioner for levy of damages at the rates specified in the said letter The rates ranged between 20% and 25% in the catagories of cases mentioned. The amounts demanded by the impugned orders follow the said percentage Section 14-B. which was introduced by the Amending Act No 37 of 1950, reads as follow :
'14-B.Power to recover damages. Where an employer makes default in the payment of any contribution to the Fund or in the transfer of accumulations required to be transferred by him under sub-section (2) of Section 15 (or sub-section (5) or Section 17) or in the payment of any charges payable under any other provision of this Act or of any Scheme or under any of the conditions specified under Section 17, the appropriate Government may recover from the employer such damages, not exceeding twenty-five per cent of the amount of arrears, as it may think fit to impose'
(2) After siting S. 7A introduced by Amended Act, judgment proceeds]
(3) Among others, the following three contentions have been urged on behalf of the petitioner :
(1)The functions to be performed under Section 14B are quasi judicial functions in respect of which there could be no administrative directions of the kind issued,;
(2)in any case no enquiry was made and the petitioner was not given an opportunity of participating in the proceedings culminating in the said demands being made ; and
(3)the Impugned orders had not been passed by the appropriate Government or by one with properly delegated powers.
(4) A mere perusal of section 14B shows that a discretion has been vested in the appropriate Government to recover from the employers such damages as it may think fit to impose provided they did not exceed 25% of the amount of arrears. Only the ceiling of the amount of damages has been fixed. The appropriate Government was given the power to recover such damages as it may think fit to impose. Determination of damages is a quasi judicial function. A similar question fell for decision before the Mysore High Court in R. Fernandes and and others v. State of Mysore A.I.R. 1969 Mysore 197. Somnath Iyer, J., speaking for the Division Bench, held the view that' where the State Government evolves a rigid and inflexible formula for the computation of damages and authorises by a notificate the Regional Provident Funds Commissioner to recover damages from an employer, the demand made by the Regional Provident Funds Commissioner is illegal'. What was left to the Regional Provident Funds Commissioner in such cases by the aforesaid direction was to merely make an arithmatical calculation according to the table. What section 14-B, on the other hand, contemplates is a duty to decide in each case that the damages should be subject to a maximum. A circular letter issued to the Regional Provident Funds Commissioners of the country imposed even a lower limit, which is not what section 14-B contemplates. It may be that in certain conceivable cases there may be valid excuses given for not making the contributions in time. If any penalty had to be paid merely for such defaults then section 14-B should have been worked differently.
(5) It is no doubt seen that the entire effort was to prevent employers from defaulting in the nutter of miking the payments. The mode of recovery according to section 8 of the Act is the same as for an arrear of land revenue. The Scheme framed under the Act also provides for penalties in respect of nonpayment of amounts which have not been paid under the said Act. The contributions to be made by the employer are fixed by para 29 of the Scheme and para 30 provides for payment of such contributions. Para 76 of the Scheme provides for punishment for failure to pay contributions .etc. with imprisonment which may extend to six months or with fine which may extend to one thousand rupees or with both. Section 14 of the Act which deals with penalties expressly makes provision for the Scheme providing for such penalties being imposed on any person for defaults in complying with the provisions thereof. In addition to these stringent provisions Section 14-B was also enacted in order to recover such damages also from the employer by giving the power to the appropriate Government to make such recovery as it may think fit to impose. As Somnath Iyer, J pointed out, section 14-B 'does not reserve for the appropriate Government or the Regional Provident Fund Commissioner, the power to say, whatever may be the extenuating circumstances, that the employer cannot be absolved from liability to pay damages'.
(6) It does not appear necessary to discuss this question at any further length because a. similar view has been taken by the High Courts of Patna Bombay and Madras (R B.H. Jute Mills (Pvt.) Ltd. v. Regional Provident Funds Commissioner, Bihar, I.L.R (1958) 37 Pat 47 ; Bharat Barrel and Drum Mfg, Co. v. Raval, (1966) 2 Lab. L.J. 804 ; Regional Provident Funds Commissioner, Madras v. K. R. Subhiar Taoe Factory. (1966) 2 Lab L.J. 676. In view of the above position being fairly clear it is needless to discuss the other two contentions raised on behalf of the petitioner.
(7) The Writ Petition is accepted accordingly and the impugned demands made for damages by the Regional/Provident Fund Commissioner in his orders (Annexures B1 to B4) are quashed. It is needless to state that the appropriate Government will be free to take such steps as it may be advised against the petitioner for recovery of damages under section 14-B of the Act. There will be no order as to costs in the circumstances.