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Birla Cotton Spinning and Weaving Mills Ltd. Vs. Union of India and ors. - Court Judgment

LegalCrystal Citation
SubjectService
CourtDelhi High Court
Decided On
Case NumberCivil Writ Appeal No. 396J of 1978
Judge
Reported inILR1984Delhi60
ActsEmployees Provident Fund and Miscellaneous Provision Act, 1952 - Sections 14(2A)
AppellantBirla Cotton Spinning and Weaving Mills Ltd.
RespondentUnion of India and ors.
Advocates: B.R. Iyengar,; B.R. Sabharwal,; R.C. Chawla,;
Cases Referred(See D. D. Joshi v. Union of India
Excerpt:
employees provident fund and miscellaneous provisions act, 1952 - sections 14(2a) & 14-b read with employee provident fund scheme and pension scheme paras 10, 12 (1) (3), 37 & 39--initial responsibility for making payment of contribution by employer or on behalf of employee lies on the employer--contribution is to be deposited within 15 days of the close of the month default due to non-deposit within the prescribed period--damages under section 14-b can be imposed--deposit before issuance of show cause does not wash away the liability under section 14-b--no limitation for initiating proceedings under section 14--b--section 14-b is intravires the constitution proceedings under section 14 (2a) and under section 14-b are not in the alternative--section 14-b also applied incase of.....sachar, j. (1) this group of petitions were heard together. all of them are directed against the respective orders of respondent regional provident fund commissioner imposing damages under section 14-b of the employees' provident funds and miscellaneous provisions act, 1952 (hereinafter to be called act). many of the points raised are common and will stand decided in all the petitions by the decision given in one of the petition. we shall however deal with each petition separately, also. (2) section 5 of 1952 act empowers the central government to frame a scheme to be called employees provident fund scheme for the establishment of provident funds under the act, . . . and there shall be established, after the framing of a scheme a fund. section 6 of the 1952 act provides for payment of.....
Judgment:

Sachar, J.

(1) This group of petitions were heard together. All of them are directed against the respective orders of respondent Regional Provident Fund Commissioner imposing damages under Section 14-B of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 (hereinafter to be called Act). Many of the points raised are common and will stand decided in all the petitions by the decision given in one of the petition. We shall however deal with each petition separately, also.

(2) Section 5 of 1952 Act empowers the Central Government to frame a scheme to be called Employees Provident Fund Scheme for the establishment of Provident Funds under the Act, . . . and there shall be established, after the framing of a scheme a Fund. Section 6 of the 1952 Act provides for payment of contributions by the employer to the Fund of six and a quarter percent of the basic wages payable to the employee and employee's contribution, which shall be equal to the contribution payable by the employer in respect of him. Section 2(h) of the Act defines 'Fund' to mean the Provident Fund established under a Scheme.

(3) EMPLOYEE'S Provident Fund Scheme 1952 was published on 2nd September, 1952. Para 30 of the Scheme provides that the employer shall in the first instance pay both the contributions payable by himself, referred to as employer's contribution and also on behalf of the member employed by him the contribution payable by such member. Para 32 provides that notwithstanding the provisions of the Scheme or any law for the time being in force, the amount of a member's contribution paid by the the employer shall be recoverable by means of deduction from the wages of the member, and not otherwise. Para 32 (3) provides that any sum deducted by an employer from the wages of an employee under this Scheme shall be deemed to have been entrusted to him for the purpose of paying the contribution in respect of which it was deducted.

(4) Section 14-B provides that where an employer makes default in the payment of any contribution to the Fund (The Family Pension Fund or Insurance Fund-this was inserted by Act 40 of 1973 and Act 99 of 1976), the Central Provident Fund Commissioner or such other officer as may be authorised by the Central Government may recover from the employer such damages not exceeding (Twenty Five per cent. This was however, omitted by Act 40 of 1973) the amount of arrears as it may think fit to impose.

(5) Section 6A was introduced in 1952 Act by Act 16 of 1971 and empowered the Central Government to frame a scheme to be called the Employee's Family Pension Scheme. In pursuance of this the Central Government has framed a Scheme called The Employees' Family Pension Scheme which was published in March, 1971 and was also deemed to come into force with effect from the same date. Paras 10 and 12 of the Family Pension Scheme are pan materia the same and worded in similar manner as Paras 30 and 32 of the Employees' Provident Fund Scheme. Definition of Family Pension Fund was introduced by Act 16 of 1971, to mean the Family Pension Fund established under the Family Pension Scheme.

(6) Civil Writ Petition 396 of 1978 is directed against the impugned order of the Regional Provident Fund Commissioner dated 1st February, 1978 by which he imposed damages under Section 14-B of 1952 Act, in the amount of Rs. 7748. These damages were imposed because the Commissioner held that the defaults Were committed by the petitioner in payment of Family Pension Contributions as are payable under the Employees' Family Pension Scheme, 1971. The period covered is (a) from September 1971 to December, 1971 (b) from February, 1972 to August, 1972 ; and (c) September, 1974.

(7) A reference to the table of alleged defaults will show that the contribution was deposited later than 20th of the . subsequent month for which wages had been paid. Mr. Iyengar did not dispute the dates of deposit. He, however, urges that in the Family Pension Scheme no period of time is mentioned for depositing the same. But para 38 of the Provident Fund Scheme, which requires that the employer shall within 15 days of the close of every month pay the sum to the Fund . . .. would be applicable because Para 39 of the Family Pension Scheme specifically says that in regard to matters for which either there is Ho provision or there is an inadequate provision in this Scheme the corresponding provisions in the Scheme shall apply. Thus this requirement of 15 days has to be read in the Pension Scheme also.

(8) The next contention as that 15 days time would start binning only after a deduction has been made from the wages of the workman. Now it is correct that the delay in deposit has been worked out by the respondent on a straight formula of non deposit within 15 days of the close of the month. But Mr. Iyengar says that there is no default unless first a deduction has been made and thereafter a period of 15 days has been allowed to elapse. The suggestion of the counsel for the petitioner is that as Para 12 of Pension Scheme provides that any sum deducted by an employer from the wages of an employee shall be deemed to be entrusted to the employer and as Para 12(1) provides that the amount of contribution payable by the employer on behalf of the member of Pension Fund will be recoverable by means of a deduction from the wages of the members of the Family Pension Fund, it means that until deduction is made from wages no liability to deposit contribution to the Fund or Pension Fund arises. This attempt to equate the employer's liability to deposit the contribution being dependent upon first having made a deduction from wages is misconceived.

(9) Para 10 of the Pension Scheme clearly puts a responsibility to pay both the contributions payable to the Family Pension Fund by himself and on behalf of the member of the Pension Fund in the 1st instance (though Para 38 of the Scheme watches the employer's interest by allowing him that before paying the member employee his wages . . . . to deduct the employee's contribution from his wages). But law does not absolve the employer from depositing both the contributions until the time a deduction has been made from the wages. Para 12 does not provide for any condition precedent before depositing the contributions. All that Para 12 does is to limit the right of the employer to recover the contribution made by him on behalf of the employee recoverable only by deduction from his wages and not otherwise. This is meant to protect the employee from having any other funds of theirs excepting their; wages being proceeded against. This beneficial purpose has no relevance to the liability of employer in the first instance to deposit the contributions irrespective of whether deduction from wages of employee has been made or not. The initial responsibility for making the payment of the contribution by employer as well a on behalf of the employee lies on the employer (see organo Chemicals Industries v. Union of India, 1979 Sc 1803 para 33(1). That this interpretation given by us in accordance with object of the Act was also the view of High Court of Kerala in Calicut Modern Spinning & Weaving Mills Ltd. v. Regional Provident Fund Commissioner, 1982 LAB.I.C. 1422 wherein it held that even a case of lockout and strike failure to make the contribution resulting in default will have to be visited by damages under Section 14-B of the Act. In Justifying this view it observed :

'TO allow the employer to make the contribution only when he pays the wages would be to stultify the project. To accept the petitioner's contention in this case would be to enable the employer to divert remittances to the Fund to suit his convenience putting forward sometimes reasonable grounds, sometimes justifiable grounds and most often unjustifiable grounds.'

In that context when Para 38 of the Scheme requires deposit to be made within 15 days of close of every month, and as the contribution is relatable to the percentage of wages payable to the employee, obviously, the close of -every month means the month for which wages are payable to the employee in the subsequent month. Thus for the wages payable for the month of January, contribution is to be deposited by the employer within 15 days of the close of the month, i.e. January. Thus deposit for January has to be made by 15th of February. This is the only manner by which some kind of certainty and uniformity can be put in the working of the scheme. As a matter of fact this matter stands concluded by the Organo's case (supra) wherein it was said that the 'deposit of such contribution shall be made by the employer within 15 days of the close of every month, that is, a contribution for a particular month has got to be deposited by the 15th day of the month following' (para 33).

(10) The next contention was that Section 14-B of 1952 Act can only be applicable if any arrears of contribution are still outstanding at the time of issue of show cause notice by the Commissioner. Admittedly in most of the petitions the contributions had already been deposited (though late) prior to issue of show cause notice and the contention is that as such proceedings under Section 14-B were not maintainable. We. cannot agree. A reading of the Act and Para 38 of the Scheme makes it absolutely clear that the employer is under a statutory obligation to deposit the contribution by fifteenth of subsequent month to the Fund by cheque or bank draft. Similarly para 9 of Pension Scheme requires that from and out of contribution payable by the employer and employee in each month under Section 6 of the Act, a part of the contribution shall be remitted by the employer to the Family Pension Fund by a separate bank draft or cheque. Thus the contributions are payable for each month by a fixed period. A statutory obligation is thus cast on the employer. The moment payment has not been deposited by the prescribed period, a default has been made ; the amount that was to be deposited is the arrears. Proceedings under Section 14-B can be initiated on the occurrence of a default. This power is not nullified by the mere fact of having paid the arrears Subsequently. Rigour of Section 14-B of the Act cannot be avoided by merely saying that the default which was committed has been made good by the time show cause notice was issued. It should be remembered that each time there is delay in making deposit of contribution as required by the Scheme it amounts to an employer making a default ; each one of these defaults is liable to be proceeded with under Section 14-B of 1952 Act. It is not a condition precedent to the exercise of powers under Section 14-B of the Act that any arrears should be outstanding at the point of time when show cause is issued. Arrears arise on the very day on which the employer defaults in making payment of contribution. The default having been committed, power of the Commissioner to proceed under Section 14-B arises. This power is not taken away by the mere fact that arrears have since been deposited by the employer. The power of the Commissioner to proceed under Section 14-B arises immediately as the employer makes the default. It is only when the question arises as to what should be the quantum of damages that the question of arrears' has any relevance, for the simple reason that damages which can be imposed are not to exceed the amount of arrears. Thus reference to arrears in Section 14-B has relevance only to the limit of damages imposable, not to the power to impose damages, which is distinct and. is available the moment when the default was committed. To accept the argument of the petitioners would amount to an open invitation to the employer to defeat the purpose of Section 14-B by not depositing the contribution within the prescribed time, and utilise the funds for his business and still avoid the penal damages under Section 14-B by simply depositing the contribution before show cause is issued. This would make a mockery of Section 14-B of the Act.

(11) Mr. Thandani, the learned counsel for one set of the petitioners, sought to urge that it was the duty of the Provident Fund Commissioner to know as to when the contribution has been deposited and if notice is given after some delay. Section 14-B cannot be inyoked. The commissioner cannot be expected to have up to date verification on the 16th of every month to check up whether contributions have been paid with regard to each of the lakh of employees covered by the Scheme, and Pension Scheme. The Scheme gives a detailed procedure with regard to the time, date etc. when the employer is to deposit the contributions. Surely he cannot complain that he is unaware of his statutory liability to deposit contribution until he receives a notice from the Regional Provident Fund Commissioner. No principle of law can be invoked by the petitioner to get absolution from Section 14-B, by the mere devise of depositing the contribution, once a default as envisaged by the Act has been committed by the employer. A reference to the Supreme Court in Organo's case (supra) will show that in that case defaults were committed in payment of the provident fund and family pension fund by making delayed payments for the period from March to October, 1975 and from December, 1975 to November, 1976. The period of delay in payment of amount varied from a few months to a year. Notice to show cause by Regional Provident Fund Commissioner was issued on 7th June, 1977 requiring the petitioner to show cause why damages should not be levied under section 14-B of the Act. It is clear that by the time show cause notice was issued the contributions had already been deposited by the employer (though undoubtedly they were deposited later than as required under the Act and the Scheme). Notwithstanding that arrears stood deposited the Court upheld the order of the Commissioner imposing damages under Section 14-B of the Act. This necessarily implies the rejection of the argument that the deposit of contributions before the issue of show cause, washes away the liability under Section 14-B of the Act, because on no other premise can the judgment of the Supreme Court, upholding the imposition of damages even after the arrears had been deposited, be explained.

(12) Similar argument that if arrears have already been paid by the employer, no action could be taken under Section 14-B of the Act was raised but rejected in a Division Bench of Punjab High Court in State of Punjab v. Amin Chand. & Sons; (1970)37 Fjr 92 which observed that non attention in the office of Commissioner cannot affect the exercise of power under Section 14-B of the Act. The same view of law was reiterated in subsequent decisions of Punjab High Court in M/s International Electricals, Faridkot v. Regional Provident Fund Commissioner, 1980 Rev. L.R 145 and M/s. T.C.M. Woollen Mills (P) Ltd. v. Regional Provident Fund Commissioner, 1981 Lab. I.C. 267. Similar view was also taken in M/s. Hindustan Malleables and Forgins Ltd. v. Regional Provident Fund Commissioner, 1978 Lab. I.C. 930 . This contention of inapplicability of Section 14-B is thereforee without any substance. There is equally no merit in the contention that default in Section 14-B requires a contemptuous or willful default and such conduct is a conditions precedent to taking action under Section 14-B of the Act. In Organo Chemicals' case (supra-para 47) the Supreme Court has observed that the word 'default' in Section 14-B of the Act must be construed in the light of para 38 of the Scheme which provides a payment of contribution has got to be made by the 15th of following month and thereforee the word 'default' in Section 14-B must mean 'failure in performance' or 'failure to Act'. If the payment is not made by the date as prescribed in para 38 of the Scheme, there will be default in payment. As to whether and what justification there was for delay in payment is a separate matter relating to the merits. But by non-payment, default has been committed. (See M/s. Hindustan Malleables' Case, Para . In Albert v. Investment (1867) 3 Q.B.D. 123 Cockbum C.J. observed :

'DEFAULT must be taken to mean a non-payment by the party bound to pay, without the consent of parties having a right to waive the payment.. ....default must mean a default where something is not done by the mere act of omission of one party.,.......'

(13) Thus Section 14-B is immediately attracted when the employer omits to deposit the contribution by the date as prescribed in Para 38 of the Scheme.

(14) A half hearted attempt was made by Mr. Iyengar to urge that as the Commissioner was authorised by a notification of 1973 to proceed under Section 14-B, he was incompetent to deal with defaults said to have been committed in 1971-72. There is no substance in it. Show cause was issued in 1977 and by that time the Regional Provident Fund Commissioner had been properly empowered to take proceedings under section 14-B of the Act. The competency of an authority has to be seen at the time when it proceeds to take action and not with reference to the alleged period of default which may even have been committed earlier to 1973. (See C.W. 193/1976; M/s. Lajpat Potteries (P) Ltd. v. Regional Provident Fund Commissioner, decided by this court on 6-8-1976 ; M/s. Hindustan Malleables case (supra) and T.C.M. Woolen Mills case (supra) Is There Any Period For Taking Proceedings Under Section 14-B Of The Act :- In most of the cases notices under Section 14-B have been given after a number of months and in quite some of them even after a period of 6 years or more from the date of the alleged default. The counsel for the petitioners have sought to urge that such a delay in taking proceedings pet se vitiates the show cause and hence no damages could have been imposed. It will be seen that there is no period of limitation provided under Section 14-B of the Act. It is also apparent from record that there has been no condensation by the respondents of the default committed by the petitioner. What is, however, urged is that the mere fact that such a long time was taken to issue notice means that there must have been a condensation of the delay in depositing the contribution. We cannot so assume. It may be that if the staff of the Provident Fund Commissioner , works more efficiently it may have been possible for them to detect earlier the various defaults committed by be petitioner and to issue notice to them with regard to these. But it should not be forgotten that under law the responsibility in the first instance for depositing the contribution is on the employer. He is expected to deposit the fund by 15th of the subsequent month. The moment he does not do so he commits defaults within the terms of Section 14-B of the Act. The Explanationn for the default may result in the respondents not imposing any damages or imposing nominal damages. But it is not correct to say that unless a notice is given separately with respect to each default by the Regional Provident Fund Commissioner, no action for each default under Section 14-B can be taken on the basis of notice which mentions number of defaults. It is true that the Regional Provident Fund Commissioner will have to apply his mind with regard to each default and then impose damages with reference to each one of them separately. But that does not mean that a consolidated notice mentioning the various defaults with all the details of delay and the proposed penalty, cannot all be put in one notice. After all the idea of a notice is to give an opportunity to the employer as to the action that is proposed to be taken against him. This is done sufficiently when a notice mentioning all the defaults including what damages are proposed is given to the employer. No separate notice for each of the defaults is necessary to be given Was held in M/s. Udaipur Sahkari Upbhogta Thok Bhandar Ltd. Udaipur v. The Union of India & Others, 1981 Lab. I.C. 285 . Mr. Iyenagar's argument that even if the employer had committed 10 defaults but notice was given to him after the 11th default (though mentioning all previous defaults) he would be deemed to have defaulted only once on the 11th default and the factum of the first 10 defaults could not be taken into account by the respondent- Commissioner for the purpose of imposition of damages under section 14-B of the Act has nothing to commend it in law or principle. The slackness or even negligence in the office of the Regional Provident Fund Commissioner does not absolve the employer for each default committed by him. The exercise of power under Section 14-B of the Act does not automatically get blunted because of the inefficiency or slow working in the office of Regional Provident Fund Commissioner.

(15) It was nevertheless urged that the maximum period of limitation within which proceedings can commence under Section 14-B should be the one laid down in Article 137 of the Schedule to the Limitation Act. We cannot agree. Article 137 in terms only refers to the filing of the application. Section 14-B, however, is a power of the Commissioner to be exercised by him to impose damages in case of default by the employer. There is no question of moving an application by the Commissioner. In terms Article 137 would not be attracted. Moreover it is well settled that Article 137 will apply only to any petitions or applications filed under any Act to Civil Court. (See Kerala State Electricity Board v. T. P. Kunhaliumma. : [1977]1SCR996 and Shri Raj Chopra v. Smt. Shanno Devi & others : AIR1981Delhi18 . Admittedly there is no involvement of civil court in any proceedings under Section 14-B of the Act. Invoking the aid of Article 137 of Schedule to Limitation Act is futile.

(16) It was then sought to be urged that notwithstanding that there may not have been prescribed any period of limitation there should nevertheless be read into Section 14-B an inbuilt, inherent limitation that action cannot be taken by the Regional Provident Fund Commissioner after a great delay and it is only permissible to proceed within a reasonable period. Suggestion being that unless it could be shown that the time gap between the alleged default and the notice issued by the Regional Provident Fund Commissioner was within reasonable period proceedings under Section 14-B could not be sustained. Reference in this connection was made by Dr. Singhvi to Ram Kishan Baldeo Prasad v. Commissioner of Income Tax : [1967]65ITR491(All) . ; Bisheshwar Lal v. Income Tax Officer, Gonda: : [1970]75ITR698(All) ; Champalal Binani v. Commissioner of Income Tax (1970) 76 Itr 693 and K.P. Narayanappa Setty v. Commissioner of Income Tax : [1975]100ITR17(AP) But we find that all of them are distinguishable. In Ram Kishan Baldeo Prasad's case (supra) the facts were that a notice under Section 28(3) of the 1922 Income Tax Act was issued on June 24. 1949 for default in filing the return. Reply was given by the assesses. However, the order of Income Tax Officer imposing the penalty was passed only on 20-8-1958. It was in these circumstances that a question was raised in a reference made under Section 66(2) of the Act whether a penalty could have been imposed in 1957 for the assessment year of 1945-46. The Bench accented that as a matter of law there is no period of limitation prescribed and it is not possible to say that the order passed is one which was invalid. But why it answered the reference against the Revenue was because the Tribunal had not considered the matter whether because of inordinate delay it will not affect the propriety of the penalty order. As a matter of fact the Bench specifically dissented from the view of the Single Judge that inordinate delay in every case as a matter of law would lead to the invalidity of the penalty order, because as it stated that when there is no period prescribed fur limitation delay can only be a factor to be taken into consideration in determining the propriety of the order. It will thus be seen that these considerations may have relevance if at all before the Regional Provident Fund Commissioner for consideration on merits, but cannot in proceedings under Article 226 invalidate the order of the Commissioner only on this account.

(17) In Bisheshwar Lal's case (supra) the facts were that notices were issued for penalty proceedings for the assessment years from 1944-45 to 1948-49. The firm was dissolved in 1948. Though notices were issued in 1949 they remained pending without disposal right till 1963. It was in these circumstances that it was held that the penalty proceedings are vexatious and an order was issued quashing them. No such delay in between the date of issue of notice and the passing of the final order arises in the present case.

(18) In Champalal Binani's case (supra) again notice was issued to take penalty proceedings in 1944. Though a reply wa sent by the assessed nothing was done by the department for a period of 12 years. It was in these circumstances that the court felt that such gross delay in disposing of the matter was not justified and the proceedings were thereforee, quashed because of the inaction on the part of the department.

(19) In K. P. Narayanappa Setty's case (supra) assessment became final, on 24-7-1954 but so order levying penalty were issued up to July 1, 1963. The court felt that even after 9 years of the Tribunal's farmer the department had not taken any action and thereforee there was inordinate delay and penalty had not been imposed within reasonable lime. It is important to note that this was also a matter disposed of on a reference to the High Court under Section 6 of the Income Tax Act wherein the question of propriety is both relevant and necessary to be considered. These general propositions under the Income Tax Act can be of no avail to Dr. Singhvi because it is settled view of the Supreme Court and other Courts that it is settled view there is no period of limitation the authorities cannot be debarred from taking action under the Statute, because of the fact that there has elapsed considerable period since the default took place. These limitations would apply with more rigour to the provisions of 1952 Act which is a socio-economic measure enacted for the support of weaker sector viz. the working class during the superannuated winter of their life. (See Organo Chemical's case Paras 23, 46 (supra). Whatever thereforee, the relevance of ratio of cases cited by Dr. Singhvi to the particular facts therein may be, it is not possible to accept such a broad proposition in proceedings under Section 14-B of the Act. When the legislature has not chosen to fix any period of limitation it would be impermissible to read any shorter period limiting the power of the Commissioner to proceed under Section 14-B of the Act, within a particular period. No doubt a Single Judge of Punjab High Court in M/s. Amin Chand's vs. State of Punjab AIR 1965 P&H; 441 held that a notice issued 6 years after the alleged default was arbitrary and proceedings under Section 14-B could not be taken after such a long delay. But this view however, was not accepted as correct law and appeal against that order was allowed in State of Punjab v. Amin Chand (supra). In that case defaults were committed by the employer between the period December, 1953 to May 1957. The delay was of 2 to 5 days. Show cause was issued in I960 by Regional Prudent Fund Commissioner. The learned single judge had quashed the notice on the ground that it was arbitrary to have issued notice after a period of six years. Allowing the appeal Division Bench though observing that if the department had been more efficient they would have noticed the factum of default and could have issued notice much earlier, yet found nothing unreasonable and upheld the order imposing damages under notion 14B of the Act. In Divisional Engineer A.P.S.E. Board V. Regional Provident fund Commissioner, Hyderabad : 1979 Lab. I.C. 187 the exercise of power by the Commissioner to recover damages after a lapse of 6 or 7 years after the defaults were committed was held to. be not without jurisdiction especially when the legislature has not thought fit to fix any period of limitation under Section 14-B of the Act. it was emphasised that the Statute having been enacted by Parliament for the benefit of workers, a beneficial construction must be placed on it.

(20) In M/s. Hindustan Malleables' case (supra) the defaults were committed in 1970 and the show cause notice under Section 14-B was issued some time in 1977. The order imposing damages was held to be valid.

(21) Similar view was taken in Regional Provident Fund Commissioner U.P. v. Allahabad Canning Co.; 1978 Lab. I.C. 998 . In that case defaults were committed from 1964- 1970. Show cause notice was issued in August, 1973. The jurisdiction to proceed under Section 14-B was upheld.

(22) A similar view has also been taken in a Division Bench of this Court in C.W.P. No. 193/76 decided on 6-8-1976 (supra). That the view that in the absence of statutory provision any limitation or restriction on a party or authority to exercise its right or power can still be circumscribed has not been accepted by the Supreme Court which has rather consistently held to be contrary.

(23) That limitation cannot be read where it is not so provided was also held in The Swastik Oil Mills Ltd. v. H. B. Munshi; (1968) 21 STC 383. In that case assessment related to year 1948-49. The assessment order was passed on 2-1-1954. Suo motu revision was taken by the Deputy Commissioner on 7-1-1963 on which he issued the notice. Argument was that the notices issued after such a long delay should be quashed. This was rejected by the High Court and in appeal the plea was again repeated that proceedings should be held to be barred because limitation of reasonable time within which the revisional powers should be exercised must be read in the statute itself. Rejecting this the Supreme Court observed that 'Section 22 of the Act of 1946 and Section 31 of the Act of 1953 do not lay down any limitation for exercise of the power of revision by a Deputy Commissioner suo motu, and we arc not prepared to accept that any such limitation must be necessarily read in the two Acts'. The argument that after such a long delay a party may be grievously prejudiced to give his defense because of the lapse of time was also rejected by the High Court in the same authority wherein it made a valid distinction between jurisdiction to proceed with the assessment and the merits of the particular case by observing that 'in our opinion, if the Legislature permitted the revising authority to issue a notice and start a proceeding after any lapse of time, we cannot on the more ground that it is issued after a long lapse of time quash the said notice. When the petitioner appears before the authority and produces such material as it can, the authority may consider the same having regard to the fact that the petitioner is likely to be handicapped by the lapse of time in producing further and better material before him. At any rate that will be a matter relating to the merits, which will be put by the petitioner before the assessing authority and has nothing to do with the jurisdiction of the assessing authority to issue the notice, with which alone we are concerned in the present case.'

(24) Reference may with advantage be made to Bombay Gas Co. v. Gopal Bhiva : ( : (1963)IILLJ608SC . In that case application was filed under Section 33C of Industrial Disputes Act. The facts were that award had been pronounced in May, 1950 and the application wa$ filed in 1958. One of the objections taken to the maintainability of the application was that under the Payment of Wages Act a claim for wages has to be made within 6 months from the date on which the cause of action accrued to the employee. It was also pleaded that the claim for wages even before a civil suit would be barred after 3 years but because of Section 22 of the Payment of Wages Act a claim for wages beyond one year could not be made. On that reasoning it was sought to be urged that it would be anomalous that a claim which would be rejected as barred by time if made under the Payment of Wages Act should be entertained under Section 33C(2) of the Industrial Disputes Act. Rejecting this argument of limitation for treating the application under Section 33C(2) as to be barred by time on the ground of laches the court observed that 'it seems to us that where the legislature has made no provision for limitation, it would not be open to the courts to introduce any such limitation on grounds of fairness or justice' .. ... ... .. 'Mr. Kolah no doubt emphasised the fact that such belated claims made on a large scale may cause considerable inconvenience to the employer, but that is a consideration which the legislature may take into account, and if the legislature feels that fair play and justice require that some limitation should be prescribed, it may proceed to do so. In the absence of any provision, however, the Labour Court cannot import any such consideration in dealing with the applications under Section 33C(2).' The Supreme Court cautioned that limitation cannot be introduced on academic ground of social justice and it can be introduced, if at all, by the legislature. One of the reasons for not reading any implicit limitation in Section 33C(2) was that the legislature may have thought that the employees who are entitled to take the benefit of this provision may not always be conscious of their rights and it. would not be right to put restriction of limitation in respect of claim which they may have to make under the said provision. Similar considerations would apply in the present case also where the Provident Fund contribution is really for the benefit of the employee. When the Central Government proceeds under Section 14B to impose damages any recoveries made will go to enhance the fund which is to be utilised for the benefit of the employees. This is now so settled by the Organo 'Chemical's case (supra), wherein it was emphasised 'A special statute creating a special fund, empowers special officers to recover specially designated contributions and special damages for default............... Indeed, employees are a needy community and if the Fund is replenished by damages the scheme can be improved and the benefits augmented. It is really as if instead of each employee moving an application for recovery of the provident fund contribution a power has been given to the Regional Provident Fund Commissioner to move and take proceedings on behalf of the beneficiary employees. Section 14B has been enacted for the benefit of the workers and it must bear a beneficial construction. There is no justification to emasculate the provisions of this beneficial legislation by seeking to read a period of limitation even on the apparently liberal sounding label of reasonableness in favor of employer when the legislature has chosen to provide no such period.

(25) Again in East India Coal Co. v. Rameshwar : (1968)ILLJ6SC an application was filed under Section 33C(2) which related to claims for the years commencing 1948 onwards. The application was filed in 1962. An argument was raised that because of delay of laches the application should be held to be not maintainable. The court however, rejected this end held that there is no justification in inducting a period of limitation provided in the Limitation Act into the provisions of Section 33C(2) when the Section does not provide for any period of limitation. It followed the earlier case of Bombay Gas Company (supra).

(26) In Punjab Co-Operative Bank Ltd. v. R. S. Bhatia 1975 Sc 1898, an application was filed under Section 33C(2) in July 1968. The claim related to the period 1954 to 1961. The argument that the claim was barred on the ground of undue delay or laches on the part of workmen was held to have been rightly rejected by the Labour Court which view was upheld by the Supreme Court.

(27) We, thereforee, must repell the contention that the impugned orders pasted under Section 14B per se stand vitiated because of the time gap between the issue of notice by the Regional Provident Fund Commissioner and the date when the defaults are said to have been taken place. No such general infirmity can be held to invalidate these orders. Only if in any particular case some illegality or error of jurisdiction is established will the petitioner be entitled to succeed. This part of the contention of the petitioners thereforee must fail. (We shall deal with the each case separately later on).

(28) Though we have upheld the right of the Regional Provident Fund Commissioner to proceed under Section 14B even after a great deal of time lag (absent any other peculiar circumstances applicable to the facts of each case) we cannot but express our unhappiness at the delay which has taken place in the office of the Commissioner. We have not been able to appreciate as to why the office of the Regional Provident Fund Commissioner should have been so remiss in pursuing the matter where the stakes for the working class are so great. A good beneficial legislation can be set at naught by the neglect, the inefficiency and the carelessness of the bureaucratic muddle. This is an aspect which seriously requires the attention of the authorities concerned to see that the mandate given by the legislature is not set at naught by the inaction of the bureaucratic and the executive act.

(29) In this connection we must also notice that the remissness in not depositing the Provident Fund Contribution is not restricted to the Private Sector but extends unfortunately to a much serious degree to the public sector. In this case a reference may be made to the recent figures given by the Central Board of Trustees as to the amount of defaulters to be found in this sector. These figures reveal large scale evasion of the provisions of the Act. One of the disturbing disclosures in the report is that out of 5044 public sector units 1077 are defaulters. For the employee's family pension fund, the Government arrears in March, 1982 came to 39 crores against the private sector's 2.61 crores. Nearly 60 big establishments are said to have accumulated dues of more than Rs. 20 lakhs. More than 70,000 prosecutions are pending in various courts. This is notwithstanding the stringent penalty of 100 per cent of the penalty amount prescribed under the Act.

(30) It may be that there is no limitation within which the proceedings under Section 14B(r) may be initiated against an employer. But that by itself would not justify the respondents' from sleeping over their duties for decades and then all of a sudden one day to wake up and start these proceedings against an employer. Technically there may not be a bar. But a practical working arrangement must be arrived at. Cases must be distinguished. Where there has been a total neglect of making contribution as required by the Statute, then unless some fullest justification is put forth the default of the employer would necessarily require action to be taken against him under Section 14B even if number of years have elapsed since the default was committed. But where the employer has been depositing the contribution but has defaulted in the sense that he has de- layed it by a few days' or a couple of weeks a more liberal and less stringent action is called for in case action is initiated against such an employer for a period extending over decades. It is common case that monthly statements are filed by the employers with the Regional Provident Fund Commissioner of the deposits effected, in the Provident Fund and the family pension scheme. The dates of deposits are also elaborated. The Regional Provident Fund Commissioner in the circumstances, can without any difficulty ascertain if defaults or delays have been committed or not. The question to be considered is, if he does not choose to ascertain the correct position, and be vigilant, can he seek that his' own rem^sness, inactivity and laches for years together be ignored while he should have full right to take the employers to task for defaults committed for periods ranging from some days to some months. In our social welfare state, the concept it seems, needs to be recognised in our jurisprudence that when a subject is sought to be penalised for lapse in the discharge of obligations within a particular time, the government has as well to correspondingly observe norms of promptitude and reasonableness, and cannot post to seek soft paddling and by-passing of its own lapse, and sermonise the subject of the virtues of the promptness. Inefficiency, inactivity or red-tapism in governmental departments can only provide cover up, to the concerned officers as if they can afford to indulge in them with immunity with no consequence flowing to them for the resultant loss caused to the government or the department or body for the protection of which they are posted. One can understand cases where offenders have managed to conceal their identity and the delays remain undiscovered on account of deceptions played by them. However, where facts are known to the government, or could be known with a little bit of diligence, to seek to penalise the subject heavily for some days' delay and ignore the non-feasance or misfeasance of the government for years together, would appear to be very harsh. It is correct that the socio-economic legislation meant for the ultimate benefit of the labour has to be enforced in the right spirit. However, the real bite should come and severe actions taken against those who do not at all comply or designedly commit long delays. The same, however, need not be harshly enforced against all sundry, most of whom do effect deposits, through late by some days, or weeks, because of certain compelling exigencies. Old graves too have not to be indiscriminately dug, and matters which were considered closed long back, should not be too readily opened. The law of limitation does not have its roots entirely in technicalities. It has been rightly termed by age old jurists as law of peace and repose. One has to take into account that it may not be possible sometimes to recapitulate and explain the circumstances which operated a decade or so earlier in the commission of default for short periods in the deposit of amounts. It is possible that after such a great delay the respondents may be under a bona fide belief that the delay that has occurred has been condoned and may so arrange his finances and commitments as not to provide for any damages that may suddenly now be imposed for all these years.

(31) Sufficient or reasonable cause in any provision of law while explaining delays, has generally been liberally and generously interpreted. In the tax laws reasonable periods are provided or taken into account while considering penal consequences. This is in spite of the fact that taxes are part of what has already been earned, and it is meant to provide contribution to the national exchequer for socio-economic, defense and civic needs of the State. It cannot be ignored that industry and labour are mutually complementary, and anything detrimental to the one is bound to affect the Other. The vest in this regard has not to be cavalier or flamboyant, but sober, balanced and circumscribed. While there can be no room for complacency and leniency qua real defaulters, casual and munor del

(32) In this regard, it need hardly be impressed that in the matter of actual deposits' or the delays thereof, the poor and illeterate do not there and then directly come into the picture. They rather appear much later when the stage of payment comes. It is rather the Regional Provident Fund Commissioner who administers this specialised law and acts' on their behalf that has directly to deal with the employers. He must, thereforee, put his house in order, and act promptly and with diligence. Not unoften, young entrepreneurs who set up new industries, are not fully familiar with the vast net-work of the Industrial law, and the consequences that flow in case of commission of defaults. There is, thereforee, no point in taking a too stringent a view qua all sundry and howsoever limited the defaults may be.

(33) It is in this context, thereforee, that we feel that while taking action under Section 14B a distinction will have to be drawn between those employers who have been contumacious in making the default and those who have not been especially when the question of imposing the quantum of damages arises for period extending over a number of years backwards from the date the action is initiated against the employer.

(34) One of the arguments raised was that as in the normal course Inspector must have inspected the premises and as statements are to be supplied every month by the establishment the fact that defaults have been committed in not depositing the contribution in time must have come to the notice of the authorities concerned immediately. The argument thus was that having come to know of it if the authorities waited for long time in initiating the proceedings it must be taken that the authorities had waived the defaults and hence could not now proceed under Section 14B of the Act. The first answer to this argument is that there is no jurisdiction in the Commissioner waiving or stopping itself from proceedings under Section 14B of the Act. Section 14B casts a duty on the authority concerned in case tf defaults to take proceeding for necessary action. Of course if after issuing notice the authority is satisfied that there were justifiable grounds for the default if may completely condone the fault or if not satisfied, it may impose damages as it may think fit. But there can be no question of waiver or estoppel because the exercise of this statutory obligation cannot be compromised or given up even by the Regional Provident Fund Commissioner itself. To permit such a course would be to reduce the beneficial provision of Section 14B to a nullity and to reduce it to the whim of the Commissioner, which is impermissible. The contention of waiver or estoppel must, thereforee, fail.

(35) A question was also sought to be raised as to on whom lay the burden of proof to urge that a default had taken place was for the Regional Provident Fund Commissioner to show. In our View the question posed misapprehends the position' in law. It is apparent that default under Section 14B occurs the moment contribution has' not been paid as required by para 38 of the scheme, by the 15th of the following month. When a notice is, thereforee, issued by the Regional Provident Fund Commissioner under Section 14B to the establishment the whole matter is at large and the same has to be decided after considering the evidence produced. This question is not to be decided by the abstract law of onus of proof, it is question of fact which has to be decided, namely whether the contribution was made within the period provided in para 38 of the scheme. No doubt the proceedings are initiated by the notice sent by the Commissioner. But equally as to whether payment was made or not and when are obviously matters within the special knowledge of the employer, he must give evidence of the payment and cannot take cover under any assumed principle of onus of proof. In our view the whole controversy of onus of proof is unreal and of no significance.

(36) Any attempt to challenge the constitutionality of Section 14B, as was done by Mr. Malik, counsel for the petitioners, is doomed to failure right at the threshold because of decision in the Supreme-Court in Organ Chemical's case (Supra.) upholding the validity of the said provision.

(37) In that case challenge was made to Section 14B of the Act on the ground that it confers unguided, uncontrolled and arbitrary power on Regional Provident Fund Commissioner to impose damages' which may be to the extent of 100% equal to the amount of arrears. This challenge was forthrightly rejected having of no substance, wherein the court observed 'The power of the Regional Provident Fund Commissioner to impose damages under section 14B is a quasi-judicial function. It must be exercised after notice to the defaulter and after giving him a reasonable opportunity of being heard. The discretion to award damages could be exercised within the limits fixed by the Statute.- The guidelines are provided in the Act and its various provisions, particularly in the word 'damages' the liability for which in Section 14B arises on the 'making of default'.'

(38) Equally of no avail is the argument that damages in Section 14B must be co-related to a finding as to what loss has been actually suffered by the Fund or the employees. 'The object and purpose of the section is to authorise the Regional Provident Fund Commissioner to impose exemplary or punitive damages and thereby to prevent employers from making defaults. The intention is to invest the Regional Provident Fund Commissioner with power to impose such damages that the employer would not find it profitable to make defaults in making payments' (para 35 Organo Chemical's case).

(39) Nor does the argument that no appeal is provided against an order passed under Section 14B of the Act affect the validity of the provision. 'Mere absence of provision for an appeal does not imply that the Regional Provident Fund Commissioner is invested with arbitrary or uncontrolled power without any guidelines. The conferral of power to award damages under Section 14B is to ensure the success of the measure. It is dependent on existence of certain facts, there has to be an objective determination, not subjective. The Regional Provident Fund Commissioner has not only to apply his mind to the requirements of Section 14B but is cast with the duty of making a speaking order, after conforming to the rules of natural justice.' (See para 40 Organo Chemical's Case).

(40) inspire of the vires' of Section 14B having been upheld the counsel for the petitioners sought to urge that many aspects and facets of the challenge had not been noticed by the Supreme Court in Organo Chemicals' Case. In that connection Mr. Malik read to his aid Smt. Maneka Gandhi v. Union of India, : [1978]2SCR621 , (especially to Paras 56 and 65) to urge that Article 14 strikes' at arbitrariness in State action and the principle of reasonableness must be implicit in every legislation. Similarly Mr. Marwaha seeks to find support from the observations in Air India v. Nereesh Meerza & Others, : (1981)IILLJ314SC (Fazal Ali J.) to urge that Section 14B suffers from the vice of arbitrariness. In our view reliance on these general principles which are of course unexceptionable are of no consequence in the present case, in view of the specific decision on Section 14B in Organo Chemical's Case (supra). These arguments in reality amount to asking as to hold that Organo Chemical's case has been wrongly decided. This we cannot do.

(41) Now admittedly Organo Chemical's case has upheld the validity and constitutionality of Section 14B of the Act. In that context it is not open to his court reopen this conclusion for it is well settled that if a question has been concluded by the Supreme Court, 'The decision was binding on the High Court and the High Court could not ignore it because they thought that 'relevant provisions were out brought to the notice of the Court'.' (See B. M.Lakhani v. Malkapur Municipality : AIR1970SC1002 ) .

(42) We however allowed some of the points to be argued and It is only fair that we deal with them.

(43) Mr. Malik had sought to urge that there was double jeopardy when proceedings are taken against the employer under Section 14B of the Act. This argument is sought to be raised by urging that under Section 14(2A) whoever contravenes or makes default in complying with any provision of the Act......... shall if no other penalty is elsewhere provided be punishable with imprisonment Which may extend to 3 months, covers the same ground as that under Section 14B which empowers' the employer in default in payment of contribution to impose damages. In our view the argument is misconceived. The two provisions cannot be said to violate any provision of Article 20(2) of the Constitution. Under Section 14(2A) making a default in complying with the provisions of the Act is punishable with imprisonment. Under Section 14B it is a power to impose damages. It may be a different matter that this power to impose damages is exemplary or penal and in such a manner so that the employer does not find it profitable to make default. But the exercise of power under Section 14B is very different from the power to impose imprisonment by criminal court under Section 14(2A); the two are distinct. Article 20(2) of the Constitution prohibits a person from being prosecuted and punished for the same offence more than once. But there is no prosecution for an offence under Section 14B of the Act. It has been held that proceedings' taken before the Sea Customs Authorities do not constitute a prosecution of the person from whom goods are confiscated nor does the order of confiscation constitute punishment by a court and such a person cannot by reason of these proceedings before the Sea Customs Authorities be said to have been prosecuted and punished for the same offence with which he is later on charged before a Magistrate in complaint which is filed against him under Section 23 of the Foreign Exchange Regulations Act, 1947. (See Maqbool Hussain v. State of Bombay; Air 1973 Sc 325) (24). Again in Thomas Dana v. State of Punjab; : 1959CriLJ392 the court held that even when the Custom Authorities passed an order imposing a penalty under item 8 of schedule to Section 167 of the Sea Customs Act in the amount of Rs. 25 lakhs and also ordering confiscation of the properties worth over Rs. 8.50 lakhs it still could not be taken to be the same thing as a punishment imposed by a criminal court by way of punishment for a criminal offence, and thereforee, a mere proceedings even after imposition of such heavy penalty under Sea Customs Act would not bar the prosecution and imprisonment under Section 167(81) of the Act read with Section 23 and 23B of the Foreign Exchange Regulations Act. Thus proceedings taken before the Sea Customs Authority were held not to be 'prosecution' within the meaning of Article 20(2) of the Constitution and its protection could not be invoked. On a parity of reasoning thus even though the imposition of damages under Section 14B of the Act may be penal in nature as the Organo's case decided, it still must be held that the imposition of damages is not a prosecution by a court of law and will not attract Article 20(2) of the Constitution. (See The Regional Provident Fund Commissioner, Trivandrum & etc. v. Bharat Plywood & Timber Products (Pvt.) Ltd. and others; 1980 LAB. I. C. 446 and Madras-Bangalore Transport Company v. Regional Provident Fund Commissioner, Madras, 1969(2) Ilj 136.

(44) We may however, note in fairness to Mr. Malik that he really did not seriously urge the argument of double jeopardy under Article 20(2) of the Constitution. His argument in. fact is that there are two courses open to the Commissioner under which to proceed against an employer namely under Section 14(2A) of the Act or Section 14B and that there was no guidance under which provision to proceed against a particular employer which meant that an uncanalised discretion has been given to Commissioner to proceed at his whim and arbitrarily against one employer under Section 14(2A) read with Section 14AC and against another similarly situate under Section 14B of the Act. This argument is based on misapprehension of the correct position in law.

(45) This argument seems to assume wrongly that these are two alternative courses open to the Regional Provident Fund Commissioner, namely (1) either to proceed against a defaulter under Section 14B of the Act or (2) to prosecute him under Section 14(2A). The foundation of the argument is non-existent. Proceedings under Sections 14B and 14(2A) are not in the alternative. They are supplemental. This is not a case where the Regional Provident Fund Commissioner has a discretion without any guidelines to resort either to proceed under Section 14B of the Act or to sanction prosecution on under Section 14AC. In fact, both the proceedings are available to the Regional Provident Fund Commissioner. This is not a case like Northern India Caterers (Private) Ltd. and another v. State of Punjab and another; Air 1968 Sc 1581, where a person Hi unauthorised occupation of public premises could be proceeded against either in a civil court or before the Estate Officer, and as one was more drastic than the other, and there were no guiding principles as to which one to select, the provision was held to be unconstitutional. It was to remove this infirmity that an amendment was brought in barring the jurisdiction of the civil court and providing that there will be only one procedure for ejectment of persons; in unauthorised occupation of public premises. This amendment was upheld in Hari Singh v. Military Estate Officer, Delhi, : [1973]1SCR515 . Here there is no question of pick or choose. A defaulter is liable both under Section 14B and 14(2A) of the Act. There is no question of discrimination because every employer making default is liable to be proceeded against under both the provisions i.e. under Section 14(2A) and 14B of the Act. When, thereforee, any employer who makes default is liable to be similarly proceeded under both the provisions the question of any arbitrariness or discrimination does not arise. Faced with this situation, Mr. Malik then urged that as Section 14AC lays down that no court shall take cognizance of an offence punishable Under the Act except........with the previous sanction of the Central Provident Fund Commissioner there may be arbitrariness in not granting sanction against one employer while granting the same in case of other because of the fact that no guidelines are laid down under which circumstances sanction will be granted. We find the argument unacceptable. As to and under what circumstances sanction will be granted has necessarily to be determined on the facts of each case. Power having been given to senior officers they are expected to apply their mind and then take a decision whether to grant the sanction or not for prosecution of an employer in each case. It may be that if there is an in constitutional default of a minor nature sanction may not be given while in case of an employer who is habitual defaulter or has no justification whatsoever for having defaulted a number of times sanction may be given. No hard and fast rule cam evidently be laid down fixing rigid limits for giving or refusing sanction. It will depend upon the facts' of each case. All that can be said is that as this power is being given to serve a public purpose the authority concerned has to act impartially, without any bias and on the basis of the relevant material placed before it. Of course if in any particular case a party is of the view that sanction has not been given legally or that there are no facts on the basis of which any authority could have given the necessary sanction it may be open to the person concerned to challenge the giving of sanction in that particular case. But the fact that the sanction given in a particular case may be challenged does not mean that the power to give sanction given in Section 14AC is by itself discriminatory. By the very nature of power, such a discretion has to be left to the authorities concerned. Such a power is to be found under various provisions. Thus Section 197 of the Criminal Procedure Code empowers the State Government to give sanction for prosecution.........no specific guidelines or any principles are laid down therein. It has never been held that such a power is an uncanalised power or is hit by Article 14 of the Constitution. Of course if sanction is' given On the basis of facts on which no reasonable person could have come to a conclusion that this was a case in which sanction should have been given or some other patent illegality is found the court may. if it so finds fit. interfere with such an order. This is because it is by now well settled that 'it is an un-written rule of law, constitutional and administrative, that whenever a decision making function is entrusted to the subjective satisfaction of a statutory functionary, there is an implicit obligation to apply his mind to pertinent and proximate matters only, eschewing the irrelevant and the remote'. (Vide Shalini Soni V. Union of India : 1980CriLJ1487 ) . But on that ground the statutory provisions empowering the authority to give sanction for prosecution has never been held to be illegal. Rather the contrary. Thus the argument that the power to give sanction vests an absolve and arbitrary power under Section 197 of the Criminal Procedure code as it did not lay down or indicate any guiding principle to control the exercise of discretion was raised in Mata Jog Dobey v. H. C. Bhari : : [1955]28ITR941(SC) but was rejected with the observations that 'it has to be borne in mind that a discretionary power is not necessarily a discriminatory power and that abuse of power is not to be easily assumed where the discretion is vested in the Government and not in the minor official'.

(46) There is another infirmity in the argument. We are concerned with proceedings under Section 14B of the Act. As we have said proceedings can be taken against an employer in default both under Section 14(2)(A) and 14B. Proceedings under Section 14B., thereforee, are perfectly legal. If and when any employer is proceeded against for prosecution wider Section 14(2)(A) he may if so advised and if circumstances so warrant raise the plea that sanction has not been given legally, or that it should not have been given. But that aspect has no relevancy in the present proceedings' under Section 14B. of the Act.

(47) Reference was then made by Mr. Malik to Explanationn (1) to Section 405 of the Indian Penal Code which makes an employer who deducted the employees' contribution to be decried to have been entrusted with the amount for contribution and if he makes default in the payment, he shall be deemed to have dishonestly used the amount of the said contribution in violation of the direction of law. Thus an employer who makers default in paying contribution would be punishable under Section 405 for committing criminal breach of Trust. The argument is that if a default is committed in the payment of contribution an employer can be prosecuted for an offence under Section 405 Indian Penal Code and also is liable to be proceeded with Section 14B. of the Act. This argument of the employer being liable for being proceeded under Section 14B. and Section 405 Indian Penal Code has to be rejected as being untenable on the same grounds as mentioned above with regard to the liability both under Section 14B. and 14(2A) of the Act. As mentioned above there is no double,jeopardy, both the provisions dealing with distinct situations. As it is permissible to proceed against each employer both under Section 14B. of the Act as well as in section 405 Indian Penal Code the complaint of arbitrariness Vanishes. The mere fact that a sanction has to be given by the Regional Provident Fund Commissioner does riot make the provision arbitrary. It is implicit that any power which is given to authority that it will be exercised in public interest and in the interest of justice. Section 14B. is attracted immediately there is a default in payment of contribution. It is not open to the authority concerned not to proceed against the defaulting employer. Of course as to how much damages should be imposed or whether Explanationn given by the employer is satisfactory, are all matters which necessarily will be examined by the authority concerned. Every defaulting employer is liable both for being prosecuted in the criminal court as well being proceeded under Section 14B. of the Act. The vice of arbitrariness is only imaginary. As a matter of fact challenge to the virus of Section 14B. on the ground of alleged violation of Article 14 of the Constitution is no longer rest integra, in view of Organo's case (supra). This very argument of Section 14B. being hit by Article 14 was rejected in the said case by the Supreme Court when it observed in para 38:

'THE power of the Regional Provident Fund Commissioner to impose damages under Section 14B. is a quasijudicial function. It must be exerted after notice to the defaulter and after giving him a reasonable opportunity of being heard. The discretion to award damages could be exercised within the limits fixed by the statute. The guidelines are provided in the Act and its various provisions, particularly in the word 'damages' the liability for which in Section 14B. arises on the 'making of default'.'

Similar plea raised before a Division Bench of Punjab High Court was rejected in State of Punjab and others V. Amin Chand & Sons', 37 F.J.R. 92 wherein it was observed that there is more than ample guidance for the exercise of its discretion by the appropriate Government under Section 14B. of the Act. Its discretion is (a) whether or not to impose damages having regard to the facts and circumstances of a case, and (b) if it decides to impose damages, to determine the quantum of damages within the limits specifically provided in the section, against in view of the facts and circumstances of the case.' This challenge by Mr. Malik to the constitutionality of Section 14B. on this ground, thereforee, fails.

(48) The next attack was that there was no objective determination of the damage imposed and the order passed thus fell foul of ratio in Organo's case (supra). Now there is no doubt that the order that has to be passed under Section 14B. is a quasi judicial order and has to be passed after giving an opportunity to the party concerned. 'There is to be objective determination and not subjective determination and Section 14B. requires the making of a speaking order after conforming to the Rules of natural justice (see para 14 of Organo's case (supra). What is objected to is the circular that has been issued by the Central Provident Fund Commissioner giving a standard table in broad outline for levy of damages. What the circular has done is to give a table of percentage of damages for defaults of varying kind. Thus for first default for a period of less than one month. 2 per cent penalty of damages is suggested. For every delay for a longer period-say 2 months, 3 months and so on. higher damages are mentioned, going up to 55 per cent for a delay for over 12 months. Similarly, for 2nd or 3rd defaults various percentages are given. The maximum that is equivalent to the amount in default is to be applied when number of defaults exceeds twelve. It is strongly contended that the respondents have acted mechanically and only applied the circular and have not considered each case on merits. The argument is that as the Commissioner has to act as a quasi judicial authority he cannot surrender hie duty to an outside anthority. Speaking as a proposition of law, there can be no quarrel. But the assumption made by the petitioner is on non- existent foundation.

(49) The circular issued in no way fetters the power of the Regional Provident Fund Commissioner. The only purpose of the circular is to give a broad and general guidance to large number of officers who are spread over the whole country. As a matter of fact the issue of these guidelines has the sensible purpose of keeping the discretion within certain broad contours. It will be appreciated that the Act permits the imposition of damages equal to the amount of the arrears. Technically and in law it would be competent for the Commissioner to impose even 100 per cent damages for the first default if he found fit to impose. Now this Act is applicable all over the country. This circular is only an attempt at devising some kind of uniformity in these proceedings while at the same time leaving the discretion unfettered. The circulars have rather the effect of easing the rigidity. Thus the trustees have even decided that if the Provident Fund dues payable for a particular month were paid before the Provident Fund amount for the next months fell due, the default for that particular month should not be treated as a continuous default and that the immediate next default should be treated as a fresh default. Laying down of these guidelines does not offend any principle of law, nor does it act as a fetter on the discretion of the Commissioner. That the standard table for levy of damages framed by the Government is a salutary measure for the guidance of Officers of the Government to Act under Section 14B. was held in a division bench of this court in Atlantic Engg. Services V. Union of India; 1979 Lab. I.C. 695 wherein the court observed that under the table the amount of damages is related to the delay in payment of the contribution. This method of determining damage is entirely reasonable and it. shows that no officer acting under Section 14B. can act arbitrarily, but must follow this reasonable guideline made by the Government. Further this is only a guideline. It is not a determination. The actual decision as to what the damages should be in a particular case is made only after hearing the employer and assessing the particular facts of his case.'

(50) We also find no force in the submission that there has been a mechanical application of the formula for imposing damages and that no application of tire mind has been exercised by the authority concerned. In each case a speaking order has been passed. Before passing the impugned order the procedure that was followed is that show cause notice was issued to the party concerned attaching with it the details of the defaults which are said to have taken place. It is a very detailed document which gives the due date when the contribution, should have been made. the date when it was actually made, the delay that was occasioned and also indicating the number of defaults i.e. whether it is the first second or. so and also specifying the percentage of arrears proposed to be imposed as damages'. Thereafter on receipt of a reply further hearing is given to the petitioner with full rights to lead any evidence and produce any documents before the authority concerned. It is thereafter that the impugned speaking orders have been passed. It is correct that in imposing damages broadly the slab given in the table have been made the basis. But there is no mechanically about it. Mind has been applied to each case. In many cases though proposed damages were indicated, 100 per cent of arrears but after the hearing, the Fame have been reduced to 25 per cent (in C. W. 362/1978- Associated Journals Ltd. V. The RPFC). No doubt in some other cases the proposed damages and the ultimate damages' imposed are the same. But from this it does not follow that there has been no application of mind. Simply because the broad parameters have been hid down for the imposition of damages does not mean that this is an inflexible rule. Rather a fair feature of the circular 'is that it is broadly laying down what should be the limits within, which general damages may be imposed. No doubt the order under Section 14B. being a quasi Judicial one the same has to be imposed by an authority after giving an opportunity and applying its mind to the facts of each case. Thus the mere fact of a circular having been issued does' not make an individual order automatically null and void unless some infirmity is established in that particular order. Reference in this connection may be made to Coal Mines P.F. Commr. v. J. P. Lalla; : (1976)IILLJ91SC . That case dealt with the provisions of Coal Mines Provident Fund and Bonus Scheme Act. A scheme had been framed under that Act which required the employer to make certain contribution towards provident fund and bonus. Section Iof of the said Act (like Section 14B. of the Act) provided that where an employer makes a default in the payment of any contribution, the Central Government, may recover from such employer, such damages, not exceeding 25 per cent of the amount of arrears', as it may think fit to impose. The Central Government further directed that powers exercised by it be exercised by Coal Mines Provident Fund Commissioner in terms of the notification issued by it. The notification had a schedule attached where sliding scales of damages had been fixed by the Central Government under Section 10F of that Act (this table is more or less on a similar pattern as the Standard Table issued under the Act). In the case before the Supreme Court the employer was directed to pay a particular amount of contribution and damages at the rate of 25 per cent. The employer filed objections as to why damages should not be imposed @ 25 per cent. No. opportunity however, was given to the employer and he was informed that damages could not be waived apparently because of the Sliding Table fixing that percentage of damages. This was challenged before the Supreme Court. The Supreme Court accepted that determination of damages is not a mechanical process, nor an application of a rigid formula, and further that the authorities are required to apply their mind to the facts and circumstances of the case. It accordingly agreed with the High Court that an opportunity should have been given to the employer to be heard before the damages were determined. It is however, significant to note that no objection was found to be framing of the sliding scale of damages as per circular issued by the Central Government. The only infirmity found was that no opportunity was given before imposing the damages. As a matter of fact if no such scale is fixed an argument may as well be raised that there is no limit to the damages which maybe imposed so that even on first default a particular Commissioner could impose damages equal to the amount of arrears while some other Regional Provident Fund Commissioner may impose only 5 per cent on the 12th default. The standard table has the advantage of rationalisation and some kind of uniformity about a legislation which is applicable throughout the country. In that context objection to the legality of the standard table, which at the maximum is only to be treated as broad guideline, on the ground that it trespasses on the discretion of the Regional Provident Fund Commissioner is futile and is repelled. What Is The Effect Of Circular Dated 3-11-1982 Issued By The Central Provident Fund Commissioner

(51) It appears that the Employees Provident Fund Review Committee in its report in June, 1981 recommended to the Government that instead of imposing damages on the employers for belated payment of the fund and family pension fund the defaulting employer should be asked to pay penal interest. The Central Board of Trustees of the Employees Provident Fund considered this recommendation at its 92nd. meeting held on 26-6-1982 and approved the proposals for replacement of existing guidelines and decided that damages should be charged at a flat rate of 25 per cent per annum on all belated remittances subject to the condition that the total damages levied did not exceed the actual amount in default. The Board's decision was referred to the Government of India. The Government was of the view that though it Will take some time to amend Section 14B but nevertheless the decision of the Board may be given effect to. The Central Provident Fund Commissioner, thereforee, wrote to the Regional Provident Fund Commissioners advising them that they should regulate the levy of damages @ 25 per cent per annum subject to the conditions specified in the preceding paragraphs in an cases of default with immediate effect. It then added the following instructions which is the basis' of contention of the counsel for the petitioners that discrimination has been practiced against them by acting on the basis of standard table for levy of damages. The objected position is as follows :-

'ALL pending cases and those cases where hearing under Section 14B have already been held but final orders have not been issued should also be regulated as per this letter. Cases where speaking orders have already been issued may not however, be reopened except as otherwise instructed in this office circular letter No. 6-IIlDam(Gen.)/80 dated 31-12-1980'

(52) The argument which was raised by Dr. Singhvi and also by the other counsel was that there was no justification or rationality, in applying this circular only to the cases which were pending final disposal before the Provident Fund Commissioner. It is apparent that there is a vast difference in levying of the damages in terms of the circular which is only 25 per cent per annum on all belated remittances and the damages which had been imposed and imposable under Section 14B which can be to the extent of amount of arrears. We were given a chart by Dr. Singhvi to emphasise what extreme difference it will make it the calculation is done on the basis of this circular of November, 1982. It was pointedly asked as to why pending cases (mentioned in the circular) should not cover within it also cases like the petitioners which were pending before this court, or even if some of those which may be pending before the Supreme Court. Dr. Singhvi relied strongly on Jalan Trading Co. V. Mill Mazdoor Sabha; : (1966)IILLJ546SC to urge that if this circular was meant to limit its' applicability to only those cases which were pending before the Regional Provident Fund Commissioners and not to those cases which were pending before the Supreme Court and the High Courts the same would be discriminatory. Mr. Chawla, on the other hand referred us to Jain Bros. V. Union of India : [1970]77ITR107(SC) to urge that Jalan's case (supra) had no applicability. His argument was that the pendency of the cases before the Regional Provident Fund Commissioner was a consistent and rational principle in as much as it created a proper classification of cases which had been disposed of and those which were pending with the Commissioner with the result that all cases which were pending before him could be decided similarly. He argued that the matter before this High Court and the Supreme Court could not be treated to be on the same par as the matters which were pending before the Regional Provident Fund Commissioner. Mr. Singhvi however, joined issue on this and said that position was anomalous that while the case of one employer say for 1963-64 had been disposed of by the Regional Provident Fund Commissioner because the employer was more cooperative, he would have had to pay greater damages, while the case of another employer for the same period was pending before the Commissioner, may be because the employer was non-cooperative, with the result that the non-cooperative employer will get the benefit of the less stringent principle laid down for assessment of damages in November, 1982 circular, but the benefit of this circular will be denied to the petitioners even if his matter is pending in this court. He says that there may have been good reason for giving the benefit of this circular to all pending cases whether before the Commissioner or the Courts, but none when pendency is artificially split up by restricting it only if the matter is pending before the Commissioner. We would in the normal course have examined in depth the efficacy or otherwise of the respective argument on this aspect, but in view of the new development which arose during the hearing we are refraining from doing that. Mr. Chawla appealing for the Regional Provident Fund Commissioner filed an affidavit before us during the hearing on 17-5-1983 by the Law Officer, Central Provident Fund Commissioner. It is stated therein that after the circular of 3-11-1982 was issued communications were received from various Regional Provident Fund Commissioners making certain enquiries and asking for clarification on the application of circular dated 3-11-1982. That the matter was thereafter under consideration and now in consultation with the Government of India a circular dated 13-5-1983 has been issued (a copy of which has now been filed). The said circular dated 13-5-1983 now makes it clear that all defaults for the period up to September 1982 (dues payable on or before 15-10-1982) are advised to be processed and decided as per the then existing guidelines. But that defaults arising for the month of October, 1982 (payable on or before 15-11-1982) and defaults onwards are advised to be regulated under the revised guidelines Accordingly a reference in para 3 of the revised guidelines that 'All pending cases; and those cases where hearing under Section 14B have already been held but the final orders have not been. issued should also be regulated as per this letter. Cases where speaking orders have already been issued may not however, be reopened except as otherwise instructed in this office circular is directed to be deleted.' The result of this circular of 13-5-1983 is that the basis of levy of damages at the rate of 25 per cent per annum is now applicable only to those cases of defaults in payment of contribution from the month of October for payments which were to be made by 15-11-1982. All cases of default relating to previous period up to September, 1982 (dues payable by 15th October, 1982) will continue to be governed by the graded rates of damages in Standard Table mentioned in earlier sidelines. Now no question of this circular of 3-11-1982 being applicable to any pending cases whether before the Regional Provident Fund Commissioner or before the High Courts or the Supreme Court can arise. Pendency of the matter anywhere has ceased to have any relevancy for the applicability of circular dated 3-11-1982 whether cases' have already been disposed of by the Commissioner or are yet to be disposed of by the Commissioner, uniform rules and guidelines given earlier will continue to apply to cases for defaults' up to and including for September, 1982. The infirmity in the circular of 3-11-1982 based on the fortuitous circumstance of the mater pending before the Commissioner no longer survives. Non-cooperation of the employer for having delayed the matter does not give him any benefit of the circular of 3-11-1982, which is only to apply to all cases arising thereafter. Thus the basic foundation for the argument of discrimination no longer survives. Now all employers are being treated uniformally on the same pattern i.e. to say all persons whose contributions were due by 15-11-1982 but they make a default will have the damages assessed in terms of the circular of 3-11-1982. Here is a uniform, consistent pattern which has been imposed on all employers.

(53) An attempt made to challenge the fixing of date of November 1982 as being arbitrary is futile and without any merit. The date has relevance to the time when decision was taken by the Government and the Central Provident Fund Commissioner issued the circular. Obviously when a decision is taken to revise guidelines for imposition of damages, some date had to be fixed from which these revised guidelines will apply. The fixing of date is by its very nature ad hoc and unless it could be said that the fixation of date was totally arbitrary and un-related to any reason the same cannot be held to suffer from the vice of arbitrariness. It is well settled that 'judicial scrutiny can extend only to the consideration whether the classification rests on a reasonable basis and whether it bears nexus with the object in view. It cannot extend to embarking upon a nice or mathematical evaluation of the basis of classification, for were such an inquiry permissible it would be open to the court to substitute their own judgment for that of the Legislature or the rule making authority on the need to classify or the desirability of achieving a particular object'. It is also well settled that 'the choice of a date as a basis for classification cannot always be dubbed as arbitrary even if no particular reason is forthcoming for the choice unless it is shown to be capricious or whimsical in the cireumstances. When it is seen that alien or a point there must be and there is no mathematical or logical way of fixing it precisely, the decision of the legislature or its delegate must be accepted unless we can say that it is very wide of the reasonable mark'. (See Union of India v. Parmeshwaran Match Works; : 1978(2)ELT436(SC) ) . In that case the Supreme Court quoted with approval the decision in Louisville Gas Co. v. Alabama Power Co., 240 Us 30, wherein it was observed that the choice of a date as a basis for classification cannot always be dubbed as arbitrary even if no particular reason is forthcoming for the choice unless it is shown to be capricious or whimsical, in the circumstances of the case. (See D. D. Joshi v. Union of India : : (1983)IILLJ14SC ) (39).

(54) Applying these principles we do not find any division of a homogeneous class. Ah employers who make defaults up to the month of September are to be governed by the old guidelines. All subsequent defaults will be governed by new guidelines of 3-11-1982 clarified by Circular of 13-5-19S3. The benefit is being made de available to each one of them. The example oft quoted by Dr. Singhvi of pendency of case of one employer for 1963-64 being disposed of by the Regional Provident Fund Commissioner on different guidelines, another being disposed of by different yardsticks is no longer valid, as each category will be governed by the same set of guidelines.

(55) Another objection raised by the Petitioners was that the notification made in circular of 13-5-1983 was unauthorised. Now as per Section 5(1) of the Act the Central Government is empowered to constitute a Board of Trustees (to be known as Central Board) which is to administer the fund. By Section 5D Central Provident Fund Commissioner is the Chief Executive Officer of Central Board. The argument is that the circular of 13-5-1983, by which distinction between pending cases has been deleted is unauthorised. Now this assumes that the distinction between pendency or otherwise of cases mentioned in 3-11-1982 circular was authorized by the Central Board and the later deletion in 13-5-1983 is by Central Provident Find Commissioner himself. The assumptions are not supported by record. The petitioner in C.W. 1420/1983 have filed proceedings of Central Board wherein the decision was taken. This will show that at item No. 10, at its meeting held on 26-6-1982, wherein decision was taken to revise the guidelines by charging 25 per cent penal interest, there was no decision as to from what date the revised guidelines' were to be made applicable. In the normal course they would be applicable to all defaults occurring in future. But in the circular of November, 1982 distinction was made between the pendency or otherwise of the case. It is on record that the. Central Board had not in any case done this. This distinction was introduced by the C.P. Commissioner on his own. So thereforee, when regions sought clarifications and pointed out the anomaly of this distinction the circular of 13-5-1983 has been issued by the Central Provident Fund Commissioner removing this distinction. It is quite obvious that the Central Provident Fund Commissioner who was responsible for making this distinction in the circular of November 1982, has revised it by 13-5-1983 circular. There was no bar on him to do so, as the authority for this action was the same. It can riot, thereforee, be said that the circular of 13-5-1983 was in any way unauthorised, as it only complies with the actual decision taken by the Central Board.

(56) Counsel for the petitioner then raises various objections to the issue of this circular of 13-5-1983 by urging that this was an attempt to ever-reach the court. He says that only after the matter had been argued for a number of days and apprehending adverse decision this devise of circular was resorted to. In justification of circular, Mr. Chawla points out and, in our view, correctly that in response to the circular of November, 1982 queries had been raised by the various Regional Provident Fund Commissioners, and in support a copy of one such letter from Kerala dated 8-11-1982, has been filed which shows that a query was raised whether to restrict the benefit of circular to only those matters pending before the Regional Provident Fund Commissioner. It was specifically posed that since cases decided are not to be reopened the order may discriminate between establishment in respect of which damages have been levied up to date and those on which damages have not been levied for a number of years. Thus the matter was being examined much earlier than the hearing before us. It cannot, thereforee, be said that the matter has been maneuvered only with a view to meet the case of the petitioners, It may be that the matter could have been dealt with at a quicker speed earlier. It may even be that the present decision making was expedited because of the pendency of the matter before us. But for that reason alone we cannot strike down the circular of 13-5-1983 as being without jurisdiction or discriminatory. As a matter of fact we find the objection of the petitioners to be rather illogical. They raised an argument that the November 1982 circular is discriminatory because 'it does not give the benefit of the circular to all cases which are pending either before the Regional Provident Fund Commissioner or the Courts'. Their objection was that the classification on the ground of pendency was irrational and hence bad. Realizing the force of this argument the respondent itself has decided to apply a uniform decision namely-that only incase of defaults from October 1982 onwards will the benefit of November 1982 circular apply and to all defaults up to September 1982, the old guidelines will continue to apply whether the matter is pending or has been disposed of. Thus the Commissioner is removing the vice of discrimination to which the petitioners were objecting. The Commissioner is only doing now what he might have done in the first instance and also taking the precaution of covering all the period up to October, 1982. If the circular as now issued on 13-5-1983 had been issued in November 1982, and no objection could have been raised to the constitutionality of it, we cannot see how any objection can be raised to its constitutionality by the mere fact that it has been issued during the pendency of the hearing before us. The objection to the circular of 13-5-1983, thereforee, fails.

(57) The last argument of Mr. Iyenger (in C.W. 396/1978) was that no action for default in payment of contribution on account of family pension can betaken under section 14B for any period prior to November 1973. If so, the only period covered in the impugned order would be the default made in April, 1974. The point urged is that section 14B which empowers damages to be imposed for default to make contribution to Family Pension Fund was amended by Act 40 of 1973 by incorporating 'family Pension Fund' and thus no proceedings can be taken under Section 14B with regard to any alleged default committed for period prior to 1-11-1973. Now it will be seen that the contribution which an employer has to pay under Section 6 is 6-1/4 per cent of the basic wages (dearness allowance, retaining allowance, if any, for the time being payable to each of the employee). Thus all establishments which are covered by the Act an employer is under the obligation to pay in terms of para 38 of the Employees Provident Fund Scheme the said contribution Along with the employees contribution within 15 days of the close of every month. This was the position prior to the insertion of Section 6A by Act 16 of 1971. Section 17 however, empowers the Central Government to exempt from the operation of any provisions of Scheme if the rules of Provident Fund with respect to the rates of contribution in the establishment were not less favorable than those specified in Section 6. The petitioner, Birla Mills were undoubtedly exempted from the payment of this contribution by the Regional Provident Fund Commissioner. Thus they were not under any obligation to pay or deposit the Provident Fund Contribution. But then Act 16 of 1971 was brought in and Employees' Family Pension Fund Scheme was introduced by virtue of Section 6A. Sub-section 6 of Section 17 was inserted by the said Act 16 of 1971, which provides that notwithstanding the exemption granted to the establishment from payment of the Provident Fund but if the establishment is one to which the provisions of Family Pension Fund Scheme apply, shall notwithstanding the exemption pay to the Family Pension Fund such portion of the employers contribution as well as employees contribution to its provident fund............ as may be specified in Family Pension Scheme. The over-all result, thereforee, is that from and out of the contribution payable by the employer and employees in each month under Section 6 of the Act a part of the contribution, representing 1-1/6th per cent of the employee's pay Along with an equivalent amount of 1-1/6th per cent from and out of the employer's contribution shall be remitted by the employer to the Family Pension Fund (see Rule 9 of the Employees Family Pension Scheme). Thus notwithstanding the exemption granted to the petitioner to deposit provident fund the liability to pay the employer and employees contribution to the family pension fund arose against the petitioner when the employees family pension, scheme came into force w.e.f. 1-3-1971. Admittedly there is default by the petitioner in payment of the family pension fund. The argument of lack of jurisdiction in being proceeded against under Section 14B arises from the fact that as Section 14B prior to the amendment made by Act 40 of 1973 did not include the word 'family pension fund', this power to impose damages could only be available in 1973. We cannot agree. Section 14B undoubtedly always applied when there is default in payment of any contribution to the fund. Fund. is no doubt defined under the Act to mean the provident fund established under a scheme. Prior to 1971 as contribution of 6-1/4 per cent of basic wages etc. had to be paid to the provident fund account and as there was exemption given to the petitioner there could obviously arise no question of any default by them by not depositing it in the Bank. But from the coming into force of the Family Pension Fund Scheme in 1971, Section 17(6) specifically provided that the employer shall pay a portion of the amount to the family pension fund notwithstanding the exemption granted under sub-section (1) of Section 17. This portion of amount is admittedly a part of the fund which payable by the employer under Section 6. So long as the establishment was exempted and the Pension Fund Scheme had not been incorporated by Act 16 of 1971 the total amount had to be deposited in the provident fund maintained by the employer himself. But after the coming into force of the Family Pension Scheme the employer notwithstanding' the exemption under Section 17(1) had to deposit 1-1/6th per cent of pay of the employee from and out of the contribution payable by the employer and employee to the family pension fund. In fact, thereforee, when employer defaults to pay to Family Pension Fund he is defaulting in payment of the contribution to the fund because nonpayment to the family pension fund is in fact nothing but that a part of the fund is being retained by the employer and not depositing contribution. Thus as an un-exempted employer if he was not paying to fund he would be liable to be proceeded under Section 14B, similarly an exempted employer would be liable to be proceeded with under Section 14B of the Act for having made default in payment of a portion of contribution to the Family Pension Fond, because by not so depositing he is in fact making a defaulting payment of contribution payable under Section 6. In case in contribution under Section 6 was separate from that under Section 6A, then unless Section 14B mentioned both funds and Family Pension Fund an employer could not be proceeded for having made default in payment of Family Pension Fund. But as the amount of contribution is determined by reference to Section 6 and under Section 6A, it is only a portion out of that amount that is to be paid to Family Pension Fund, this contribution continues to bear the characteristic of being a contribution to the Fund. Section 6A has only the effect of splitting out of the original amount of contribution under Section 6. In case in contribution under Section 6 was separated in the Family Pension Fund. Thus the petitioner by not depositing the said portion from 1971 onwards would be in default of payment of .contribution to the Fund. It is no doubt true that the word 'family pension fund' was inserted in Section 14B by Act 40 of 1973. But Section 17(b) of the Act itself lays down a duty to make contribution to the Family Pension Fund and thereforee, if such a contribution is not made there is a default in the payment of any charges payable under any provisions of the Act or under any of the conditions specked under Section 17. Thus the amendment in 1973 was more of a clarificatory nature and out of abundant caution because even un-amended Section 14B of the Act made a provision for proceeding against an employer for making default in payment of any contribution to the fund which necessarily includes the total amount of contribution payable and as family pension fund is only a part of the over-all fund, non deposit of family pension fund since 1971 amounts to making a default as contemplated by Section 14B (Unamended). Amendment by Act 40 of 1973 was only clarificatory in nature. Power to impose damages for non-deposit of Family Pension Fund must be deemed to be implied in Section 14B, ever since Family Pension Fund Scheme was introduced on 1-3-1971. The exemption under Section 17(1) of an establishment from the payment of Provident Fund does not automatically exempt the establishment from paying the contribution to the Family Pension Fund. This plea, thereforee, fails.

(58) The question, however, to be considered is whether the other view that Section 14B had not specifically provided for levy of damages for default in the deposit of the family pension scheme, can be treated as entirely off the mark and not reasonably possible. There is no gain-saying that where the matter is capable of two opinions, especially in the eye of a lay man who is obliged to obey, penal consequences should not be enforced if the defaulter has in good faith acted as such. The benefit of doubt, in this regard, must go to the person concerned.

(59) It should also be noted that the legislature did not at the time of incorporation of the Family Pension Fund incorporate in the definition clause the 'Family Pension Fund' with the result that the 'fund' continued to be defined as Provident Fund, till 1973 when an amendment was made in the definition clause to define family pension fund and also to incorporate it in Section 14B. It is, thereforee, possible as was argued by Mr. Iyenger that the respondent/employer may legitimately have thought that as Section 14B provided for damages only in case of default in paying the fund no damages could be imposed for the defaults in making the family pension fund contribution. Though we have held that this view of law is not correct and that in fact Section 14B even without the amendment brought in by Act 40/1973 would have permitted the imposition of damages for defaults in making the contributions to the family pension fund, we cannot rule out the contention of Mr. Iyenger as entirely imaginery. In fact the Regional Provident Fund Commissioner himself has conceded in his order that there was some ambiguity over the question whether in such cases where defaults were committed in payment of family pension contributions, damages are to be invited or not and the provision was made more ex-amendment Act 40 of 1973. Now the total damages imposed implicit by inserting the words 'Family Pension Fund' through the are 3748 except a sum of Rs. 87.50 which is for the period of default in April, 1974. The other amounts consist of defaults alleged to have been committed from September, 1971 to August, 1972 for various periods in between. The point to note is that barring a small sum of Rs. 87.50 other defaults are alleged to have been committed prior to amendment of the Act in 1973. Another significant fact is that the show cause notice why damages should not be imposed was issued on 29-1-1977; four years after the amendment of the Act in 1973. The petitioners understanding that Act of 1973 could not permit damages to be imposed for a period prior to the coming into force of 1973 Act is not after-thought is clear from the fact that in reply to the show cause of 21-2-1977 this very plea was taken by them. It will thus be clear that though thereforee technically in law a default has been committed permitting the respondents to impose damages for defaults in depositing family pension funds for the period earlier to amending Act 40 of 1973 coming into force, the fact could not be ignored that it is only the sum of Rs. 87.50 that is subsequent to the period of Act 40 of 1973. The whole course of correspondence and even the ambiguity accepted by the Regional Provident Fund Commissioner thus shows that there as bona fide reason for the respondent; to assume that no damages were imposable. We do feel that this is a case in which the respondent could have exercised its discretion in not imposing the damages considering that there was no default committed for subsequent periods, and also that the amount was a very small one. Though, thereforee, we would hold on a point of law against the petitioner we would in the circumstances set aside the order dated 1-2-1978 passed by the Regional Provident Fund Commissioner imposing damages on the petitioners.

(60) General argument on the question of damages imposed being heavy is of no avail. This is a socio-economic legislation and subserves the weaker section of the community. It should also be noticed that the Section 14B as originally provided for imposing damages not exceeding 25 per cent but so large were the defaults and so persistent the conduct of the employers that this provision was found to be not deterrent enough and the recovery of damages proved to be elusive. That is why the Act had to be amended to provide for damages not exceeding the amount of arrears by Act 40 of 1973. The statement of Objects and Reasons clearly mentioned that the working of the scheme having not been effective in preventing defaults, it was found that the arrears which stood at 3.65 crores in 1959-60 had risen to 20.60 crores on 21-3-1962. In the. decade since then the Provident Fund dues have run up to manifolds.

(61) As a suit though we have rejected the constitutional and other legal challenges raised in the petition the same is being allowed on the ground as mentioned earlier that considering that the default in the payment of family pension fund for the period subsequent to coming into force of Act 1973 is minimel; this was a case in which the imposition of damages should not have been imposed. To that extent thereforee the writ petition is allowed and the impugned order dated 1-2-1978 imposing damages to the extent of Rs. 3748 on the petitioner is quashed and set aside. The petition is disposed of accordingly. There will be no order as to costs.


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