S.K. Mal Lodha, J.
1. Messrs Udaipur Sahkari Upbhogta Thok Bhandar Ltd. has filed this Writ Petition under Article 226 of the Constitution with a prayer that the order (Ex. 2) dated August 29, 1979 passed by the Regional Provident Fund Commissioner, Rajasthan, Jaipur (for short the Commissioner, hereafter) under Section 14B of the Employees Provident Fund Act, 1952 thereinafter referred to as the 'Act) may be quashed.
2. The petitioner, as alleged, is a registered Cooperative Society under the Rajasthan Cooperative Societies Act, 1965. On November 15, 1978, a notice was issued to it mentioning, amongst others, the following:
Whereas information has been laid before me and on consideration there of. I have reason to believe that in respect of your establishment namely, M/s Udaipur Sahkari Upbhokta Thok Bhandar Ltd. which was covered with effect from March, 1969 under the Employees Provident Funds and Miscellaneous Provisions Act, 1952 you have failed to remit:
(i) The Employees' and Employer's share of contribution from July, 71 to Dec. 75 to the fund within 15 days of the close of each of the aforesaid months which you were liable to pay under para 30 and 21(1) of the Employees Provident Fund Scheme, 1952.
(ii) The Employees share of family Pension Fund Contribution for the month from May 74 to Dec. 75 and Employer's share of Family Pensions Fund Contribution for the month from May 74 to Dec 75 to the fund within 15 days of the close of each of aforesaid months which you were liable to pay under para 9(1), 10(1)(2)(3) of the Employee's Family Pension Fund Scheme, 1971.
(iii) Administrative charges to the fund for the months from July 71 to Dec. 75 within 15 days of the close of each of the month which you were liable to pay under para 38(1) of the said scheme.
It was stated that the Commissioner (respondent No. 3) proposed to levy damages on all belated payments of Contribution and administrative charges as envisaged under Section 14B of the Act. The petitioner submitted a reply (Ex. 1A) dated December 5, 1978 to the notice. In the reply, (Ex. 14) dated December 5, 1978 to the notice in the reply, it was stated that it was covered under the Act from March 1969. The relevant portion of reply (Ex. 14) is as under:
In some of the past cares as specified in the statements enclosed with the letter under reference, the payment has been deposited late merely through an oversight and not for any other reasons.
It has never been the intention of the Bhandar to avoid any work of payment. It would also be clear from the returns submitted for the last four years that the Bhandar is keen in depositing the P F. Contributions timely. Only in some past cases the timely payment could not be deposited through an oversight.
After hearing the Accountant and the Accounts officer of the petitioner's Organisation, the Commissioner in exercise of the powers conferred upon him by Section 14B of the Act, ordered for the recovery of the following amount from it.
(a) Rs. 7,200/- On Provident Fund Contribution.
(b) Rs. 500/-on Family Pension Fund Contribution, and
(c) Rs. 165/- on Administrative Charges. Total Rs. 7865/-
The petitioner has filed this writ petition questioning the legality of (the order (Ex. 2) dated August 29, 1979 passed by the Commissioner under Section 14B of the Act.
3. The writ petition is opposed on behalf of respondents No. 1 and 3. On their behalf, a reply to the writ petition was filed on January 11, 1980. Along with the reply, true copy of the statement (Annexure R.1) showing the details of payments and copy of the extract of the Gazette Notification (Annexure R-2) dated October 16, 1973 were filed.
4. I have heard Mr. K N. Joshi, learned Counsel for the petitioner and R.R. Vyas, Central Jail Govt. Standing Counsel, for respondents No. 1 and 3.
5. It was argued by Mr. K.N. Joshi learned Counsel for the petitioner, that damages under Section 14B of the Act have been levied for the period from July 1971 to December 1975 by the impugned order dated August 29, 1979, notice (Ex. 1) is dated November 15, 1978 and as the damages were not levied immediately after default but they have been levied after four years together (from July 1971 to December, 1975), the exercise of discretion under Section 14B of the Act is arbitrary and had resulted in operation of law very hardly and therefore this Court should therefore with the impugned order in exercise of its extra-ordinary jurisdiction under Article 226 of the constitution. The other link of the argument in this connection was that the words used in Section 14B of the Act 'may recover from the employer Such damages clearly show that it was not obligatory for the Commissioner to recover damages and as-he did not levy damages even after the defaults were committed it will be considered that the authority did not consider Appropriate: to levy damages and thus, this will amount to waiver. In this connection, he invited my attention to the decision of Amin Chand v. State of Punjab AIR 1953 Punj. 441
I may read here Section 14B of the Act:
14-B, Power to recover damages: Where an employer makes default in the payment of any contribution to the Fund or in the transfer of accumulation required to be transferred by him under Sub-section (2) of Section 15(or Sub-section (5) of Section 17) or in the payments of any charges payable under any other provision of this Act or of may Scheme or under any of the conditions specified under Section 17, the appropriate Government may recover from the employer such damages, not exceeding twenty-five percent of the amount of arrears, as it may think fit to impose.
Provided that before levying and recover such damages, the employer shall be give in a reasonable opportunity of being heard.
This section authorises to Impose damages to the extant mentioned therein, in case if non-payment and to recover the same. The arrears, which are envisaged under this Section are (a) when on employer makes a default in payment of contribution to the funds, the family fund or the Insurance Fund, (b) when an employer makes a default In transfer of accumulations required to be transferred by him to be transferred under Section 15(c) when an employer makes a default in the payment of any charges payable under any other provisions of this Act or of any scheme or Insurance Scheme or under any of the conditions specified under Section 17. Para 38 of the Employee's Provident Funds Scheme, 1952 deals with mode of payment of contribution). The relevant portion of sub-para (1) of Para 38 is as under.:
38(1) The employer shall, before paying the member his wages in respect of any period on part of period for which contributions ate payable, deduct the employee contribution from his Wages which together with his own contribution as well as an administrative charge of such percentage of the pay basic wages, dearness allowance retaining allowance, if any, and cash value of food concessions admissible thereof for the time being payable to the employee other than an excluded employee & in respect of which provident fund contributions are payable, as the Central Govt. may fix, he shall within fifteen days of the class of every month pay the same to the Fund by separate bank drafts or cheques on account of contribution and administrative.
For the application of Section 14B of the Act, the condition precedent is that default has been committed, It is only in a case where an employe commits default in the payment then he can he assessed to damages. The word 'default' used in Section 14B means failure in performance of failure to act Once a payment is not made by the time prescribed by the statute, that will be default in the payment. Para 38 of the Employee provident Funds Scheme, 1952 provides that the payment of contribution can be made by the 15th of the following month and, therefore, if the payment is not made by that date, there will be default in the payments However if the payment though made after default, but before notice is issued under Section 14B of the Act, this may be a circumstance which the Competent Authority can take into account in considering the quantum of damages with regard to default.
6. In Regional Provident fund Commissioner U.P. v. Allahabad Canning Co. Allahabad 1975 Lab. IC 995, Division Bench of Allahabad High court observed as under.
In the absence of any bar of limitation, there is no principle of law which debars the provident Fund Commissioner from exercising the statutory powers available to him under Section 14B of the Act.
7. The Decision of the Regional provident Fund Commission U.P. case (supra) was followed by another Division Bench of the Allahabad High Court in Shyam Glass Works v. the State of U.P., and Ors. : AIR1979All19 and it was said therein that there was no reason to take a different view. A Division Bench of the Patna High Court in Hindustani Mellablee and Forgins Ltd. v. The Regional Provident Fund commissioner and Ors. 1975 Lab IC 938 held that in the Act there is nothing to indicate that if there has been delay in initiating the proceeding under Section 14B, then the consequence will be that damages will be time barred or deemed to be condoned. I respectfully agree with the view expressed in the aforesaid three decisions the Allahabad and Patna High Courts and hold that there is no principle of law which preclude or debar the Regional Provident Fund Commissioner from exercising his statutory power under Section 14B of the Act. With profound respect to the learned judge of the Punjab High Court. I have not been able to persuade myself to hold that the damages should be levied immediately after the default and if the levy is delayed, an employer may infer that the concerned authority has decided not to exercise its discretion to levy damages dissent from the view taken in Amin Chand v. State of Punjab AIR 1953 Punj. 441. I further hold that there is nothing in the Act to show that if there has been delay In initiating the proceedings under Section 14B of the Act, it will be deemed that they have been waived or condone. The first contention is, therefore, rejected.
8. It was next contended on behalf of the petitioner that as some of the defaults related to period prior to 1st of November, 1973, the Commissioner was not competent to deal with and levy the damages for these periods. These defaults pertain from July, 1971 to August, 1973. The submission of the learned Counsel was that the amendment incorporated in Section 14B of the Act by Act No. 40 of 1971 not being retrospective, the Commissioner was not competent to determine damages for the periods prior to November, 19/3. I am unable to accept this contention. There is no questiqn of amendment being retrospective. The Notification (Anx. Rule 2) dated December 16, 1973 is as under:
S.O. 548(B). In exercise of the powers conferred by Section 14B of the Employees Provident Fund and Family Pension Fund Act,1952 and in supersession of all previous notifications on the subject, the Central Govt. hereby authorised that the powers vested in the General Provident Fund Commissioner under the provisions of the above said section shall also be exercisable within each of the region specified in the schedule by the respective Regional Provident Fund Commissioner in whose region the establishment is covered or has Its Head Office.
This Notification shall come into force on the first day of November, 1973.
1. State of Rajasthan.
It follows, therefore, that by the amendment the concerned authority has been changed. If prior to November, 1973, any damages were to be Imposed far default, the authority was the State Government. After November, 1973, such authority is the Commissioner It the default had come to the knowledge of the competent authority, i.e. the Commissioner, after November 1, 1973 and it relates to be period before November, 1978, I am enable to see any valid reason as to why he is not competent to impose damages with regard to that period also. A similar contention was raised in M/s Hindustan Meliables & Forgins case (supra) and it was repelled. I am, therefore, of the opinion that the Commissioner was competent to levy damages in regard to default before November, 1973.
9. Mr. K.N. Joshi, learned Counsel for the petitioner then argued that the Impugned order (Ex. 2) is vitiated for the reason that It does not contain reasons. He submitted that it is not a speaking order. In this connection, he Invited my attention to Organs Chemical Industries v. Union of India AIR 1979 SC 1803 wherein it was observed that having regard to the punitive nature of the power exerciseable under Section 14A and the consequences that raise therefrom, an order under Section 14B must be a speaking order' containing the reasons in support of it It was further held therein that 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 confirming to the rules of natural justice. While examining this argument of the learned Counsel.of few facts deserve to be recalled here Notice (Ex. 1) dated November 10, 1973 was accompanied by the statement showing the dates of belated payments made by the petitioner. The statement contains the details of the amounts paid and the dates when deposits were in fact made by the petitioner. The notice (Ex. 1) wag replied by the petitioner vide reply (Ex. 1 A) dated December 9, 1978 In the reply, the detail? of the defaults as well as the dates when the amounts were paid were not disputed. The reply given was that the amounts were desposited late by an oversight and that it was not the intention of the petitioner to avoid any sort of payment. It is clear from the reply that the petitioner did not raise any dispute with regard to the contents of the notice (Ex. 1) and the statement amended thereto. A perus-sal of the impugned order shows that on behalf of the petitioner, It was submitted that delay in payment was due to an over-sight and not intentional, as the Accountant was not aware of the provisions by the Act at that time. The Commissioner has clearly mentioned in the impugned order that he has considered the reply (Ex. I A) dated Decembers, 1978. He has observed as follows:
On consideration, I am inclined to believe that the reasons given by the establishment do not fully justify the delays and as such request of the establishment for condonation of the delay does not deserve consideration.
10. It was held in the Regional Provident Fund Commissioner U P.'s case (supra) that the reasons expected to be recorded in a speaking order must necessarily depend on the nature of contentions raised it reply to the show cause notice. Having gone through the impugned order, I find It difficult to understand as to what other reasons would have been given by the Commissioners in view of the reply filed on behalf of the petitioner and the contentions raised before him. He has considered the explanation of the petitioner and declined to condone delay in payments. As regards the assessment of damages, it may be pointed out that the Commissioner took into consideration the circumstances explained by the petitioner in regard to belated payments and the period of delay and thereafter, he observed that the ends of Justice will be satisfied if damages at the rates as given in the enclosed statement for the total amount of Rs. 7868/- only are levied on the establishment The Commissioner has applied his mind and has made a speaking order', which could be made in view of the reply (Ex. 1 A) and submission made before him. The contention of the learned Counsel for the petitioner that, the inpugned order (Ex. 2) is not a speaking order, being devoid of force, is therefore, repelled.
11. Learned Counsel also argued that the petitioner was not afforded a reasonable opportunity as envisaged under Section 14B of the Act, in as much as separate notices for each of the defaults were not issued and that only one composite notice in respect of the defaults committed by the petitioner was only giver. The details of the defaults which are contained In the notice (Ex. 1), have already been recorded above. No such objection was raised on behalf of the petitioner either in the reply to the notice or before the Commissioner. The power of the Commissioner to Impose and recover damages under Section 14B of the Act is undoubtedly a quasi-judicial function A, laid down In Organ Chemical Industries's case AIR 1979 SC 1803. I must be exercised after notice to the defaulter & after giving reasonable opportunity of being heard The statement which accompanied the notice (Ex. 1) contained ali the dates of the belated payments. It is already mentioned id the notice that the Commissioner wanted to levy damages on all belated payments of contribution and administrative charges as envisaged by Section 14B of the Act. It is thus, clear that by the notice (Ex. I), the petitioner was made aware of the defaults committed by it In payment of the amounts which ft was required to deposite under the Act and the Scheme thereunder. It is not the case of the petitioner that there was any mistake in the details mentioned in the notice with regard to any of the belated payments. At the'risk of repetition, it may be stated that in the reply to the notice (Ex. 14) dated December 5 1978 it was stated that 'in some of the past cases as specified in the statements enclosed' with the letter (Ex. 1) the payment has been statement merey through an oversight.' Thus, the petitioner had notice of ball the defaults, when notice (Ex. 1) was sent. One Amarchand Accountant appeared on behalf of the petitioner before the Commissioner on December 6, 1978 and made his submissions but no objection relating to separate notices was raised The petitioner had notice of each of the defaults and it is not the case of the petitioner that in legard to it, no reasonable opportunity was afforded to It. Separate notice are not contemplated under Section 14B of the Act for each of the accumulative defaults. A reasonable opportunity of being heard is merely contemplated by Section 14B of the Act, What is required is that the establishment against whom damages are contemplated to be levied and recovered should be given reasonable opportunity of being heard and that reasonable opportunity is by giving notice that the defaults have been committed and that the Commissioner wants to levy damages on belated payments The notice(Ex. 1) is a substantial compliance as reasonable opportunity of being heard was given to the petitioner before levying damages
12. Mr. K. N Joshi, learned Counsel for ths petitioner pressed for my consideration that no nonce was given to-the petitioner in regard to the quantum of damages to be levied for each of the defaults and In this connection there was no application of mind by the Commissioner. Having regard to notice (Ex. 1) accompanied by the statement of belated payment and the reply thereto, I am satisfied that there has been no prejudice to the petitioner
13. Here, I may notice Section Fernedes v. State AIR 1969 mys. 196, in which it was observed that the words 'as it may think fit to Impose' clearly display the legislative Intent that In each case-there should be an application of the mind of the appropriate Government to its relevant features which should guide the conclusion both on the question whether any damages should be demanded and of their quantum It was further observed that the formation of the opinion that the case is a fit one for the demand for payment of damages and of a particular sum of money as damages is what Section 14B clearly insists upon, and it is plain that opinion has to be applied independently in the case of each default to which Section 14B refers, in Shyam Glass Works's case : AIR1979All19 it was obsesved as under:
The appropriate Govt, has, however, been conferred a discretion in assessing or recovery of damages from the erring employers. This is clear from the expression occurring in the section 'as it may think fit to Impose'. Since the nature of levy Is punitive and as the State Govt. Is required to consider the facts of each case while exercising its discretion, It would require an enquiry in consonance with the principles of natural justice.
14. It is, therefore, clear that while levying damages under Section 14B of the Act, opinion with regard to each of che defaults should be formed indepedentty and not that separate notices should be issued for each of the defaults. In the Impugned order (Ex. 2), it is clearly mentioned that the payment of Provident Fund Contribution, Family Pension Fund Contribution and administrative charges amounting to Rs. 14,166,50 P.'.Rs 851.50 P, and Rs. 324 65 P respectively for the period from July 1971 to December 1975 were delayed. According to 14 B of the Act, after its amendment by Act No. 40 of 1973, the damages to the extent of 25% of the dues for the period prior to November 1973 and 100% for-the-subsequent period could be imposed on the establishment. It is clearly mentioned In the impugned order (Ex. 2) that tfce maximum amount of damages calculated as aforesaid comes to Rs. 13,313.90 P. The Commissirner levied damages at the rates given in the statement that was enclosed with the order (Ex. 2). The details of the total amount of Rs. 7865/ is contained in that statement.
15. During the course of dictation of judgment, Mr. R Rule Vyas, Central Government Standing Counsel, snbmitted the statement of damages levied on the petitioner marked as Annexure-R 3. Learned Counsel for the petitioner stated that ft was or account of inadvertance that the statement appended to the order (Ex-2) was not submitted with the writ petition and that he has no objection if the statement (AnnexureR 3) filed by Mr. Rule R. Vyas, Central Govt. Standing Counsel is taken on record for consideration. At this point of time learned Counsel for the petitioner invited my attention to G.P.F.C's Circular No. E-128 (1) 60/III dated 19.3.64 as modified by Circular No E 11/128 (Section 14B Amendment)/73, dated 24 10 73, reference of which is made in the Compilation on Employee's Provident Funds, 1979 Edition. The para on which reliance was placed is as under:
(3) Grace Period And Reduction Of Rate Of Damages.
The Govt. of India have approved the following decision taken by by the Central Board of Trustees at its meeting held on 13th January, 1964
(i) Five days of grace may be allowed to employers for payment of provident fund contribution, administrative charges and inspection charges during which net damages be levied.
(ii) For delays upto 15 days, including five days of grace damages at half the rates laid down in the table recommended by the Central Board of Trustees may be levied.
(GPPC's Circular No. B-128(1) 60111 dated 19-3-1964 as modified by Circular No. 8-II/128 (Section 14B Amendment)/73, dated 24-10-1973).
Note: The above procedure can be adopted by the Regional Commissioners as power now stands delegated to them.
(iii) The Central Board of Trustees at its meeting on 13 4-1967 agreed that if payment was made within grace period already allowed by it, then such payments should not be counted as default even for the purpose of counting the number of defaults at the time when the contribution is paid after the expiry of the days of grace.
(G.P.F.C.'s Circular No. Section 128(1) 60-IV dated 29-4-1967).
After seeing the statement of damages (Annexure-R 3) levied on the petitioner, learned Counsel for the petitioner stated that damages have been levied in accordance with the circular mentioned above. In notice (Ex. 1) dated November 15, 1978, the petitioner was apprised that the Commissioner intended to levy damages on all belated payments of contribution. Administrative charges as envisaged under Section 14B of the Act. It is further mentioned in notice (Ex. 1) is as under:
And Where As for determining the amount of damages leviable upon you, it is desired to give you an opportunity to represent your case... your contention as to why damages may not be levied to the extent of the amount of belated remittances so envisaged in Section 14B of the Act... I shall be constrained to levy damages on all belated payments on the basis of material/information available and pass the order to recover the amount of damages so assessed in the same manner as an arrear of Land Revenue as per Section 8 of the Act.
In the notice (Ex. 1), Section 14B of the Act was also reproduced. It is, therefore, clear that the petitioner was apprised as to why damages should not be levied and so also the extent to which the damages were to be levied. I have already extracted two paras of the reply (Ex. 1A) herein above and what the petitioner stated and showed cause in respect of these two matters was 'that matter may be considered sympathetically and damages for past belated payments may kindly be walved off.'' Conisdering the circumstances, which were brought to the notice of the Commissioner on December 6, 1973 when the Accountant of the petitioner appeared and made submissions, the Commissioner was of the view that the ends of justice would be satisfied if damages at the rates given In the statement enclosed with the order|(Ex. 2) are levied on the establishment. It is, therefore, clear (hat the determination of the damages was made after giving an opportunity to the petitioner to show cause as to why damages be not levied to the extent of the belated payments. The petitioner had, thus, notice about the extent of damages and in this regard also the principles of natural justice were followed.
16. No other point arises for consideration.
17. I, accordingly, dismiss the writ petition without any order as to costs.