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Jodhpur Sahakari Upbhokta Wholesale Bhandar Ltd. Vs. the Regional Provident Fund Commissioner and anr. - Court Judgment

LegalCrystal Citation
SubjectService
CourtRajasthan High Court
Decided On
Case NumberS.B. Civil Writ Petition No. 1493/82
Judge
Reported in1983WLN(UC)190
AppellantJodhpur Sahakari Upbhokta Wholesale Bhandar Ltd.
RespondentThe Regional Provident Fund Commissioner and anr.
DispositionPetition dismissed
Cases ReferredOrgano Chemical Industries v. Union of India
Excerpt:
.....the absence of any period of limitation, these is no principle of law which debars the provident fund commissioner from exercising the statutory powers conferred on him under section 14b of the act.;the proceedings for levy of damages under section 14b of the act would not be barred merely because they were not initiated soon after the default had been committed.;(b) employees provident fund and miscellaneous provisions act, 1952 - section 14b--exparte proceedings--several notices given but no notice given for heating on 17-9-1981--held, it was not incumbent to give notice of each hearing and refusal to set aside exparte proceedings is justified.;if the representative of the sahakari bhandar failed to appear on the earlier dates, it was not incumbent upon the commissioner to go on..........) has challenged the order ( ex. 7 ) dated 17th september 1981 passed by the regional provident fund commissioner, rajasthan, (hereinafter referred to as 'the commissioner's) and the order (ex. 12) dated 3rd april, 1982 passed by the accounts offficer in the office of the commissioner by order dated 17th september, 1981, a sum of rs 15,703/- has been imposed as damages on the sahakari bhandar under section 14b of the employees provident fund and misc. provisions act, 1952 (hereinafter referred to as 'the act') on account of delayed payment of the provident fund contributions, family pension contributions and administrative charges. by order dated 3rd april, 1982, the request made by the counsel for the sahakari bhandar for setting aside the the order dated 17th september, 1981 was.....
Judgment:

S.C. Agarwal, J.

1. In this writ petition filed under Article 226 of the Constitution of India, the petitioner M/s. Jodhpur Sahakari Upbhokta Wholesals Bhanndar Ltd, Jodhpur (hereinafter referred to as the Sahakari Bhandar ) has challenged the order ( Ex. 7 ) dated 17th September 1981 passed by the Regional Provident Fund Commissioner, Rajasthan, (hereinafter referred to as 'the Commissioner's) and the order (Ex. 12) dated 3rd April, 1982 passed by the Accounts Offficer in the office of the Commissioner By order dated 17th September, 1981, a sum of Rs 15,703/- has been imposed as damages on the Sahakari Bhandar under Section 14B of the Employees Provident Fund and Misc. Provisions Act, 1952 (hereinafter referred to as 'the Act') on account of delayed payment of the provident fund contributions, family pension contributions and administrative charges. By order dated 3rd April, 1982, the request made by the counsel for the Sahakari Bhandar for setting aside the the order dated 17th September, 1981 was rejected.

2. The Sahakari Bhandar is a co-operative society registered under the provisions of the Rajasthan Co-operative Societies Act, 1953. It is running a Super Market or Sahakari Bhandar at Jodhpur. It is covered by the provisions of the Act. By a notice dated 4th March, 1980 issued by the Commissioner under Section 14B of the Act, the Sahakari Bhandar was informed that the Sahakari Bhandar had not paid the employee's share as well as the employer's share of Family Pension Fund contribution, the administrative charges, the contribution of the Employee's Deposit Linked Insurance Scheme as well as the Administrative charges to the Employee's Deposit Linked Insurance Scheme for the period August, 1972 to February, 1977 and the arrears for the period May, 1973 to November, 1977 within 15 . days from the close of each of the aforesaid months. By the notice aforesaid, the Commissioner also informed the Sahakari Bhandar that the Commissioner had to levy damages on all belated payments of contribution and administrative charges under Section 14B of the Act and that for determining the amount of damages leviable upon the Sahakari Bhandar, he desired to give to the Sahakari Bhandar an opportunity to represent its case. The Commissioner, therefore, summoned the Sahakari Bhandar to appear before him, either in person or through an authorised representative, on 16th April, 1980 along with all relevant records/documents for confirmation or other-wise of actual dates of payments made by the Sahakari Bhandar for the various months as shown in the statement enclosed to the said notice. It appears that no body appeared on behalf of the Sahakari Bhandar before the Commissioner on 16th April, 1980, in response to the said notice. Another notice dated 24th April, 1980 was given by the Commissioner to the Sahakari Bhandar whereby the Sahakari Bhandar was requested to appear before him on 4th June, 1980. On 4th June, 1980, one telegram was sent by the General Manager of the Sahakari Bhandar seeking adjournment of the case for 10th or 1 th June, 1950 on the ground that the legal adviser of the Sahakari Bhandar was ill. On 10th June, 1980, the legal adviser attended the office of the Commissioner and he was informed that the case was fixed for hearing on 6th July 1980. On 16th July, 1980 no body appeared on behalf of the Sahakari Bhandar and the case was adjourned to 10th September, 1980. The case was further adjourned from time to time but neither any reply was filed nor anybody appeared on behalf of the Sahakari Bhandar The matter was taken up by the Commissioner on 17ch June, 1981 but on that date also no body appeared on behalf of the Sahakari Bhandar. The matter was taken up by the Commissioner on 17th June, 1981 but on that date also, no body appeared on behalf of the Sahakari Bhandar and there upon the Commissioner decided to proceed exparte. Thereafter the Commissioner passed the order dated 17th September,1981 wherein, while observing the although the total amount in respect of which the default had been committed was Rs. 15,997.63, he impose, damages to the extent of Rs. 15,703/-. After passing the aforesaid order, the counsel for the Sahakari Bhandar, on 9th November 1981, submitted an application for setting aside the order dated 17th September, 1981. By letter dated 3rd April, 1982, the Accounts Officer in the office of the Commissioner informed the Sahakari Bhandar that the request contained in the letter dated 9th November, 1981 for setting aside the order dated 17th September 1981 could not be accepted to. Thereupon, the Sahakari Bhandar has filed this writ petition.

3. The writ petition has been contested by the respondents who have filed a reply to the same.

4. I have heard Shri B.C. Mehta, the learned counsel for the Sahakari Bhandar and Shri R.R. Vyas, the learned counsel for the respondents. Both the learned counsel requested that the writ petition may be finally disposed of at this stage and arguments were heard on that basis.

5. The first contention that was urged by Shri Mehta was that the default in respect of which damages have been imposed, relates to the period from August. 1972 to June, 1975 and that the proceedings for the imposition of the damages were initiated in 1980, i e. after a lapse of nearly eight years and that in view of their conduct in not taking action soon after the default had been committed, the respondents were estopped from levying damages on the Sahakari Bhandar. In my view the aforesaid contention of Shri Mehta is without any force. Shri Mehta has not been able to point out any provision of law where by a period of limitation has been prescribed for levying damages under Section 14B of the Act. On the other hand, there are decisions of the High Courts to the effect that Section 14B of the Act does not provide any period of limitation during which action against the erring employer can be taken for payment of damages under the Act and in the absence of any period of limitation, there is no principle of law which debars the Provident Fund Commissioner from exercising the statutory powers conferred on him under Section 14B of the Act. (See Regionl Provident Fund Commissioner, U. P. v. Allahabad Canning Co. 1978 Lab IC 998, H.S. Salve Kadam and Co. v. R.P.F. Commissioner, Bangalore 1981 Lab. IC 568). In my opinion, therefore, the proceedings for levy of damages under Section 14B of the Act would not be barred merely because they were not initiated soon after the default had been committed.

6. The second contention that was urged by Shri Mehta was that the Commissioner was in error in proceeding exparte against the Sahakari Bhandar and in passing the order dated 17th September, 1981 and that the Commissioner ought to have set aside the said owner when so requested by the counsel for the Sahakari Bhandar. In my view, the aforesaid content on is also without any merit. Horn the record, it is apparent that a number of opportunities were given by the Commissioner to the Sahakari Bhandar for appearance before him and for production of the relevant records but the Sahakari Bhandar neither appeared before the Commissioner nor submitted the records. The Sahakari Bhandar did not even send a reply to the notice that was issued by the Commissioner offering an explanation for the defaults mentioned in the notice. Shri Mehta has urged that no notice was rent to the Sahakari Bhardar about the fixation of 17th June, 1981 as the date for the hearing of the case and in the absence of such a notice, the proceedings that were taken by the Commissioner on 17th June, 1981, must be set aside. It may be that no notice was sent to the Sahakari Bhandar or its counsel with regard to the fixation of 17th June, 1981 as the date of hearing but earlier to that a number of notices were sent to the Sahakari Bhandar initmating the dates. It was the duty of the Sahakari Bhandar and its counsel to keep track of the next date that was fixed in the case and if the representative of the Sahakari Bhandar failed to appear on the earlier dates, it was not incumbent upon the Commissioner to go on sending notices for each date thas was fixed in the case to the Sahakari Bhandar. In the circumstances no fault can be found with the Commissioner in proceeding exparte against the Sahakari Bhandar on 17th June, 1981 and in passing the order dated 17th September, 1981. For the same reason no fault can be found with the order dated 3rd April, 1982 refusing to set aside the order dated 17th September, 1981.

7. The last contention that was urged by Shri Mehta was that the order 17th September, 1981, whereby a sum of 15,703/- has been imposed as damages, has been passed mechanically and arbitrarily in as much as for most of the defaults the maximum amount of damages has been levied irrespective of the nature of the default. In support of his aforesaid submission, Shri Mehta has invited my attention to the statement giving the details of damages that have been levied as appended to the order dated 17th September, 1981 and has pointed out that for the defaults for the months of August, 1972 to September, 1973, damages have been levied at 25% of the dues,(which was the maxi mum amount leviable as damages under the provisions of Section 14B of the Act during that period) and that for the period subsequent to September, 1973 damages have been levied at 100% of the dues(which is the maximum provided under Section 14B now)except in one case where the damages have been levied at 50%,

8. The provisions of Section 14B of the Act came up for consideration before the Supreme Court in Organo Chemical Industries v. Union of India AIR 1979 SC 1803. In that case, the Supreme Court has noticed that prior to the amendment of Act by Act No. 40 of 1973, the maximum amount of damages that could be levied under Section 14B of the Act was 25% of the arrears and that by Act No. 40 of 1973 Section 14B was amended and the amount of damages that could be levied under Section 14B was increased from 25% to 100% the amount of arrears because it was found that the existing provisions of the Act were not effective in preventing defaults in payment of contribution to the employees' provident fund. Taking note of the aforesaid amendment that has been made in Section 14B of the Act by Act No. 40 of 1973, the Supreme Court has observed as under:

The expression 'damages' occurring in Section 14B is, in substance, a penalty imposed on the employer for the breach of the statutory obligation. The object of impostion of penalty under Section 14B is not merely to provide compensation for the employees'. We are clearly of the opinion that the imposition of damages under Section 14B serves both the purposes. It is meant to penalise, defaulting employer as also to provide reparation for the amount of loss suffered by the employees. It is not only a warning to employers in general not to commit a breach of the statutory requirements of Section 6, but at the same time it is meant to provide compensation or redress to the beneficiaries i.e. to recompense the employees for the loss sustained by them. There is nothing in the section to show that the damages must bear relationship to the loss which is caused to the beneficiaries under the Scheme. The word 'damages' in Section 14B is related to the word 'default'. The words used in Section 14B are 'default in the payment of contribution' and, therefore, the word 'default' must be construed in the light of Para 38 of the Scheme which provides that the payment of contribution has got to be made by the 15th of the following month and, therefore, the word 'default' in Section 14B must mean 'failure in performance' or 'failure to act'. At the same time, the imposition of damages under Section 14B is to provide reparation for the amount of loss suffered by the employees.

In that case the constitutional validity of the provisions of Section 14B of the Act was challenged on the ground that it confers an unguided power on the Regional Provident Fund Commissioner to arrive at a decision and was, therefore, violative of the provisions of Article 14 of the Constitution. The Supreme Court rejected the said contention and observed as under:

While fixing the amount of damages, the Regional Provident Fund Commissioner usually takes into consideration, as he has done here, various factors viz. the number of defaults, the period of delay, the frequency of defaults and the amounts involved

In that case, the employers had committed defaults in payments of Provident Fund and Family Pension Scheme dues for the period from March to October, 1975 and again for the period from December, 1975 to November, 1976 and damages 100% had been levied by the Regional Provident Fund Commissioner. The Supreme Court after taking note of the fact that the employers had committed defaults in payments of the Provident Fund and Pension Scheme in the past and were habitual defaulters, held as under:

This was pre-eminently a fit case for imposition of punitive damages to ensure due compliance of the provisions of the Act.

In the present case, from the reply filed on behalf of the respondents, it appears that the Sahakari Bhandar's a habitual defaulter in payment of Provident Fund dues and that in the past also it had made delayed payments and that in respect of delayed payments for various periods between February, 1967 to February, 1971 a sum of Rs. 942 85 was imposed as damages on the Sahakari Bhandar by the order dated 19th January, 1972 passed by the Commissioner. The Sahakari Bhandar again made defaults in payment of provident fund dues between the period March, 1971 to July 1972. Thereafter the Sahakari Bhandar committed the defaults which form the subject matter of the order dated 17th September, 1981. The said order shows that the Sahakari Bhandar made continuous defaults in payment of provident fund dues during the period August, 1972 till June, 1975 as well as the arrears for the period May, 1973 to November, 1977. The statement which is appended to the order dated 17th September, 1981 shows that in many cases the defaults were for periods exceeding five yeas. Taking into consideration the facts and circumstances referred to above and the decision of the Supreme Court in Organo Chemical Industries's case AIR 1979 SC 1803, I am of the opinion that this was also pre-eminently a fit case for imposition of punitive damages to ensure due compliance of the provisions of the Act and it cannot be said that the order imposing damages has been passed mechancially or arbitrarily.

9. No other contention was urged by Shri Mehta.

10. I, therefore, find no merit in this writ petition and it is, accordingly, dismissed. But in the facts and circumstances of the case there will be no order as to costs.


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