Karnataka High Court
M/S Micron Engineers vs The Registrar on 30 August, 2013
Author: Ram Mohan Reddy
Bench: Ram Mohan Reddy
1
W.P. 39516/12
IN THE HIGH COURT OF KARNATAKA, BANGALORE
DATED THIS THE 30TH DAY OF AUGUST, 2013
BEFORE
THE HON'BLE MR.JUSTICE RAM MOHAN REDDY
WRIT PETITION NO. 39516 OF 2012 (L-PF)
BETWEEN:
M/S. MICRON ENGINEERS
BY ITS PROPRIETOR P VISHWANATH
S/O. LATE PUTAIAH
AGE 50 YEARS
No. B-10, BEL INDUSTRIAL ESTATE
JALAHALLI, BANGALORE - 560 013.
... PETITIONER
(BY SRI. M R RAJAGOPAL, ADVOCATE)
AND :
1 THE REGISTRAR
EMPLOYEES PROVIDENT FUND
APPELLATE TRIBUNAL
SCOPE MINAR, CORE II, 4TH FLOOR
LAKSHMI NAGAR DIST. CENTRE
LAKSHMINAGAR, NEW DELHI 110092.
2 THE COMMISSIONER
O/O REGIONAL PROVIDENT FUND
SUB REGIONAL OFFICE S(1)F
1ST CROSS, PEENYA INDUSTRIAL ESTATE
PEENYA, BANGALORE - 560 058.
3 THE ASST. PROVIDENT FUND COMMISSIONER
O/O REGIONAL PROVIDENT FUND
2
W.P. 39516/12
SUB REGIONAL OFFICE S(1)F
1ST CROSS, PEENYA INDUSTRIAL ESTATE
PEENYA, BANGALORE - 560 058.
4 THE ENFORCEMENT OFFICER
ENCLORCEMENT SECTION
O/O REGIONAL PROVIDENT FUND
SUB REGIONAL OFFICE S(1)F
1ST CROSS, PEENYA INDUSTRIAL ESTATE
PEENYA, BANGALORE - 560 058.
5 THE ACCOUNTS OFFICER
O/O REGIONAL PROVIDENT FUND
SUB REGIONAL OFFICE S(1)F
1ST CROSS, PEENYA INDUSTRIAL ESTATE
PEENYA, BANGALORE - 560 058.
6 THE SECRETARY
CENTRAL BOARD OF TRUSTEES
EMPLOYEES' PROVIDENT FUND
ROOM No. 120, 1ST FLOOR
SHRAMA SHAKTHI BHAVAN
RAFI MARG
NEW DELHI - 110 001.
7 DEPUTY DIRECTOR (RECOVERY)
EMPLOYEES' PROVIDENT FUND
ORGANISATION, BHAVISHYA NIDHI
BHAWAN, 14, BHIKAJI CAMA PLACE
NEW DELHI - 110 066.
... RESPONDENTS
(BY SRI. HARIKRISHNA S HOLLA, ADVOCATE)
THIS WRIT PETITION IS FILED UNDER ARTICLES 226 &
227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE
ORDER OF THE R3 DT. 18.07.2007, IN PROCEEDINGS & ALSO A
DEMAND U/S. 7Q IN PROCEEDINGS AS PER ANN-M & N & ALSO
3
W.P. 39516/12
ORDER OF THE R1 APPELLATE AUTHORITY IN PROCEEDINGS
DT. 24.12.2010 AS PER ANN-R; AND ETC.
THIS WRIT PETITION COMING ON FOR PRL.HEARING IN
'B' GROUP THIS DAY, THE COURT MADE THE FOLLOWING:
ORDER
Petitioner - Establishment when covered under The Employees Provident Funds and Miscellaneous Provisions Act, 1952, (for short, 'the Act'), failed to make payment of the contribution under the Act, within the time stipulated, whence was issued with a notice dated 17.05.2007 to show cause as to why, for the belated remittances, damages under Section 14B of the Act should not be recovered for the period from March 1988 to Feb 2006. Petitioner did not respond to the notice, nor to the opportunity of hearing extended on 21.06.2007. Therefore, the Assistant Provident Fund Commissioner, SRO-Peenya, Bangalore, proceeded ex parte to apply the provisions of the Act and the 4 W.P. 39516/12 Employees' Provident Fund Scheme, 1952, and determined a total of `.1,81,980/- as damages under Section 14B of the Act, in respect of five accounts, by order dated 18.07.2007 Annexure 'M'.
2. That order when carried in an appeal - ATA No.525 (6) 2007 KAR 4142, the Provident Fund Appellate Tribunal, New Delhi, by order dated 24.12.2010 Annexure 'R', rejected the appeal, where afterwards, petitioner preferred W.P. No.9659/2011 whence, a learned single Judge, by order dated 22.09.2011 Annexure 'T', recording the submission of the learned Counsel for the petitioner and dismissed the petition, reserving liberty to the petitioner, to approach the Central Board of Trustees by filing a petition under Section 32(b) of the Act.
3. Petitioner, though made a representation, in compliance with the said submission, the petition was 5 W.P. 39516/12 rejected by order dated 13.09.2012 Annexure 'V'. Hence, this petition.
4. Sri Rajagopal, learned Counsel for the petitioner submits that the delay, if any, caused in the remittance of the contribution from March 1988 onwards was either three or four days, and a maximum within a week, and therefore, the Regional Provident Fund Commissioner, without referring to the number of days delay, has in a mechanical fashion, without assigning reasons and findings, determined as damages a total of `.1,81,980/-, in five accounts. This, according to the learned Counsel, is not in conformity with clause 32A of the Scheme. In addition, learned Counsel submits that the respondent could not have initiated proceedings after a delay of 18 years to impose damages under Section 14B of the Act. Learned Counsel submits that in almost similar though not identical 6 W.P. 39516/12 circumstances, Apex Court noticing the delay in initiating proceedings under Section 14B, by order dated 09.04.2001 confined damages leviable in that case to the extent of 25% of the total damages, in Appeal (Civil) No.6498/1998 in the case of M/s. K. Streetlite Electric Corporation Vs. Regional Provident Fund Commissioner, Haryana.
5. Per contra, learned Counsel for the respondent - Provident Fund Organization seeks to sustain the order impugned as being well merited, fully justified and not calling for interference.
6. Heard the learned Counsel for the parties, perused the pleadings and examined the orders of the Assistant Regional Provident Fund Commissioner, and the appellate Tribunal as well as that of the Board of Trustees. Clause 32A of the Employees Provident Fund Scheme, 1952, provides that where an employer makes 7 W.P. 39516/12 default in the payment of any contribution to the Fund, or in the transfer of accumulations required to be transferred by him under sub-section (2) of section 15 or sub-section (5) of section 17 of the Act or in the payment of any charges payable under any other provisions of the Act or the Scheme or under any of the conditions specified under section 17 of the Act, the Central Provident Fund Commissioner or such officer as may be authorised by the Central Government by notification in the Official Gazette in this behalf, may recover from the employer by way of penalty, damages at the following rates :--
(a) Less than two months : five per cent of arrears per annum;
(b) Two months and above but less than four months : ten percent of arrears per annum;8 W.P. 39516/12
(c) Four months and above but less than six months : fifteen percent of arrears per annum; and
(d) Six months and above: twenty five percent of arrears per annum;
7. A perusal of the order of the Assistant Regional Provident Fund Commissioner discloses that it is not a speaking order. There are no reasons assigned over the number of days delay in the remittance of the contribution for the period from March 1988 to February 2006. There is also no discussion over the period of default and the rates of damage in percentages as applicable in terms of clause 32A of the Scheme of 1952 supra for each default, except for the statement, which reads thus:
"I have considered all relevant facts on record in order to consider the levy of damages as provided for under Section 14B 9 W.P. 39516/12 of the Employees' Provident Fund and Miscellaneous Provisions Act, 1952."
There is no material whatsoever over facts considered by the authority to conclude and determine damages payable. Suffice it to state that the order Annexure 'A' suffers from failure to assign reasons, and findings except conclusions, hence, tantamounts to denial of justice.
8. Sequentially, the Appellate Tribunal also did not apply its mind to relevant material, but in a mechanical manner, confirmed the determination of damages by the Assistant Regional Provident Fund Commissioner.
9. The Board of trustees too, without application of mind, rejected the plea of the petitioner. 10 W.P. 39516/12
10. In the circumstances, none of the orders of the Authority or the Tribunal, much less the Trustees are sustainable in law, since shown to be arbitrary and contrary to rule of law, calling for interference.
11. Sri Rajagopal, learned Counsel for the petitioner submits that `.50,000/- has since been paid on 28.10.2007 and that the petitioner is willing to deposit another `.25,000/-, if granted two weeks time, towards damages.
In the result, this petition is allowed. The order dated 18.07.2007 Annexure 'M' and the demand notice Annexure 'N' as well as the order of the Appellate Tribunal Annexure 'R' and the communication Annexure 'V' of the Board of Trustees are quashed. The proceeding is remitted to the Assistant Provident Fund Commissioner, Bangalore, for consideration afresh, and 11 W.P. 39516/12 pass an order in accordance with law and in the light of the observation supra, after extending reasonable opportunity of hearing to the petitioner, who is directed to be present before the authority on 23.10.2013, without any further notice, and on which date, petitioner is directed to file its explanation to the notice issued by the Assistant Provident Fund Commissioner.
Sd/-
JUDGE sma