Jharkhand High Court
Damodar Valley Corporation vs Regional Provident Fund Commissioner ... on 9 November, 2017
Author: Rajesh Shankar
Bench: Rajesh Shankar
IN THE HIGH COURT OF JHARKHAND AT RANCHI
W.P.(C) No.903 of 2007
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1. Damodar Valley Corporation (DVC), having office at
DVC Towers, VIP Road, Kolkata-700054, through Joint
Director of Personnel & Ex. Officio Under Secretary,
DVC, Shri P. R. Bhagat, resident of Sector-II, HEC
Colony, P.S. Jagarnathpur, District Ranchi.
2. Chief Accounts Officer/Chief Engineer, Chandrapura
Thermal Power Station, DVC, Dhanbad, Bokaro.
.......... Petitioners.
-Versus-
Regional Provident Fund Commissioner-II, Employees
Provident Organization, Regional Office, Ranchi,
Jharkhand.
.......... Respondent.
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CORAM : HON'BLE MR. JUSTICE RAJESH SHANKAR
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For the Petitioner : Mr. Srijit Choudhary, Advocate
For the Respondent: Mr. Gautam Rakesh, Advocate
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17/09.11.2017:
1. The present writ petition has been filed for quashing the order dated 31st July, 2007 passed by the Regional Provident Fund Commissioner-II, Ranchi whereby the petitioner-Damodar Valley Corporation (DVC) has been held liable for payment of damage and interest under section 14-B and 7Q of the Employees Provident Fund and Misc. Provisions Act, 1952 (for short 'Act, 1952').
2. The factual background of the case, as stated in the writ petition, is that the employees working in the factory of the petitioner-DVC were granted exemption u/s 17(1) of the Act, 1952 vide Approval Order of the Regional Provident Fund Commissioner being Order no.R-Ex-077/WB/ Rules/8702 dated 03.09.1966, hence the petitioner-DVC is governed by the Provident Fund Rules of Employees Contributory Provident Fund DVC, 1962. From the commencement of the Employees' Pension Scheme, 1995 w.e.f. 16th November, 1995, 8.33% of the employees' pay was directed to be remitted by the employer to the Employees Provident Fund. The respondent vide Letter no.JH/RAN/Circle: 14/D/JH/1683/CA/733 dated 16.06.2005 made demand of Rs.13,10,882/- from the petitioner-DVC under A/C-1, A/C no.2, A/C no.10, A/C no.22 on the alleged delayed payment of PF dues for the period from 6/88 to 7/02. The petitioner no.2 vide Letter no.SR.ACAO/ STPS/ -2- ACCOUNTS/ Cont/ EPF/ 1313 dated 13th October, 2005 made objection to the alleged demand. However the respondent vide Order No.RO/RNC/Damages/JH/1683/06/ 488 dated 31.07.2007 held the petitioners liable to make payment of damage and interest on account of delayed payment of Provident Fund for the period from 6/88 to 7/02.
3. Learned counsel for the petitioners submits that Paragraph 32(A) of the Employees' Provident Funds Scheme, 1952 empowers the Central Provident Fund Commissioner to initiate a proceeding under Sections 14(B) and 7(Q) of the Act, 1952 as such, the Regional Provident Fund Commissioner-II, Ranchi wrongly assumed his jurisdiction to impose the damages and interest under Sections 14(B) and 7(Q) of the Act, 1952, respectively. Learned counsel for the petitioners further submits that the circular issued under the signature of the Assistant Provident Fund Commissioner on behalf of Regional Provident Fund Commissioner, Delhi dated 28th November, 1990 has made it clear that as per the decision of the Central Board of Trustees, the cases under Section 14(B) of the Act, 1952 are to be finalized within a period of three years. Accordingly, the Regional Provident Fund Commissioners were suggested that the cases in which the damages are yet to be levied as on 30.06.1990, they should ensure that all such cases should be disposed of within a period of three years from the date of issuance of the circular and the fresh defaulted damages were required to be levied within the closure of the subsequent three financial years. It is also submitted that the period of default of the petitioners is said to be from June, 1988 to July, 2002 for which a proceeding was initiated by the respondent in the year, 2005 and the said delay cannot be said to be reasonable for initiating a proceeding under Section 14(B) and 7(Q) of the Act.
4. Learned counsel for the petitioners further submits that pursuant to the notice issued to the petitioner-DVC dated 16th June, 2005, the reply was submitted vide letter no.1313 dated 13th October, 2005, bringing the fact to the notice of the respondent that some of the amount shown by -3- the said authority in its statement appear to have been inserted twice. The said details have been mentioned in Paragraph No.2 of the reply dated 13th October, 2005. It was also pointed out to the said authority that there were some factual errors also in the statement to the extent that for certain months there should not have been any penalty, as the remittance was made by the petitioner-DVC on time.
It was also highlighted that some amount already remitted by the petitioner-DVC for the period 6/1988 to 3/1998 covers some part of the period of the notice i.e. from 6/1988 to 7/2002.
5. Learned counsel for the petitioners puts reliance on the judgment rendered by the Hon'ble Supreme Court in the case of Maharashtra State Financial Corporation Vs. Ashok K. Agarwal & Ors., reported in (2006) 9 SCC 617, and submits that in the facts of the present case Article 137 of the Limitation Act would be applicable and in view of the same, the respondent could have initiated a proceeding under Sections 14B and 7(2) of the Act, 1952 only within a period of three years from the date of alleged default on the part of the petitioner-DVC. However, initiation of the said proceeding as late as in the year 2005 cannot be said to be legally permissible at such a belated stage. Learned counsel further submits that though there is no limitation provided under the Act, 1952 for initiating a proceeding to impose the damages upon the defaulting employer/establishment, yet the said proceeding should be initiated within a reasonable period, as has been held by the Hon'ble Supreme Court in the case of Orissa Forest Development Corporation Vs. Regional Provident Fund Commissioner, Orissa reported in 1995 LLR 930.
6. Per Contra, Learned counsel for the respondent submits that Section 32-A of the Act, 1952 permits the Central Provident Fund Commissioner or an officer authorized by the Central Government by notification in the official gazette to recover any penalty, damages from the employer in the case of default in remittance of any contribution as mandated in the Act, 1952. Though, the -4- petitioner-DVC has agitated the issue of lack of jurisdiction with the respondent, yet it has not been able to establish that the respondent was not duly authorized to assume jurisdiction to pass an order under Section 14-B and 7(2) of the Act, 1952. The learned counsel further submits that the contention of the petitioners that some amount has been shown twice in the demand notice (Annexure-2) and the payments earlier remitted by it have not been considered is not correct, as the impugned order dated 31st July, 2007 itself suggests that the same has been taken into consideration by the respondent-Regional Provident Fund Commissioner-II, Ranchi.
7. Learned counsel for the respondent relies on a judgment rendered by the Hon'ble Supreme Court of India in the case of M/s. Hindustan Times Ltd. Vs. Union of India & Ors., reported in (1998) 2 SCC 242, and submits that the Law of Limitation will not apply, so far as the Act, 1952 is concerned.
8. Learned counsel for the respondent further relies upon the judgment rendered by the Hon'ble Supreme in the case of M/s. K. Streetlite Electric Corporation Vs. Regional Provident Fund Commissioner, Haryana, reported in (2001) 4 SCC 449, and submits that the order imposing damages cannot be set aside on the ground of delay in initiating the proceeding under Section 14B unless any specific case of prejudice is proved by the employer.
9. Learned counsel for the respondent also relies upon the judgments of the Patna High Court rendered in the cases of S. K. Nasiruddin Biri Merchants Pvt. Ltd. Vs. Assistant Provident Fund Commissioner & Ors., reported in 2016(4) PLJR 499, and Inter State Transport Agency Vs. The Regional Provident Fund Commissioner, reported in 1983 PLJR 170, and submits that there is no limitation for initiating a proceeding under Section 14B of the Act, 1952 and the delay committed in initiation of the proceeding does not amount to any waiver and/or condonation.
-5-10.Heard the learned counsel appearing on behalf of the parties and perused the materials available on record. In the present case, due to delayed remittance of PF dues from 6/88 to 7/02, the respondent issued letter dated 16.06.2005 to the petitioners demanding Rs.13,10,882/- as damage and interest provided under section 14(B) and 7(Q) of the Act, 1952. The petitioners made objection to the said letter on 13th October, 2005, however the respondent vide impugned order 31.07.2007 held the petitioners liable to make payment of damage and interest amounting to Rs.13,10,882/- on account of delayed payment/remittance of Provident Fund for the period from 6/88 to 7/02. The learned counsel for the petitioners assiduously argues that the impugned order has been passed after the period of limitation of three years and to that effect, learned counsel has relied upon a circular issued under the signature of the Assistant Provident Fund Commissioner on behalf of Regional Provident Fund Commissioner, Delhi dated 28th November, 1990 wherein it has been made clear that the Central Board of Trustees had decided that the cases under Section 14(B) of the Act, 1952 are to be finalized within a period of three years .
11.I have perused the judgment of the Hon'ble Supreme Court rendered in the case of M/s Hindustan Times (Supra.). Para 26 of the said judgment reads as follows:-
"29. From the aforesaid decisions, the following principles can be summarised: The authority under Section 14-B has to apply his mind to the facts of the case and the reply to the show cause notice and pass a reasoned order after following principles of natural justice and giving a reasonable opportunity of being heard; the Regional Provident Fund Commissioner usually takes into consideration the number of defaults, the period of delay, the frequency of default and the amounts involved; default on the part of the employer based on plea of power cut, financial problems relating to other indebtedness or the delay in realisations of amounts paid by the cheques or drafts, cannot be justifiable grounds for the employer to escape liability; there is no period of limitation prescribed by the legislature for initiating action for recovery of damages under Section 14B. The fact that proceedings are initiated or demand for damages is made after several years cannot by itself be a ground for drawing an inference of waiver or that the employer was lulled into a belief that no proceedings under Section 14B would be taken; mere delay in initiating action under Section 14B cannot amount to prejudice inasmuch as the delay on the part of the department, would have only allowed the employer to use the monies for his own purposes or for his -6- business especially when there is no additional provision for charging interest. However, the employer can claim prejudice if there is proof that between the period of default and the date of initiation of action under Section 14B, he has changed his position to his detriment to such an extent that if the recovery is made after a large number of years, the prejudice to him is of an "irretrievable" nature; he might also claim prejudice upon proof of loss of all the relevant records and/or non-availability of the personnel who were, several years back in charge of these payments and provided he further establishes that there is no other way he can reconstruct the record or produce evidence; or there are other similar grounds which could lead to "irretrievable" prejudice; further, in such cases of "irretrievable" prejudice, the defaulter must take the necessary pleas in defence in the reply to the show cause notice and must satisfy the concerned authority with acceptable material; if those pleas are rejected, he cannot raise them in the High Court unless there is a clear pleading in the writ petition to that effect."
12.In the case of M/s K. Streetlite (Supra.), the Hon'ble Supreme Court in para 4 held as under:-
"4. These two contentions stood rejected by the High Court. Firstly, that delay in initiating proceedings under Section 14-B of the Act will not be a ground for setting aside an order imposing damages unless specific plea of prejudice is raised before the Provident Fund Commissioner and established and further that the instructions given by the Central Government do not have any binding force. The High Court adverted to the decision of this Court in Hindustan Times Ltd. v. Union of India & Ors., to reach this conclusion. In that case, this Court examined the scheme of the provisions of the Act in relation to delay in passing of the order. It was stated that the mere fact that the proceedings are initiated or demand for damages is made after several years cannot, by itself, be a ground for drawing an inference of waiver of that the employer was lulled into a belief that no proceedings under Section 14-B would be taken and mere delay in initiating such action cannot amount to prejudice inasmuch as such delay would result in allowing the employer to use the monies for his own purposes or for his business especially when there is no additional provision for charging interest on such amount. However, the employer can claim prejudice if there is proof that between the period of default and the date of initiation of action under Section 14-B he has altered his position to his detriment to such an extent that if the recovery is made after a large number of years, the prejudice to him is of an irretrievable nature, and such prejudice can also be established by stating reason of non-availability of records of the personnel by which evidence it could be established that there was some basis for delay in making the payments. Therefore, this Court was of the opinion that such delay, by itself, would not result in any prejudice. In the present case, the High Court found that no such prejudice was either pleaded or proved. Hence the first contention stands rejected."
13.In both the aforementioned judgments, the Hon'ble Supreme Court specifically held that there is no period of limitation for initiation of a proceeding under section 14-B of the Act, 1952. Merely because the claim for damages has been raised after several years, that cannot, by itself, be a -7- ground for quashing the proceedings under Section 14-B of the Act, 1952. Such proceeding can only be challenged on the ground of prejudice if there is proof that between the period of default and the date of initiation of action under Section 14-B of the Act, 1952 the employer has altered his position to its detriment to such an extent that if the recovery is made after several years, the prejudice to the employer is of an irretrievable nature. It has further been held that if any instruction has been issued in this regard the same will have no effect. Thus, the circular dated 28th November, 1990 issued on behalf of the Regional Provident Fund Commissioner, Delhi on which the petitioners are relying upon, is directory in nature and the same cannot override the provisions of the statute. The principle of reasonable time is to be applied in such cases where the exercise of power by the authority at a very belated stage is likely to result in deprivation of property which rightly and lawfully belongs to a person concerned. However, the position under Section 14B of the Act is completely different. In fact, the defaulter/employer due to the delay committed in realization of the damages and interest under Sections 14B of the Act, 1952 enjoys it as "Boon of Delay". The judgment relied upon by the petitioners rendered in the case of Maharashtra State Financial Corporation (Supra) would not apply in the facts of the present case, whereas the judgments in the cases of M/s. Hindustan Times Ltd. (Supra) and M/s. K. Streetlite Electric Corporation (Supra) have been passed while interpreting the provisions of the Act, 1952 and as such the ratio of the same will apply in the present case. I find the force in the submission of the learned counsel for the respondent that Section 32-A of the Act, 1952 permits other authorized officers also to recover any penalty and damages from the defaulting employer. The petitioners, on the other hand, have failed to establish that at the relevant time the respondent had no jurisdiction to pass the impugned order. Moreover, Section 17(1-A) of the Act, 1952 makes it clear that the provisions of Sections 6, 7-A, 8 and 14-B would also -8- apply to the employer of the exempted establishment in addition to any other conditions which may be specified in the notification granting such exemption and if the employer contravenes or makes default in complying with any of the said provisions or conditions or any other provision of the Act, 1952, the employer is liable for the damages and the interest for the same. It is also evident from the order dated 31th July, 2017 that the representative of the petitioner-DVC, after scrutinizing and verifying the relevant records of the establishment, admitted the figures to be correct. It further appears that the discrepancies pointed out by the petitioner-DVC vide Letter No.1313 dated 13th October, 2005 were also taken into consideration by the respondent-Regional Provident Fund Commissioner-II, Ranchi while passing the impugned order dated 31st July, 2007.
14.In view of the discussions made herein above, I see no reason to interfere with the impugned order dated 31st July, 2007 passed by the Regional Provident Fund Commissioner-II, Ranchi.
15.The writ petition, being devoid of merit, is, accordingly, dismissed.
(Rajesh Shankar, J.) Sanjay/AFR