Karnataka High Court
Mr Shriram Reddy vs The Regional Provident Fund ... on 28 February, 2022
Bench: S.Sujatha, Shivashankar Amarannavar
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 28TH DAY OF FEBRUARY, 2022
PRESENT
THE HON'BLE MRS.JUSTICE S.SUJATHA
AND
THE HON'BLE MR. JUSTICE SHIVASHANKAR AMARANNAVAR
WRIT PETITION No.28047/2019(L-PF)
BETWEEN :
Mr.Shriram Reddy
S/o Kanna Reddy
Aged about 56 years
Residing at:
No.896/11, 1st main
Mahalakshmipuram
Bangalore - 560 086.
Erstwhile Prop. of
online Consultancy Services. ... PETITIONER
(By Sri. M.T Nanaiah, Senior Counsel a/w
Sri Hemanth R Rao, Advocate
Sri Aditya Dmello, Advocate)
AND :
The Regional Provident Fund Commissioner-1
Employees' Provident Fund Organisation
Regional Office, Peenya, No.62, 3rd Cross
Industrial Suburb, yeshwanthpur 2nd stage
Bengaluru - 560 022. ...RESPONDENT
(By Smt.B.V.Vidyulatha, Advocate)
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This Writ Petition is filed under Articles 226 and 227
of the Constitution of India with a prayer to quash the order
dated 6.5.2019 passed by the Central Government Industrial
Cum Labour Court produced at Annexure-G and Etc.,
This Writ Petition coming on for Preliminary Hearing in
'B' Group this day, S. SUJATHA, J. passed the following;
ORDER
The petitioner has assailed the order dated 06.05.2009 passed by the Central Government Industrial Tribunal Cum Labour Court, Bangalore, (Annexure G) inter-alia the demand letter dated 11.01.2018 (Annexure D) issued under Section 7- Q by the respondent.
2. The Petitioner, claiming to be the proprietor of online consultancy services, a proprietorship concern which was in the business of providing online consultancy services to its customers, being aggrieved by the order passed under Section 14-B of the Employees Provident Fund and Miscellaneous Provisions Act, 1952 (`the Act' for short) and the -3- demand order dated 11.01.2018 calling upon the petitioner to pay a sum of Rs.3,09,674/- under Section 7-Q of the Act is before this Court.
3. Learned counsel for the petitioner submitted that subsequent to passing of the order under Section 14-B and 7-Q of the Act, review petition was filed before respondent which came to be rejected. On further appeal before the Central Government Industrial Tribunal cum Labour Court (`the Tribunal' for short), the same came to be dismissed on the ground that the provisions of Limitation Act, 1963 are not applicable to condone the delay in preferring the appeal under the provisions of the Act. Learned counsel inviting the attention of the Court to the order dated 19.08.2021 passed by this Court in the present proceedings submitted that the points which requires consideration by this Court in this appeal being formulated, the appeal filed beyond the period of 120 days is held to be -4- not maintainable and insofar as the demand made under Section 7-Q of the Act it has been observed that neither the order passed under Section 7-A of the Act nor passed under Section 14-B of the Act contain any finding recorded with regard to interest component having been adjudicated or determined. Whereas, the demand letter (Annexure - D) dated 11.01.2018 is said to be an order determining the quantum of interest payable under Section 7-Q of the Act. Learned counsel further referring to the judgment of the Hon'ble Apex Court in the case of Arcot Textite Mills Ltd., Vs. The Regional Provident Fund Commissioner and others, Civil Appeal No. 9488/2013 (D.D 18.10.2013) as well as the judgment of the Hon'ble High Court of Kerala at Ernakulam in the case of Latheef K.A. Vs. Union of India, W.P. (C) No.2191/2020 (D.D. 25.02.2020) submitted that though levy of interest is sought to be automatic, the authority while exercising power under Section 7-Q of the Act has to compute the interest -5- after providing an opportunity to the establishment which is sine quo non. Annexure R-1 placed on record by the respondent authorities indicates the tenor of the said document i.e., summons issued to appear for hearing under Section 14-B of the Act and the order for payment of interest under Section 7-Q of the Act relating to the period from 01.04.2000 to 31.03.2014. In the absence of notice issued under Section 7-Q of the Act, demand made as per Anneuxre - D is unsustainable.
4. Learned counsel appearing for the respondent justifying the impugned order at Annexure - D submitted that the petitioner has responded to the composite notice issued under Section 14-B and 7-Q of the Act, i.e., Annexure R-1 and in terms of Annexure R- 8 dated 06.02.2017 reconciled the payments made towards the contributions. The only grievance of the petitioner was that the department has assessed the establishment wrongly to pay the contributions twice -6- pursuant to which the respondent authorities have informed the petitioner that no such amount was recovered twice as alleged by the petitioner. The cheque for a sum of Rs.2,17,504/- was returned due to insufficient funds by the Bank and hence, the case was concluded assessing the dues for March 2006 at Rs.2,17,504/-. No further amount of Rs.2,17,504/- was recovered. Thus the learned counsel made an endeavor to contend that at no point of time, no grievance was made by the petitioner regarding the determination of interest which was statutorily fixed at 12% p.a. but now having failed in an attempt to challenge the order under Section 7-A and 14-B of the Act, is making frivolous allegation inasmuch as the determination of interest is concerned. Accordingly sought for dismissal of the writ petition.
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5. We have carefully considered the arguments advanced by the learned counsel appearing for both the parties and perused the material on record.
6. As already discussed hereinabove, the two points formulated by this Court for consideration are as under:
(i) Whether Tribunal was justified in dismissing the appeal filed under Section 7A challenging the order passed under Section 14B of Employees Provident Funds and Miscellaneous Provisions Act, 1952, as barred by limitation?
(ii) Whether order passed under Section 7Q (Annexure-A2) is an independent order or it is a part of order dated 11.01.2018 (Annexure- C) or part of order passed under Section 7A dated 30.11.2010?-8-
7. As regards point No. (i) it has been held against the petitioner and in favour of the respondent. Now the controversy revolves around point No. (ii). Annexure D - the demand letter under Section 7-Q of the Act is the direction issued to the employer to remit the amount quantified as interest under Section 7-Q of the Act. Annexure R-1 is said to be the consolidated notice under Section 14-B and 7-Q of the Act as contended by the learned counsel for the respondent, indeed the same calls upon the petitioner to make the payment towards interest and provides an opportunity of being heard only so far as levy under section 14-B of the Act is concerned. Hence, in our considered view, there is no opportunity provided to the petitioner in the demand made by the respondent authorities with respect to levy of interest.
8. At this juncture, it would be profitable to refer to the judgment of the Hon'ble Apex Court in the -9- case of Arcot Textile Mills supra, wherein the Hon'ble Apex Court has observed that demand notice under Section 7-Q of the Act is a matter of computation but sometimes computation is done when the main order is passed and at times an interest component is demanded separately by the competent authority. There can be error in computation. It has been held, it is difficult to hold that when a demand of this nature is made in a unilateral manner and the affected person is visited with some adverse consequences, no prejudice is caused. When an independent order is passed under Section 7-Q of the Act, the affected person should have the right to file an objection if he intends to do so. This principle enunciated by the Hon'ble Supreme Court has been followed by the Hon'ble Kerala High Court in the case of Latheef K.A., supra.
9. Thus, it is clear that the establishment would be entitled to file objections to the determination
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of interest made under Section 7-Q of the Act inasmuch as the computation of the interest. No doubt the same is a limited enquiry, but the principles of natural justice warrants providing such an opportunity to the establishment regard being had to the limited scope which indeed cannot be extended to consider the issues decided under Section 7-A and 14-B of the Act as in the present case. In the absence of such an opportunity being provided to the petitioner, in the interest of justice and equity, we deem it appropriate to provide an opportunity to the petitioner - establishment to file objections to the demand letter at Annexure - D construing the same as a notice. If such objections are filed within a period of two weeks from the date of receipt of certified copy of the order, the respondent shall consider the same in accordance with law and take appropriate decision inasmuch as quantification of interest is concerned. Such exercise shall be made in an expedite manner.
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10. It is made clear that the scope of such enquiry would be limited to Section 7-Q of the Act and not under Section 7-A or 14-B of the Act, the issues regarding which, are already decided by this Court as aforesaid.
With the above observations and directions, the writ petition stands disposed of accordingly.
Sd/-
JUDGE Sd/-
JUDGE LRS