Delhi High Court
Old Village Industries Ltd. vs The Asstt. Provident Fund Commissioner ... on 25 November, 2004
Equivalent citations: II(2005)BC138, 115(2004)DLT510, (2005)IILLJ742DEL
Author: Swatanter Kumar
Bench: Swatanter Kumar
JUDGMENT Swatanter Kumar, J.
1. Being aggrieved from the order dated 19.4.2004 passed by the Assistant Provident Fund Commissioner, the Employees Provident Fund Organisation under Section 14B of the Employees Provident Fund and Miscellaneous Provisions Act, 1952 and also from the recovery of notice dated 10.9.2004 issued by the Recovery Officer, Employees Provident Fund Organisation, New Delhi. The petitioners have filed this petition under Article 226 of the Constitution of India praying for quashing of both these orders and restraining the respondents from taking any coercive steps in effecting recovery from them.
2. The petitioner company has been carrying on its business for a considerable time and was brought under the provisions of the Act with effect from 1.3.1975. There was default in its contribution by the petitioner company and the respondent No. 1 issued a notice dated 12.2.2004 for initiating proceedings for default for the period 1997-2004. The representation of the petitioner was considered by the authorities. However, vide order dated 19.4.2004 the respondents raised the demand and liability of the petitioner to the extent of Rs. 30,13,744.00. Against this order the petitioner preferred an appeal under Section 7(1) of the Act. The appeal was filed in the Registry of the Appellate Tribunal but the same could not be processed and listed for hearing because of the Presiding Officer had not been appointed by the Competent Authority. In the meanwhile on 10.9.2004 respondent No. 2 issued a recovery certificate" for recovery of the demand which have been raised against the petitioner by the initial order. The amount is sought to be recovered as arrears under Section 8 of the Act and the petitioners have been directed to appear in person requiring them to show cause why they be not committed to civil prison in execution of the said recovery certificate.
3. The basic grievance of the petitioners is that the respondents are enforcing recovery of an illegal demand which is bad in law as well as based on wrongful computation. Such coercive steps including the civil imprisonment of the petitioner is being taken for the fault of the respondents themselves as the appeal filed by the appellant within time is not being heard despite requests. It is also contended that the demand raised by the respondents consists primarily of interest and damages under Section 14B of the Act and enforcing such a liability is totally arbitrary. The petitioners also filed an affidavit before this Court dated 25.10.2004 stating therein that a sum of Rs. 4,78,780.00 was remitted towards the total outstanding to the recovery officer and now nothing is due from the petitioner concerned.
4. There is no dispute to the fact that the damage raised by the respondents dated 19.4.2004 mainly consists of element of interest and damages. Large sums are not due on account of default of payment and the petitioner has also made payment of more than Rs. 4 lacs as aforestated after issuance of recovery certificate. Learned Counsel appearing for the respondents contended that against the damages and/or interest imposed under Section 14B of the Act by the Competent Authority no appeal lies under Section 7(1) of the Act and as such there cannot be a stay and/or waiver of such amount by any Forum. Resultantly it is contended that this Court should also not grant any stay to the petitioners. However, the appeal preferred by the petitioner would be heard shortly.
5. Section 7(1) of the Act gives right to a person aggrieved by an order passed under Sub-section (3) or Sub-section (1) of Section 4, Section 3(1) or Section 7B except an order rejecting an application for review in Sub-section (5) thereof or Section 7C or Section 14B may prefer an appeal to a Tribunal against such notification or order. Once such an appeal is filed, the obligation under Section 7(1) of the Act is upon the Tribunal to grant opportunities to the parties to hear the appeal and pass orders in accordance with law.
6. The contention raised on behalf of the respondents is misconceived inasmuch as the provisions of Section 7(1) specifically postulate an appeal against an order passed under Section 14B of the Act imposing damages on an employer who makes a default in payment of contribution to the fund or transfer of accumulation required to be transferred by him under Section 7(2) of the Act mentioned therein. Once an appeal is postulated against the order under Section 14B under the provisions of the Act then it obviously would be well within the jurisdiction of the Tribunal to consider the stay and/or waiver of such demand of damages. At this stage, reference to the provisions of Section 7-O of the Act can be usefully made. The same is as under:
"Deposit of amount due, on filing appeal--No appeal by the employer shall be entertained by a Tribunal unless he has deposited with it seventy-five per cent of the amount due from him as determined by an officer referred to in Section 7A:
Provided that the Tribunal may, for reasons to be recorded in writing, waive or reduce the amount to be deposited under this section."
7. The power to waive or reduce the amount to be deposited is relatively to the amount determined by the Officer under Section 7A of the Act. In other words the pre-requisite of deposit of 75% of the demanded amount applicable to an order passed under Section 7A and not to other provisions. The Legislature in its own wisdom has restricted the application of the provisions of Section 7(1) to the order passed under Section 7A. Such provisions are to be construed strictly and cannot be given a wider meaning so as to create a liability which is intended to be correct to the entertainment of an appeal. The liability to deposit arises in the situation strictly contemplated under the provisions of this section. There is nothing in the section so as to extend its application to an order passed under Section 14B of the Act. An employer has a right to prefer an appeal against an order under Section 14B, under Section 7(1) of the Act but the pre-condition of deposit for entertainment of such an appeal is not covered under Section 7-O of the Act. Thus, I have no hesitation in rejecting the contention of the respondents that it would be mandatory for the employer to deposit 75% of such amount before appeal can be entertained or even that there cannot be stay of recovery of the said amount by the Appellate Authority. The argument raised on behalf of the respondents would be untenable even for another reason that damage is the consequence of the demand raised under Section 7A of the Act. The provisions of Section 14B of the Act attracted only if there is default on the part of the employer. It being a consequential liability essentially must fall in a category of not the principal liability to attract stringent provisions of pre-deposit to the hearing of the appeal. Such provisions being related to revenue would be construed strictly whether to the advantage or disadvantage of the person upon whom the liability is sought to be fastened. Once the provisions of Section 7-O does not include an appeal against an order under Section 14B then it would be in no way permissible to include such an order by implication or otherwise.
8. In regard to the pendency of the appeal before the appropriate Forum it is clear that no fault can be attributed to the petitioner employer. He has preferred an appeal in the prescribed Forum under Section 7(1) which is admittedly pending before the Appellate Tribunal. The obligation to hear an appeal lies upon the Tribunal and if for any reason whatsoever it is not able to hear the appeal, it will be most unfair to enforce its demand particularly when the validity of such a demand is challenged by the employer on various legal as well as computation basis. In this regard it will be appropriate to refer to a detailed order passed by this Court in WPG No. 16137/2004.
"It is a known fact that the post of the Presiding Officer of the Tribunal is lying vacant now for more than a year. Its repercussions are serious and must invite attention of all concerned at the relevant quarters of the Government of India. Where this is hampering the administration and justice there it equally and adversely affects the recovery of Slate revenue and distribution of funds to its rightful claimants. The employers who are fastened with the liability for contribution of fund under the provisions of the Act are not able to take benefit of the statutory remedy provided to them in law and are compelled to file writ petitions before the High Court which certainly is an avoidable litigation.
Mr. Pati also conceded that different Benches of this Court have passed orders and directions requiring the authorities to effectively and expeditiously deal with this problem. Today even orders of other High Courts have been brought to the notice of Mr. Pati. Despite of these orders the matter has lingered for too long, may be for one reason or the other.
Furthermore, it also amounts to loss to Government revenue as the Courts are normally inclined to grant stay in such cases because there is hardly any fault attributable to the employer at least prima facie.
In the above circumstances it is clear that nobody stands to gain by this inaction on the part of the Government. To provide expeditious justice is not a concept confined to Courts only but it must equally apply to the Institutions/Tribunals performing quasi-judicial functions, The Court must take judicial notice of the fact that large number of writ petitions are being filed in this Court as well as other High Courts, where the petitioners pray for grant of interim orders only on the ground that the Tribunal is not constituted and the appeals filed by them in the Office of the Tribunal have not been heard till date. It is their contention that they cannot be asked to pay huge amounts and their properties be attached by the Department without even granting them an opportunity of being heard. The remedy of appeal before the Tribunal is a statutory remedy and thus every person affected adversely by the order of the lower authorities must be granted an opportunity to substantiate his contentions before the Tribunal. In the case of Arihant Threads Ltd. v. Union of India, in WP(C) No. 3331 of 2004 a Division Bench of the Punjab and Haryana High Court while disposing of number of writ petitions vide its order dated 25th March, 2004 had passed the following directions:
'Learned Counsel appearing for the Union of India also assures the Court that all steps will be taken by the concerned Ministry to have the appointments finalised expeditiously and without any unnecessary delay.
In view of the statements made on behalf of the Union of India as well as the Provident Fund Commissioner, we do not consider it necessary to go into the merits of the various contentions raised before us. Suffice it to say that the stand taken by the respondents is fair, just and equitable.
On the basis of the statements made on behalf of the respondents, we dispose of this writ petition with directions that the petitioner can file appeal(s) accompanied by a stay application, if not already filed, within two weeks from today. If such appeal(s) are filed proof thereof is shown to the Recovery Officer, then said Officer would not affect recovery of the demand issued under Section 7-A of the Act till decision of the stay application, as stated by the learned Counsel appearing for the respondents. We make it clear that the direction would obviously operate only till the disposal of the stay application by the competent authority. We have pious hope that Union of India shall expeditiously make the appointment of the Presiding Officer of the Appellate Tribunal and Regional Provident Fund Commissioner exercising jurisdiction over Punjab and Haryana would not compel the people to approach the Court Such litigation, obviously, is avoidable by timely action on the part of the official respondents.
We expect that State of Haryana, State of Punjab which also exercises powers over Union Territory of Chandigarh would take due notice of this order and take appropriate measures at their own level to achieve the public purpose to avoid unnecessary litigation. Obvious result thereof would be less burden on the State exchequer which the State would incur in filing and defending avoidable litigation.
All these writ petitions are accordingly disposed of with the above directions.' It appears that the request of the Court made in the above order was not sufficient indication for the authorities to act expeditiously as even now and undisputedly the file for appointment to these posts is shuffling from one department to another. The Court is unable to appreciate such an approach.
At this stage I would refrain from commenting any further in this regard or from taking serious view of the inaction on the part of the authorities concerned. I express pious hope that authorities would act now at least with a specific direction to the Secretary, Ministry of Labour and Employment; Secretary, Department of Personnel and Secretary, in charge of Appointment Committee of Cabinet, to ensure that the matter in relation to appointment of Presiding Officer of the Tribunal is finalised as expeditiously as possible, and in any case not later than 45 days from the date of this order. Mr. Pati shall submit a compliance report to the Court before the next date of hearing.
The above case is fixed on 25.11.2004 for directions."
9. In view of the above directions already issued by this Court it is not necessary to discuss the matter in any further detail. There is no dispute before this Court that the petitioner employer has already filed an appeal which is pending in the Registry of the Tribunal. For the reason aforestated this writ petition is allowed limited to the extent that no coercive steps will be taken by the authorities to recover the demand in question till the application filed by the appellant for waiver and/or restraining recovery is decided by the Appellate Tribunal in accordance with law. The writ petition is disposed of in the above terms leaving the parties to bear their own costs.