Calcutta High Court (Appellete Side)
The India Jute & Industries Ltd. And Anr vs The Regional Provident Fund ... on 8 July, 2024
IN THE HIGH COURT AT CALCUTTA
CONSTITUTIONAL WRIT JURISDICTION
APPELLATE SIDE
Present :-
The Hon'ble Justice PARTHA SARATHI SEN
WPA 30485 of 2016
The India Jute & Industries Ltd. and Anr..
-Vs-
The Regional Provident Fund Commissioner-II and Ors.
For the Petitioners: Mr. Soumya Majumder, Adv.,
Mr. Amitava Mitra Adv.,
Ms. Antara Choudhury, Adv.,
Ms. Sonia Nandy, Adv.
For respondent nos. 1 to 3: Ms. Aparna Banerjee, Adv.
For the respondent nos. 6/ S.B.I: Mr. Anirban Pramanick, Adv., Ms. Subhasree Dey, Adv., Mr. Punarbasu Nath, Adv.
Hearing concluded on: 26.06.2024. Judgment on: 08.07.2024. PARTHA SARATHI SEN, J. : -
1. In this writ petition the writ petitioner has prayed for cancellation and/or revocation and/or withdrawal of the order no. WB/HWR/Damage/9516/HLY/1196(I) dated 08.12.2016 whereby and whereunder the respondent no.1/authority has imposed damages to the tune of Rs.78,39,064/- and interest of Rs.37,87,607/- under Section 14(B) and Section 7(Q) respectively of the Employees' Provident Funds And Misc. Provisions, 1952 (hereinafter referred to as the said 'Act' in short) upon the writ petitioner no.1. It is pertinent to mention herein that such damages and interest have been imposed by the respondent 2 no.1/Authority on account of alleged delay by the writ petitioner for the remittance of the contributions for the period 01.01.2014 to 30.09.2015.
2. It is undisputed that initially the writ petitioner/company was an exempted establishment under Section 17 of the said Act however, such exemption stood cancelled on and from 27.10.2010.
3. In course of hearing Mr. Majumder, learned advocate appearing on behalf of the writ petitioner submits before this Court that challenging such exemption the writ petitioner and the Board of Trustees (BOT in short) have challenged the said decision by filing a writ petition being WP No. 1755(W) of 2011 where however no favourable order was passed in favour of the writ petitioner. However, the employees of the writ petitioner company was aggrieved with the judgment as passed in the said writ petition and they carried the matter in a writ appeal.
4. Drawing attention to page no.85 of the writ petition being a show cause notice dated 10.09.2013 it is submitted by Mr. Majumder that since in the BOT there was a representative of the employees and since the said representative of the employees declined to put his signature on the cheques of the bank accounts as mentained by the BOT, there occurred a delay in transfer of past accumulation and for which the respondent/authority being the Provident Fund Authority freezed such accounts and therefore the show cause notice dated 10.09.2013 is bad in law in view of the fact that because of the aforesaid non-cooperation of the representative of the employees of the writ petitioner/company and because of freezing of the bank accounts the past accumulation fund 3 could not be transferred to the Provident Fund Authority. Drawing attention to page nos. 90 to 92 and page nos.93 to 95 it is further submitted by Mr. Majumder that the aforementioned predicament of the writ petitioner was duly conveyed to the respondent/authorities by the writ petitioner/company as well as BOT under cover of their letter dated 25.09.2013 showing bona fide of the writ petitioner. It is submitted further by Mr. Majumder, that from page nos. 59 to 61 of the writ petition it would reveal further that the writ petitioner had made a communication with the Axis Bank Ltd. regarding change of signatures for smooth operation of the bank accounts and demat account for immediate transfer of past accumulation investment on the BOT fund to the fund of the respondent authority i.e. Provident Fund Authority.
5. In course of his submission Mr. Majumder further draws attention of this court to page nos. 156 to 159 of the writ petition. It is submitted that from the said documents it would reveal that the writ petitioner/ company had submitted with the respondents/authorities the statement of accounts of Provident Fund Trust Fund as on 01.01.2014, interest accrued from 01.01.2014 to date of sale /transfer and amount remitted to EPFO. It is thus submitted that from aforesaid material it would reveal that there was no mala fide intention on the part of the writ petitioner/company to transfer past accumulation and therefore while passing an order for damages the respondent no.1 /authority ought to have exercised its discretion in favour of the writ petitioner by levying no damages upon the writ petitioner.
4
6. Drawing attention to page no 158 being the statement of accrued interest for security/bonds which was transferred in cash to EPFO vis-à- vis para 60 of Employees Provident Fund Scheme, 1952 (hereinafter referred to as the said 'Scheme') it is contended by Mr. Majumder that from the statement of accounts as submitted with the Provident Fund Authority it would reveal that the writ petitioner had duly transferred the accumulated interest from 01.01.2014 to 04.03.2015 to the fund as mentioned by the respondents/authority and thus the writ petitioner ought not to have saddled with any further interest under Section 7(Q) of the said Act. It is further submitted by Mr. Majumder, that the words used in Section 17(Q) namely; 'on any amount due' ought not to be construed as the amount of past accumulation and therefore the arithmetic calculation as made in order under challenge regarding interest under Section 7(Q) of the said Act is also faulty and is thus liable to be set aside.
7. Placing reliance upon the decision of a co-ordinate bench dated 26.09.2023 as passed in WPA 976 of 2022 (M/S Alam Tannery Private Ltd & Anr. vs. The Additional Commissioner and Regional Director Employees State Insurance Corp. WB & Ors.) it is argued by Mr. Majumder, that from the order under challenge it would reveal that there was total non-application of mind on the part of the respondent no.1 in the representation of the writ petitioner (Annexure P30 of the writ petition at page nos. 170 to 179) which was submitted pursuant to the summons dated 05.01.2016. Mr. Majumder thus submits before this Court that the 5 instant writ petition may be allowed by passing an appropriate order of revocation of the order dated 08.12.2016 as passed by the respondent no.1/authority.
8. Per contra, Ms. Banerjee, learned advocate for the respondent/authority at the very outset draws attention of this Court to page no.164 of the writ petition. It is submitted by Ms. Banerjee that on perusal of the copy of the said summons dated 05.01.2016 it would reveal that the said summons was issued to the writ petitioner for hearing under Section 14B and Section 7(Q) of the said Act for belated remittance of contributions made during period 01.01.2014 to 30.09.2015. It is submitted that the writ petitioner/company under cover of their reply dated 11.07.2016 had failed to submit any plausible explanation with regard to the said non-remittance which was again brought to the notice of the writ petitioner by the Provident Fund Authority under cover of their letter dated 16.11.2016.( vide Annexure P31 at page nos.181 to 183).
9. It is further submitted by Ms. Banerjee that the summons dated 05.01.2016 has got no relation with the alleged delay in transferring the past accumulation as wrongly argued by Mr. Majumder, learned advocate for the writ petitioner. Drawing attention to Section 7( Q) of the said Act it is argued by Ms. Banerjee that after cancellation of exemption under Section 17(5) of the said Act, it is incumbent upon the writ petitioner/company to transfer the past accumulation as well as to remit the contributions within the statutory period failing which the said Act permits the Provident Fund Authority to impose damages under Section 6 14B of the said Act and also to impose interest at the rate prescribed in the said Act.
10. In course of hearing Ms. Banerjee, learned advocate for the respondent/authority also draws attention of this Court to Para 32A and 32B of the said Scheme. It is submitted that there was no arbitrariness on the part of the respondent no.1/authority in calculating the damages for default in payment of any contribution since the same has been done in accordance with para 32A of the said Scheme and since the writ petitioner/company does not come under the purview of the organization as mentioned in paragraph 32B of the said Scheme, the writ petitioner/company cannot claim any reduction or waiver of damages. Ms. Banerjee, learned advocate for the respondent/authority thus submits that the instant writ petition may be dismissed.
11. For effective disposal of the instant writ petition some provisions of the said Act as well as the said Scheme are required to be looked into and thus are quoted hereinbelow in verbatim:-
"14B. Power to recover damages.--Where an employer makes default in the payment of any contribution to the Fund , the Pension Fund or the Insurance 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 or in the payment of any charges payable under any other provision of this Act or of 5 any Scheme or Insurance Scheme or under any of the conditions specified under section 17, the Central Provident Fund Commissioner or such other officer as may be authorised by the Central Government, by notification in the Official Gazette, in this behalf] may recover 7 from 7 the employer by way of penalty such damages, not exceeding the amount of arrears, as may be specified in the Scheme:
Provided that before levying and recovering such damages, the employer shall be given a reasonable opportunity of being heard: Provided further that the Central Board may reduce or waive the damages levied under this section in relation to an establishment which is a sick industrial company and in respect of which a scheme for rehabilitation has been sanctioned by the Board for Industrial and Financial Reconstruction established under section 4 of the Sick Industrial Companies (Special Provisions) Act, 1985,subject to such terms and conditions as may be specified in the Scheme."
Section 7(Q) of the said Act is quoted hereinbelow in verbatim:-
"7Q. Interest payable by the employer.--The employer shall be liable to pay simple interest at the rate of twelve per cent. per annum or at such higher rate as may be specified in the Scheme on any amount due from him under this Act from the date on which the amount has become so due till the date of its actual payment:
Provided that higher rate of interest specified in the Scheme shall not exceed the lending rate of interest charged by any scheduled bank."
Para 32A and 32B are quoted below in verbatim:-
"32A. Recovery of damages for default in payment of any contribution (1) Where an employer makes 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 Scheme or under any of the conditions specified under section 17 of the Act, the 8 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 rates given below: --
Sl Period of Default Rate of Damages
no. (Percentage of arrears per
annum)
(1) (2) (3)
(a) Less than two months Five
(b) Two months and above but less Ten
than four months
(c ) Four months and above but less Fifteen
than six months
(d) Six months and above Twenty Five.
(2) The damages shall be calculated to the nearest rupee, 50 paise or more to be counted as the nearest higher rupee and fraction of a rupee less than 50 paise to be ignored.
32B. Terms and conditions for reduction or waiver of damages.- The Central Board may reduce or waive the damages levied under section 14B of the Act in relation to an establishment specified in the second proviso to section 14B, subject to the following terms and conditions, namely: --
(a) in case of a change of management including transfer of the undertaking to workers' co-operative and in case of merger or amalgamation of the sick industrial company with any other industrial company, complete waiver of damages may be allowed;
(b) in cases where the Board for Industrial and Financial Reconstruction, for reasons to be recorded in its schemes, in this 9 behalf recommends, waiver of damages up to 100 per cent may be allowed;
(c) in other cases, depending on merits, reduction of damages up to 50 per cent may be allowed."
Clause 22 and Clause 23 of para 27AA of the Scheme are as under:-
"22. The employer and the members of the Board of Trustees, at the time of grant of exemption, shall furnish a written undertaking to the RPFC in such format as may be prescribed from time to time, inter alia, agreeing to abide by the conditions which are specified and this shall be legally binding on the employer and Board of Trustees, including their successors and assignees, or such conditions as may be specified latter for continuation of exemption.
23. The employer and the Board of Trustees shall also give an undertaking to transfer the funds promptly within the time limit prescribed by the concerned RPFC in the event of cancellation of exemption. This shall be legally binding on them and will make them liable for prosecution in the event of any delay in the transfer of funds"
12. Keeping in mind the aforementioned provisions of law, if I make an endeavour to scrutinize the materials as placed before this Court it appears that from the summons dated 05.01.2016 as issued in the name of the writ petitioner/company that the said summons is restricted for alleged belated remittance during the period 01.01.2014 to 30.09.2015. Admittedly under cover of its letter dated 11.07.2016 (Annexure P30 of the writ petition) the writ petitioner/company made representation with the Provident Fund Authorities but in the said representation the writ 10 petitioner/company have practically narrated the events occurred after cancellation of exemption resulting to delay in transfer of the past accumulation. The said letter dated 11.07.2016 was also duly replied by the Provident Fund Authority under cover of its letter dated 16.11.2016 (Annexure P31 to the writ petition) where it is specifically mentioned that summons was issued for belated remittance of the contributions for the period 01.01.2014 to 30.09.2015.
13. In course of argument Mr. Majumder, learned advocate appearing for on behalf of the writ petitioner was very vocal with regard to the incidents occurred after cancellation of exemption but no plausible explanation could be given by him in his argument as to what prevented the writ petitioner in remitting the contributions in time for the aforementioned period.
14. In course of his argument Mr. Majumder placing reliance upon para 60 of the said Scheme submits that since the interest has already been credited into account of the Provident Fund Authority, the respondent no.1/authority is not justified to charge further interest under Section 7(Q) of the said Act.
15. It appears to this Court that such argument of Mr. Majumder is not convincing inasmuch as para 60 of the said Scheme deals with the 'accruing interest' of the beneficiary of the fund while Section 7(Q) of the said Act deals with the 'penal interest' which is being imposed upon the organization for belated remittance of the contributions. 11
16. As discussed supra, in absence of any plausible explanation from the side of the writ petitioner this Court finds no illegality and irregularity on the part of the respondent no.1/authority in imposing penal interest upon the writ petitioner on account of delayed remittance of the contributions.
17. In further considered view of this Court the damages as imposed under Section 14B of the said Act is also in accordance with law inasmuch as Clause 23 of Appendix A of para 27AA of Scheme made it clear that the employer and the BOT are equally liable for transfer of the funds within the time limit prescribed failing which it would make them liable for prosecution.
18. Before parting with, this Court intends to place its reliance upon the reported decision of Horticulture Experiment Station Gonikoppal, Coorg, vs. Regional Provident Fund Organization reported in (2022) 4 SCC 516 as cited from the respondent/authority wherein the Hon'ble Supreme Court expressed the following view:-
"Taking note of three-Judge Bench judgment of this Court in Union of India and Others v. Dharmendra Textile Processors and others (supra), which is indeed binding on us, we are of the considered view that any default or delay in the payment of EPF contribution by the employer under the Act is a sine qua non for imposition of levy of damages under Section 14B of the Act 1952 and mens rea or actus reus is not an essential element for imposing penalty/damages for breach of civil obligations/liabilities."12
19. In view of the discussion made hereinabove this Court thus finds no merit in the instant writ petition and the instant writ petition is thus dismissed along with all interim applications, if there be any.
20. Interim order, if there be any, stands hereby vacated.
21. However, there shall be no order as to costs.
22. Urgent Photostat certified copy of this judgement, if applied for, be given to the parties on completion of usual formalities.
(PARTHA SARATHI SEN, J.)