Orissa High Court
Bhubaneswar City Distribution ... vs Union Of India (Uoi) And Anr. on 19 September, 1997
Equivalent citations: (1998)IILLJ1044ORI
Author: Pradipta Ray
Bench: Pradipta Ray
JUDGMENT R.K. Patra, J.
1. The Bhubaneswar City Distribution Division represented through its Executive Engineer, Electrical Grid Corporation of Orissa Limited, Bhubaneswar is the petitioner. It has tiled this application under Articles 226 and 227 of the Constitution of India challenging the order at Annexure -5 passed by the Regional Provident Fund Commissioner, Orissa, Bhubaneswar under Section 14B of the Employees' Provident Funds & Miscellaneous Provisions Act. 1952 (in short, 'the Act') levying damages on it amounting to Rs. 10,80,125/- for the delayed payment of the statuary dues for the periods 1986-87, 1987-88, 1988-89, 1989-90 and 1990-91.
2. Shri Nayak, learned counsel for the petitioner raises the following contentions in support of the application:-
(i) The petitioner was not given reasonable opportunity of being heard in respect of the 1 delayed payment of dues for the period 1986-87 in as much as in the show cause notice at Annexure-2 there was no such allegation but in the impugned order damage has been imposed for the said period.
(ii) The entire proceeding leading to the passing of the impugned order is vitiated as it was not initiated within a reasonable period.
(iii) Delayed payment of the statutory dues ipso-facto does not invite levy of damages under Section 14B of the Act and the Commissioner in the impugned order has not: given any specific reason for levy of the damages.
(iv) The damages have been levied arbitrarily without following any principle.
(v) In any event, with effect from April 1, 1990 no damages can be levied on the petitioner in view of the Government decision communicated in letter No. 1107 dated; January 28, 1997 at Annexure-1 excluding the Orissa State Electricity Board from the purview of the Act.
Shri Samal, learned counsel appearing for the opposite parties contends as follows: -
(i) Although in the show cause notice at Annexure-2, there was no mention of delayed payment of dues for the period 1986-87, the petitioner was issued with the show cause notice for the said period in P.O. Case No. 197 of 1994 to which the petitioner submitted its show cause reply which indicates that the petitioner was given reasonable opportunity of hearing in respect of the delayed payment of dues for the period 1986-87 and by the impugned order, the Commissioner has disposed of both the cases i.e. P.D.Case Nos. 197 of 1994 for the period 1986-87 and 132 of 1994-95 relating to other periods.
(ii) The Act has not provided any period of limitation for initiation of the proceeding under Section 14B of the Act and the affidavit dated August 29, 1997 filed in the case on behalf of the Commissioner would show that the proceeding was initiated soon after the default was detected.
(iii) The petitioner having defaulted in making payments is statutorily liable to pay damages.
(iv) The damages have been levied as per the prescribed rate.
(v) The State Government's decision excluding the petitioner from the purview of the Act is not final as the opposite parties may challenge the same in appropriate forum.
3. We have carefully considered the rival contentions of the counsel for the parties.
Contention No. (i):-So far as the grievance of the petitioner that in the show cause notice at Annexure-2, there was no allegation of nonpayment/delayed payment of the dues for the period 1986-87 is concerned, we may state that the petitioner was admittedly given notice to show cause for the said period in P.D.Case No. 197 of 1994. The petitioner had also submitted his reply in the said case. By the impugned order, the Commissioner had disposed of two cases, i.e. P.O. Case Nos. 197 of 1994 and 132 of 1994-95. In view of this factual position, the contention of Shri Nayak on this score has no merit.
Contention No. (ii):- It is true that under the Act, there is no provision prescribing any period of limitation for initiation of proceeding for levy of damages under Section 14B of the Act. The law seems to be fairly settled that even though the statute does not provide for any limitation for exercise of power, the same should be exercised within a reasonable period. What would be the reasonable period would depend upon the facts and circumstances of each case. In the case at hand, in the affidavit dated August 29, 1997 it has been pleaded on behalf of the Commissioner that no unreasonable delay had occurred in initiating the proceedings in as much as the petitioner not only defaulted in making the payments but also defaulted in submitting the statutory forms which resulted in early detection. Besides this, for the entire State, there is one Commissioner functioning under the Act and there are more than five thousand establishments covered under the E.P.F. Scheme.
We are, however, not inclined to probe if unreasonable delay had occurred in initiating the proceedings against the petitioner for the reasons mentioned hereinafter.
Contention No. (iii) 6: Section 14B of the Act clearly provides that where an employer makes default in the payment of any contribution required under the Act, the Commissioner may recover from the employer by way of penalty of such damages provided that before levying and recovering of such damages, the employer shall the given a reasonable opportunity offering heard. A bare reading of the provision would indicate that delayed payment of the statutory dues as it had occurred in the present case, does not ipso-facto invite levy of damages. If the employer furnishes sufficient cause for the delay, the designated authority in a given case may not levy damages. In the impugned order, the Commissioner in paragraph-5 has observed " that the establishment had defaulted in payment of statutory dues without any valid reasons."
Shri Nayak, learned counsel for the petitioner submits that earlier different divisions were depositing the employees and employers' share with the Commissioner within the time stipulated but subsequently when the centralised payment scheme was introduced, the divisions could not deposit the share and as such, delay in deposit was unavoidable and was not intentional. This plea taken by the petitioner does not seem to have been considered by the Commissioner as is evident from the impugned order.
Contention No. (iv):- The break-up of damages levied on the petitioner (vide enclosure to Annexure-5 series) would show that for the period of delay ranging from six days to 562 days (from March, 1986 to March, 1990), 25% of arrears per annum has been imposed as penal damages. It is evidently arbitrary. May it be stated that previously damages were being imposed at a rate basing on circulars issued by the Commissioner under which damages up-to 100% was impossible. Such imposition being arbitrary, as there was no clear guideline paragraph 32-A has been inserted vide C.S.R. No. 521 dated August 16, 1991 (with effect from September 1, 1991) clearly indicating that damages may be recovered from the employer at the rates given below:
"Period of default Rate of damages (percentage of arrears per annum)
(a) Less than two months Seventeen
(b) Two months and above but less than four months.
Twenty-two
(c) Four months and above but less than six months Twenty-seven
(d) Six months and above Thirty-seven".
The aforesaid provision though is not strictly applicable to the case at hand, it indicates the mind of the Government that the rate of damages should not be arbitrary. On the facts and circumstances of this case and keeping in view that the Act is a beneficial legislation for the employees in factories and establishments covered under the Act and to avoid further litigation between the parties, we are inclined to -hold that the petitioner is liable to pay damages at the rate of 17 % per annum on the percentage of arrears.
Contention No.(v);- The Government letter No. 1107 dated January 28,1997atAnnexure-1 shows that on the direction issued by the Supreme Court, the Government decided that with effect from April 1, 1990 the provisions of the Act are not applicable to the erstwhile Orissa State Electricity Board. The said decision has to be taken as final since the opposite parties have not yet challenged the same in any court of law. This being the position, the impugned order so far as it relates to levy of damages from April 1, 1990 to February 1091 is liable to be quashed. We order accordingly.
4. In the result, the impugned order at An-nexure-5 and the calculation sheets at An-nexure-6 series are quashed. The Commissioner-opp. party No. 2 is directed to recalculate the damages for the period from March 1986 to March 31, 1990 at the rate of 17% per annum keeping in view the observations made above and pass appropriate order under Section 14B of the Act. As already stated, with effect from June 1, 1990 as the petitioner's establishment is excluded from the purview of the Commissioner is not competent to pass any order determining liability under Section 14B of the Act with effect from that date so long as the Government decision communicated in Letter No. 1107 dated January 28, 1997 at Annexure-1 stands unreversed by the competent Court of law.
5. Shri Nayak submits that if recalculation is made afresh pursuant to this order, the Commissioner may have to refund to the petitioner the excess amount deposited by it and as required under paragraph 60(2)(b) of the Employees' Provident Funds Scheme, 1952, interest is payable on the said amount of refund by the Commissioner. Shri Samal contends that no interest is payable on such claim of refund. We do not find any substance in the objection of Shri Samal in view of the clear provisions of the liability of the Commissioner to pay interest. Therefore, in the event it is ultimately found that the petitioner is entitled to refund, the Commissioner will pass appropriate order as required under paragraph 60 of the Employees' Provident Funds Scheme, 1952 and refund the amount found due together with the interest so determined. The Commissioner will complete this exercise within two months of receipt of this order.
6. The writ application is accordingly allowed. There would be no order as to costs.
Pradipta Ray, J.
7. I agree.