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Mr. Satyendra Kumar Singh, the learned Advocate appearing for the petitioner restricted his challenge to the impugned order levying interest under Section 7Q of the said Act to the legal grounds only. His first contention was that by issuing proper notification, in the official gazette under Section 17(1) of the said Act, the appropriate Government has granted exemption to the petitioner and as such the respondent provident fund authority cannot levy any interest under Section 7Q of the said Act on the petitioner. He strenuously urged that the impugned order passed by the respondent no. 3 levying interest upon the petitioner under Section 7Q of the Act is without jurisdiction. Mr. Singh further submitted, that although Section 7Q was inserted in the Act in the year 1988, but the said Section came into force with effect from July 01, 1997. He placed reliance on the following circular dated May 29, 1990 issued by the Central Board of Trustees of the Provident Fund.

Period of Delay Revised Interest- Total Existing rate Rates of chargeable of damages Damages under Section 7Q or less months but less than 4 months months but less than 6 months months Mr. Singh cited a decision of the Division Bench of the Delhi High Court in the case of M/s. Systems and Stamping & Anr. vs. Employees' Provident fund Appellate Tribunal & Ors. reported in 2008 LLR 485 wherein the above circular was considered. He contended that from the above circular, it is evident that for the purpose of quantification of damages under Section 14B of the Act, interest under Section 7Q is also taken into consideration and as such, it has been held in the said decision that the provident fund authorities cannot impose further interest under Section 7Q upon the defaulting establishment. However, Mr. Shiv Chandra Prasad, learned Advocate appearing for the respondent Provident Fund Authorities refuted the contentions of Mr. Singh by submitting that from the all provisions contained in the said Act, it is evident that even an establishment which has been granted exemption under Section 17(1) of the Act, is liable to pay interest under Section 7Q for delayed deposit of provident fund, pension and deposit linked insurance of its employees. Relying on the decisions of the Supreme Court in the cases of Organe Chemical Industries and Anr. vs. Union of India and Ors. reported in (1979) 4 SCC 573 and N.K. Jain and Ors. vs. C.K. Shah and Ors. reported in (1991)2 SCC 495 Mr. Prasad submitted that the Act was enacted for the benefit of the workmen/employees and the Act is a social welfare legislation. Therefore, according to him, the provisions contained in the Act must receive purposive construction and the provisions contained in Section 7Q is squarely applicable to the petitioner.

By reading the provisions contained in Section 7Q read with Section 17(1) of the Act it is evident that none of the said sections contain any provision excluding an exempted establishment from the liability to pay interest under Section 7Q of the Act. The language of Section 7Q is clear and unambiguous containing no provision exempting any establishment from the liability to pay interest on delayed deposit of the contribution to the Provident Fund or the Pension Fund or the Insurance Fund on account of its employees. Further, Clause (a) of Section 17(1A) is divided in two parts. The second part is more specific inasmuch as it has been clearly stated that where an employer contravenes and makes default in compliance with any of the said conditions and provisions or any other provisions of the Act, (this would obviously include Section 7Q) he shall be punishable under Section 14 as if the said establishment had not been exempted under Clause (a). Therefore, there is a deeming provision giving clear indication of application of Section 7Q of the Act to even an "employer" who has been granted exemption under Section 17(1) of the Act of an "exempted establishment". In support of this conclusion reliance may be placed on the decision of the Supreme Court in the case of Regional Provident Fund Commissioner vs. Hooghly Mills co. Ltd. reported in (2012) 2 SCC 489. By the said decision the Supreme Court, rejected the contention of the respondent in the said case that an establishment granted exemption under Section 17(1) of the Act, is not liable to pay damages under Section 14B of the Act, for delayed deposit of Provident Fund on account of its employees. After considering the provisions contained in Sections 14B and17 of the Act, the Supreme Court held that an establishment granted exemption under sub- section (1) or Section 17 is also liable to pay damages under Section 14B of the Act for delayed deposit of provident fund contribution of its employees. For the aforesaid reasons, I find no merit in the first contention of Mr. Singh, learned Advocate for the petitioner that the respondent no. 3 had no jurisdiction to pass the impugned order under Section 7Q of the Act against the petitioner on the ground that it was granted exemption under Section 17(1) of the Act.

So far as the decision the Division Bench of Delhi High Court in the case of M/s. Systems & Stamping (supra) cited by Mr. Singh on behalf of the petitioner, in the said case, the issue was as to whether even after Section 7Q came into effect July 01, 1997 the Provident Fund Authority could claim damages on the basis of the Circular dated May 29, 1950 quoted above to include an amount stated in Section 7Q of the Act. The Division Bench of the Delhi High Court held that after the provisions contained in Section 7Q came into effect, a defaulting employer is required to pay damages under Section 14B of the Act only at the rate specified in column 1 of the Table contained in the said circular dated September 25, 1990 and not interest amount under Section 7Q as laid down in column 3 of the said circular, otherwise, the employer would have to pay interest twice. The said decision upheld the liability of an establishment to pay interest under Section 7Q of the, after July 01, 1997, for delayed deposit of provident fund, pension and deposit linked insurance of its employees. Thus, the said Division Bench decision of the Delhi High Court, cited by Mr. Singh does not render any support to his contention that the petitioner is not liable to pay interest under Section 7Q of the Act or impugned order suffers from any illegality.