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1. This petition under Article 226 of the Constitution takes exception to the imposition of damages under Section 14-B of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952, hereinafter referred to as 'the Act'.

2. Petitioner is a private limited company registered under the Companies Act, 1956. It was incorporated on 1st February 1973 and is engaged in commercial and trading activities. It has an establishment and was covered under the Act in 1975. A code number was allotted to it and remittances representing the employer's and employees' contributions were made to the account kept with the respondent. In October 1976, the Petitioner set up another business being that of shipping and doing business in the name and style of Allan a Lines. Having a work-force of less than 50, the petitioner wanted to avail of infancy benefits under Section 16(1)(b) of the Act vis-a-vis the establishment for Allana Lines. However, on 24th October 1977, it approached the respondent for voluntary coverage under Section 1(4) of the Act. The Commissioner gave a reply which is at Exh.C, acceding to the request for allotment of a separate Code number for Allanna Lines, but making it clear that the said allotment was for the purposes of administrative convenience and that in his eyes Allana Sons Pvt. Ltd. and Allana Lines were parts of the same establishment and not separate or independent units. It was further made clear that Allana Lines would be deemed to be covered as from 1st December 1976. On 11th December 1984, the respondent addressed Exh.E to Allana Lines calling upon it to show-cause why an order under Section 14B of the Act should not be made against it for delaying the remittance of contributions for the months December 1976 to August 1982 - both inclusive. A reply was given to the show-cause notice by the petitioner describing the said reply to be for and on behalf of Allana Lines - a division of Allana Sons Pvt. Ltd. In the reply, which is atExh.F, various defences were taken and on 3rd January 1986, respondent passed the order impugned in this petition. Seven defences were raised by the petitioner and all of them were negatived. Commissioner split up the defaults into four categories. For the first category damages were imposed at rate 100% of the dues; for the second category at 70% of the dues; for the third category 5% and for the last category 2%. Petitioner was directed to pay Rs. 37,050.15 ps. representing the damages and the administrative charges. Failure to pay the amount within a fortnight of the reciept of the order by the petitioner was to give rise to action under Section 8 of the Act.

3. Petitioner's contention is that Allana Lines is an independent establishment having a separate and distinct business vis-a-vis that being done by Allana Sons Pvt. Ltd. This latter concern is a bare and simple commercial and trading establishment engaged in the sale and purchases of goods as also export and import thereof. Allana Lines on the other hand is a shipping concern. The two businesses are served by different staffs and with separate managers attending to each of them. The businesses have maintained separate accounts and even compilation of annual accounts is kept distinct and different. There is no nexus or connection between the two businesses. Neitheris one incidentally or even proximately connceted with the other. Therefore, the two represent different and separate establishments. Allana Lines was entitled to infancy period benefits of five years under Section 16(1)(b) of the Act and it was for this reason that it sought a separate Code number by its letter dated 24th November 1977. In writing that letter Allana Lines were foregoing the infancy benefit for near about 4 years. Seeking voluntary coverage did not mean that Allana Lines was admitting its being a department or branch of Allana Sons Private Ltd. It gave the remittances with a view to avoid unnecessary controversy. The show-cause notice given by the respondent had been properly replied to. In spite of this the respondent had thought it proper to impose damages under Section 14-B of the Act. No case for imposition of damages existed and in any case the order of the respondent was wholly arbitrary in that no explanation had been essayed for imposition of different rates for different periods. The order was an abuse of the power vested in the Commissioner under Section 14-B of the Act and deserve to be quashed.

4. Respondent in a return filed by an Enforcement Officer on his behalf, maintained that Allana Lines is a division, branch or unit of petitioner-company. That is why Section 2-A of the Act was attracted and that explained the respondent's communication at Exh.C. Petitioner had accepted this position and it did not lie in its mouth to contend that though entitled to the infancy benefit of Section 16(1)(b), it had foregone a substantial part of the advantage by seeking voluntary coverage. There had been delay in the remittances and a show-cause had been given to the petitioner. The order impugned was a proper exercise of jurisdiction vested in the respondent. The petition was without merit and deserved to be dismissed with costs.

6. If Allana Lines was not a department or branch of Allana Sons Pvt. Ltd. for the applicability of Section 2-A, it could not be faulted for delaying the remittances at least upto the time when it applied for the voluntary coverage. After the coverage had been obtained, it knew that the Act applied to it. The employees' contributions were recovered from the wages payable to the employees. Therefore, recoveries effected as from March 1978 had to be remitted with the stipulated time. Tested thus, the delays commencing from June 1978 with breaks and ending August 1982 would be liable for the imposition of damages. For the preceding period i.e. commencing from December 1976 and ending February 1978, the petitioner was not liable to impose any penalty. In the result, the petition is allowed. Rule is made partially absolute, by quashing damages imposed by the respondent for the period commencing December 1976 to February 1978 (both months inclusive). Parties to bear their own costs.