http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 24  

PETITIONER: ORGANO CHEMICAL INDUSTRIES & ANR.

       Vs.

RESPONDENT: UNION OF INDIA & ORS.

DATE OF JUDGMENT23/07/1979

BENCH: KRISHNAIYER, V.R. BENCH: KRISHNAIYER, V.R. SEN, A.P. (J)

CITATION:  1979 AIR 1803            1980 SCR  (1)  61  1979 SCC  (4) 573  CITATOR INFO :  R          1979 SC1918  (14)  R          1985 SC 613  (7)  D          1991 SC 101  (226)  RF         1991 SC1289  (16)

ACT:      Employees Provident  Fund and  Miscellaneous Provisions Act 1952-S.  14B and  Constitution of  India 1950,  Art. 14- Power to recover damages-Absence of appellate review-Whether violates Art.  14-Damages whether  to be credited to general revenues of State.      Words   &    Phrases-’Damages’   meaning   of-Employees Provident Fund and Miscellaneous Provisions Act 1952-S. 14B.      Interpretation   of   Statutes-A   policy   orientation interpretation  necessary  for  a  welfare  legislation-Each word, phrase  or sentence  to be  considered in the light of general purpose of the Act.

HEADNOTE:      The Provident  Fund  Act  1952  as  originally  enacted provided for  the institution  of compulsory  provident fund for employees  in factories  and other establishments. Under s. 4  of the Act the Central Government framed the Employees Provident Fund  Scheme, 1952 and s. 6 of the Act enjoined on every   employer to  make contributions to the Fund. Section 14  of   the  Act  provided  penalties  for  breach  of  the provisions of  the Act  viz., failure  to pay contributions, failure to  submit necessary returns etc., and the penalties extended to  various terms  of imprisonment extending upto 6 months or with fine upto Rs. 1000/-.      The Act  was amended  by Parliament  by Act XVI of 1971 and it  was re-entitled as the "Employees Provident Fund and Miscellaneous  Provisions   Act,  1952".  The  amending  Act inserted s.  6A in  the Act  for the  establishment  of  the Family Pension  Fund, and  in exercise  of  its  powers  the Central Government  created the  Family Pension Scheme, 1971 and para  9 of  the Scheme created a Family Pension Fund and provided that  from and  out of  contribution payable by the employer and  employees in each month under s. 6 of the Act, a part of the contribution shall be remitted by the employer to the Family Pension Fund.      The authorities  noticed in  the working of the Act and

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 24  

the Scheme that an employer could delay payment of provident fund  dues   without  any  additional  financial  liability, amended the  Act and inserted s. 14B for recovery of damages on the  amount of  arrears, the  object and purpose being to authorise the Regional Provident Fund Commissioner to impose exemplary  punitive  damages  and  thereby  to  prevent  the employers  from   making  the   defaults.  Section   14B  as originally enacted  provided, for imposition of such damages ’not exceeding  twenty  five  per  cent  on  the  amount  of arrears.’  This,   however,  did   not  prove   sufficiently deterrent and  the employers  were still  making defaults in making contributions  to  the  provident  fund  and  in  the meanwhile utilising  both their  own contribution as well as the employees’ contributions in their business. 62      The National  Commission on Labour, recommended that in order to  check the growth of arrears, penalties for default in payment  of provident  fund dues should be more stringent and that  the default  should be  made cognizable. This view was endorsed  by the Estimates Committee in its 116th Report to the  Parliament. Accordingly, the Act was further amended by Act  No. 40 of 1973, and the words "twenty five per cent" were omitted  from s.  14B and  the words "not exceeding the amount of arrears" were substituted.      The employer  a chemical industry failed to deposit the amount of Provident Fund and Family Pension Scheme dues with the Provident Fund Commissioner. The Regional Provident Fund Commissioner  after  issuing  a  show-cause  notice  to  the employer, imposed  a penalty  which was  equivalent  to  the amount payable  by the  petitioner company  and this penalty came to nearly Rupees one lakh.      The  employer   pleaded  before   the  Provident   Fund Commissioner that disputes between the partners of the firm, power cut of 60% necessitating purchase of generating set on loan basis  leading to  loss were the difficulties in making the contributions  in  time  and  these  were  circumstances beyond  their   control.   The   Regional   Provident   Fund Commissioner after  affording the petitioner the opportunity of a hearing, by a reasoned order, considered in detail each of the  grounds taken  in mitigation of the default and came to the conclusion that none of the grounds alleged furnished a legal  justification for the delay in making contributions in time and held that the petitioner had failed to carry out their  obligations   to  contribute   to  the  Fund  and  no convincing case having been made out to justify the delay in making the  deposits and  being ’habitual defaulters’, their case should  be severely  dealt with and held that it was  a fit case  for imposition  of punitive  damages to ensure due compliance of the provisions of the Act.      In the  writ petition to this Court it was contended on behalf of  the petitioners  (i) that  s. 14B  of the  Act is violative of  Art. 14  of the  Constitution  as  it  confers unguided, uncontrolled, and arbitrary powers on the Regional Provident Fund  Commissioner, (ii)  s. 14B  deals  with  the power to  recover damages  and the damages imposed must have co-relation with  the loss  suffered as  a result of delayed payment, (iii)  the period  of arrears varies from less than one  month   to  more  than  12  months  and  therefore  the imposition of  damages at  the flat rate of 100% for all the defaults  irrespective   of  their   duration  is  not  only capricious but  arbitrary; (iv)  the absence of provision of appeal leaves  the defaulter-employer with no remedy and (v) s. 14B  of the  Act has  not authorised  levy of  any  penal damages i.e. the penalty or fine but deals with the power to recover the damages.

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 24  

Dismissing the petition, ^ HELD : Per Krishna Iyer, J.      1. The Act a social security measure is a humane homage the State  pays to  Arts. 39 and 41 of the Constitution. The viability of  the  project  depends  on  the  employer  duly deducting the workers’ contribution from their wages, adding his  own  little  and  promptly  depositing  the  same.  The mechanics  of  the  system  will  suffer  paralysis  of  the employer fails to perform his function. The dynamics of this beneficial statute  derive its  locomotive  power  from  the funds regularly flowing into the statutory till. [69 B-C] 63      2. If  the  stream  of  contributions  were  frozen  by employers’ defaults  after due  deduction for  the wages and diversion  for  their  own  purposes  the  scheme  would  be damnified by traumatic starvation of the Fund. [69D]      3. ’Damages’ have a wider socially semantic connotation than pecuniary  loss  of  interest  on  non-payment  when  a social welfare  scheme suffers  mayhem  on  account  of  the injury. Law  expands concepts  to embrace social needs so as to become functionally effectual. [69E]      4. The  power to affect citizen’s rights, especially by way of punitive impost or damages for wrong doing, is quasi- judicial  in   character  even  if  exercised  by  executive echelons. This  Court  has  underscored  the  importance  of injecting  the  norms  of  natural  justice  when  statutory functionaries affect the rights of a person. [71A]      5. (i)  The imposition  of damages  on  a  party  after statutory hearing  is quasi-judicial  direction. This  Court has impressed  the requirements  of natural  justice on such jurisdiction  and  one  such  desideratum  is  spelling  out reasons for  the order  made, in  other  words,  a  speaking order. The  inscrutable  face  of  a  sphinx  is  ordinarily incongruous with  a judicial  or quasi-judicial performance. [71E]      (ii) An  imperative of  s. 14B is that the Commissioner shall give  reasons for  his order  imposing damages  on  an employer. Such  a guarantee  ensures rational  action by the officer,  because   reasons  imply   relevant  reasons,  not capricious ink and the need for cogency rivets the officer’s mind to  the pertinent  material on  record. Moreover,  once reasons are  set down,  the order  readily exposes itself to the writ  jurisdiction of  the court  under Art. 226 so that perversity, illiteracy,  extraneous influence, malafides and other blatant infirmities straight get caught and corrected. [71F-G]      6. A  high official hears and decides. The maximum harm is pecuniary  liability limited  by the  statute.  The  writ jurisdiction is  ready to  review glaring errors. Under such circumstances the  needs of  the factual  situation and  the legal milieu  are such  that the absence of appellate review in no  way militates  against the justice and reasonableness of the  provision. The  argument of  arbitrariness  on  this score is  untenable. The  section is  not bad, though action under the  section can  be challenged  in writ  jurisdiction when infirmities which attract such jurisdiction vitiate the order. [71 E-F]      7. The  argument that  absent detailed  guidelines, the law is  void, is not tenable. What is not explicit may still be implicit.  What is  not articulated at length may be spun out from  a  single  phrase.  What  is  not  transparent  in particularised provisions  may be  immanent in the preamble, scheme, purpose  or subject-matter  of the Act. What is real is  not   only  the  gross  but  also  the  subtle.  Such  a

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 24  

perspective dispels  the submission  that s.  14B is  bad as uncircumscribed and over-broad. [72H-73A]      8. The  word ’damages’  under s.  14B has  a wealth  of implications  and   limitations,  sufficient   to  serve  as guideline in  fixing the  impost. The conceptual limitations of ’damages’  serve as guideline and barricade the exercise. The  Commissioner   cannot  award   anything  more  than  or unrelated to  ’damages’. Nor  can he  go beyond  100% of the amount   defaulted.   Such   limitations   without   further guidelines are  not uncommon  in  taxing  laws  to  penalise defaults and suppressions. [73B, H, 74A] 64      C.I.T., M.P.  v. Radhakrishan,  [1979] 2 SCC 249; P. N. Kaushal v.  Union of India, etc., [1978] 3 SCC 558; referred to.      9. The  expression ’damages’ is neither vague nor over- wide. Its precise import in a given context is not difficult to discern.  A plurality  of variants stemming out of a core concept is  seen in  such words  as  actual  damages,  civil damages,  compensatory   damages,   consequential   damages, contingent  damages,  continuing  damages,  double  damages, excessive  damages,   exemplary  damages,  general  damages, irreparable damages, pecuniary damages, prospective damages, special damages,  speculative damages,  substantial damages, unliquidated damages.  But the  essentials are (a) detriment to one by the wrong doing of another, (b) reparation awarded to the  injured through  legal remedies  and (c) its quantum being  determined   by  the  dual  components  of  pecuniary compensation for  the loss  suffered and  often not always a punitive addition  as a  deterrent-cum-denunciation  by  the law. [74 B-D]      10. ’Exemplary  damages’ are  damages on  an  increased scale, awarded  to the  plaintiff over  and above  what will barely compensate him for his property loss, where the wrong done to  him was  aggravated by  circumstances of  violence, oppression, malice,  fraud or  wanton and  wicked conduct on the part  of the  defendant and  are intended  to solace the plaintiff for  mental anguish  laceration of  his  feelings, shame, degradation  or other  aggravations of  the  original wrong,  or  else  to  punish  the  defendant  for  his  evil behaviour or  to make  an example  of him,  for which reason they are  also called  "punitive" or  "punitory" damages  or "vindictive" damages, and (vulgarly) "smart-money". [74E-F]      11. The  power conferred  to award damages is delimited by the  content and contour of the concept itself and if the Court finds  the Commissioner  travelling beyond,  the  blow will fall.  Section 14B is therefore good for these reasons. [74G]      12. A  policy oriented  interpretation when  a  welfare legislation  falls  for  determination,  especially  in  the context of  a developing country, is sanctioned by principle and  precedent   and  is   implicit  in   Art.  37   of  the Constitution, since the judicial branch is, in a sense, part of the  State. So  it is reasonable to assign to ’damages’ a larger, fulfilling meaning. [75E]      14. The  composite idea of ’damages’ includes more than pecuniary compensation.  Moreover, the  injured party is the Board of  trustees who  administer the  Fund. That  Fund not merely loses  the interest  consequent on the nonpayment but receives a  shock in  that its  scarce resources are further famished by employers’ default. There is great social injury to the  scheme when employers default in number. So the lash of the  law is delivered when its object is frustrated. More denunciatory is  the fact that the employer makes deductions from the  poor wages  of the  workers and diverts even those

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 24  

sums for  his private  purposes by  failing to  make  prompt remittances. Thus  default in contributions is compounded by ’embezzlement, as  it were.  Naturally, damages will take an exemplary character  and inflict  a heavy  blow on the shady defaulter. [75F-G]      15. The  damages are  levied  under  the  Act  and  the Authority  levying   damages  is   created  by  Act  and  is responsible for  the collection of contributions and damages for the  Fund. It  is not  possible to  dichotomise and hold that the  contributions go  into the  Provident Fund but the rest of the damages go 65 into the  general revenues.  This is  not a  fine under  the criminal law. Nor is it recovery on behalf of the Government of amounts  under a general statute for purposes of revenue. A special  statute creating a special fund, empowers special officers to  recover specially  designated contributions and special damages  for default.  The entire sum belongs to the fund except  perhaps the  administrative charges  which  are usually separately  indicated.  It  is  wrong  therefore  to credit the damages into the general revenues. To that extent it is  a breach of the statutory scheme and a deprivation of what belongs to the workers’ Provident Fund. If any State is diverting the damages under the Act into its own coffers, it is improper. [76G-77B]      16. ’Damages’ as imposed by s. 14B, includes a punitive sum quantified  according to  the circumstances of the case. In  ’exemplary   damages’  this   aggravating   element   is prominent.  Constitutionally  speaking  such  a  penal  levy included in  damages is perfectly within the area of implied powers and the legislature may, while enforcing collections, legitimately  and   reasonably  provide   for  recovery   of additional sums  in the  shape of  penalty so as to see that avoidance is  obviated. Such  a penal levy can take the form of damages. [75H-76B]      Per Sen,  J. 1. Section 14B of the Employees’ Provident Funds and  Miscellaneous Provisions Act, 1952 was enacted to deter the  employers and to thwart them from making defaults in carrying out their statutory obligations to make payments to the Provident Fund. The object and purpose of the Section is to  authorise the Regional Provident Fund Commissioner to impose exemplary  or punitive damages and thereby to prevent employees from  making defaults. The intention in increasing the quantum of damages. namely, "not exceeding the amount of arrears"  is   to  invest   the  Regional   Provident   Fund Commissioner with  power to  impose such damages so that the employer would  not find  it profitable  to make defaults in making payments. [82D-G]      2. The  word "damages"  in Section 14B of the Employees Provident  Funds  and  Miscellaneous  Provisions  Act,  1952 cannot be  read in isolation nor can section 14B be read out of context.  The word  has to  be given  its true meaning in consonance with the objects and purposes of the Legislation. It must  take its  colour and  content from its context. The woed ’damages’  in section  14B, in  the context in which it appears, means  penal damages  i.e. a penalty and not merely actual loss  to the beneficiaries. Otherwise the very object of the Legislation would be frustrated. [87D]      3. The imposition of damages under section 14B serves a two-fold purpose.  It  results  in  damnification  and  also serves  as   a  deterrent.  The  predominent  object  is  to penalise, so  that an  employer may  be thwarted or deterred from making any further defaults. [87E]      The expression "damages" accruing in Section 14B is, in substance, a  penalty imposed on the employer for the breach

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 6 of 24  

of the  statutory obligation.  The object  of imposition  of penalty u/s  14B is  not merely "to provide compensation for the employees".  The imposition  of damages  u/s 14B  serves both the  purposes.  It  is  meant  to  penalise  defaulting employer as  also to  provide reparation  for the  amount of loss suffered  by the employees. It is not only a warning to employers in general not to commit a breach of the statutory requirement of section 6 of the Act, but at the same time it is meant to provide compensation 66 or redress  to the  beneficiaries  i.e.  to  recompense  the employees for  the loss  sustained by them. The damages need not bear any relationship to the loss which is caused to the beneficiaries under the scheme. [87F-G]      4. Each  word, phrase or sentence must be considered in the light  of the  general purpose of the Act itself. A bare mechanical interpretation  of the words devoid of concept or purpose will reduce most of legislation to futility. It is a salutary rule  well established  that the  intention of  the legislature must be found by reading the statute as a whole. [89E]      The word  "damages" in  section 14B  is related  to the word "default".  The words  used in section 14B are "default in the  payment of  contribution" and,  therefore  the  word "default" must  be construed  in the light of Para 36 of the Employees’ Provident  Fund Scheme, 1952, which provides that the payment  of contribution  has got to be made by the 15th of the following month and, therefore, the word "default" in section 14B  must mean  "failure in performance" or "failure to act".  At the same time the imposition of damages u/s 14B is to  provide reparation for the amount of loss suffered by employees. And this is in accord with the intent and purpose of the legislation. [87H-88B]      5. In  assessing the  damages, the  Regional  Provident Fund Commissioner is not only bound to take into account the loss to  the beneficiaries,  but also  the  default  by  the employer in  making his  contributions, which occasioned the infliction of  damages. The entire amount of damages awarded under section  14B,  except  for  the  amount  relatable  to administrative charges,  must necessarily  be transferred to the Employees’  Provident Fund  and the Family Pension Fund. The employees would get damages commensurate with their loss i.e. the  amount of  interest on  delayed payments,  but the remaining amount  would go to augment the ’Fund’ constituted under section  5, for  implementing the  scheme of  the Act. [89G-90A]      6. Section  14B of  the Act does not confer unguided or uncontrolled discretion  upon the  Regional  Provident  Fund Commissioner to  impose such  damages "as he may think fit", and, is,  therefore, not  violative of  Article  14  of  the Constitution. [83G]      It cannot be said that there are no guidelines provided for fixing  the  quantum  of  damages.  The  guidelines  are provided in the Act and its various provisions, particularly in the  word "damages" the liability for which under Section 14B arises on the ’making of default". The word "damages" in Section 14B lays down sufficient guidelines for the Regional Provident Fund Commissioner to levy damages. [83G-84B]      7. The power of Regional Provident Fund Commissioner to impose damages under section 14B is quasi-judicial function. It must be exercised after notice to the defaulter and after giving him  a reasonable  opportunity of  being  heard.  The discretion to  award damages  could be  exercised within the limits fixed  by the  statute, by  taking into consideration various factors,  namely, the number of defaults, the period

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 7 of 24  

of delay, the frequency of defaults and the amount involved. Having  regard   to  the   punitive  nature   of  the  power exercisable under  Section 14B  and  the  consequences  that ensue therefrom,  an order  under  Section  14B  must  be  a "speaking order"  containing the  reasons in  support of it. [83H-84A] 67      Commissioner of  Coal Mines  Provident Fund, Dhanbad v. J. Lalla & Sons, [1976] 3 S.C.R. 365; referred to.      8. Mere  absence of  provision for  an  appeal  in  the Employees Provident  Fund and  Miscellaneous Provisions Act, 1952  does  not  imply  that  the  Regional  Provident  Fund Commissioner, is  invested with  arbitrary  or  uncontrolled power, without any guidelines. [85B]      The conferral  of power  to award damages under section 14B is to ensure the success of the measure. It is dependent on existence  of certain facts, there has to be an objective determination, not subjective. [85C]      The Regional  Provident Fund  Commissioner has not only to apply  his mind to the requirements of Section 14B but is cast  with  the  duty  of  making  a  speaking  order  after conforming to the rules of natural justice. [85C]      The absence  of a  provision for appeal or revision can be of  no consequence.  Where the  discretion to  apply  the provisions  of   a  particular  statute  is  left  with  the Government or  one of  the  highest  officers,  it  will  be presumed that the discretion vested in such a high authority will not be abused. The Government or such authority is in a position to  have all the relevant and necessary information in relation  to each  kind of  establishment, the  nature of defaults made  by the  employer and  the necessity to decide whether the  damages to  be imposed  should be  exemplary or not. When  the power  has to  be exercised  by  one  of  the highest officers,  the fact that no appeal has been provided for  "is   a  matter  of  no  moment".  There  is  always  a presumption that  public officials  would  discharge,  their duties honestly  and in  accordance with  the rules  of law. [85G, D-F]      Mohammad Ali  and Ors.  v. Union  of  India  and  Anr., [1963] Suppl.  1 SCR  993; K.  L. Gupta  v. Bombay Municipal Corporation, [1968]  1 SCR  274; Chintalingam  and  Ors.  v. Govt. of  India and  Ors. [1971]  2  SCR  871  and  Pannalal Binjraj v. Union of India, [1957] SCR 233; followed.      9. In  the instant  case, the petitioners are guilty of suppressio  veri   for  deliberate   concealment  of   facts pertaining to the earlier defaults and the attendant levy of damages under  s. 14B.  The petitioners  instead  of  making their contributions,  deliberately made  willful defaults on one pretext  or another  and have been utilising the amounts deducted from  the wages of their employees, including their own contributions  as well  as  administrative  charges,  in running their  business. Therefore, this was pre-eminently a fit case  for imposition  of punitive  damages to ensure due compliance of the provisions of the Act. [79F, G, 80C]

JUDGMENT:      ORIGINAL JURISDICTION : Writ Petition No. 4319 of 1978.      (Under Article 32 of the Constitution)      Bardridas  Sharma   and  K.   R.  R.   Pillai  for  the Petitioners.      Soli J.  Sorabjee, Addl.  Sol. Genl.  of India  and  A. Subhashini for the Respondents.      The following Judgments were delivered :

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 8 of 24  

68      KRISHNA IYER, J.-Having had the advantage of reading my learned brother’s judgment I should have stopped mine with a single sentence,  following the example of Diplock, L.J. who in Hughes  v. Hughes(1)  merely said: ’For the reasons given by my  brother Harman  I would  dismiss the  appeal’. But  I respect  brother   Sen’s   request   that   my   concurrence notwithstanding I  should, in  a separate opinion, highlight the  quintessential   aspects  and   reinforce   the   legal conclusions  which   are   interpretatively   decisive   and constitutionally validatory  of Section 14B of the Employees Provident  Fund   and  Miscellaneous  Provisions  Act,  1952 (briefly, the  Act). That  is the  apology for this separate judgment of  mine. Why  an apology?  Because  exordiums  are opprobriums and  socio-economic apercus  are  anathemas  for some judicial  psyches; and  I should have, for that reason, abandoned  my  habitual  deviance  from  the  orthodox  norm idealised by  some that  a judicial  judgment shall be a dry statement of  facts, drier presentation of law and logomachy and  driest  in  least  communicating  to  the  law  abiding community, which  is the  court’s constituency,  the glow of life  giving   principles  rooted  in  social  sciences  and translated  into   juristic  rules   which  legitimate   our institution functionally.  The  last  consideration,  in  my humble view,  is the elan vital of the justicing process and jettisoning it  is judicial self-alienation from the nation. Of course, minds differ as rivers differ and habits die hard      The central  issues in  this civil  appeal are  whether Sec. 14B of the E.P.F. and M.P. Act is unconstitutional and, if  not,   what  is   the  semantic-juristic  sweep  of  the expression  ’damages’   used  therein.   Other   vital   but peripheral  matters  may  be  side-stepped  for  the  nonce, especially because my learned brother has neatly and rightly dealt with  them. The  factual setting  of the case, without which  the   legal  contentions  argued  lose  their  lucent relevance, have  been stated by my brother Sen, J. but I may project them in a single sentence to help focus on the vires of Sec.  14B and  the conceptual  width of  ’damages’ in the given context.  Is the imposition by the ’speaking order’ of the Regional  Provident Fund  Commissioner, Chandigarh, of a heavy penalty  of Rs. 94,996.80 by way of damages under Sec. 14B  of   the  E.P.F.  and  M.P.  Act  1952  upon  the  writ petitioners-employers, for  chronic and unjustified defaults in  remittances  of  the  provident  fund  contributions  of themselves  and  their  employees  legally  sustainable,  if obviously in  excess  of  the  pecuniary  loss  of  interest attributable to  the non-payment.  Briefly and  broadly  and lopping off  aspects unnecessary for this case the scheme of the  Act  is  that  each  employer  and  employee  in  every ’establishment’ falling within the Act do contribute 69 into a  statutory fund a tittle, viz. 6 1/4% of the wages to swell into  a large  Fund wherewith  the workers who toil to produce the nation’s wealth during their physically fit span of life  may be  provided some  retiral benefit  which  will ’keep the  pot boiling’  and some  source wherefrom loans to face unforeseen  needs may be obtained. This social security measure is a humane homage the State pays to Articles 39 and 41 of the Constitution. The viability of the project depends on the  employer duly  deducting the  workers’  contribution from  their  wages,  adding  his  own  little  and  promptly depositing the nickle into the chest constituted by the Act. The mechanics  of the  system will  suffer paralysis  if the employer fails to perform his function. The dynamics of this beneficial statute  derives its  locomotive power  from  the

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 9 of 24  

funds regularly flowing into the statutory till.      The pragmatics  of the  situation is that if the stream of contributions  were frozen  by employers’  defaults after due deduction  from the  wages and  diversion for  their own purposes,  the   scheme  would  be  damnified  by  traumatic starvation of  the Fund, public frustration from the failure of the  project and  psychic demoralisation of the miserable beneficiaries when  they find  their wages  deducted and the employer get  away with  it even  after default  in his  own contribution  and   malversation  of   the  workers’  share. ’Damages’ have  a wider  socially semantic  connotation than pecuniary loss  of interest  on non-payment  when  a  social welfare scheme  suffers mayhem on account of the injury. Law expands concepts  to embrace  social needs  so as  to become functionally effectual.      We may  read  Sec.  14B  and  Rule  38  to  vivify  the discussion:           "14B. Power  to recover damages: Where an employer      makes defaults  in the  payments of any contribution to      the Fund  (the Family Fund or the Insurance Fund) or in      the  transfer   of   accumulations   required   to   be      transferred by  him under sub-section (2) of Section 15      [for sub-section  (5) of  Section 17] or in the payment      of any  charges payable  under any  other provision  of      this Act  or of  (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   from  the  employer  such  damages,  not      exceeding the  amount of arrear, as it may think fit to      impose.           Provided that  before levying  and recovering such      damages, the  employer  shall  be  given  a  reasonable      opportunity of being heard." 70           "38  Mode   of  payment  of  contribution-(1)  The      employer shall,  before paying  the member his wages in      respect of  any period  or part  of  period  for  which      contributions  are   payable,  deduct   the  employee’s      contribution from his wages which together with his own      contribution as  well as  an administrative  charge  of      such percentage  of the total employer’s and employee’s      contribution as may be fixed by the Central Government,      he shall  within fifteen  days of  the close  of  every      month’s pay  to the  Fund by  separate Bank  drafts  or      cheques on  account of contributions and administrative      charge......           (2)   The    employer   shall   forward   to   the      Commissioner, within  fifteen days  of the close of the      month, a monthly consolidated statement in such form as      the Commissioner  may specify  showing recoveries  made      from  the   wages  of  each  employee  and  the  amount      contributed by  the employer  in respect  of each  such      employee".      Counsel   for    the   petitioners   has   turned   the constitutional fusillade  on Sec.  14B by  charging it  with many-sided, in-built  arbitrariness and  therefore liable to be fatally shot down by Art. 14. The provision is simple and the contention  is familiar. The offending words of Sec. 14B are that  ’the Provident  Fund Commissioner may recover from the employer  such damages,  not  exceeding  the  amount  of arrear, as  it thinks  fit to  impose.’ Within  the limit of 100%, the enforcing agency is vested with naked and unguided power to  inflict any  quantum of  damages as he fancies and

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 10 of 24  

this  blanket  authority  is  instinct  with  discriminatory possibility, a  vice to  which Art.  14 is very allergic. No reasons need  be given, no appellate or revisional review is prescribed and no judicial qualification is required for the Commissioner. This  tiny statutory  tyrant must  be slain if equal  justice  under  the  law  were  to  be  part  of  our fundamental  rights   package.   So   runs   the   argument- traditional,  attractive   and   near-lethal.   Indeed,   if executive fiats released from legal restraints, were free to run amok,  our freedoms  would be  frothy boasts  ! Sedulous scrutiny of  this submission  of counsel  is our solemn duty since I share with him the pensive thought that arrogance of power dressed  in little,  brief authority is the undoing of our  constitutional  order.  And  yet,  here  the  mini-nero portrait is too naive to meet with approval.      A shower  of precedents  has rained  on Art. 14 but the cardinal   principles   have   sunk   so   deep   into   the constitutional consciousness  of the juristic community that recapitulation of  citations is  an act of supererogation. 1 desist from it. 71      The power to affect citizen’s rights, especially by way of punitive  impost or  damages for  wrong doing,  is quasi- judicial  in   character  even  if  exercised  by  executive echelons. This  Court  has  underscored  the  importance  of injecting  the  norms  of  natural  justice  when  statutory functionaries affect the rights of a person. The most recent of the cases which lay bare the elementals of this branch of jurisprudence are:  (1)Siemens Engineering and Manufacturing Co. of India Ltd. v. Union of India(1); (2) Maneka Gandhi v. Union of  India(2) and (3) Mohinder Singh Gill & Anr. v. The Chief Election Commissioner, New Delhi and Ors.(3)      In Siemens’ case this Court observed:      "It is now settled law that where an authority makes an      order in  exercise of a quasi-judicial function it must      record its  reasons in  support of  the order it makes.      Every  quasi-judicial   order  must   be  supported  by      reasons. That  has been  laid down  by a  long line  of      decisions of  this Court ending with N. M. Desai v. The      Testeels Ltd. & Anr.(4)"      Fair play  in Administration is a finer juristic facet, at once fundamental and inviolable and natural justice is an inalienable functional  component  of  quasi-judicial  acts. Here, it  is indubitable that the imposition of damages on a party  after   a  statutory   hearing  is  a  quasi-judicial direction. This  Court has  impressed  the  requirements  of natural  justice   on  such   jurisdictions  and   one  such desideratum is  spelling out  reasons for the order made, in other words,  a speaking  order. The  inscrutable face  of a sphinx is  ordinarily incongruous  with a judicial or quasi- judicial performance.  It is,  in my  view, an imperative of Sec. 14B  that the  Commissioner shall  give reasons for his order imposing damages on an employer. The constitutionality of the  power, tested  on the  anvil of  Articles 14 and 19, necessitates this  prescription. Such  a  guarantee  ensures rational  action  by  the  officer,  because  reasons  imply relevant reasons,  not  capricious  ink  and  the  need  for cogency rivets  the officer’s mind to the pertinent material on record.  Moreover, once  reasons are  set down, the order readily exposes itself to the writ jurisdiction of the court under Article 226 so that perversity, illiteracy, extraneous influence, malafides  and other blatant infirmities straight get caught and corrected. Thus, viewing the situa- 72 tion from  the  conspectus  of  requirements  and  remedies,

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 11 of 24  

statutory  agencies  may  be  inhibited  and  the  scare  of arbitrary behaviour  allayed once reasons are required to be given.      Nor is  the plea  of absence of guidelines or appellate review sound  enough to subvert the validity of Sec. 14B. It is attractive  to hear  the argument that an order passed by an authority,  which becomes infallibly final in the absence of an appeal or revision, is apt to be arbitrary and bad. An appeal is  a desirable  corrective but  not an indispensable imperative and  while its  presence is  an  extra  check  on wayward orders  its absence is not a sure index of arbitrary potential. It  depends on  the nature of the subject matter, other available  correctives,  possible  harm  flowing  from wrong orders and a wealth of other factors.      If a  death sentence  is allowed  to become  conclusive without so  much as  a single appeal, Articles 14 and 21 may imperil such  a provision  but if  a fine of Rs. 5/- imposed for a  minor offence  in a  summary trial  by a  First-Class Magistrate is  imparted a finality, subject, of course, to a constitutional remedy  in the  event of  perverse or  patent illegality we  may still  uphold that provision with an easy constitutional conscience. In the present case, a hearing is given to  the affected party. Reasons have to be recorded in the order  awarding damages.  The writ jurisdiction is ready to review  glaring errors.  The maximum  harm  is  pecuniary liability limited  by the statute. A high official hears and decides. Under  such circumstances  the needs of the factual situation and  the legal milieu are such that the absence of appellate review in no way militates against the justice and reasonableness   of   the   provision.   The   argument   of arbitrariness on this score is untenable. The section is not bad. Maybe,  action under  the section  may be challenged in writ jurisdiction  provided infirmities  which attract  such jurisdiction vitiate the order.      The bogie of absence of guidelines in the provision and consequential possibility  of the  authority running berserk or acting  humanistically does  not frighten. Of course, the more bereft of explicit guidelines a statutory power is, the more searching must be the judicial invigilation to discover hidden injustice  and masked  mala fides.  Even so,  let  us examine the ground that, absent detailed guidelines, the law is void. What is not explicit may still be implicit. What is not articulated  at length  may be  spun out  from a  single phrase. What is not transparent in particularised provisions may be immanent in the preamble, scheme, purpose or subject- matter of  the Act.  What is  real is not only the gross but also the subtle, if I may strike a deeper note. Such a pers- 73 pective dispels  the  submission  that  s.  14B  is  bad  as uncircumscribed and over-broad.      The power  under the Section permits award of ’damages’ and that  word has a wealth of implications and limitations, sufficient to  serve as  guideline in  fixing the impost. In Arvinder Singh’s  case(1) this  Court  upheld  an  otherwise unbridled power  to levy  tax  by  importing  a  variety  of factors  gathered  from  the  statute  and  relied  on  many precedents. Likewise,  in Radhakrishan’s  case(2) this Court rejected the plea that a power in the Commissioner to choose one of  the two  remedies was  invalid  in  the  absence  of guidelines and observed, on a review of the case-law:           "When power  is conferred  on high and responsible      officers they  are expected  to act  with  caution  and      impartiality while  discharging their  duties  and  the      circumstances under  which they  will choose  either of      the remedies  available should  be left  to  them.  The

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 12 of 24  

    vesting of  discretionary power  in the state or public      authorities or  an officer  of high standing is treated      as a  guarantee that  the power will be used fairly and      with a sense of responsibility.      It has  been held  by the  Privy Council in Province of      Bombay v.  Bombay Municipal Corporation (3), that every      statute must be supposed to be for public good at least      in intention  and therefore  of few laws can it be said      that the  law confers  unfettered  discretionary  power      since  the  policy  of  law  offers  guidance  for  the      exercise of discretionary power". Although  our  democratic  ethos  is  incongruous  with  the assumption that  highly paid  officials are more responsible than low-paid  minions, the  jurisprudence of  power must be applied workably  and not  untouched by reality. More to the point is the decision in Kaushal’s case(4). There this Court accepted the submission that the seemingly naked power under Sec.  59  of  the  Punjab  Excise  Act  was  guided  by  the requirement that  it was  to be  exercised  for  control  of consumption of intoxicants. (The whole scheme of the statute proclaims its  purpose of  control in  time  and  space  and otherwise  observed   the  Court).   Here   the   conceptual limitations of ’damages’ serve as guideline and barricade 74 the exercise.  The Commissioner  cannot award  anything more than or unrelated to ’damages’. Nor can he go beyond 100% of the  amount  defaulted.  Such  limitations  without  further guidelines are  not uncommon  in  taxing  laws  to  penalise defaults and suppressions.      What do  we mean by ’damages’? The expression ’damages’ is neither  vague  nor  over-wide.  It  has  more  than  one signification but  the precise  import in a given context is not difficult  to discern.  A plurality of variants stemming out of  a core  concept is  seen in  such  words  as  actual damages, civil  damages, compensatory damages, consequential damages,  contingent  damages,  continuing  damages,  double damages,  excessive   damages,  exemplary  damages,  general damages, irreparable damages, pecuniary damages, prospective damages, special  damages, speculative  damages, substantial damages, unliquidated  damages. But  the essentials  are (a) detriment  to   one  by   the  wrong-doing  of  another  (b) reparation awarded to the injured through legal remedies and (c) its  quantum being  determined by the dual components of pecuniary compensation  for the loss suffered and often, not always, a  punitive addition as a deterrent-cum-denunciation by the  law. For instance, ’exemplary damages are damages on an increased  scale, awarded to the plaintiff over and above what will barely compensate him for his property loss, where the wrong  done to  him was  aggravated by  circumstances of violence, oppression,  malice, fraud,  or wanton  and wicked conduct on  the part  of the  defendant, and are intended to solace the  plaintiff for  mental anguish, laceration of his feelings, shame,  degradation, or  other aggravations of the original wrong, or else to punish the defendant for his evil behavior or to make an example of him, for which reason they are  also   called  "punitive"   or  "punitory"  damages  or "vindictive" damages,  and  (vulgarly)  "smart-money".  (See Black’s Law  Dictionary, 4th  Edition  p.  467/468).  It  is sufficient for  our present  purpose to state that the power conferred to  award damages  is delimited by the content and contour of  the concept  itself and  if the  Court finds the Commissioner travelling beyond, the blow will fall. Sec. 14B is good for these reasons.      The  further   submission   is   that   damages   being compensatory in  character could not exceed the interest the

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 13 of 24  

amount defaulted  would have  carried during  the period  of delay. The  respondent has  gone beyond  the mere quantum of interest and  has rounded  it off  to a  sum  equal  to  the defaulted  contribution.   Is   this   excess   an   illegal extravagance or  a legal  levy  ?  This  turns  on  what  is ’damages’ in the setting of the Act. 75      The measure  was enacted  for the  support of  a weaker sector viz.  the  working  class  during  the  superannuated winter of  their  life.  The  financial  reservoir  for  the distribution  of   benefits  is   filled  by   the  employer collecting, by deducting from the workers’ wages, completing it with  his own  equal share and duly making over the gross sums to  the Fund.  If the  employer neglects  to  remit  or diverts the  moneys for alien purposes the Fund gets dry and the retirees  are denied  the meagre  support when they most need  it.  This  prospect  of  destitution  demoralises  the working class  and frustrates  the hopes  of  the  community itself. The  whole  project  gets  stultified  if  employers thwart contributory  responsibility and  this wider fall-out must colour the concept of ’damages’ when the court seeks to define its  content in  the special setting of the Act. For, judicial  interpretation  must  further  the  purpose  of  a statute.  In   a  different   context  and   considering   a fundamental treaty,  the European  Court of Human Rights, in the Sunday Times Case, observed :           "The Court  must interpret  them  in  a  way  that      reconciles  them   as  far  as  possible  and  is  most      appropriate in order to realise the aim and achieve the      object of the treaty".      A  policy-oriented   interpretation,  when   a  welfare legislation  falls  for  determination,  especially  in  the context of  a developing country, is sanctioned by principle and precedent and is implicit in Art. 37 of the Constitution since the judicial branch is, in a sense, part of the State. So it  is  reasonable  to  assign  to  ’damages’  a  larger, fulfilling meaning.      What are the strands which make the fabric of ’damages’ under the  Article? I have stated earlier that the composite idea of ’damages’ includes more than pecuniary compensation. Moreover, the  injured party  is the  Board of  Trustees who administer the Fund. That Fund not merely loses the interest consequent on  the non-payment  but receives a shock in that its scarce  resources are  further  famished  by  employers’ default. There  is great  social injury  to the  scheme when employers default  in numbers.  So the  lash of  the law  is delivered when  its  object  is  frustrated.  What  is  more denuciatory is  the fact  that the employer makes deductions from the poor wages of the workers (and makes them suffer to that extent)  and diverts  even those  sums for  his private purposes  by  failing  to  make  prompt  remittances.  Thus, default in  contributions is  compounded by embezzlement, as it were, Naturally, damages will take an exemplary character and inflict a heavy blow on the shady defaulter.      I am  clearly of the view that ’damages’, as imposed by Section 14B, included a punitive sum quantified according to the circumstances of 76 the case. In ’exemplary damages’ this aggravating element is prominent. Constitutionally  speaking,  such  a  penal  levy included in  damages is perfectly within the area of implied powers and the legislature may, while enforcing collections, legitimately  and   reasonably  provide   for  recovery   of additional sums  in the  shape of  penalty so as to see that avoidance is  obviated. Such  a penal levy can take the form

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 14 of 24  

of damages because the reparation for the injury suffered by the default  is more than the narrow computation of interest on the contribution.      This Court  has  in  R.S.  Joshi,  Sales  Tax  Officer, Gujarat and  Others v.  Ajit Mills  Limited  and  Another(1) considered the constitutionality of a penal forfeiture and a bench of seven judges in that case has upheld it.      A Patna decision where the levy of damages was attacked as violative  of Article  20(2) has  taken the view that the amount of  damages imposed  under Section  14B is  penal  in character.  Of  course,  the  learned  judges  repelled  the application of  Article 20(2)  of the  Constitution to  this situation but  made some  observations which are misleading. The Court there took the view that the damages imposed under Section 14B  are transferred  to the general revenues of the appropriate government  and went  on to  observe: "In  other words, the  infliction of  the damages  under section 14B is not  meant   to  provide  compensation  or  redress  to  the employees whose  interest may be injured. It is not meant to provide reparation  to such  employees and  the  quantum  of damages imposed  has no  relation  to  the  amount  of  loss suffered by the employees. I consider that the infliction of the damages  under section 14B is penal in its nature. It is a warning  to employers in general not to commit a breach of the statutory rule".      The above  observations, in  my view, are unsound and I am happy  to record  that my  learned brother takes the same view, although  in his separate judgment this aspect has not been expressly  considered. I  speak for  both  of  us.  The damages are  levied under  the Act.  The  authority  levying penal damages  is created  by the Act and is responsible for the collection of contributions and damages for the Fund. It is  not   possible  to   dichotomise  and   hold  that   the contributions go into the Provident Fund but the rest of the damages go  into the  general revenues.  This is  not a fine under the criminal law. Nor is it recovery, on behalf of the Government of  amounts under  a general statute for purposes of revenue. A special statute creating a special fund, em- 77 powers special  officers  to  recover  specially  designated contributions and  special damages  for default.  The entire sum belongs  to the  Fund except  perhaps the administrative charges which  are usually  (as  in  this  case)  separately indicated. In our view, therefore, it is wrong to credit the damages into  the general  revenues. To  that extent it is a breach of  the statutory  scheme and  a deprivation  of what belongs to  the workers’  Provident Fund.  Indeed, employees are a  needy community  and if  the Fund  is replenished  by damages  the   scheme  can  be  improved  and  the  benefits augmented. We, therefore, express the view that if any State is diverting  damages under the Act into its own coffers, it is improper.  Lazarus can  ill-afford to lose even a little. State and citizen alone is subject to the rule of law.      I am  in full  agreement with  the concluding statement regarding the  disposition of the damages made in my learned brother’s judgment:      The  learned  Additional  Solicitor  General  was  fair enough to  concede that the entire amount of damages awarded under  Section  14B  except  for  the  amount  relatable  to administration charges  must necessarily  be transferred  to the Fund  constituted under  the Act.  We  hope  that  those charged with  administering the  Act will  keep this in view while allocating the damages under Section 14B of the Act to different heads. The employees would, of course, get damages commensurate  with  their  loss,  that  is,  the  amount  of

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 15 of 24  

interest on  delayed payment but the remaining amount should go to  augment the  Fund constituted  under  Section  5  for implementing the schemes under the Act.      In this  view I  direct the  appropriate Government  to credit the  sums allocable  to the  Fund so that the damages may reach where it belongs.      I wholly agree with my learned brother, for the reasons I have  given. The  Writ Petition  deserves to  be dismissed with costs.      SEN, J.-This  is a  petition under  Article 32  of  the Constitution by  M/s. Organo  Chemical  Industries,  Sonepat directed against  an order  of the  Regional Provident  Fund Commissioner, Chandigarh,  dated October  12, 1977, by which he imposed  a penalty of Rs. 94,996.80 on the petitioners as damages under  s. 14B  of the Employees’ Provident Funds and Miscellaneous Provisions  Act, 1952, for delayed remittances of the  Employees’ Provident  Fund,  Family  Pension  Scheme contributions  of   their  employees,  including  their  own contributions, and the administrative charges thereon.      Organo Chemical  Industries, an  ’establishment’ within the meaning  of section  1(3) of  the  Employees’  Provident Funds and Miscellaneous 78 Provisions Act,  1952 (hereinafter referred to as ’the Act’) to which  the Act applies, committed defaults in payments of Provident Fund and Family Pension Scheme dues for the period from March  to October  1975 and  again for  the period from December  1975  to  November  1976  to  the  extent  of  Rs. 92,687.00 and  of administrative  charges amounting  to  Rs. 2,309.80 i.e.  Rs. 94,996.80  in all. The Regional Provident Fund Commissioner,  Chandigarh, accordingly,  issued a  show cause notice dated June 7, 1977 requiring the petitioners to show cause  why damages should not be levied under s. 14B of the Act. The notice was accompanied by a statement showing a break-up of the various amounts in arrears and the extent of delay in  respect of each payment and the details of damages proposed to  be imposed  on the belated payments. The period of delay  in payment  of the  amounts remitted varied from a few months  to a  year. It was proposed to levy damages at a uniform rate  of hundred  per cent on each of the amounts in arrears. In response to the notice, the petitioners tried to explain away  the delay  by alleging  that  it  was  due  to difficulties  beyond   their  control  and,  therefore,  the payments could  not be  made in  time viz.,  the facts  that there were  disputes between  the partners  of the firm as a result of  which, there was a loss of Rs. 1,40,165.15, there was a  power cut  of 60%  by the  Haryana Electricity  Board w.e.f. May  6, 1974,  which  compelled  the  petitioners  to purchase a  Generating set to tide over the difficulties and that the  establishment had  borrowed  huge  sums  from  the Haryana Financial Corporation and in payment of which it had defaulted for  want of  financial  resources  etc.  It  was, accordingly, contended  that the  default, if  any, was  not willful as  they had  no intention  to commit a default. The Regional Provident  Fund Commissioner  after giving  to  the petitioners the  opportunity of  a hearing  by his  reasoned order dated August 16, 1977 considered in detail each of the grounds taken  in mitigation of the defaults and came to the conclusion that  none of  the grounds  alleged  furnished  a legal justification for the delay in making contributions in time. As  regards the  alleged dispute  among  the  partners leading to a loss of Rs. 1,40,165.15, he observed:           "Even if  it is  assumed that  there was a loss as      claimed it  does not  justify the  delay in  deposit of      Provident Fund  money which is in unqualified statutory

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 16 of 24  

    obligation and  cannot be allowed to be linked with the      financial position of the establishment, over different      points  of  time.  Besides  50%  of  the  contributions      deposited late  represented the  employees’ share which      had been  deducted from  the employees  wages and was a      trust money  with employer for deposit in the statutory      fund. The delay in the deposit of this part of the 79      contribution amounted  to breach  of trust and does not      entitle the employer to any consideration for relief." With respect  to the  plea that  the  petitioners  had  been subject to  a power-cut  of 60%  w.e.f. May  6, 1974  by the Haryana  Electricity   Board,  he   negatived  the  plea  by observing that  this restriction  was not  exclusive to them and further  that no  cause had  been shown  as to  how this prevented them  from depositing  the provident  fund dues in time. Even  if the power-cut had resulted in any substantial loss, it  would have  reduced the liability on the amount of provident fund  dues also.  He went on to observe that where an employer  can pay  wages, it  is not  conceivable why  it cannot pay  the provident  fund dues.  As regards  the stand taken that the establishment had borrowed huge sums from the Haryana Financial  Corporation and  in repayment of which it had default,  he held  that even if it were so, the fact did not absolve  the establishment  of its  statutory obligation for deposit  of provident  fund dues in time. Similarly, the other  reasons   furnished  like   the  purchase  of  a  new generating plant  or internal dispute among the partners and the  dissolution  of  the  partnership  firm  etc.  did  not constitute  sufficient  cause  beyond  the  control  of  the petitioners to  justify the  late deposit  of provident fund dues. He,  accordingly, concluded  that the  petitioners had failed to  carry out  their obligation  to contribute to the Employees’ Provident  Fund and  Family Pension scheme within the time  limit provided  therefor; and  that no  convincing case had  been made  out to  justify the delay in making the deposits. He  also on  the material  on record  found, as  a fact, that  the petitioners,  having regard  to  their  past record, were ’habitual defaulters’ and had, therefore, to be severely dealt  with, and should be visited with the maximum penalty.      The petitioners are guilty of suppressio veri and this, by itself, was sufficient to dismiss the writ petition; but, since it  involves a point of importance which was argued at length, we will have to deal with the same.      There can  be no  doubt that  the petitioners have been habitual defaulters in the matter of making contributions to the Employees’  Provident Fund,  Family Pension  Scheme  and payment of  administrative charges  from the very inception. They have deliberately concealed the facts pertaining to the earlier defaults  and the attendant levy of damages under s. 14B of  the Act.  For the  period between  November 1970 and January 1971,  again for  the period  between October  1971, February 1972,  March and  April 1973,  August  to  October, 1973, January  and February  1974, then again for the period March 1974,  May to  August 1974, October and December 1974, and 80 January 1975,  they made  delayed payments of the Employees’ Provident Fund  and Family  Pension Scheme  Contribution and consequently the  Regional Provident Fund Commissioner after notice to  them under  s. 14B,  and  after  considering  the objections  raised  and  hearing  the  petitioners,  imposed damages amounting  to  Rs.  223.35,  Rs.  2,452.40  and  Rs. 15,214.05 for  the periods  in question  respectively, which

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 17 of 24  

they deposited  on February 17, 1972, September 25, 1975 and December 13, 1976.      It would  thus be manifest that the petitioners instead of making  their contributions,  deliberately  made  willful defaults on  one pretext  or another and have been utilising the amounts  deducted from  the wages  of  their  employees, including their  own contributions as well as administrative charges, in  running their  business. The Regional Provident Fund Commissioner,  therefore,  rightly  observed  that  the petitioners having  regard to  their  past  record  must  be visited with the maximum penalty.      Taking an  overall view,  the Regional  Provident  Fund Commissioner, by  his reasoned order dated October 12, 1977, adverted to  the fact  that the  petitioners  were  habitual defaulters and,  therefore, deserve to be dealt with sternly so as to bring home the deterrent effect of damages under s. 14B of  the Act  and, accordingly,  directed recovery of Rs. 94,996.80 at the rate of hundred per cent i.e. equivalent to the  amount   in  arrears,   for  the   delayed  payment  of contributions to  the Employees’  Provident Fund, the Family Pension Fund and administrative charges, as detailed below:-                                                        Rs.      (1)  Damages on delayed payment of provident           fund and family pension fund contributions           required to be deposited u/s.6        .  92,687.00      (2)  Damages on delayed payment of           administrative charges   ...   ...        2,309.80                                                -------------                                                    94,996.80                                                ------------- This was pre-eminently a fit case for imposition of punitive damages to  ensure due  compliance of  the provisions of the Act.      Before  stating   the  contentions  raised  by  learned counsel for  the petitioners,  we think it convenient to set out the  scheme of  the  Act  and  the  relevant  provisions thereof having  a bearing  on the question to be determined. It would  be relevant  to take  into  account  some  of  the provisions of  the Provident  Funds Act which have since its inception in 1952, been subjected to various amendments. The Provident Fund Act, 1952 as originally enacted, provides for the institution  of compulsory provident funds for employees in factories and other 81 establishments. It applies to every establishment which is a factory engaged  in any industry specified in Schedule I and in which  twenty or  more persons  are employed  and to  any other establishment  employing twenty  or  more  persons  or class of  such establishments  which the  Central Government may specify  in that  behalf by Notification in the Official Gazette. Under  s. 4,  the  Central  Government  framed  the Employees’ Provident  Funds Scheme,  1952  by  S.R.O.  1509, dated September  2, 1952.  Section 6  of the  Act enjoins on every  employer  to  make  contribution  to  the  Employees’ Provident Fund  at the  rate  of  6%  of  the  basic  wages, dearness allowance,  retaining allowance,  if any,  for  the time  being  payable  to  each  of  the  employees  and  the employees’ contribution  shall be  equal to the contribution by the  employer in  respect of  him. The  employee  at  his option may, however, increase the contribution to the extent of 8-1/3%.      The initial  responsibility for  making payment  of the contribution of  the employer  as well  as of  the employee, lies on  the employer.  Para  30  of  the  Scheme  makes  it incumbent on  the employer  that  he  shall,  in  the  first

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 18 of 24  

instance, pay  both the  contribution payable by himself and also on behalf of the member employed by him. Under para 38, the employer is authorised before paying the member employee his wages  in respect  of any  period or  part of period for which contributions  are payable,  to deduct  the employee’s contribution from  his wages.  It further  provides that the deposit of  such contribution  shall be made by the employer within fifteen  days of  the close  of every  month, i.e., a contribution for  a particular month has got to be deposited by the  15th day  of the month following. A breach of any of these requirements  is made  a penal  offence. Section 14 of the Act  provides for  penalties. Failure to comply with the requirements of  s. 6  is punishable  with various  terms of imprisonment which  may extend to a period of six months, or with fine  which may  extend to one thousand to two thousand rupees, under  the provisions  of s.  14, depending upon the nature  of   the  breach,   viz.,   failure   to   pay   the contributions, or  failure to  submit the necessary returns, or  failure  to  pay  administrative  charges.  Section  14A provides for  offences  by  companies  and  other  corporate bodies. Para  76 of  the Scheme  provides for punishment for failure to  pay contributions etc., and in particular by cl. (d), every  employer guilty  of  contravention  or  of  non- compliance with  the requirements  of the  Scheme, shall  be punishable with  imprisonment which may extend to six months or with fine of Rs. 1,000/-.      Parliament amended  the Act  by Act No. 16 of 1971, and it was  re-entitled as  the ’Employees’  Provident Funds and Miscellaneous 82 Provisions Act,  1952’. It inserted s. 6A in the Act for the establishment of the Family Pension Fund. In exercise of the powers conferred by s. 6A, the Central Government framed the Employees’ Family  Pension Scheme, 1971 by G.S.R. 315, dated March 4,  1971. Under  Para 4  of the Scheme, every employee who is  a member  of the Employees’ Provident Fund, is given the option to join the Family Pension Scheme. Para 9 created the Family  Pension Fund  and provides  that from and out of the contributions  payable by  the employer and employees in each  month   under  s.   6  of  the  Act,  a  part  of  the contribution, representing  1-1/6%  of  the  employees’  pay along with  an equivalent  amount of  1-1/6% from out of the employer’s contribution,  shall be  remitted by the employer to the Family Pension Fund.      In its working, the authorities were faced with certain administrative difficulties. An employer could delay payment of Provident  Fund dues  without  any  additional  financial liability. Parliament,  accordingly,  inserted  s.  14B  for recovery of damages on the amount of arrears. The reason for enacting s.  14B is  that  employers  may  be  deterred  and thwarted from  making defaults  in  carrying  out  statutory obligations to  make payments  to the  Provident  Fund.  The object and  purpose of  the  section  is  to  authorise  the Regional Provident  Fund Commissioner to impose exemplary or punitive damages  and  thereby  to  prevent  employers  from making  defaults.   Section  14B,   as  originally  enacted, provided for  imposition of  such damages, not exceeding 25% of the amount of arrears. This, however, did not prove to be sufficiently deterrent.  The  employers  were  still  making defaults in  making contributions to the Provident Fund, and in the  meanwhile utilising  both their  own contribution as well as  the employees’ contribution, in their business. The provision contained  in s.  14B  for  recovery  of  damages, therefore, proved to be illusory. Accordingly, by Act No. 40 of 1973,  the words  ’twenty-five per  cent of’ were omitted

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 19 of 24  

from s.  14B and  the words  ’not exceeding  the  amount  of arrear’ were  substituted. The  intention is  to invest  the Regional Provident  Fund Commissioner  with power  to impose such damages  that the employer would not find it profitable to make defaults in making payments.      In support  of the  petition, learned  counsel for  the petitioners assails  the  impugned  order  on  two  grounds, namely, (i)  s. 14B of the Act is violative of Article 14 of the Constitution  as it  confers unguided,  uncontrolled and arbitrary power  on the Regional Provident Fund Commissioner to impose  damages which  may be to the extent of 100% i.e., equal to  the amount  of  arrears.  The  conferral  of  such unguided, uncanalised  and arbitrary  power on  the Regional Provident 83 Fund Commissioner  to arrive  at  a  decision,  without  any guide-lines  whatsovever,   makes  s.  14B  constitutionally invalid as  offending against  Article 14,  and (ii)  s. 14B deals with the power to recover damages. It is not the power to impose  penalties. The  word ’damages’  in s.  14B  must, therefore, be  understood in  the legal  sense. Damages must have some  correlation with the loss suffered as a result of delayed payments.  The authority  imposing  the  penalty  or damages must,  therefore, apply  its mind  to this aspect of the  matter.  The  defaulting  employer  under  s.  14B  is, accordingly, liable to pay damages which represents the loss to the  beneficiaries of  the scheme,  such as  recovery  of interest; but  not anything  more, as  such  recovery  would amount to  penalty, and  that is  not  permitted  under  the section. There is no substance in any of the contentions.                Section 14B of the Act reads as follows:                "14B.  Power  to  recover  damages:-Where  an           employer makes  defaults in  the  payment  of  any           contribution to  the Fund  (the Family 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 (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  from   the  employer  such           damages, not exceeding the amount of arrear, as it           may think fit to impose.                Provided that  before levying  and recovering           such  damages,  the  employer  shall  be  given  a           reasonable opportunity of being heard."      The contention  that section  14B confers  unguided and uncontrolled discretion  upon the  Regional  Provident  Fund Commissioner to  impose such  damages ’as  he may think fit’ is, therefore,  violative of Article 14 of the Constitution, cannot be accepted. Nor can it be accepted that there are no guide-lines provided  for fixing the quantum of damages. The power of  the Regional Provident Fund Commissioner to impose damages under  s. 14B  is a quasi-judicial function. It must be exercised  after notice to the defaulter and after giving him a  reasonable opportunity of being heard. The discretion to award  damages could be exercised within the limits fixed by the  Statute. Having regard to the punitive nature of the power exercisable under s. 14B 84

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 20 of 24  

and the consequences that ensue therefrom, an order under s. 14B must  be a  ’speaking order’  containing the  reasons in support of  it. The  guide-lines are provided in the Act and its various  provisions, particularly  in the word ’damages’ the liability  for which  under s. 14B arises on the ’making of  default’.  While  fixing  the  amount  of  damages,  the Regional Provident  Fund  Commissioner  usually  takes  into consideration, as he has done here, various factors viz. the number of  defaults, the  period of  delay, the frequency of defaults and  the amounts involved. The word ’damages’ in s. 14B lays down sufficient guidelines for him to levy damages.      Learned counsel  for the petitioners, however, contends that in  the instant case, the period of arrears varies from less than  one month  to more than 12 months and, therefore, the imposition  of damages  at the  flat rate of hundred per cent for all the defaults irrespective of their duration, is not only capricious but arbitrary. The submission is that if the intention  of the  legislature was to make good the loss caused by default of an employer, there could be no rational basis to quantify the damages at hundred per cent in case of default for  a period  less than  one month  and those for a period more than 12 months. It is urged that the fixation of upper limit  at hundred  per cent  is no  guide-line. If the object of the Legislation is to be achieved, the guide-lines must specify  a uniform  method to  quantify  damages  after considering all  essentials like  loss or  injury sustained, the  circumstances   under  which   the  default   occurred, negligence, if  any, etc.  It is said that the damages under s. 14B  which  is  the  pecuniary  reparation  due  must  be correlated  to   all  these   factors.  In  support  of  his contention, he  drew our  attention to  s. 10F  of the  Coal Mines Provident Fund and Bonus Schemes Act, 1958, which uses the words  ’damages not exceeding twenty-five per cent’ like section 14B of the Act, and also to a tabular chart provided under that Act itself showing that the amount of damages was correlated to  the period  of arrears.  We regret, we cannot appreciate this line of reasoning. Section 10F of the Act of 1958  came   up  for  consideration  before  this  Court  in Commissioner of  Coal Mines  Provident Fund,  Dhanbad v.  J. Lalla &  Sons.(1) This  Court observed,  firstly,  that  the determination of  damages is not ’an in flexible application of a  rigid formula’,  and secondly,  the words  ’as it  may think fit  to impose’ show that the authority is required to apply its  mind to  the facts and circumstances of the case. The contention  that in  the absence  of any guide-lines for the quantification  of  damages,  s.  14B  is  violative  of Article 14 of the Constitution, must, therefore, fail.      In this  connection, it was also urged that the absence of any  provision for appeal, leaves the defaulting employer with no remedy. The 85 conferral  of  arbitrary  and  uncontrolled  powers  on  the Regional Provident Fund Commissioner to quantify damages, it is  said,   without  a  corresponding  right  of  appeal  or revision, makes  the provision  contained in  s. 14B  per se void and  illegal and it is liable to be struck down on that ground. We  are afraid,  the contention  is wholly devoid of substance. Mere  absence of provision for an appeal does not imply that  the  Regional  Provident  Fund  Commissioner  is invested with  arbitrary or  uncontrolled power, without any guide-lines. The  conferral of  power to award damages under s. 14B  is to  ensure the  success of  the  measure.  It  is dependent on  existence of certain facts, there has to be an objective  determination,   not  subjective.   The  Regional Provident Fund  Commissioner has  not only to apply his mind

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 21 of 24  

to the  requirements of  s. 14B but is cast with the duty of making a  "speaking order", after conforming to the rules of natural justice.      This Court  has repeatedly  laid it down that where the discretion to  apply the  provisions of a particular statute is left  with the Government or one of the highest officers, it will  be presumed that the discretion vested in such high authority  will  not  be  abused.  The  Government  or  such authority is  in a  position to  have all  the relevant  and necessary  information   in  relation   to  each   kind   of establishment, the  nature of defaults made by the employer, and the  necessity to  decide  whether  the  damages  to  be imposed should  be exemplary  or not:  Mohmedalli &  Ors. v. Union of  India &  Anr.(1) It  was stated  in K. L. Gupta v. Bombay Municipal  Corporation(2) that  when power  as to  be exercised by  one of  the highest officers, the fact that no appeal has been provided for ’is a matter of no moment’. The same  view  was  reiterated  in  Chinta  Lingam  &  Ors.  v. Government of  India & Ors.(3) There is always a presumption that public  officials would discharge their duties honestly and in accordance with the rules of law. This was emphasised in Pannalal  Binjraj v. Union of India,(4) stress being laid on the  power being  vested not in any minor official but in top-ranking authority.  In the circumstances, the absence of a provision for appeal or revision can be of no consequence.      Turning now  to the  main question,  the contention  is that s.  14B of the Act does not authorise levy of any penal damages, i.e., a penalty or fine but deals with the power to recover damages.  It is not the power to impose a penalty on the defaulting employer though the 86 maximum amount  of damages  that can  be recovered  has been indicated in  the section,  it is submitted that the damages must have  some correlation  with the  loss  suffered  as  a result  of  delayed  payments  and  the  authority  imposing damages must  apply its  mind to  this aspect of the matter. The defaulter  under s.  14B is,  therefore, liable  to  pay damages which  represents the  actual loss, but not anything more, as  such recovery  would amount to penalty and that is not  permitted   under  the   section.  In  support  of  his submissions, he has referred to certain authorities.      It is  argued that the damages referred to in s. 14B is different from penalty or fine and is intended to compensate the loss to the beneficiaries of the Scheme. It has only the ordinary legal  meaning of  the term  ’damages’ viz.  actual loss as  in law  of Contract  or Tort.  Thus  the  award  of damages under  s. 14B  must be,  in essence,  the  pecuniary reparation for  loss  or  injury  sustained  by  one  person through the fault or negligence of another.      There is  a conflict  of opinion between different High Courts as  to the meaning of the word ’damages’ in s. 14B of the Act.  According to  some of  the High  Courts, the  word ’damages’ in  s. 14B means actual loss to the beneficiaries. The view  is that  s. 14B clearly indicates that an employer is liable to pay damages, if he has made defaults in payment of the contribution. Any delay in paying the amount under s. 6 causes  loss to  the beneficiaries  of the Scheme, such as loss of  the interest and the like. This is the loss that is sought to  be recovered from the defaulting employer for the purpose of  indemnifying the  beneficiaries of  the  Scheme, namely, the  employees to the extent of the loss suffered by them. The  defaulter u/s  14B is,  therefore, liable  to pay damages which  represent the loss, but not anything more, as such recovery  would amount  to penalty,  and  that  is  not permitted under the section. It is, therefore, held by these

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 22 of 24  

High Courts  that the  damages to  be imposed u/s 14B should have correlation with the loss suffered and that damages u/s 14B are intended to compensate the loss to the beneficiaries of  the   Scheme.  With  respect,  these  High  Courts  have obviously fallen into an error in reading the word ’damages’ in s.  14B in isolation, by trying to construe the word in a purely legalistic  sense. These  High Courts have overlooked that we are not concerned in interpreting what damages means in the  realm of  Contract or  Tort but  the word  had to be given its  true meaning,  in consonance with the objects and purpose of the Legislation.      The learned Additional Solicitor General brought to our notice the  conflict of  opinion between  the different High Courts on  the construction of the word ’damages’ used in s. 14B, and submitted that this has 87 given rise  to confusion  in the  mind of those charged with the duty  of  administering  the  Act.  He  wants  that  the conflict should be resolved by placing a proper construction on the  word ’damages’  in s.  14B,  in  the  larger  public interest, as  the question is one of frequent occurrence. He rightly contends  that the word ’damages’ in s. 14B must, in the context  in which it appears, means penal damages i.e. a penalty and  not merely actual loss to the beneficiaries. He submits that  if the  word ’damages’ appearing therein, were to mean  actual loss  to the  beneficiaries and not anything more, as  some of  the High  Courts have held, it would make the Act unworkable. He also points out that some of the High Courts have taken a view to the contrary. According to these High Courts,  the expression  ’damages’ is,  in substance, a penalty imposed  on the  employer  for  the  breach  of  the statutory obligation.  The  object  of  the  Legislature  in enacting s.  14B  is  clearly  to  punish  the  recalcitrant employers.      The traditional view of damages as meaning actual loss, does not take into account the social content of a provision like s.  14B contained  in a socio-economic measure like the Act in  question. The word ’damages’ has different shades of meaning. It  must take  its  colour  and  content  from  its context, and  it cannot be read in isolation, nor can s. 14B be read  out of  context. The very object of the Legislation would be  frustrated if  the word  ’damages’ appearing in s. 14B of  the Act was not construed to mean penal damages. The imposition of damages u/s. 14B serves a two-fold purpose. It results in damnification and also serves as a deterrent. The predominant object  is to  penalise, so that an employer may be thwarted or deterred from making any further defaults.      The expression  ’damages’ occurring  in s.  14B is,  in substance, a  penalty imposed on the employer for the breach of the  statutory obligation.  The object  of imposition  of penalty u/s  14B is  not merely ’to provide compensation for the employees’.  We are  clearly of  the  opinion  that  the imposition of  damages u/s  14B serves both the purposes. It is meant  to penalise defaulting employer as also to provide reparation for the amount of loss suffered by the employees. It is  not only  a warning  to employers  in general  not to commit a  breach of  the statutory requirements of s. 6, but at the  same time  it is  meant to  provide compensation  or redress  to   the  beneficiaries   i.e.  to  recommence  the employees for  the loss  sustained by them. There is nothing in  the   section  to   show  that  the  damages  must  bear relationship  to   the  loss   which  is   caused   to   the beneficiaries under  the Schemes.  The word  ’damages’ in s. 14B is  related to  the word ’default’. The words used in s. 14B are  ’default  in  the  payment  of  contribution’  and,

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 23 of 24  

therefore, 88 the word ’default’ must be construed in the light of Para 38 of  the   Scheme  which   provides  that   the  payment   of contribution has got to be made by the 15th of the following month and, therefore, the word ’default’ in s. 14B must mean ’failure in  performance’ or  ’failure to  act.’ At the same time, the  imposition of  damages  u/s  14B  is  to  provide reparation for the amount of loss suffered by the employees.      The construction  that  we  have  placed  on  the  word ’damages’ appearing  in s. 14B of the Act, is in accord with the intent and purpose of the Legislation. It was brought on the statute  book by Act 37 of 1953, the objects and reasons so far material, read:-      "There are  also certain administrative difficulties to      be set  right. There  is no provision for inspection of      exempted factories  nor is  there any provision for the      recovery of dues from such factories. An employer . . .      can delay  payment of  Provident Fund  dues without any      additional financial  liability. No punishment has been      laid down  for contravention  of some of the provisions      of the Act." (Emphasis supplied). The object  and purpose  of the  section is to authorise the Regional Provident  Fund Commissioner to impose exemplary or punitive damages  and thereby  prevent employers from making defaults. The provision for imposition of damages at twenty- five per  cent of  the amount  of arrear,  however, did  not prove to  be effective. Accordingly, but Act 40 of 1973, the words ’not exceeding the amount of arrear’ were substituted, for the  words ’twenty-five  per cent’.  The  necessity  for making this  change  is  brought  out  in  the  objects  and reasons, a material portion of which reads:-              "STATEMENT OF OBJECTS AND REASONS:                       (Act 40 of 1973)           The working  of the  Employees’ Provident Fund and      Family  Pension  Fund  Act,  1952  and  the  Employees’      Provident Fund  Scheme has  revealed that  the  present      provisions of  the Act and the Scheme are not effective      in preventing  defaults in  payment of contributions to      the Employees Provident Fund or in recovery of the dues      on that  account. The  result is  that  the  amount  of      Provident Fund  arrears recoverable  from the employers      has been  streadily increasing. In 1959-60, the arrears      which amounted  to Rs.  3.65 crores,  rose to  Rs. 5.96      crores as  on the 31st March 1967. The arrears stood at      Rs. 14.6  crores on 31st March, 1970 and they have been      risen to Rs. 20.65 crores as on the 31st March, 1972. 89           2.  The   National  Commission   on   Labour   has      recommended that  in  order  to  check  the  growth  of      arrears, penalties for defaults in payment of Provident      Fund dues  should be  made more  stringent and that the      default should  be made cognizable. In its 116th Report      presented to  Parliament in  April 1970,  the Estimates      Committee has  endorsed the recommendations made by the      National Commission on Labour and has further suggested      that Government  should  consider  the  feasibility  of      providing compulsory  imprisonment for certain offences      under the Act. Accordingly, it is proposed to amend the      Act so as to render the penal provisions more stringent      and to  make defaults cognizable offences. Provision is      also being made for compulsory imprisonment in cases of      non-payment  of  contributions  and  administration  or      inspection charges.  As recommended  by  the  Estimates      Committee, a  further provision is being made to enable

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 24 of 24  

    levy of  damages equal  to the amount of arrears from a      defaulting employer." (Emphasis supplied). Each word,  phrase or  sentence is  to be  considered in the light  of   general  purpose  of  the  Act  itself.  A  bare mechanical interpretation  of the words devoid of concept or purpose will reduce most of legislation to futility. It is a salutary rule,  well established,  that the intention of the legislature must be found by reading the statute as a whole.      There appears  to be a misconception that the object of imposition of  penalty under  s.  14B  is  not  ’to  provide compensation  for  the  employees’  whose  interest  may  be injured, by  loss of  interest and the like. There is also a misconception that  the damages imposed under s. 14B are not transferred to  the Employees’ Provident Fund and the Family Pension  Fund,   of  the  employees  who  may  be  adversely affected, but  the amount  is  transferred  to  the  General Revenues of  the appropriate  Government. We  find that this assumption is  wholly unwarranted. In assessing the damages, the Regional  Provident Fund  Commissioner is not only bound to take  into account the loss to the beneficiaries but also the default  by the  employer in  making his  contributions, which occasions  the  infliction  of  damages.  The  learned Additional Solicitor General was fair enough to concede that the entire  amount of  damages awarded  under s. 14B, except for the  amount relatable  to administrative  charges,  must necessarily be  transferred to the Employees’ Provident Fund and the Family Pension Fund. We hope that those charged with administering the Act will keep this in 90 view while allocating the damages under s. 14B of the Act to different heads. The employees would, of course, get damages commensurate with their loss i.e., the amount of interest on delayed payments;  but the  remaining amount  should  go  to augment the  ’Fund’ constituted under s. 5, for implementing the Scheme under the Act.      The result, therefore, is that this writ petition fails and is dismissed with costs. N.V.K.                                   Petition dismissed. 91