http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 4  

PETITIONER: REGIONAL PROVIDENT FUND COMMISSIONER

       Vs.

RESPONDENT: S.D. COLLEGE, HOSHIARPUR G ORS.

DATE OF JUDGMENT:       28/10/1996

BENCH: K. RAMASWAMY, G.B. PATTANAIK

ACT:

HEADNOTE:

JUDGMENT:                          O R D E R      Delay condoned.      Leave granted.      we have heard learned counsel on both sides.      These appeals  by special leave arise from the judgment of the  Division Bench  of the  Punjab &  Haryana High Court made on December 6, 1995 in CWP Nos.637 and 692 of 1995.      The admitted position is that the appellant had applied the provisions of Employees Provident Fund and Miscellaneous Provisions  Act,   1952  (for   short,  the  ’Act’)  to  the respondent Institution  by notification dated March 6, 1982. Calling the  notification in  question the  respondent,  had filed writ  petition in  this Court.  This court by judgment dated January  29, 1988 had held that the Act would apply to the  educational   institutions  and,  therefore,  they  are required to  comply with  the notification  issued under the Act. This Court had directed thus:      "shri S.k.  Bagga, learned  counsel      appears for  the petitioners. We do      not   find  any  substance  in  the      contention of   the  petitioners in      these cases  that  the    Employees      Provident Funds  and  Miscellaneous      Provisions Act,  1952  (hereinafter      referred to  as "the  Act")  has no      application  to   the   educational      institutions, who  are  petitioners      in   these  cases.  We,  therefore,      dismiss all  these cases.      we  direct   that  the  petitioners      shall comply  with the  Act and the      schemes framed thereunder regularly      with effect from 1.2.1988. Whatever      arrears they  have to pay under the      Act and  the schemes  in respect of      the  period  between  1.3.1982  and      1.2.1988 shall  paid by each of the      petitioners within such time as may      be   granted    by   the   Regional      Provident Fund  Commissioner if the

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 4  

    petitioners  pay  all  the  arrears      payable from  1st March,  1982 upto      1st  February  1988  in  accordance      with the directions of the Regional      Provident  Fund   Commissioner   he      shall not  levy any damages for the      delay in  payment of  the  arrears.      Having regard  to the special facts      of these  cases the subscribers(the      employees) shall not be entitled to      any interest  on the  arrears.  The      writ  petitions   are  disposed  of      accordingly. No costs."      In spite of the directions issued by this Court instead of complying  with the orders of this Court, the respondents continued  to  deposit  amounts  with  the  University.  The respondents thus,  have not  with the law. Consequently, the appellant exercising  the Power  under Section  14-B of  act levied  damages   @  25%   of  the  amount  Payable  by  the respondents The respondents filed writ petitions against the appellant in  the High Court. The High court in the impugned order has  held that  the appellant  is not  liable to  levy damages on the respondents. Thus these appeals by special leave.      Section 14-B of Act reads as under:      "14-B. Power  to recover  damages.-      Where an  employer makes default in      the payment  of any contribution to      the Fund  (the family  Fund or  the      Insurance  fund)   or  in   to   be      transferred  by   him  under   sub-      section (2)  of Section  17) or  in      the 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  notification  in  the  Official      Gazette in  this behalf may recover      such  damages,  not  exceeding  the      amount  of   arrears,  as   may  be      specified in the scheme;      Provided that  before  levying  and      recovering   such    damages,   the      employer   shall    be   given    a      reasonable opportunity    of  being      heard:      Provided further  that the  Central      Board  may   reduce  or  waive  the      damages levied  under this  Section      in  relation  to  an  establishment      which is  a sick industrial company      and in  respect of  which a  scheme      for   rehabilitation    has    been      sanctioned   by   the   Board   for      Industrial      and       Financial      Reconstruction  established   under      Section 4  of the  Sick  Industrial      Companies   (Special    Provisions)      Act, 1985,  subject to  such  terms      and conditions  as may be specified      in the scheme."      Shri Randhir  Jain, learned counsel for the respondent, contends  the   after  the   judgment  by  this  Court,  the

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 4  

respondents have  applied for  permission to  the University for withdrawal  of the  amount. After  the  receipt  of  the direction issued by the University on June 7, 1990, they had redeposited  the   amount  to  the  tune  of  Rs.6,40,122.70 together with  other charges in a sum of Rs.58,736.70. There was no  intentional delay  on the part of the respondents in not depositing  the amount  and therefore the High Court was right in directing to recover the damages under Section 14-B of the  Act. This  Court on  July  10,  1996  issued  notice stating as  to why the respondents are not liable to pay the interest for  the failure  to pay  the G.P.F.  from February 1988 to  May 1990 in the light of the admission made by them in paragraph 6 of their reply letter dated  October 26,1994.      Now, an  affidavit has  been filed  on  behalf  of  the respondents stating  that they  have deposited the amount in the University  and the  amounts was  kept in  fixed depoits earning interests  @ 11%  since a  direction was  issued  to comply with  the direction  to redeposit  the amount,  after premature encashment, they returned it with 9%  interest and the same  was deposited  and, therefore, they are not liable to pay  the damages  that are  determined  by  the  Regional Provident Fund Commissioner under the impugned order as assailed  in   the  writ  petition.  Having  regard  to  the contention, the  question that  arises for consideration is: whether  the appellant is entitled to recover damages?      A reading  Section 14-B  of the Act would indicate that the employer  is under  an obligation  under the  statute to comply with  the payment  of the amount, In the event of his committing default in the payment of the contribution to the fund or  in the  payment of  any charges  payable under  any other provisions  of the  Act or  any  scheme  or  insurance scheme or any of the conditions specified in Section 17, the Central Provident Fund Commissioner or such other officer as may  be   authorised  by  the  Central  Government  may,  by notification in the official Gazette in this behalf, recover from the  employer by  way of  penalty,  such  damages,  not exceeding the  amount of arrears, as may be specified in the scheme. The  second proviso  only lifts  the embargo  in the event of the industry becoming sick and it was reconstructed under the  provisions of  Section 4  of the  Sick Industrial Companies (Special  Provisions) Act,  1985 subject  to  such terms and  conditions as  may be  specified in the scheme of rehabilitation.  In  other  words,  the  Act  envisages  the imposition of  damages for  delayed payments.  The Act  is a beneficial welfare  legislation to  ensure health  and other benefits to  the employees.  The employer  under the  Act is under  a   statutory  obligation  to  deduct  the  specified percentage or  the contribution  from the  employee’s salary and matching  contribution, the entire amount is required to be deposited  in the  fund within  15 days after the date of the collection, every month.      Thereby the employer is under a statutory obligation to deposit the amount to the credit of the Fund every month. In the event  of any  default committed in that behalf, Section 14-B steps  in and calls upon the employer to pay damages by way of  penalty the  maximum of  which  is  the  accumulated arrears. The Regional Provident Fund Commissioner is given discretion  only to reduce a percentage of damages and he has  no power  to waive penalty altogether. In this case, admittedly, after  the judgment, there was no reason for the respondent to deposit the amount with the University. We can understand that  , since  there was  a scheme  framed by the University and  the respondent  was under  an obligation  to comply with  the scheme. they can have a feeling of doubt as to whether  they should  abide by  the scheme  framed by the

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

University or  under the  Act. Since they had filed the writ petition in this Court, this Court gave direction on January 29,1988   directing   the   respondents   to   deposit   the contribution with  the appellant.  Thereby  the  respondents have a  statutory obligation  to  deposit  the  amount  from February 1988  onwards. Therefore, there is no justification whatsoever to  deposit and keep depositing the amount in the University account  after the  judgment of  this Court.  The mere fact  that  the  University  has  given  permission  to redeposit the  amount with the appellant does not enable the respondents to  take shelter  thereunder for  non-deposit of the amount in the Fund.      Under these  circumstances, we  do not think that there is any  justification in  the contention  for waiver  of the penalty imposed  by the Regional Provident Fund Commissioner . As  held earlier,  there is  no  discretion  left  to  the Commissioner to  totally waive the penalty. What was left to his discretion  is the rate at which it is to be computed by way of penalty. In this case, admittedly, 25% of the damages was computed  as penalty. Since the respondent had deposited the amount  in fixed  deposit  and  it  earned  9%  interest thereon, the  balance amount is required to be deposited and the respondent  is directed  to deposit  the balance  amount within six weeks from today.      The appeals  are accordingly allowed. The writ petition stands dismissed. No costs.