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PETITIONER: COAL MINES PROVIDENT FUND COMMISSIONERDHANBAD & OTHER

       Vs.

RESPONDENT: J. LALA & SONS

DATE OF JUDGMENT13/02/1976

BENCH: RAY, A.N. (CJ) BENCH: RAY, A.N. (CJ) BEG, M. HAMEEDULLAH SINGH, JASWANT

CITATION:  1976 AIR  676            1976 SCR  (3) 365  1976 SCC  (1) 964  CITATOR INFO :  R          1979 SC1803  (39)

ACT:      Coal Mines  Provident Fund  and Bonus  Scheme Act  1948 (XLVI of  1948)-  Section  IOF  and  78-Payment  of  damages payable by  the employer-Whether  the Coal  Mines  Provident Fund Commissioner  should give  an hearing  to the employer- Meaning of  the words  "such damages".. "as ft may think fit to impose".

HEADNOTE:      Section IOF  of the Coal Mines Provident Fund and Bonus Scheme Act  1948 is  a penal section under which for default in the  payment of  any  Provident  Fund  contribution,  the Central Government  may recover from such employer or person as the  case may  be, such damages, not exceeding 25% of the amount of arrears, as it may think fit to impose. ln respect of tho  period from  July to September, 1968, the respondent employer was  asked to  pay a  sum of Rs. 1455.50 as damages being 25%  of the arrears of Provident Fund contributions by the appellant  to which he filed an objection explaining the delay. The  employer’ request  for waiving  the damages  was negatived. The writ application of the employer against that order was allowed by the High Court on two grounds, viz. (i) that  the   computation  of   damages  should   arise   upon consideration of  the facts  and circumstances, and (ii) the authorities should have given an opportunity to the employer to represent the case.      Dismissing the appeal by special leave, the Court. ^       HELD:  ( I  ) The  provisions contained in a 78 of the Act indicate  first  that  the  Coal  Mines  Provident  Fund Commissioner may determine the amount due from the employer, and second,  for this purpose he may conduct such enquiry as he  may   deem   necessary.   Therefore,   an   enquiry   is contemplated.  Section   78  (3   )  speaks   of  reasonable opportunity being  given to  an employer  to  represent  his case. The provision in s. 10F of the Act also indicates that determination of  damage is  not a  mechanical process.  The words of  importance in  s. 10F of the Act are "such damages not exceeding 25 per cent of tho amount of arrears as it may

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think fit  to impose".  Here the  two important features are these: First  the  words  of  importance  are  "damages  not exceeding 25%  show that the determination of damages is not an inflexible  application of the rigid formula. Second, the words "as  it may  think fit  to impose" in s. 10F show that the authorities  are required  to apply  their mind  to  the facts and circumstances of the case. [368A-C]      (2) When  a body or authority has to determine a matter involving  rights   judicially,  the  principle  of  natural justice is implied if the decision of that body or authority affects individual rights or interest. [368E-E]      Indian Sugars  & Manufacturers Ltd v. Amravati Services Co-operative Society  Ltd. Anr.  r[1976] 2  S.C.R.  740  and State of  Punjab v.  K R.  Erry k  Sobhag Rai Mefta [1973] 2 S.C.R. 405, applied.

JUDGMENT:      CIVIL APPELLATE  JURISDICTION: Civil Appeal No. 1363 of 1974. Appeal  by special  leave from  the judgment and order dated the 20th May, 1971 of the Patna High Court at Patna in C.W.J.C. No. 306      L. N. Sinha and Girish Chandra, for the appellants      S. N.  Mishra, B.  P. Singh and A K Srivastava, for the respondents.   9-L522SCI/76 366      The Judgment of the Court was delivered by      RAY, C.J.-This  appeal by  special leave  turns on  the question whether  the Coal Mines Provident Fund Commissioner is to  hear an employer before making an order requiring the employer to  pay damages under section 10F of the Coal Mines Provident Fund  and  Bonus  Scheme  Act,  1948  (hereinafter referred to as the Act).      The employer  being the  respondent to  this appeal was directed  by  a  letter  dated  3/4  January,  1969  to  pay provident fund  contributions amounting  to Rs.  5821.21 for the months  of July  to September,  1968 and  damages at the rate of  25 per  cent on  the above  dues amounting  to  Rs. 1455.5O. The  employer was required to pay damages under the provisions of section 10F of the Act.      The  employer   filed  an   objection  explaining   the circumstances under  which there was delay in the payment of provident  fund  contributions.  The  employer  prayed  that damages might  not be imposed at the rate of 25 per cent for the delay  in payment.  The employer paid the provident fund contributions.  The   employer  was  informed  that  damages charged  on   the  delayed   payments  of   provident   fund contribution could not be waived.      The employer  thereafter filed  an application  in  the High Court  for an  order that the demand notice be quashed. The High  Court acceded  to the application of the employer. The High Court gave two reasons. First, that the computation of amount  of damages  should arise  upon  consideration  of facts and  circumstances and  a  mechanical  computation  of damages is  not contemplated. Second, the authorities should have given  opportunity to  the employer  to . represent the case.      The High  Court did  not accept  the contention  of the employer that  section 10F of the Act suffered from the vice of excessive delegation.      The provision  contained in  section 10F of the Act are as fol lows:-           "Where an employer makes default in the payment of

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    any contribution  or bonus  or any  charges payable- by      him under  any scheme  framed under  this act, or where      any person  who is  required to transfer provident fund      accumulations in  accordance  with  the  provisions  of      section 3D  makes  default  in  the  transfer  of  such      accumulations, the  Central Government may recover from      such employer  or person,  as the  case  may  be,  such      damages, not  exceeding twenty-five  per  cent  of  the      amount of arrears, as it may think fit to impose."      The Central Government under sub-section (1) of section 10 C  of  the  Act  is  authorised  to  delegate  any  power exercisable by  it under  the  Act,  or  any  Scheme  framed thereunder, to the Coal Mines Provident Fund Commissioner or any other officer.      The  Central   Government  in  exercise  of  the  power conferred under  section 10C(1)  of the  Act by notification dated 1st October, 367 1966 directed  that powers  exercisable by it under sections 10A and  A 10F of the Act and specified in column (1) of the Table attached  to the  notification shall,  subject to  the conditions specified  in the  corresponding entry  in column (2) of  the Table attached, be exercisable by the Coal Mines Provident Fund Commissioner appointed under section 3C(l) of the Act.  There is  a Schedule  attached to the notification where sliding scale of damages has been fixed by the Central Government under  section  10F  of  the  Act.  The  Schedule attached to the notification is as follows:-           "Sliding rate of recovery of damages under section      10F of  the Coal  Mines Provident Fund and Bonus Scheme      Act, 1949." C  S.No. of Period of defaultault , duting one over over over  over over the year. month one two three four five or less  month months months months months up to up to up to up to        two three fourfive months months months months       2 3 4 5 6 7 Ist default  2% of S% of 18% of 15% of 20% of 25% of arrears alTears alTears  arrears arTears arrears 2nddefault S% " IO% " 15%  " 20% " 25% " 2S% " 3rd default IO% " IS% " 20% " 2S% " 2S%  " 2S%  " 4thdefault IS% " 20% " 2S% " 2S% " 2S% " 2S% 5th default  20% "  2S% "  2S% "  2S% "  2S% "  2S% " 6th or subsequent 2S% " 2S% " 2S% " 2S% " 2S% " 2S% " default li      Under section  78 of  the Act  the Coal Mines Provident Fund Commissioner  or any  other officer  authorised in that behalf by  the Central  Government may,  by order, determine the amount due from any employer under any provision of this Act or any scheme framed thereunder and for this purpose may conduct such enquiry as he may deem necessary. Section 78(3) also contemplates  giving of  reason-  able  opportunity  to represent the  case. The High Court held that the provisions of section 78 are attracted in the case of an order relating to  determination   of  damages  for  delay  in  payment  of contribution under the Act.      The Solicitor  General contended that section 78 of the Act does not apply for two reasons. First, section 78 of the Act would  be applicable  only  where  liability  is  to  be determined. Neither  liability to pay nor default in payment is disputed  in the  present case. Second, under section 10F of the Act the amount of damages is quantified and a 368      personal hearing  is not necessary because the employer has said  everything in  his representation and an order for payment of damages is not one of punishment.      The provisions  contained in  section  78  of  the  Act indicate  first   that  the   Coal  Mines   Provident   Fund

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Commissioner may determine the amount due from the employer, and, second, for this purpose he may conduct such enquiry as he  may   deem   necessary.   Therefore,   an   enquiry   is contemplated. Section 78(3) speaks of reasonable opportunity being given  to an  employer  to  represent  his  case.  The provisions in  section 10F  of the  Act also  indicate  that determination of  damages is  not a  mechanical process. The words of  importance in  section 10F  of the  Act are  "such damages not  exceeding 25  per cent of the amount of arrears as it  may think  fit to  impose". Here  the  two  important features are  these. First,  the  words  of  importance  are "damages not  exceeding 25  per cent". These words show that the  determination   of  damages   is  not   an   inflexible application of a rigid formula. Second, the words "as it may think fit to impose" in section 10F of the Act show that the authorities are  required to  apply their  mind to the facts and circumstances of the case.      This Court  in The  India Sugars and Refineries Ltd. v. Amravathi Service  Co-op. Society  Ltd. &  Anr. etc.(l) said that  "situations   in  which  a  duty  will  arise  to  act judicially  according  to  the  natural  justice  cannot  be exhaustively enumerated. A duty to act judicially will arise in the exercise of a power to deprive a person of legitimate interest or  expectation that  addition price would be paid. The facts  which point  to an  exercise of powers judicially are  the   nature  of  the  interest  to  be  affected,  the circumstances in  which the  power falls to be exercised and the nature  of the  sanctions, if any involved". When a body or authority  has to  determine a  matter  involving  rights judicially the  principle of  natural justice  is implied if the decision  of that  body or  authority affects individual rights or  interests. Again,  in such cases having regard to the particular  situation it would be unfair for the body or authority not to have allowed a reasonable opportunity to be heard. (See  State of  Punjab v.  K. R.  Erry &  Sobhag  Rai Mehta.(2)      The  High   Court  was   correct  in  holding  that  an opportunity should  have been  given to  the employer  to be heard before  the damages  were determined.  The appeal  is, therefore, dismissed with costs.                    S. R.Appeal dismissed. (1) [1976] 2 S.C.R. 740.            (2) [1973] 2 S.C.R. 405. 369