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CASE NO.: Appeal (civil)  3848 of 2000

PETITIONER: Halwasia Vidya Vihar (Sr.Sec.School) Haryana     

RESPONDENT: The Regional Provident Fund Commissioner              

DATE OF JUDGMENT: 27/03/2006

BENCH: ARIJIT PASAYAT & TARUN CHATTERJEE

JUDGMENT: J U D G M E N T

ARIJIT PASAYAT, J.              Challenge in this appeal is to the judgment rendered by a  Division Bench of the Punjab and Haryana High Court holding  that the appellant was required to pay damages in terms of  Section 14(B) of the Employees Provident Funds and  Miscellaneous Provisions Act, 1952 (in short the ’Act’)  amounting to Rs.14,50,172/-.   

       Brief reference to the factual aspects would suffice:-

       The appellant, an educational institution was affiliated to  the Education Department to the Haryana Government.  A  scheme of contributory provident fund was in operation which  was under the control and guidance of the Haryana  Government and same was being applied to the appellant- institution.  Under the said scheme of contributory provident  fund it was mandated that an account shall be opened in the  name of each subscriber in a Cooperative Bank approved by  the Registrar, Co-operative Societies, Haryana. Appellant  transferred its affiliation to Central Board of Secondary  Education (in short ’CBSE’) in April, 1984 after obtaining no  objection certificate from the State Government. As per  C.B.S.E. bye-laws, appellant was required to follow the State  Government Rules regarding salary and service conditions of  its staff members.  Accordingly, the scheme of contributory  provident fund which was earlier being followed by the  appellant, continued to be operative. On being asked by the  Regional Provident Fund Authorities the scheme under the Act  was adopted by the appellant w.e.f. 1.7.1993; but the same  was made operative retrospectively w.e.f. August 1982 by the  authority. Thereafter in respect of each employee the provident  fund contributions were deposited with the Regional Provident  Fund Commissioner. The accumulated balance in the  contributory provident fund accounts of the various employees  was transferred by the Department of Education, Haryana to  the Employees Provident Fund Scheme under the Act in May  and June, 1995 and an amount of Rs.17,33,914.60 was  transferred by the Haryana Government. On 5.2.1996,  proceedings under Section 7(A) of the Act were initiated.   Taking into account the amount payable on assessment and  giving credit to the aforesaid amount, it was held that there  was extra deposit of Rs.44,031.85.  Therefore, the proceedings  were dropped and no recovery was effected. On 14.2.1997  notice under Section 14(B) of the Act was issued covering the  period August, 1982 to June 1993.  Reply was furnished by

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the appellant taking the stand that since the deposit had been  made with the Government Authorities in terms of the  applicable scheme, there was no scope of levy of any damage.   However, the Commissioner imposed damages of  Rs.14,50,172/- which was about 100% of the alleged amount  of default. For the purpose of levy reference was made to the  table contained in Section 32A.  An appeal was filed before the  Statutory Tribunal, i.e. Employees Provident Fund Appellate  Tribunal, New Delhi (in short the ’Appellate Tribunal’).  In  appeal it was held that there was no default in view of the  circumstances noted above. A writ petition was filed  challenging the order before the High Court taking the stand  that there was no power to waive/reduce the damages except  in terms of the circumstances indicated in Section 14(B)  (proviso).  The High Court placed reliance on a decision of this  Court in Regional Provident Fund Commissioner v. S.D.  College, Hoshiarpur and Ors. (1997 (1) SCC 241) and held that  the penalty as levied by the Commissioner were to be  maintained.   

       In support of the appeal learned counsel for the appellant  submitted that there was absolutely no remiss on the part of  the appellant which had scrupulously followed the scheme of  the State Government. There was a transfer of the amount  which would show that by no stretch of imagination it can be  conceived that there was any default, muchless intentional.  It  was pointed that S.D. College’s case (supra) has no application  to the facts of the present case.  In that case the college in  question continued to deposit the amount with the university  in spite of the directions of this Court, and there the quantum  of damages was reduced to 25%.  

       Learned counsel for the respondent-Commissioner  submitted that the appellant was aware of its liability and had  filled up the form to make the deposits with the provident fund  authorities but continued to make the deposit with the State  Government.  That being so, the High Court was justified in its  conclusions.

       Section 14-B reads as follows:-

"14-B. Power to recover damages. - Where an  employer makes default in the payment of any  contribution to the Fund (the Family Pension  Fund of 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 recover from the  employer by way of penalty such damages, not  exceeding the amount of areas, 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

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is a stick 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 (1 of 1986),  subject to such terms and conditions as may  be specified in the Scheme."  

       Therefore, reduction or waiver can be done in the  indicated circumstances. In S.D. College’s case (supra) this  Court took note of the fact that by order dated 29th January,  1988 the respondent-college authorities were directed to  deposit the contribution with the appellant-Commissioner  thereby there could be compliance of statutory obligation to  deposit the amount in the manner as directed, from February  1988 onwards. But the college authorities continued to deposit  the amount with the University. It is to be noted that the  factual background in that case was somewhat different.  In  the instant case there was no allegation that there was any  delay in making the deposit with the Government under the  scheme which was being followed by the appellant.  Even  otherwise in S.D. College’s case (supra) also this Court did not  maintain the levy of damages at 100% and reduced it to 25%.  Taking into account the special features involved, we direct  that the damage imposed shall be restricted to 25% of the  amount levied by the respondent-Commissioner.  

Appeal is allowed to the aforesaid extent without any  order as to costs.