http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 9  

PETITIONER: M/S HINDUSTAN TIMES LIMITED

       Vs.

RESPONDENT: UNION OF INDIA & OTHERS

DATE OF JUDGMENT:       07/01/1998

BENCH: S.B. MAJMUDAR, M. JAGANNADHA RAO.

ACT:

HEADNOTE:

JUDGMENT:                       J U D G M E N T M. JAGANNADHA RAO. J.      This is an appeal preferred against the judgment of the Delhi High  Court dated  28.8.1080 in C.W.P. No. 843 of 1980 dismissing the  Writ Petition  of the  Petitioner. The  writ petition was  filed questioning  the order  of the  Regional Provident Fund  Commissioner  dated  7.5.1980  passed  under section 14-B of the Employees Provident Fund & Miscellaneous Provisions Act,  1952 (hereinafter called the ’Act’) levying damages in  a sum of Rs 44,220.00 and Rs. 1,035.50 for delay in  remitting  the  employees  provident  fund  contribution within the  period stipulated in para 38.10 of the Employees Provident Scheme.  1952 for  the period  July 65, October 65 December, 65  January 66  to March  66, August  66, July 67, August 67, May 68, July 68 to November 68.      The  writ petition was dismissed by a Division Bench of the High  Court on  28.8.80 by  a non-speaking  order merely saying "dismissed".  It is  against the  said judgment  that this appeal has  been preferred.      The facts of the case are as follows:      The appellant  is the  employer. On account of delay in payment of provident fund contributions, a notice was issued on 23.3.71  by  the  Department  complaining  of  delays  in remitting the provident fund amounts for the period July 65, October  65,   December  65  to  March  1966,  August  1966, September 1966,  December 1966  to February  67, July  67 to August 67, January 68, April 68 to November 68 and September 1972 and  stating that  the amounts  were  credited  in  the accounts  of   the  department   only  after   20th  of  the ’following’ months.  The appellant  was requested  to inform whether the  cheques for these months were "tendered" "on or before 20th  of the  following month"  to which  the payment relates. The appellant sent a letter dated 19.12.1872 giving only the  dates on  which the  cheques were  signed  by  the appellant. Therefore,  the department  sent a further letter dated 10.1.1973  asking the  appellant to  furnish "proof of the dates of presentation of cheques".      It does  not appear that the appellant sent any further reply to  the Department. However, there was also no further correspondence from the side of the department. We only have

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 9  

the show cause notice dated 24.3.79 by the department asking the appellant as to why, consequent to delay in the remittal of the  PF contributions,  damages in a sum of Rs. 51,970,10 and administrative  charges in   a sum of Rs. 1215.10 should not be recovered for the period from July 1965 to September, 1972.      The appellant’s  representative attended the hearing of the case  on 1.5.79  and 3.7.79 and finally filed a reply on 5.2.80 raising  various contentions.  A copy  of the  letter dated 23.10.1979  from the  Bank  giving  details  was  also enclosed.  After   referring  to   various  contentions  and rejecting  some   of  them,   the  Regional  Provident  Fund Commissioner stated that the payments for September 1966 and September 1972 were as stipulated in para, 38 of the scheme, and going  by the  dates of  the challans and treating those dates as  the dates  of presentation of cheques in the Bank, the deposits  for December  66,  January  67,  February  67, January 68,  April 68 and June 68 were "treated to have been deposited..... within the time stipulated in para 38" of the Scheme whereas  the rest  of the  payments were  treated  as belated and  amenable to damages. There was also no proof of strikes by  the workers  for the  period 23rd  July to  16th September 1968. The interpretation  of para 38 of the Scheme that "the  question of  payment of contribution should arise only after employees share of contribution has been deducted from their  wages" was  rejected, in  view of para 30, 32 of the Scheme.  It was  also stated  that for collection of the amounts  under   Section  14B,   there  was   no  period  on limitation. The  delay  was  "immaterial".  It  was  however stated that  no formal orders were passed by his predecessor "deciding not  to   raise any  demand", as  contended by the appellant in  the appellant’s  reply dated  5.2.80.  In  the result the  impugned  order  dated  7.5.80  was  passed  for recovery of  Rs. 44,220.00  as damages  and Rs.  1035.50  as administrative charges  as compared to Rs. 51,990.10 and Rs. 1215.15 mentioned in the show cause notice.      In this appeal, learned Senior counsel for the employer Dr. Shankar Ghosh contended that the demand notice issued on 7.5.80 in  respect of alleged belated payments of the period from 1965  to 1968  was arbitrary and unreasonable, that the demand was  dropped in  1971 and must be deemed to have been waived and  that going  by the  dates of  the  cheques,  the payments must  be deemed  to be  in time.  We have heard Sri Harish Chandra for the department.      At the  outset, we  may sat  that the Division Bench of the High Court of Delhi ought to have given reasons at least briefly, which  dismissing the  writ petition  in limine. As stated in Fauja Singh vs. Jaspal Kaur [1996 (4) SCC 461], on the plainest consideration of justice, the High Court should have given  reasons. The absence or reasons has deprived the Supreme Court  from knowing  the circumstances which weighed with the  High Court to dismiss the matter in limine. It was an unsatisfactory  method  of  disposal.  The  necessity  to provide reasons,  howsoever brief,  in support  of the  High Courts’  conclusions   is  too  obvious  to  be  reiterated. Obligation to  give reasons  introduces clarity and excludes or at  any rate  minimises the  chances of arbitrariness and the higher  forum can test the correctness of those reasons. It becomes  difficult for  this Court  in all  such cases to remit the  matters to the High Court inasmuch as by the time cases reach this Court, several years would have passed.      In an  article ’On  Writing Judgments’, Justice Michael Kirby of  Australia [(1990)  (Vol.64. Australian Law Journal p.691)] has approached the problem from the point of view of the  litigant,   the  legal   profession,  the   subordinate

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 9  

Courts/tribunals, the  brother Judges  and the  judges’  own conscience. To  the litigant,  the duty  of the  Judge is to uphold his  own integrity  and let the losing party know why he lost  the case.  The legal profession is entitled to have it demonstrated that the Judge had the correct principles in mind, had  properly applied  them and is entitled to examine the body of the Judgment for the learning and precedent that they provide  and for  the reassurance of the quality of the Judiciary  which   is  still   the   centre-piece   of   our administration of  justice. It  does not  take long  for the profession to  come to  know, including  through the written pages of  published judgments,  the lazy  Judge,  the  Judge prone to errors of fact etc. The reputational considerations are important  for the exercise of appellate rights, for the Judges’ own self-discipline, for attempts at improvement and the  maintenance   of  the  integrity  and  quality  of  our judiciary. From  the point  of view  of  other  Judges,  the benefit that  accrues to  the lower  heirachy of  Judges and tribunals  is   of  utmost  importance.  Justice  Asprey  of Australia had  even said  in Pettit  vs. Dankley  [(1971 (1) NSWLR 376  (CA)] that the failure of a Court to give reasons is an  encroachment upon  the right  of appeal  given  to  a litigant. In  our view,  the satisfaction  which a  reasoned Judgment gives to the losing party or his lawyer is the test of a  good Judgment. Disposal of cases is no doubt important but   quality of  the judgment  is  equally,  if  not  more, important. There  is  no point in shifting the burden to the higher Court either to support the judgment by reasons or to consider the  evidence or  law for  the first time to see if the judgment needs a reversal.      We shall now proceed to take up the main issues arising in this appeal.      Section 14.B  as amended by Act 40/73 w.e.f. 1.11.1973, confers power on the concerned authority to recover damages. Where an  employer makes  default  in  the  payment  of  any contribution to  the Trust  Fund the concerned authority may recover from  the employer  by way  of penalty such damages, not exceeding  the amount of arrears, as may be specified in the scheme.  The section  itself, after  the 1973 amendment, now provides that before levying and recovering damages, the employer shall  be given  a reasonable  opportunity of being hear.  The  scheme  referred  to  in  Section  15-B  is  the Employees Provident  Scheme 1952,  so far  as provident fund contributions are concerned.      Under clause  29 of  the said  Scheme, the contribution payable by  the employer  shall be equal to the contribution payable by the employee. Under clause 32(3).      "any sum  deducted by  an  employer      from the wages of an employee under      this scheme shall be deemed to have      been  entrusted   to  him  for  the      purpose of  paying the contribution      in  respect   of   which   it   was      deducted"      Therefore, the scheme creates a fiction of entrustment.      Clause 38  deals with the mode of payment and says that 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 employees contribution from his  wages which  together with his own contribution as well as  an administrative  charge, shall  be paid within 15 days of  the close  of every month into the Fund by separate bank drafts or cheques,      "Provided that  if the  payment  is      made by  a  cheque,  it  should  be

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 9  

    drawn only on the local bank of the      place in which deposits are made"      This is  obviously meant  for early  clearance and  for payment into the fund.      Clause 52  requires investment  of the monies belonging to the Employees Provident Fund. Clause 60 requires interest to be  credited to  the member’s account. The computation of damages shows  that the  department permits a ’grace period’ of 5  days and  it is  only thereafter  that the damages are computed. Section  11 of  the Act  deals  with  ’penalties’. Further under section 405, Explanation-I of the Indian Penal Code. 1860,  if a  person being  an  employer,  deducts  the employees  contribution   from  the  wages  payable  to  the employees for  crediting  to  a  provident  fund  or  family pension fund  established by  any law  for the time being in force,  the  said  amount  shall  be  deemed  to  have  been entrusted with the amount of the contribution so deducted by him and  in default, the person could be liable for criminal breach of trust.      It appears  that, soon  after 1952  delays in remitting the contributions  under the  Act  became  chronic  and  the arrears payable  to the  Trust Fund  increased from  time to time.  This   was  because  initially  the  maximum  damages awardable was  only 25%  of the  arrears and  no interest is payable. Therefore  by an Amendment in 1973 the damages were increased from  25% to  a maximum  of 100%. The Statement of objects and  Reasons of  the Bill  which  became  Act  40/73 stated that  the arrears in 1959-60 were Rs. 3.65 crores; in March 1970,  they rose  to 14.6  crores and by March 1971 to Rs.20.65 crores. It was stated there that the employers were using  these   monies  "in  their  business".  The  National Commission on  Labour recommended  stringent measures in its 116th Report  which was endorsed by the Estimates Committee, resulting in the 1973 Act.      In Coal  Mines Provident  Fund Commissioner,  Dhanbad & Other vs.  J.Lala &  Sons [1976  (3) SCR  365], interpreting section 10F  of the  Coal Mines  Provident  Fund  and  Bonus Scheme Act,  1948, it  was stated  by this Court that by the use of  the words  ’may levy damages’, in case of default in payment of  contribution, and the words ’as it may think fit to impost’,  it was  clear that  the determination  was  not based on  the inflexible  application of a rigid formula and that by  these words,  the authorities  were to  apply their mind to  the facts  and circumstances of the case. As a duty was judicially  imposed  on  the  authority,  principles  of natural justice  were implied. In Organo Chemical Industries & Another  vs. Union  of India  & Others  [1980 (1) SCR 61], where the vires of the Act were upheld, this Court laid down that while  passing orders under section 14-B, the authority was acting  in a  ’quais-judicial’ capacity and was bound to give reasons  for its  orders. The  levy was not necessarily proportionate to  the loss incurred by the employee inasmuch as it was partly compensatory and partly penal.      Organo case  itself was  one where there were delays in payment of the contributions and the explanations given were rejects. The  order of  the Commissioner  interfered with by the Supreme  Court. There  the default related to the period from March  to October  1975 and again from December 1975 to November, 1976. The show cause notice was issued on 7.6.1977 and in response, the appellants stated that the remittal was delayed "due  to difficulties  beyond their  control and.... there were  disputes between partners of the firm, there was a power-cut  of 60%.....  w.e.f.May 6,  1974 an d there were huge amounts  of  loan  payable  to  the  Haryana  Financial Corporation". However,  the Regional  Provident Commissioner

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 9  

by his orders dated 16.8.1977 rejected all these contentions and held that the obligation to pay these contributions into the fund  was unqualified.  The explanations of the employer were not  acceptable. The  default could  not be linked with the financial  problems facing  the  establishment.  It  was stated by  the Commissioner  that the  50% of  the employees contributions was      "trust  money   with  employer  for      deposit in  the statutor; fund. The      delay in  the deposit  on this part      of the  contributions  amounted  to      breach of trust......."      He also  found that  the appellants  in that  case were Habitual defaulters and that the maximum damages fixed under the Act  was to  be levied,  when the  matter came  to  this Court, A.P.Sen,J.  observed  that  the  default  was  wilful inasmuch as the appellants,      "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"      Krishna   Iyer,J.    in   his    concurrent   judgment, characterised such used as amounting to ’embezzlement’.      As to the manner in which the concerned authority could arrive  at  the  ’damages’,  A.P.Sen,  J.  stated  that  the authority usually takes into consideration, - as was done in that case - the number of defaults, the period of delay, the frequency of  defaults and the amounts involved. The damages were  to  be  compensatory  and  penal  as  well  and  hence principles  of  estimation  of  damages  under  the  law  of Contract or Torts, were not applicable.      The  first contention in behalf of the appellant in the context of  section 14B  is that a period of limitation must be implied  under law  for, according  to the  appellant, it will be  wholly  unreasonable  to  allow  the  power  to  be exercised after the lapse of a large number of years.      Now the  Act does not contain any provision prescribing a  period  of  limitation  for  assessment  or  recovery  of damages. The  monies payable  into  the  Fund  are  for  the ultimate benefit  of the employees but there is no provision by which  the employees  can directly recover these amounts. The power of computation and recovery are both vested in the Regional Provident Commissioner or other officer as provided in section  14-B. Recovery is not by way of suit, initially, it was  provided that  the arrears could be recovered in the same manner  as arrears  of land  revenue. But  by Act 37/53 section 14-B  was amended  providing for a special procedure under section  8-B to  8-G. By  Act  40/73  section  11  was amended by making the amount a first charge on the assets of the establishment  if the arrears of employee’s contribution were for  a period  of more that 6 months. By Act 33/88, the charge was  extended to the employee’s share of contribution as well.      In spite of all these amendments, over a period of more than thirty years, the legislature did not think fit to make any provision  prescribing a  period of  limitation. This in our opinion  is significant  and it  is clear that it is not the  legislative   intention  to  prescribe  any  period  of limitation for computing and recovering the  arrears. As the amounts are  due to  the Trust  Fund and the recovery is not be suit,  the provisions  of the Indian Limitation Act, 1963 are not  attracts. In  Nityanand M. Joshi vs. Life Insurance Corporation of  India [1970  (1) SCR  396], it has been held

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 6 of 9  

that the  Limitation Act,  1963 has no application to Labour Courts  and,   in  our   view,  that  principle  is  equally applicable to  recovery by  the  concerned  authority  under section 14-B. Further in Bombay Gas Co. Ltd. vs. Gopal Bhiva [1964 (3)  SCR 709],  it has been held that in respect of an application  under   section  33(c)(2)   of  the  Industrial Disputes Act,  1974, there  is no  period of  limitation. In that context,  it was stated that the Courts could not imply a period of limitation. It was observed:      "It   seems    that    where    the      legislature has  made no  provision      for limitation,  it  would  not  be      open to  the Court to introduce any      such limitation  on the  grounds of      fairness or justice"      The above  decisions have  been  recently  accepted  in Mukri Gopalan  vs. Cheppilet [1995 (5) SCC 5(at p.20-22)] to which one  of us   (Majmudar,  J.) was a party while dealing with the  applicability of  section 29(2)  of the Limitation Act, 1963  to Courts  or Tribunals. We may also point out in this connection  that several High Courts have rightly taken the view  that there is no period of limitation for exercise of the power under section 14B of the Act.      It is true that a principle has been laid down in State of Gujarat  vs. Patil Raghav Natha [1969 (2) SCC 187], while dealing with  suo motu  revisional jurisdiction  that though there is  no period of limitation prescribed for exercise of that power,  still such  a power  must be  exercised  within reasonable time.  The said  judgment  has  been  applied  in matters relating to section 6 to the Land Acquisition Act in a large number of cases, which were all referred to recently in Ram  Chand vs.  Union of  India [1994 (1) SCC 45]. In our view, this  line of  cases cannot ordinarily apply to monies withheld by a defaulter, who holds them in trust.      The reason  is that while in the above cases decided by this Court the exercise of powers by the authority at a very belated stage  was likely  to result  in the  deprivation of property which  rightly and  lawfully belonged to the person concerned, the  position under  section 14B of the Act of an employer  is   totally  different.   The  employer  who  has defaulted in making over the contributions to the Trust Fund had, on  the other  hand, the  use of  monies which  did not belong to him at all. Such a situation cannot be compared to the above line of  cases which involve prolonged suspense in regard to  deprivation of  property. In fact, in cases under Section 14-B if the Regional Provident Commissioner had made computations earlier and sent a demand immediately after the e amounts  fell due,  the defaulter would not have been able to use  these  monies  for  his  own  purposes  or  for  his business. In  our opinion,  it does  not lie in the mouth of such a person to say that by reason of delay in the exercise of powers  under section  14B, he  has suffered loss. On the other hand,  the defaulter  has obviously had the benefit of the ’boon  of delay’  which "is  so  dear  to  debtors",  as pointed out  by the  Privy Council  in Nagendranath  Dev vs. Suresh Chandra Dev [ILR 60 Cal. 1(PC)]. In that case, it was observed that  equitable considerations were out of place in matters   of   limitation   and   the   strict   grammatical construction alone was the guide. Sir Dinshaw Mulla stated:      "Nor in  such a case as this is the      judgment debtor  prejudiced. Be may      indeed obtain  the boon  of  delay,      which is  so dear to debtors and if      he is  virtuously inclined there is      nothing to  prevent his paying what

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 7 of 9  

    he owes into Court."      The position  of the  employer in case of default under section 14-B is no different.      A learned  Single Judge  of the  Bombay High  Court  in K.T.Rolling Mills  vs. R.M.Gandhi [1994 LLJ. 66] was dealing with a  case like  the  one  before  us  where  the  default occurred because  of the delay in realisation of monies paid by cheques. The recovery proceedings were initiated after 12 years  and  they  were  quashed  solely  on  the  ground  of unreasonable delay  relying upon  Patil Raghav  Natha’s case [1969 (@)  SCC 187]  and other  cases. The said judgment was reversed  in   Regional  Provident   Fund  Commissioner  vs. K.T.Rolling Mills Pvt. Ltd. [1995 (1) SCC 181] by this Court holding that  while it was true that normally powers for the exercised within reasonable time, the order in that case was not liable to be struck down not only because in Maharashtra there were  22, 189  establishments in  1985 - which made if difficult to  monitor delays  - but  also because the monies must have  been used  (by the  employer) for its own purpose and that  too without  paying interest, at the cost of those for whose  benefit it  was meant. Any different stand would, it was held, encourage the employers to thwart the object of the Act, which could not be permitted. We  are in respectful agreement with the above observations.      We shall now refer to the Judgments of some of the High Courts to  cull out  some broad  guidelines. The Orissa High Court  in  Orissa  Forest  Development  Corporation  Ltd.  & Another vs.  Regional Provident  Fund  Commissioner,  Orissa [1995 (71)  IFLR 388  (Orissa)] and   a  Single Judge of the Punjab & Haryana High Court in Amirchand & Sons vs. State of Punjab [AIR  1965 Pun.  441] have held like the Single Judge of the  Bombay High Court in K.T.Rolling Mills case, that if there was undue delay in initiating action under section 14B which the  Court thought  was  unreasonable,  on  that  sole ground the  demand could be struck down. With great respect, this view is, as already stated, clearly wrong. The Judgment of this  Court  in  K.T.  Rolling  Mills  case  having  been reversed by  this Court,  the above  view is  no longer good law. In  fact, the  Punjab judgment  was rightly reversed in appeal in  State of  Punjab vs.  Amirchand  [1964  (37)  FJR 92(P&H)]. The  view taken by the learned Single Judge of the Punjab &  Haryana High  Court in  1965 has also been rightly dissented by the Delhi High Court in Birla Cotton Spinning & Weaving Mills  Ltd. vs.  Union of  India (CWP  390/78) dated 29.7.83: by  the Gujarat High Court in Gandhidham case [1987 LIC 659];  the Patna High Court in M/S Inter State Transport Agency, Sitamarhi  vs. Regional Provident Fund Commissioner, Patna [1984  LIC 940]  and the  Allahabad High  Court in The Northern India  Press  Works  vs.  Regional  Provident  Fund Commissioner, U.P. & Others [1983 LIC 1314 (All)].      The Gujarat  High Court  in Gandhidham  Spinning & Mfg. Co. Ltd,  vs. Regional Provident Fund Commissioner & Another [1987 Lab.  I.C. 659  (Guj.)] (to which, one of us Majmudar, J. was  a party),  laid down a principle that ’prejudice’ on account of  delay could  arise if  it was proved that it was "irretrievable". There  it was observed that for purposes of section 14B, there is no period of limitation prescribed and that for  any negligence  on the  part of  the Department in taking proceedings  the employees,  who are  third  parties, cannot suffer. It was further observed:      "The  only   question  that   would      really survive  is the  one whether      on the facts and circumstances of a      given case,  the show  cause notice      issued after  lapse of  time can be

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 8 of 9  

    said to be issued beyond reasonable      time. The  test  whether  lapse  of      time  is   reasonable  or  no  will      depend  upon   the   further   fact      whether   the   employer   in   the      meantime has  changed his  position      to his  detriment and  is likely to      be irretrievably  prejudiced by the      belated issuance  of  such  a  show      cause notice."      It was also stated that such a defence of irretrievable prejudice on  account of delay, was to be pleaded and proved in the  reply to  the show  cause notice. We may add that if such a  plea is  rejected by  the department,  it cannot  be raised in  the High  Court unless  specifically pleaded. The above principle of prejudice laid down by Gujarat High Court in Gandhidham  Spinning &  Mfg. Co.  Ltd.  (Guj.)  has  been followed by  the Bombay  High  Court  in  S.T.G..  P&D  Mill Prakriya vs.  Regional Provident  Fund Commissioner,  Bombay [1996 (72)  FLR 823  (Bom.)]; M/s Super Processors vs. Union of India & another [1992 Lab. I.C.808 (Bom.)].      A different  aspect of prejudice was referred to in M/s Sushma Fabrics  Pvt. Ltd, vs. Union of India & another [1991 Lab. I.C.1946  (Bom.)] by  a learned  Single  Judge  of  the Bombay High  Court. It  was stated  that in some cases there could be  serious prejudice  on account of abnormal delay in taking proceedings  under section  14B, either  because  the records or  accounts of the defaulter are lost or on account of the  concerned personnel  acquainted with  the facts of a by-gone period no long er being available for unearthing the facts. But  such pleas  must be raised before the department and strictly  proved. In  case such  facts are  proved it is possible  in   some  cases   that  there   is  irretrievable prejudice.      It has  also been  held rightly  that mere delay on the part of  the department could not be treated as amounting to waiver (Divisional  Engineer,  APSEB  vs.  RPF  Commissioner [1979 Lab.  I.C.(AP) 187];  M/S Inter State Transport Agency vs. RPF Commissioner [1983 LIC 940 (Patna)]; State of Punjab vs. Amirchand [1964 (37) FJR 92 (P&H)]. This view is, in our opinion, correct.      We have  already stated  that in  Organo [1980  (1) SCR 61], the  Regional Provident  Fund  Commissioner  held  that power cut financial problems, disputed between partners were not relevant  explanations and  that the  said view  was not interfered with by this Court.      From the  aforesaid decisions, the following principles can be  summarised: The  authority under Section 14-B has to apply his mind to the facts of the case and the reply to the show cause  notice and pass a reasoned order after following principles  of  natural  justice  and  giving  a  reasonable opportunity of  being heard;  the  Regional  Provident  Fund Commissioner usually  takes into consideration the number of defaults, the  period of delay, the frequency of default and the amounts  involved; default  on the  part of the employer based on  pleas of power cut, financial problems relating to other indebtedness  or the  delay in realisations of amounts paid by the cheques or drafts, cannot be justifiable grounds for the  employer to escape liability; there is no period of limitation prescribed  by  the  legislature  for  initiating action for   recovery of damages under section 14B. The fact that proceedings are initiated or demand for damages is made after several years cannot by itself be a ground for drawing an inference  of waiver or that the employer was lulled into a belief  that   no proceedings  under section  14B would be

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

taken; mere  delay in  initiating action  under section  14B cannot amount to prejudice inasmuch as the delay on the part of the  department, would  have only allowed the employer to use the  monies for  his own  purposes or  for his  business especially  when   there  is  no  additional  provision  for charging interest. However, the employer can claim prejudice if there is proof that between the period of default and the date of  initiation of  action under  section  14B,  he  had changed his position to his detriment to such an extent that if the  recovery is  made after a large number of years, the prejudice to  him is  of an "irretrievable" nature: he might also claim  prejudice upon proof of loss of all the relevant records and/or  non-availability of  the personnel who were, several years  back in charge of these payments and provided he further  establishes that  there is  no other  way he can reconstruct the  record or  produce evidence;  or there  are other similar  grounds which  could lead to  "irretrievable" prejudice;  further,   in  such   cases  of  "irretrievable" prejudice, the  defaulter must  take  the necessary pleas in defence in  the reply  to the  show cause  notice  and  must satisfy the concerned authority with acceptable material; if those pleas  are rejected,  he cannot raise them in the High Court unless  there is a clear pleading in the writ petition to that effect.      In  the present case before us, no doubt there is delay of 14  years in initiating action and the damages are levied because of  the delay  in realisation of the amounts paid by cheque where  the amounts were credited into the accounts of the department  beyond the  grace period of 5 days. The plea of strike,  even assuming it to be relevant, was not proved. The plea of the appellant that the department must be deemed to have  dropped the  proceedings in  1971 did not also have any legs  to stand.  There is  no plea  of any irretrievable prejudice either  in the  reply to  the show cause or in the writ petition.      For the  aforesaid reasons,  this appeal  fails and  is dismissed. There shall be no order as to costs.