Labour Law Reporter

2023 LLR 316
ORISSA HIGH COURT
Hon'ble Mr. Biswanath Rath, J.
W.P. (C) No. 16113/2010, Dt/– 16-1-2023

Regional Provident Fund Commissioner, Orissa
vs.
Orissa State Commercial Transport Corporation Ltd.

EMPLOYEES' PROVIDENT FUNDS AND MISCELLANEOUS PROVISIONS ACT, 1952 – Section 14B and 7Q – Employees Provident Fund Scheme 1952 – Para 32A – EPF Authority imposed damages for delayed remittance – In appeal damages were reduced to 10% – Petitioner challenged order of Appellate Tribunal in writ petition – Held, statutory payment has been remitted belatedly – Statute provides rate for charging damages starting with 5% when delay is less than two months, with 25% in case delay is of six months and above – There is no dispute in the mechanism provided for making the assessment – Para 32B also provides scope for reduction or complete waiver of damages in case of an establishment found to be sick – Delayed remittance was due to too stringent financial conditions due to continuous losses – This is not case of non-payment – Beneficiaries are entitled only to interest – Imposition of damages is to ensure the success of the measure – Purpose of section 14B of the Act is by way of check measure to stop repetition of such conduct in future and not as a penal measure strictly – Intention of the statute is never to earn profit as it is a scheme only for the benefit of beneficiary and beneficiary undisputedly not benefited by earning of damage at higher rate – Petitioner herein is not able to disclose any tress on the period of delay – Writ Petition thus stands dismissed. Paras 7 to 9

Biswanath Rath, J.–1. Appearance memo filed by Mr. Mohanty, learned counsel for the O.S.C.T.C. Ltd. in Court today be kept on Record.

2. This Writ Petition involves a challenge to the Appellate Authority's order under the provisions of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 (hereafter called as, “the Act”) at Annexure-7 in ATA 461 (10) of 2006.

3. Background involving the case is a section 14B of the Act, proceeding was initiated at the instance of the present Petitioner involving delayed payment of contribution for the period from 5/1997 to 25.07.1998 by the Opposite Party establishment. Through Annexure-1, it has been established that the Petitioner, the Authority's decision in the charging of damage and interest for deferred payment involved herein has been established. Through Annexure-2, establishes service of copy of notice under section 14B of the Act on the Opposite Party herein. Annexure-3 discloses filing of show cause by the Opposite Party in the proceeding under section 14B of the Act. Through Annexure-4, this Court finds, there was asking for submitting month wise break up, however a reply to the same was filed on 19.11.2005 stating that Files are not available. Considering the explanation of the Opposite Party, this Court finds, there is levying of damage as well as interest by the R.P.F.C. against the Petitioner claiming in terms of Para 32A of the Act. An Appeal being filed by the Opposite Party in challenge to the assessment by the R.P.F.C. was entertained and ultimately, vide Annexure-7, the Appeal was allowed on reduction of the damage charged by the R.P.F.C. from 25% to 10% as disclosed in the impugned order, vide Annexure-7 along with interest @ 12%.

4. Taking this Court to the power of the Authority involving assessment under the provision of section 14B of the Act read together with the provision at Para 32A of the Act, Mr.Pattnaik, learned Senior counsel for the Petitioner attempted to satisfy the Court that there is justification in bringing the assessment by the R.P.F.C. charging at the rate indicated in the assessment order. In challenge to the impugned order of the Appellate Authority, Mr. Pattnaik, learned Senior counsel submits, the consideration at the Appeal stage is clearly in violation of mechanism provided in Para 32A of the Act. In the circumstance, Mr. Pattnaik, learned Senior counsel for the R.P.F.C. claims interference in the Appeal order.

5. Mr. Mohanty, learned counsel for the Opposite Party, on the other hand, again taking back to the narration already made hereinabove submitted neither the notice at Annexure-2 nor the assessment made by the R.P.F.C. involves any disclosure as to what is the delay in making the statutory payment involved. In the circumstance, taking this Court to the impugned order, an attempt is made to justify the impugned order thereby requesting this Court to dismiss the Writ Petition for having no merit.

6. Considering the rival contention of the Parties, this Court for the reliance of section 14B of the Act together with Para 32A and 32B of the Scheme by counsel for both side finds both reads as follows:–

32A. Recovery of damages for default in payment of any contribution .—(1) Where a employer makes default in the payment of any contribution to the Fund, or in the transfer of accumulation required to be transferred by him under sub-section (2) of section 15 or sub-section (5) of section 17 of the Act or in the payment of any charges payable under any other provisions of the Act or the Scheme or under any of the conditions specified under section 17 of the Act, the Central Provident Fund Commissioner or such officer as may be authorized by the Central Government by notification in the Official Gazette in this behalf, may recover from the employer by way of employer by way of penalty, damages at the rates given in the table below:–

Sl. No.	Period of default	Rate of damages (Percentage of arrears per annum)
(1)	(2)	(3)
(a)	Less than 2 months	Five
(b)	Two months and above but less than four months	Ten
(c)	Four months and above but less than six months	Fifteen
(d)	Six months and above	Twenty Five

32B. Terms and conditions for reduction or waiver of damages .—The Central Board may reduce or waive the damages levied under section 14B of the Act in relation to an establishment specified in the second proviso to section 14B, subject to the following terms and conditions, namely,

Reading together the provision at section 14(B) of the Act as well as Para 32A of the Scheme therein, this Court finds, there is no dispute that there is delay in making statutory payment by the Establishment involved herein. For the clear provision providing mechanism to charge at particular rate for the particular delay in deposit starting with 5% with delay less than two months ending with 25% in case of delay of six months and above, this Court finds, there is no dispute in the mechanism provided for making the assessment, which however remains to be considered. Para 32B also provides scope for reduction in the rate of damage. This provision even authorizes complete waiver of damages in case of an establishment found to be sick.

7. Taking into account the allegation on delay in making the statutory deposit in reading through the notice at Annexure-2, the response of the Petitioner in the Appeal proceeding as Respondent further the pleading in this Writ Petition, this Court nowhere finds any disclosure at least disclosing the period of delay in making the deposit for the period from 5/1997 to 25.07.1998 except there is only statement appears to be that there has been delay in making the payment for the aforesaid period. It is strange to observe here that even though the R.P.F.C. having all such information with it, there is nothing indicated in the issuing of Annexure-2 a document filed by the R.P.F.C. itself. In the interest of justice, there should have been statement indicating period of deposit, time for deposit and date of actual deposit at least in establishing that there is certain delay. The notice at Annexure-2 is absolutely silent. Pleadings in Writ Petition also remain absolutely silent on this aspect. It is at this stage, looking to the factual scenario available even though there are pleadings through the notice as well as the response of the R.P.F.C. before the Appellate Authority, this Court finds, no tress to the period of delay.

8. Reading the response and Appeal grounds by the Establishment, this Court finds, there was stringent financial conditions with the establishment at the relevant point of time. It is undisputed that the Company was closed as it has sustained loss continuously. Further undisputed fact remains there is payment of dues for the specific period but later on. This is not a case of non-payment but a case of deferred payment. Beneficiaries of such payment only entitled to interest for such lapses but not beyond their admissible interest and if the R.P.F.C. matched such amount in the account of beneficiaries, there is no material forth coming. The Hon'ble apex Court keeping in view all such materials in the case of Organo Chemical Industry v. Union of India, AIR 1979 SC 1803 held the conferral of power to award damages under section 14B of the Act to ensure the success of the measure. Further the provision at section 14B is by way of check measure to stop the repetition of such conduct in future and not as a penal measure strictly. Further since the order of closure of the Opposite Party was under the order of Government, the issues were definitely out of control of the Establishment, the Opposite Party. Besides the claim of Establishment damages @ 25% following provision at Para 32A of the Act appears to be bereft of any proof that there was so much delay warranting damage at such rate.

Intention of the statute is never to earn profit as it is a scheme only for the benefit of beneficiary and the beneficiary undisputedly not benefited by earning of damage at higher rate.

9. In the circumstance and the Petitioner herein is not able to disclose any tress on the period of delay and for the Appellate Authority reducing the assessment in terms of Clause-B of the Table in Para 32A of the Act with disclosure of reasons, this Court finds, there is no scope in interfering with such order.

10. In course of hearing notice of this Court has been drawn on the order dated 27.01.2015, in dismissal of the Writ Petition at the instance of present Opposite Party also involving impugned order herein. This development is taken on record only.

11. The Writ Petition thus stands dismissed for having no substance. No cost.