Judgment:
S.K. Jain, J.
1. This one single judgment will dispose of LPA Nos. 1101 and 1102of 1984 as also Civil Writ Petition No. 2261 of 1985 as identical questions of fact and law are involved in all of them.
2. The petitioners in the above mentioned three cases are the Public Limited Companies registered under the Companies Act. They were obliged to comply with the provisions of the Employees Provident Funds and Miscellaneous Provisions Act; 1952 (hereinafter referred to as the Act.) Each one of them had applied to the appropriate Government for exemption from the operation of the provisions of the Act as they desired to deposit their respective provident fund contributions in a fund managed by a private trust known by the name of Birla Industries Provident Fund, Calcutta, as the terms of the aforesaid private trust were more beneficial to their employees. Pending their applications under Section 17(1) of the Act for exemption from the operation of the provisions of the Act and the Scheme, the companies applied under paragraph 79 of the Scheme for interim relaxation. The said relaxation was granted by the Regional Provident Fund Commissioner. The said relaxation could be withdrawn for breach of any of the conditions stipulated therein and reviewed for any other sufficient cause, For some default allegedly committed by the petitioner-companies, the interim relaxation order was withdrawn with immediate effect. The result thereof was that the petitioners were rendered liable to transfer accumulations from the existing fund of the establishment to the statutory fund as required under paragraph 28 of the Scheme within a period of ten days of such rejection in the case of cash, and within thirty days in the case of securities, as also to pay administrative charges payable under paragraph 38 of the Scheme. The petitioners neither deposited cash within 10 days nor diverted securities within a period of 30 days as conditioned in the relaxation order. The said default having been committed by them, a show cause notice was issued to each of these Companies telling that it was liable to pay damages under Section 14B of the Act on account of delayed deposits.
3. The two companies in LPA Nos. 1101 and 1102 of 1984 had committed a default in transfer of accumulations in as much as each one of them had remitted the amount 2 months and 11 days after the date of withdrawal of the interim relaxation. The petitioner in C.W.P. No. 2261 of 1985 had committed various defaults during the period w.e.f. June 1981 to March 1982. Resultantly, the Regional Provident Fund Commissioner vide orders impugned before the learned Single Judge imposed damages under Section 14B of the Act to the extent of 10% on each of the Companies in the two Letters Patent Appeals whereas in C.W.P. No. 2261 of 1985, he imposed damages as under:
Nature of Damages
Amount Rs.
AccountNos.
1.
P.F.Contributions (less amountof interest paid by the Company on 28.5.83)
18,469.20 (-) 3,286.50 15.182.151.
2.
F.P.F. Contributions
3,010.15
10
3
Administrative Charges
378.90
2.
4.
E.D.L.I. Contributions
512.95
21.
5.
A.D.L.I. Admn. Charges
102.40
22.
4. M/s. Taylor Instrument Company Limited challenged the said order of the Commissioner by way of C.W.P. No. 3476 of 1978 whereas M/s. Showtamp Engineering Company Limited filed C.W.P. No. 775 of 1979. Both these petitions were heard and decided by a single Bench of this Court vide order of August 22, 1984. It was held that the impugned order of the Provident Fund Commissioner was not a speaking order to satisfy the test of Section 14B of the Act as also the law laid down by the Supreme Court in Organo Chemical Industries and Anr. v. Union of India (1979-II-LLJ-416). Resultantly, the impugned order was quashed leaving it open to the Provident Fund Commissioner to reconsider the matter in accordance with law. The said judgment of August 22, 1984 of the learned single Judge has been challenged by the Regional Provident Fund Commissioner in the aforementioned two letters patent appeals.
5. M/s. Golden Insulation and Engineering Ltd. has instituted C.W.P. No. 2261 of 1985. This petition was also directed to be heard along with above mentioned letters patent appeals as at the time of preliminary hearing it was submitted that the question of law identical to the one embraced by the above said letters patent appeals was also involved in this writ petition.
6. Shri Ashok Aggarwal, Senior Counsel for the Regional Provident Fund Commissioner, has vehemently argued that the learned Single Judge had fallen into error in holding that even if sum has cumulatively been assessed, the sum in the nature of very things requires to be bifurcated. His argument is that since it was a case of delayed transfer of accumulations, the question of bifurcation of the sum imposed as damages would not arise. In support of his argument, he has taken us through the provisions of Section 14B of the Act and has submitted that the said section has two parts. The first part deals with defaults by the employer in payment of contribution to the funds whereas the second part takes care of default in transfer of accumulation required to be transferred by the employer under Sub-section (2) or Section 15 or Sub-section (5) of Section 17 or in the payment of any charges payable under any other provisions of the Act or of any Scheme or insurance scheme or under any of the conditions specified under Section 17 of the Act and since the case involved in the two letters patent appeals was that of delay in transfer of accumulations, no bifurcation of damages as envisaged under Section 14B was required to be done.
7. In reply, Shri R.S. Mittal, learned Senior counsel for the Companies in the two patent appeals, has urged that default in remittance of the accumulations was of about 2 months and 11 days and that for the said period too the company had made payment of interest voluntarily towards reparation and, therefore, according to him, such a minor default should not have attracted damages @10% which comes to Rs. 151461.40 paise. He has further submitted that the petitioners in the two letters patent appeals were not habitual defaulters and, therefore, while fixing damages @10%, the Commissioner was required to bifurcate the damages showing as to what amount had to go towards reparation and what amount towards punitive damages.
8. We have heard the learned counsel for the parties at length and have gone through the record.
9. It is now settled law that where an authority makes an order in exercise of a quasi-judicial function, it must record its reasons in support of the order it makes. Every quasi-judicial order must be supported by reasons. That has been laid down by a long line of decisions. Fair play in Administration is a final Juristic facet, at once fundamental and inviolable and natural justice is an inalienable functional component of quasi-judicial acts. Here, it is indubitable that the imposition of damages on a party, after a statutory hearing, is a quasi-judicial direction. The Supreme Court as well as this Court has impressed the requirements of natural justice on such jurisdictions and one such desideratum is spelling out reasons for the order made, in other words, a speaking order. The inscrutable face of a sphinx is ordinarily incongruous with a judicial or quasi-judicial performance. It is, in our view, an imperative of Section 14B that the Commissioner shall give reasons for his order imposing damages on an employer. The constitutionality of the power, tested on the anvil of Articles 14 and 19, necessitates this prescription. Such a guarantee ensures rational action by the officer, because reasons imply relevant reasons, not capricious ink and the need for cogency rivets the Officer's mind to the pertinent material on record. Moreover, once reasons are set down, the order readily exposes itself to the writ jurisdiction of the Court under Article 226 so that perversity, illiteracy, extraneous influence, mala fides and other blatant infirmities straight get caught and corrected. Thus, viewing the situation from the conspectus of requirements and remedies, statutory agencies may be inhibited and the scare of arbitrary behaviour allayed once reasons are required to be given.
10. The power of the Regional Provident Fund Commissioner to impose damages under Section 14B is quasi-judicial function. The discretion to award damages could be exercised within limits fixed by the Statute. Having regard to the punitive nature of the power exercisable under Section 14B and the consequences that ensue therefrom, an order under Section 14B must be a speaking order containing the reasons in support of it. The guidelines are provided in the Act and its various provisions, particularly in the word 'damages' the liability for which arises in Section 14B on the 'making of default' while fixing the amount of damages, the Regional Provident Fund Commissioner usually takes into consideration various factors, viz., the number of defaults, the period of delay, the frequency of defaults and the amounts involved. The word 'damages' in Section 14B lays down sufficient guidelines for him to levy damages.
11. Though damages under Section 14B are cumulative and can run to a figure which may come to 100% but there is no warrant to assume that it was not required to give details as to what weighed with the mind of the Commissioner in arriving at a particular percentage. More so, because the employers suffer damages equivalent to interest for the period of delay in the transfer of accumulations and this amount has to flow to them as reparatory damages whereas some amount has to be imposed on the defaulter Company as penalty. This amount has to go towards the Fund as constituted under Section 5 of the Act and while considering the punitivity of the damages, the Commissioner has to take into account the period of delay, the amount involved and other relevant factors. In holding the above view, we are fortified by the ratio laid down in Organo Chemical Industries case (supra).
12. Since the Commissioner has not disclosed in his order, while considering punitivity of damages, the aforesaid aspects of the matter, the learned Single Judge was justified in concluding that his order was not a speaking order in terms of Section 14B of the Act.
13. For the foregoing reasons, we do not find any fault with the impugned judgment which is hereby affirmed.
14. So far as Civil Writ Petition No. 2261 of 1985 is concerned, a perusal of the order Annexure P-1 shows that the Provident Fund Commissioner has given detailed reasons for imposing damages so much so that he has quantified damages under various heads. Therefore, in our view, the said order is not covered by the judgment of the learned Single Judge. No illegality can be found in the order of the Commissioner Annexure P-1 which is hereby affirmed.
Consequently, Letters Patent Appeals Nos. 1101 and 1102 of 1984 and Civil Writ Petition No. 2261 of 1985 are hereby dismissed with costs. Counsel's fee Rs. 1000/- in each case.
The parties in the two letters patent appeals are directed to appear before the Regional Provident Fund Commissioner, Faridabad, on August 7, 1992.