S.K. Keshote, J.
1. The petitioner, New Commercial Mills Company Ltd. Ahmedabad challenges by this Sp. Civil Application the order of the respondent No. 2., Regional Provident Fund Commissioner, Gujarat State, at Ahmedabad dated March 8, 1982, Annexure 'A' made under Section 14-B of the Employees' Provident Funds & Miscellaneous Provisions Act, 1952, (hereinafter referred to as 'the Act, 1952') ordered therein to recover by way of penalty the damages to the extent of 100% or delayed payment of contribution to the fund. The damages ordered to be recovered is to the tune of Rs. 9,51,650/-. The delayed payment has been made by the petitioner of the provident fund contribution including family pension fund contribution for the months of May, June, July and August 1980 which is the subject matter of the consideration by the Regional Provident Fund Commissioner under the impugned order. The learned Counsel for the petitioner does not dispute that the Regional Provident Fund Commissioner has the power to order the recovery of penalty by way of damages for delayed payment of the contribution under Section 14-B of the Act, 1952, but he made three fold contention in support of his case.
2. Firstly, he has contended that the petitioner has been given the show-cause notice to show-cause why 50% of the amount of the arrears should not be ordered to be recovered by way of damages for the delayed payment of the contribution whereas the recovery has been ordered to be of 100% amount of arrears as damages. The Regional Provident Fund Commissioner could not have ordered for the recovery of the damages by way of penalty more than what it has decided to recover under the show-cause notice given to the petitioner.
3. It has next been contended by the learned Counsel for the petitioner that for earl ier defaults immediately preceding the default in question, the damages were sought to be levied at the rate of 1 % of the contribution whereas for the later months the damages has been ordered to be recovered at the rate of 100% of the amount of arrears.
4. Lastly, the learned Counsel for the petitioner has contended that the Commissioner while deciding the matter has not taken into consideration the financial constraints of the petitioner-Company. In support of his contentions, the Counsel for the petitioner placed reliance on the decision of this Court in the case of State of Gujarat Textile Mills Ltd. v. Regional Provident Fund Commissioner, Ahmedabad and Anr., reported in 1992(2) GLR 1630. Further argument has been made by the counsel for the petitioner that the Regional Provident Fund Commissioner could not have ordered for recovery of the damages by way of the penalty in the present case, as the petitioner company is a sick industrial company.
5. On the other hand, Shri J. D. Ajmera, learned Counsel for the Respondent No. 1 contended that Section 14-B of the Act, 1952 empowers the authority to order for recovery of the damages to the extent of the 100% amount of arrears, and as such, even if in the show-cause notice 50% was proposed to be recovered by way of penalty of the amount of arrears, while considering all the aspects the authority was within its competence to order for recovery of 100% of the amount of arrears as damages. The learned Counsel for the respondent No. 1 further contended that the petitioner-Company is habitual defaulter in making the payment of the contribution, and as such, 100% of the amount of arrears has rightly been ordered to be recovered as damages. Replying to the second contention of the Counsel for the petitioner, Shri Ajmera with all vehemence at his command contended that the earlier notice of the authority given for 1% of the amount of arrears to be recovered as damages was wholly arbitrary and unjustified. Looking to the conduct of the petitioner, who is a habitual defaulter in making the payment of contribution, the 1% levy of the damages of the amount of arrears was highly inadequate and unjustified. He has further contended that the petitioner has made default in making the deposit of employees contribution which is very serious thing. The petitioner has deducted the amount from the salaries of the employees and that too has been retained, how far it can be said to be justified which warrant any lenient approach by this Court. There is no inconsistency, but an incorrect order of the earlier damages despite the fact that the petitioner was habitual defaulter. On the basis of illegal order or incorrect order, the petitioner cannot make a claim of discrimination. The ground of discrimination on the basis of illegal and unwarranted orders of the authority is not sustainable. No benefit can be given to the petitioner on the ground that earlier officer has taken the default to be very very casual. Reliance in support of this contention has been placed by Shri Ajmera on the decision of the Supreme Court in the case of Chandigarh Administration v. Jagjitsingh reported in AIR 1995 SC 705, and the decision of this Court in the case of Bhanmati Tapubhai Muliya v. State of Gujarat, Principal Government Industrial Institute, reported in 1995(2) GLH 228. Replying to the last contention of the Counsel for the petitioner, Shri Ajmera contended that the Regional Provident Fund Commissioner has passed the order impugned in this writ petition after giving full opportunity of hearing to the petitioner. The financial condition of the petitioner-Company has also been taken into consideration. Shri Ajmera submitted that it is a writ of certiorari and this Court can only interfere with the order impugned where the authority made or commit any procedural illegality or where there is an error apparent on the fact of the order, which is not the case here. Replying to the further contention of the counsel for the petitioner, Shri Ajmera Counsel for the Respondent Mo. 1 contended that there is no provision under the Act, 1952 for waiver of or for exemption of any recovery of damages levied under Section 14-B of the Act, 1952 for sick industrial undertaking. Shri Ajmera urged that by the Act No. 33 of 1988, with effect from September 1, 1991, a further proviso has been inserted to Section 14-B of the Act, 1952, and which provides that the Central Board may reduce or waive the damages levied under this section in relation to an establishment which is a sick industrial company and in respect of which a scheme for rehabilitation has been sanctioned by the Board of industrial and Financial Reconstruction under Section 4 of Sick Industrial Companies (Sp. Provisions) Act, 1958 subject to such terms and conditions as may be specified in the scheme. But this proviso is not attracted in the case of petitioner for two reasons. Firstly, this has been brought in force from September 1, 1991 and not from retrospective effect and secondly the condition for extending the benefit of waiver or reduction of the amount of damages levied is not present in the present case and lastly, the power for waiver or reduction of damages levied vests in the Central Board and not with the Regional Provident Fund Commissioner, Ahmedabad, and the petitioner has not approached the Central Board.
6. I have given my thoughtful consideration to the submissions made by the learned Counsel for the parties. Section 14-B of the Act, 1952 provides that the authority before levying and recovering the damages should give reasonable opportunity of hearing and undisputedly the petitioner has been given an opportunity of hearing. In the present case the grievance made is that the notice which has been given to the petitioner by the Regional Provident Fund Commissioner proposed to levy 50% of the amount of delayed payment of contribution as damages under Section 14-B of the Act, 1952 but while passing the order, the authority thereunder levied 100% of the amount of delayed payment as damages which is illegal. The learned Counsel for the petitioner did not cite any decision of this Court or any other Court or the Supreme Court in support of his contention. Shri J. D. Ajmera, on the other hand, contended that though in the notice given to the respondent, the damages to be levied were proposed to be 50% of the amount of the delayed payment of contribution, but the authority has all the powers, in case after hearing the parties, it considers that it is a case where 100% of the amount of the delayed payment of contribution should be levied as damages. Shri Ajmera has also not cited any authority of this Court or of any other Court or the Supreme Court in support of his contention.
7. I have gone through the order of the authority impugned in this Sp. Civil Application, The representative of the department before the authority he during the course of the arguments, has made a statement that looking to the fact that the petitioner is a habitual defaulter in making of the late payment of the contribution for years together, it is a fit case where the 100% damages should be levied. The authority after considering the matter that the petitioner is a habitual defaulter in making of the payment of the contribution, considered it to be a fit case for the levy of 100% of the amount of the delayed payment of contribution as the damages under Section 14-B of the Act, 1952. I do not consider it to be proper to go into and decide on the question whether the authority was competent to impose 100% of the delayed payment of the contribution as damages or not where it has proposed to levy only 50% of the amount of the delayed payment contribution as damages in show-cause notice. This question is left open. But taking into consideration the fact that when notice was given for 50% of the amount of the delayed payment proposed to be levied as damages, the authority would have applied the mind to all the facts of the case. The authority when tentatively decided the amount of damages to be levied then normally it should have sticked to that amount unless or until when there is material on the record which justifies the levy of 100% of the amount of the delayed payment as damages. The only ground which has been raised for levy of the 100% of the amount of the delayed payment of the contribution as damages was that the petitioner is a habitual defaulter in making of the payment of the amount of contribution. The authority while deciding this question has altogether lost sight of another aspect, may be an order of different officer, but the fact is that for delayed payment of the contribution of the period immediately preceding the period in question, the damages at the rate of 1% of the amount of the delayed payment of contribution was proposed to be levied and that was the amount which has been ultimately levied as per the case of the petitioner. When 1% of the amount of the delayed payment was proposed to be levied for delayed payment of the contribution for the preceding period, the position of the petitioner to be habitual defaulter almost remained the same. Leaving apart the question whether the Commissioner was justified to levy only 1% of the delayed payment of the amount for delay made in the preceding period in payment of the contribution, the levy of 100% of the delayed payment as damages when the notice was given only for levy of 50% of the delayed amount as damages is not justified. The repeated defaults in payment of the contribution immediately preceding the period for which the damages have been levied at the rate of 1% is of the difference of one default. In this case the repeated default is added by one more of default made earlier, which includes therein one more default. Earlier 1% damage was levied and only because of addition of one more default in repeated defaults, the damages levied is 100%. Taking into consideration totality of the facts of the case, the first contention made by the learned Counsel for the petitioner deserves acceptance.
8. The second contention of the learned Counsel for the petitioner is devoid of any substance. The order of the Regional Provident Fund Commissioner passed under Section 14-B of the Act, 1952 earlier for period of default is not under challenge in this Special Civil Application. Taking into consideration the fact that the petitioner made repeated defaults in payment of contribution of the provident fund which is apparent from the document Annexure 'A' enclosed to the impugned order, it is difficult to say how far the Regional Provident Fund Commissioner was justified in only levying 1% of delayed amount of contribution for the previous period. Shri J. D. Ajmera, learned Counsel for the respondent submitted that the earlier order has been passed by different Commissioner and that was an illegal order. Whether the last part of this contention is available to the counsel for respondent or not to be raised while defending this Special Civil Application, but this Court cannot be oblivious of the fact that the petitioner repeatedly made defaults starting from the year 1976 and leaving apart the legality, propriety and correctness of the order of levying of damages of 1% only on this ground, it cannot be accepted that levy of damages at the rate exceeding 1% in the present case is unjustified, The Supreme Court in the case of Chandigarh Administration v. Jagjitsingh (supra) and of this Court in the case of Bhanmati Tapubhai Muliya v. Government Industrial Institute (supra), held that illegal and unwarranted decision may not provide a foundation to the petitioner to raise a contention on the ground of discrimination. The Supreme Court has further held that in the absence of challenge' to the order earlier made by the authority as well as in the absence of parties to said decision, the Court should not normally go on to decide on the validity of the said order and the matter has to be decided on the basis of the facts of the case in hand. The petitioner was a party to the earlier decision and there may not be any difficulty to examine the validity of the previous order in this case, but I do not consider it proper to adopt that course for the reason that the earlier order was undisputedly made by an officer other than the officer who made the order impugned in this Special Civil Application. I have no hesitation to say and hold that the order made under Section 14-B of the Act, 1952 for earlier period cannot be taken to be precedent or binding on the authority while dealing with the question of levying of damages for default in payment of contribution for subsequent period. The net result of this discussion is that the challenge to the order impugned in this Special Civil Application on the ground that earlier the authority has levied only 1 % damages for the default, is not sustainable.
9. The last contention of the counsel for the petitioner that the Commissioner, while deciding the matter in question has not taken into consideration the financial constraints of the petitioner-Company, is also devoid of any merits. This contention of financial constraints and for taking lenient view in the matter are based on the grounds that: (i) the petitioner-Company had to pay past huge debts of the company as per the scheme sanctioned by this Court, (ii) the, establishment suffered heavy loss due to crises in the cotton textile industry in the country as a whole, (iii) due to stringent financial difficulties and in the absence of cash money available, it could not pay provident fund dues in time. It has further been stated that for want of sufficient funds, the petitioner could not purchase the required raw materials and hence production was adversely affected. In support of these contentions, the petitioner produced before the authority the annual report for the years 1976-77, 1977-78 and 1978-79, (iv) the State Bank of Saurashtra did not grant loans as expected by the petitioner-Company, (v) the Government of India, taking into consideration precarious financial position of the Company, granted exemption to the petitioner-Company from the obligation of manufacturing controlled cloth. It has further been stated that the Employees' State Insurance had also granted an instalment to the Company for the arrears payable to the Corporation.
10. All these aspects as projected have been considered by the authority. I have also given my thoughtful consideration to the aforesaid aspects.
11. The plea that the company had to discharge huge past debts as per scheme sanctioned by this Court is of no avail. Undisputedly, the aforesaid scheme has been sanctioned before 12 years of the passing of the order impugned in this Special Civil Application, i.e. in the year 1970. The authority has rightly taken into consideration the fact that the scheme has been sanctioned by this Court after taking into consideration all the relevant facts including the obligations of the petitioner to pay the contribution under the provisions of the Act, 1952 and the scheme framed thereunder. For the aforesaid reasons, the first defence pleaded for justification of delay in making the payment of contribution is of no relevance. In the writ petition, the petitioner has stated that due to heavy financial loss, the Company has suspended its business and the mill was closed, but that was the event of the year 1968 and how far it could be relevant fact, much more the material fact for justifying the delay in making payment of contribution for the period starting from May 1980 onwards. It is not in dispute that event has come to an end on July 1, 1969. The petitioner is under the statutory duty bound to pay the provident fund. The financial difficulties of the years past coupled with the fact that the petitioner is a habitual defaulter in making payment of the contribution, and further loss in business is a professional hazard, the authority has rightly held that these are not mitigating circumstances in the present case which justify taking of lenient view. The authority has further held and rightly so, that the failure on the part of the petitioner to pay in time even the employees' share of contribution which is to be deducted and recovered from their wages, is unexplainable. The employees' contribution is a trust money with the employer to be remitted to the statutory fund within a stipulated period and the delay in depositing that amount amounts to criminal breach of trust. The petitioner is unable to make out any case for levying of damages at the rate lesser than 50% of the amount of the delayed payment of contribution. The fact that the Government of India has granted exemption to the petitioner, from obligation of manufacturing controlled cloth and its failure to obtain loan are not the matters which go in favour of the petitioner. It is a case where the authority has taken into consideration the financial constraints of the petitioner. The authority has rightly pointed out that inspite of losses suffered by the company, the Directors thereof have continuously withdrawn their remunerations and other expenses. Financial hardship is not sufficient, for every default, to mitigate damages. Once in a while a default is made may be a case where financial hardship or constraints beyond control of the party and establishment be taken sufficient to mitigate damages but it cannot be taken as a licence or permit to commit defaults repeatedly in respect of payments under the Act, 1952. Here is a case of a habitual defaulter in respect of payments under the Act, 1952 and as such financial hardship or constraints is not sufficient to mitigate damages. It does not justify committing defaults in respect of payments under the Act and the scheme. Mere existence of financial hardship is not sufficient explanation or default/delay in payments under the Act, 1952 unless it is also shown that no salaries were paid to employees and consequently no deductions were made during the relevant period or that even that much of funds to be remitted were not available on due dates. The petitioner deducted the amount of contribution from the wages/ salaries of the employees and even that amount was not remitted on due date. There is no dispute in this case that the petitioner had defaulted in depositing the contributions, both its own as well as of the employees on due date. The Act 1952 was enacted to serve beneficent purpose and it is constituted as a welfare measure as it seeks to credit fund which could be drawn upon by certain categories of employees working in factories and similar establishments to meet pressing demands, so also to provide pension after the employees have ceased to be in service. Having in mind the beneficent purpose of the said Act the fact that it has been constituted as a welfare measure, it has to be construed in such a way. A reference in this respect may have to be made to two decisions of Apex Court in the case of Regional Provident Fund Commissioner v. Shri Krishna Metal Manufacturing Co., reported in (1962-I-LLJ-427) and in the case of Regional Provident Fund Commissioner v. Shibu Metal Works, reported in (1965-I-LLJ-473). This Court sitting under Article 226 of the Constitution of India cannot sit in appeal over the order passed by the Regional Provident Fund Commissioner under the provisions of Section 14-B of the Act, 1952. This Court has very limited powers of judicial review in such cases. It can only go into a question whether the Regional Provident Fund Commissioner in assessing the damages to be levied for delayed payments under the provisions of the Act, 1952 has applied his mind to the facts and circumstances of the case or not. Where it is shown that the Regional Provident Fund Commissioner has not applied its mind to the facts and circumstances of the case and to the reply filed by the employer, the order may not be in accordance with law, but interference can only be made where the aforesaid illegality is made in making of the order by the said authority and it has resulted in substantial failure of justice to the employer. In the present case, the Regional Provident Fund Commissioner, after affording full opportunity to the petitioner and after considering all the facts and circumstances brought on record by it, imposed the damages. The reasoning adopted after consideration of all the materials produced on record and facts and circumstances of the case for imposing the damages is not perverse. No interference of this Court, in the order of the Regional Provident Fund Commissioner, impugned in this Special Civil Application, is called for to the extent of levying of 100% damages on the other grounds except the first contention made by the counsel for the petitioner.
12. Now remains only the last submission made by Counsel for the petitioner. The Counsel for the petitioner is unable to point out any provision in the Act, 1952 which provided that the damages cannot be levied on a sick industrial company. Leaving apart the question whether the petitioner-Company is sick industrial unit or not in the absence of such a provision in the Act 1952, there is no question of waiver or reduction in the amount of damages to be levied. The subsequent amendment made in Section 14-B of the said Act 1952 inserting proviso to this Section with effect from September 1, 1991 is also of no avail to the petitioner. The inserted proviso was not given effect to retrospectively. Secondly for taking benefits of that proviso, the petitioner has to establish that it is a sick industrial unit 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, subject to such terms and conditions as may be specified in the scheme. In the present case, this requirement has not been pleaded and established by the petitioner. The question of waiver or reduction of damages levied under Section 14-B arises after passing of the order and not at the stage of passing of the order. Last but not least, this power vests in the Central Board and not with the Regional Provident Fund Commissioner.
13. The net result of the discussion made, above is that this Special Civil Application succeeds in part. The order of the Regional Provident Fund Commissioner, Ahmedabad, Annexure 'A' dated March 1982, levying damages for default in payment of provident fund for the period from May 1980 to August 1980 at the rate of 100% of delayed payment of amount is modified and it is hereby ordered that the damages for the delayed payment of provident fund for the aforesaid period are levied at the rate of 50% of the amount of arrears of the provident fund, which means 50% of Rs. 9,51,650/-.
14. On April 23, 1982, this Court has passed the order which reads as under:
'Notice pending admission returnable on May 5, 1982 on condition that Rupees Eleven Thousand are deposited latest by May 1, 1982. Counsel for petitioner states that his client assures him that the amount will be deposited by him by that date. Mr.Ravani waives notice for Respondents Nos. 1 and 2. In view of the undertaking given by S.I. Kapadia, Director of petitioner-Company who is present in Court to deposit Rupees Eleven Thousand, respondents are directed to maintain status quo till further orders.'
15. The respondent was directed to maintain status quo, i.e., recovery of amount of damages as levied stands postponed on the payment Rs. 11,000/- by the petitioner. The total amount of damages is Rs. 4 lacs and odd and as such, the respondent could not recover the substantial amount for all these years as interim relief was granted by this Court in favour of the petitioner.
16. This Court has restrained the respondent from recovering the amount of damages except Rs. 11,000/- for all these years. The. amount of damages, now it is no more res integra, belongs to the fund. The beneficiaries of the fund have been deprived of this amount. On the other hand, for all these years, the petitioner has used this amount for its business. In case interim relief would not have been granted by this Court, then the petitioner has to part with the amount of damages as levied by this Court immediately after passing of the order impugned in this Special Civil Application. The petitioner has partly succeeded in this Special Civil Application and as such, the retention of the amount of damages as levied by this Court is unjustified. It is a case where by retention of such huge amount, the petitioner gains benefits and profits in the business. If it would have taken this amount for use in the business from the financial institution or from individuals, it would have paid interest, may not be at the rate of less than 18%. The balance in between gains taken by the petitioner and the loss suffered by the beneficiaries of the fund as recovery of damages levied has been stayed by this Court, has to be drawn. The petitioner cannot be allowed to benefit at the cost of beneficiaries of the fund. It is a case where in case the loss suffered by the beneficiaries of the fund in terms of amount of damages is allowed to be retained by the petitioner, it will amount to unjust enrichment of petitioner. The petitioner is a company doing business and hence such an unjust enrichment cannot be permitted and should not be permitted. The petitioner is directed to pay interest on the amount of damages aforesaid levied by this Court at the rate of 18% from April 23, 1982, the date on which interim relief has been granted, till the date of realization of this amount by the respondents. The amount of Rs. 11,000/- in case paid or deposited by the petitioner in pursance of this Court's order, has to be given set off for the purposes of calculating interest payable. It is further made clear that in case the amount of Rs. 11,000/- is paid or deposited in pursuance of this Court's order, the petitioner shall be entitled to deduct the said amount from the amount of damages payable by it under this order. The petitioner shall pay Rs. 2,000/- by way of costs of this Special Civil Application to the respondents, it is further ordered that this amount of costs shall also be deposited by the respondents on receipt of the same in the fund. Rule is partly made absolute accordingly subject to the directions given above.