Full Judgment
PRAYER
Writ petition is filed under Article 226 of the Constitution of India praying to issue a Writ of Certiorarified Mandamus, to call for the order of the first respondent passed in ATA No.857(13)05 and 437(13)06 dated 22.05.2009 and quash the same as illegal and consequently direct the 2nd respondent to remit/pay the damages computed under TN/MDU/2298/14(B)/1108/PDC(1)/2006 dated 09.06.2006,
ORDER
1. The petitioner in W.P.(MD) No.14440 of 2010 is a Mill, which has suffered an order under Section 14(b) of the E.P.F. Act for payment of damages for belated payment of the contribution under the E.P.F. Act (Shortly 'the Act'). The petitioner Mill preferred appeal against the order dated 09.06.2006 levying them damages to the Tribunal. The Tribunal, by the order dated 22.05.20090 reduced the damages by directing the authorities to collect damages at the rate of 5%, while the department levied 25%. The order of the appellate authority dated 22.05.2009 is challenged by the petitioner Mill in W.P.(MD) No.14440 of 2010. The order is also questioned by the department in the present writ petition.
2.Heard both sides.
3.Though the mill questioned the order imposing 5% of the amount as damages, the learned counsel for the Mill submits that he would be satisfied if the order is confirmed. On the other hand, the learned counsel for the department has strenuously submits that in view of the second proviso to Section 14(b) of the Act, the order of the Tribunal is without jurisdiction and the Central Board alone has power to reduce the damages levied by the department.
4.The learned counsel for the Mill submits that Section 7(L) of the Act grants power to the Tribunal to confirm, modify or annul the order by giving reasons. The learned counsel submits that Section 7(L) read with para 32(a) of the Employees Provident Fund scheme makes it clear that the Tribunal is entitled to reduce the damages in appropriate cases. The learned counsel has also relied on the decision of Division Bench of this Court in 1998(2) LLN 37 (Hindustan Times Ltd., V. Union of India) and also a Division Bench of Orissa High Court in 1998(II) LLJ 226 (Bhubaneswar City Distribution Division and Union of India and Another).
5.I have considered the submissions made on either side.
6.It is not in dispute that the Mill is a sick company and BIFR proceedings were pending at the relevant point of time. The Mill paid the contribution belatedly. The Mill, after belated remittance of the payment, was directed to pay interest under Section 7(q) of the Act. The same was questioned by them. This Court has rejected that writ petition. This matter is relating to payment of damages. The Mill has given detailed reasons as to why there was delay in belated remittance. The same was considered in detail by the appellate Tribunal and reduced the damages from the maximum to minimum. Para 32(a) of the Employees' Provident Funds Scheme, 1952 is extracted hereunder:
32A. Recovery of damages for default in payment of any contribution.-
(1) Where an employer makes default in the payment of any contribution to the 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 of the Act or in the payment of any charges payable under any other provisions of the Act or Scheme or under any of the conditions specified under section 17 of the Act, the Central Provident Provident Fund Commissioner or such officer as may be authorised by the Central Government, by notification in the Official Gazette in this behalf, may recover from the employer by way of penalty, damages at the rates given below:-
Period of Default Rate of damages(% of arrears per annum)
(a) Less than two months 17
(b) Two months and above but less than four months 22
(c)Four months and above but less than six months 27
(d) Six months and above 37
The damages shall be calculated to the nearest rupees, 50 paise or more to be counted as the nearest higher rupee and fraction of a rupee less than 50 paise to be ignored.
As per amendment to para 32(a) of the E.F.P. Scheme, 1952, provides the maximum damages is prescribed at the rate of 25% of the contribution and the minimum 5%. The Tribunal, in the facts and circumstances of the case, thought fit to exercise its discretion vested under Section 7(L) and reduced damages from 25% to 5%.
7.The learned counsel for the department sought to argue that the Tribunal has no power to interfere in the matter of reducing the levy of damages,. The learned counsel relies the second proviso of Section 14(b) of the Act.
8.In my view, the submission of the learned counsel for the department has no substance. As per Section 7(L) of the Act, the appellate authority has power to confirm or modify or annul the order appealed against. The Tribunal took note of the circumstances and reduced the penalty, exercising its discretion. I have gone through the order passed by the Tribunal. Para 9 of the order is extracted hereunder:
9.A perusal of the impugned order indicates that the Officer conducting enquiry under Section 14B of the Act has not followed the law laid down by the Apex Court and the High Court in its correct perspective. There is no enquiry or finding of fact that the appellant has willfully and deliberately withheld the PF contribution and also the Enquiry Officer has not exercise its discretion vis-a-vis the actual reasons for delays in remittance of PF dues. Accordingly, the impugned suffers from legal infirmities. However, keeping in view the reasons and circumstances in which the default in remittance of PF dues occurred, ends of justice be met by restricting the damages upto 05% per annum i.e. 05% of the actual amount of damages assessed under Section 14B of the Act in each case. In terms of the above, the appeals are disposed of. Files be consigned to the record room. Copy of the order be sent to both the parties.
In such circumstances, I am of the view that the Tribunal has exercised its discretion vested under Section 7(L) of the Act and reduced the damages. The second proviso of Section 14(B) of the Act is besides the power of the Tribunal. Without even preferring an appeal, the Mill could have approached the Central Board pointing out its difficulty and also could ask for relief under the second proviso. The power under the second proviso of Section 14(B) of the Act could not take away the power of the appellate authority under Section 7(L) of the Act.
9.In view of the same, the writ petition deserves to be dismissed and accordingly, the same is dismissed. As already stated, the learned counsel for the Mill has no objection for confirming the order though the writ petition was preferred questioning the levying of damages. NO costs. Consequently, connected miscellaneous petitions are also dismissed.