Navnilal K. Shah (Dr.) Vs. Union of India (Uoi) and anr. - Court Judgment

R. M. S. Khandeparkar, J.

1. Heard the learned Advocates for the parties. Perused the records.

2. The petitioner challenges the order dated 20th October, 2000 passed by the Regional Provident Fund Commissioner, Maharashtra and Goa, imposing the damages for the period prior to February, 1992 as also the percentage of the damages and fixation of the compound rate of interest for the pre-discovery period.

3. The challenge to the impugned order is three fold. Firstly, that it is the scheme as it exists at the time of determination of damages that has to be applied for the purpose of computation of damages irrespective of the period for which the damages are to be computed and, therefore, it was not permissible to the Regional Provident Fund Commissioner to apply the guidelines under the scheme which were in force prior to the date of the decision in relation to the computation of damages. Secondly, bearing in mind the provisions of law and the explanation issued by way of circulars by the Government, the pre-discovery period would extend upto the date on which the applicability of the Employees Provident Funds and Miscellaneous Provisions Act, 1952, hereinafter called as 'the said Act', is, conclusively made known to the establishment to which the Act is said to be applicable and the damages for such period cannot be levied since there cannot be a constructive default in relation to such period in the absence of applicability of the Act being conclusively made known to the establishment and the loss to the fund on account of delay can be compensated only by way of ordering payment of simple interest on the contribution so delayed. Thirdly, once the authorities in an inquiry under Section 7-A of the said Act determines the pre-discovery period, it is not permissible for the authorities under the said Act to review or modify such period at the time of mere computation of either interest or damages payable for such period. Reliance is placed in the decisions of a Division Bench of this Court in Union of India and Ors. v. Super Processors, reported in 1993 1 CLR 457 and of the learned Single Judge of Calcutta High Court in the matter of Aluminium Corporation of India (Ltd.) v. Regional Provident Fund Commissioner and Ors., reported in : (1959)ILLJ249Cal . An attention is also drawn to the Circular issued under Letter No. R-11025(25)/87/SS-II dated 6th October, 1989 on the subject of Waiver of recovery of the employees' share to the regional provident fund which was not deducted from the wages or the employees.

4. Few facts relevant for the decision are that consequent to the visit of an officer of the 2nd respondent to the establishment of the petitioner, there were attempts to contend that the said Act was applicable to the establishment of the petitioner, and therefore by a letter dated 9th April, 1981, the petitioner informed the respondent that total number of employees in the establishment of the petitioner did not exceed 19 at any point of time and that therefore the said Act was not applicable to the establishment of the petitioner. On 20th October, 1982, the Provident Fund Inspector Miss L. Patil visited the petitioner's establishment and collected the necessary information and various relevant particulars. On 22nd March, 1983, the 2nd respondent summoned the petitioner for inquiry to determine the issue about the coverage and the contribution, if any. It was the contention of the petitioner that the petitioner had never employed more than 19 persons and the strength of the employees had always remained below 19 persons. The inquiry proceeded under Section 7-A of the said Act for a considerable time from March, 1983 till May, 1992. It included the visits by the officers of the respondent on various occasions to the establishment of the petitioner. On 12th May, 1992, the 2nd respondent passed an order holding that though the full time employees employed by the petitioner were 19 in number, the petitioner also employed three trainees and, therefore, the total number of employees employed by the petitioner exceeded twenty and hence the provisions of the said Act were applicable to the establishment of the petitioner. It is the contention of the petitioner that though the order was passed in May, 1992, in the course of inquiry under Section 7A, the petitioner had indication in the month of February of 1992 itself of the probable decision about the applicability of the said Act to the establishment, and that thereupon the petitioner had started complying with the provisions of law in the said Act regarding the contribution to the fund since March, 1992 and, thereafter, also paid the arrears in October, 1992. Thereafter, on consideration that there was delay in paying the contribution a show cause notice came to be issued to the petitioner on 23rd May, 1996 as to why the damages as envisaged under Section 14-B of the said Act would not be imposed and recovered. The petitioner submitted the reply on 16th July, 1996 disputing the liability for damages. After hearing the petitioner, the 2nd respondent by its order dated 16th August, 1996 held that applicability of the Act to the establishment of the petitioner was intimated to the petitioner by letter issued in March, 1981 itself and, therefore, the pre-discovery period would be from June, 1979 to February, 1981. The petitioner thereupon drew an attention of the authorities to its earlier order dated 12th May, 1992 whereby the issue regarding applicability of the Act to the establishment of the petitioner was decided and communicated to the petitioner and that, therefore, the pre-discovery period would extend till the date of the said order, the respondents, however, insisted upon holding the pre-discovery period to be from June, 1979 to February, 1981 by the impugned order. Subsequent to the decision of the respondents on the point of applicability of the said Act to the establishment of the petitioner and on request by the petitioner for waiver of the employees' share of the provident fund contribution for the period from March, 1981 to February, 1992, the petitioner was informed by the respondents under letter dated 14th September, 1993 that the employees share from August, 1979 to February, 1981 was waived.

5. The circular communicated to the various offices of the 2nd respondent by the Regional Provident Fund Commissioner on behalf of the Central Provident Fund Commissioner under letter dated 6th October, 1989 clearly describes the pre-discovery period to mean the period commencing from the date on which the said Act is legally applicable to a factory or establishment and the date on which a formal notice of coverage under the Act is served on the employer by the Provident Fund authorities. In other words, though the applicability of the said Act would depend upon the employment of twenty or more persons by the establishment, in cases where there is bona fide or genuine dispute about the applicability of such Act to the establishment, till and until the authorities under the said Act on its determination of issue of applicability of the Act to an undertaking and communication of such determination to the employer, the period spent in between is to be considered as pre-discovery period and once such a period is established, the employees' share of contribution shall be payable from the 1st of the month following the issue of the notice to the employer regarding the coverage of its establishment under the said Act. It is to be noted that this clarification has been issued by the respondents themselves and nothing is placed on record by them to controvert the said circular or any further explanation having been issued by the respondents in that regard. The respondents themselves having understood the pre-discovery period being related to the formal decision regarding the coverage of an undertaking under the said Act and intimation thereof to the employer, it will not be permissible for the respondents to adopt different criteria, to decide the period of pre-discovery period. Applying the law in relation to the pre-discovery period to the facts of the case, undisputedly, the claim of the respondents about the applicability of the said Act to an undertaking of the petitioner was disputed contending that the total number of employees employed by the petitioner never exceeded 19 and it was only after prolonged investigation by the respondents, they came to the finding on the point of applicability of the said Act to an undertaking of the petitioner as late as on 12th May, 1992. There is nothing on record to disclose that the petitioner has been responsible for the delay in the decision on the part of the respondents about the applicability of the said Act to an undertaking of the petitioner. In any case, the law on the point being clearly understood by the respondents and they themselves having defined the pre-discovery period that includes the period commencing on the date from which the Act is legally applicable to the undertaking of the petitioner till the date on which a formal decision regarding the coverage of an undertaking under the said Act and intimation thereof by the respondents to the employer, and in the case in hand though the Act was legally applicable to the petitioner since 1st August, 1979, the formal decision regarding the applicability of the Act was made known to the petitioner in May, 1992 and, therefore, the period from August, 1979 till May, 1992 has to be considered as the pre-discovery period. In fact, the respondents themselves had intimated to the petitioner by the letter dated 14th September, 1993 that the employees' share for the period from August, 1979 till February, 1992 was waived, apparently, it was in relation to the pre-discovery period. Being so, the period from August, 1979 till February, 1992 was considered by the respondents themselves as the pre-discovery period.

6. As regards the contention that the authorities below while passing the order dated 20th October, 2000 were not entitled to review the period of pre-discovery period once fixed while passing the order in inquiry under Section 7-A, the attention is drawn to paragraph 3.2 of the impugned order whereby while imposing damages even in relation to the pre-discovery period, it has been calculated at the rate of 100% from 3rd March, 1981 to September, 1982; at the rate of 25% per annum from October, 1982 to August, 1991; and at the rate of 37% from September, 1991 to February 1992. However, the contention that in the course of imposing the damages, the authorities have reviewed the pre-discovery period which was earlier fixed while disposing of the inquiry under Section 7-A of the said Act, does not appear to be correct. Merely because the different rates of damages are applied for a pre-discovery period by sub-dividing the said period into different sub-periods that by itself would not mean that the authorities have virtually reviewed the order pertaining to the fixation of pre-discovery period.

7. Drawing attention to the decision of the Calcutta High Court in Aluminium Corporation of India (Ltd.)'s case (supra), it is sought to be contended that the power to recover damages would not empower the authorities to impose damages for constructive default or retrospectively, in the sense that, the employer cannot be made to pay damages for the period prior to conclusive decision on the part of the authorities about the applicability of the Act to the establishment, when a dispute in regard to the applicability of the said Act to the establishment was raised. The Calcutta High Court in Aluminium Corporation's case, had held that -

'Power to recover damages under Section 14B is expressly given only in the case 'where an employer makes default,' etc. An employer cannot make a default when there is a difficulty or doubt and when the Central Government has to remove that difficulty or doubt by an express order. It is only from the date of the order removing such difficulty or doubt that the default can operate. In other words, there can be no retrospective or constructive default in the present context of facts and law.'

8. Madras High Court in Regional Provident Fund Commissioner, Madras v. K.R. Subbaier Tape Factor, Woriyur, reported in : (1966)IILLJ676Mad to which attention was drawn by the learned Advocate for the petitioner, had after considering the decision of the Calcutta High Court in Aluminium Corporation's case, held that -

'................ it wilt not be legitimate to infer a default, merely because there was no payment by the employer of the contribution during the pre-discovery period. Each case must be examined carefully with respect to its own facts for an inference about the default.'

It was also observed therein that:

'...... the claim for administrative charges calculated as a percentage on the amount which the employer has been asked to pay by way of contribution for the back-period, is clearly admissible, though it might not be admissible in respect of employees' contribution, when it has neither been demanded nor paid.'

9. Before arriving at any conclusion on the point canvassed, it would be necessary to take note of the two decisions of the Apex Court, one in the matter of Organo Chemical Industries and Anr. v. Union of India and Ors. reported in : (1979)IILLJ416SC and another in the matter of Regional Provident Fund Commissioner v. S.D. College, Hoshiarpur and Ors., reported in : (1997)IILLJ55SC . In Organo Chemical Industries v. Union of India's case (supra), while considering the punitive nature of the powers under Section 14B, the Apex Court observed that the power of the Regional Provident Fund Commissioner to impose damages under Section 14-B is a quasi-judicial function and it must be exercised after notice to the defaulter and after giving him a reasonable opportunity of being heard besides that the discretion to award damages could be exercised within the limits fixed by the Statute. It was also observed that having regard to the punitive nature of the power exercisable under Section 14-B and the consequences that ensue therefrom, an order under Section 14B must be a speaking order containing the reasons in support of it. With those observations, it was also held that:--

'The conferral of power to award damages under Section 14-B is to ensure the success of the measure. It is dependent on existence of certain facts; there has to be an objective determination, not subjective.'

10. Taking note of a conflict of opinions between different High Courts as to the meaning of the word 'damages' under Section 14-B of the said Act, it was observed by the Apex Court in Organo Chemical's case that those High Courts who had taken the view that the damages to be imposed under Section 14-B should have correlation with the loss suffered and that the damages under Section 14-B are intended to compensate the loss to the beneficiaries of the Scheme had overlooked that the term 'damages' under the said provisions of law does not mean in the realm of Contract or Tort but the word has to be given its true meaning, in consonance with the objects and purpose of the legislation and, therefore, it was ruled that:--

'The traditional view of damages as meaning actual loss does not take into account the social content of a provision like Section 14-B contained in a socioeconomic measure like the Act in question. The word 'damages' has different sheds of meaning. It must take its colour and content from its context, and it cannot be read in isolation, nor can Section 14-B be read out of context. The very object of the legislation would be frustrated if the word 'damages' appearing in Section 14-B of the Act was not construed to mean penal damages. The imposition of damages under Section 14-B serves a two-fold purpose. It results in damnification and also serves as a deterrent. The predominant object is to penalise, so that an employees may be thwarted or deterred from making any further defaults.

The expression damages occurring in Section 14-B, in substance, a penalty imposed on the employer for the breach of the statutory obligation. The object of imposition of penalty under Section 14-B is not merely to provide compensation for the employees. We are clearly of the opinion that the imposition of damages under Section 14-B serves both the purposes. It is meant to penalise defaulting employer as also to provide reparation for the amount of loss suffered by the employees. It is not only a warning to employers in general not to commit a breach of the statutory requirements of Section 6, but at the same time, it is meant to provide compensation or redress to the beneficiaries i.e. to recompense the employees for the loss sustained by them. There is nothing in the section to show that the damages must bear relationship to the loss which is caused to the beneficiaries under the Scheme. The word 'damages' in Section 14-B is related to the word 'default'. The words used in Section 14-B are 'default in the payment of contribution' and, therefore, the word 'default' must be construed in the light of Para 38 of the Scheme which provides that the payment of contribution has got to be made by the 15th of the following month and, therefore, the word 'default' in Section 14-B must 'failure in performance' or 'failure to act'. At the same time, the imposition of damages under Section 14-B is to provide reparation for the amount loss suffered by the employees.'

The Apex Court has further held that the damages contemplated under- Section 14-B includes a punitive sum quantified, according to the circumstances of the case, and has observed that 'Damages have a wider socially semantic connotation than pecuniary loss of interest on non payment when a social welfare scheme suffers mayhem on account of the injury' while observing thus :--

'The measure was enacted for the support of a weaker sector viz. the working class during the superannuated winter of their life. The financial reservoir for the distribution of benefits is filled by the employer collecting, by deducting from the workers wages, completing it with his own equal share and duly making over the gross sums to the Fund. If the employer neglects to remit or diverts the moneys for alien purposes the Fund gets dry and the retirees are denied the meagre support when they most need it. This prospect of destitution demoralises the working class and frustrates the hopes of the community itself. The whole project gets stultified if, employers thwart contributory responsibility and this wider fall-out must colour the concept of 'damages' when the Court seeks to define its content in the special setting of the Act. For judicial interpretation must further the purpose of a statute. In a different context and considering a fundamental treaty, the European Court of Human Rights, in the Sunday Times Case, observed :

'The Court must interpret them in a way that reconciles them as far as possible and is most appropriate in order to realise the aim and achieve the object of the treaty.'

11. In Regional Provident Fund Commissioner v. S. D. College's case (supra), while dealing with the provisions of Section 14-B of the said Act, it was observed that -

'A reading of Section 14-B of the Act would indicate that the employer is under an obligation under the Statute to comply with the payment of the amount. In the event of his committing default in making the payment of contribution to the fund or in the payment of any charges payable under any other provisions of the said Act or any Scheme or Insurance Scheme or any of the conditions specified in Section 17, the Central Provident Fund Commissioner or such other officer as may be authorized by the Central Government may, by notification in the Official Gazette in that behalf, recover from the employer, by way of penalty, such damages, not exceeding the amount of arrears, as may be specified in the scheme.'

It was further observed that:

'The second proviso thereto only lifts the embargo in the event of the industry becoming sick and it was reconstructed under the provisions of Section 4 of the Sick Industrial Companies (Special Provisions) Act, 1985 subject to such terms and conditions as may be specified in the scheme of rehabilitation.'

With these observations, it was held that:

'In other words, the Act envisage the imposition of damages for delayed payments. The Act is a beneficial, welfare legislation to ensure health and other benefits to the employees. The employer under the Act is under a statutory obligation to deduct the specified percentage of contribution from the employee's salary and matching contribution, the entire amount is required to be deposited in the fund within 15 days after the date of the collection, every month.

Thereby the employer is under a statutory obligation to deposit the amount to the credit of the Fund every month. In the event of any default committed in that behalf, Section 14B steps in and calls upon the employer to pay damages by way of penalty, the maximum of which is the accumulated arrears. The Regional Provident Fund Commissioner is given discretion only to reduce a percentage of damages and he has no power to waive penalty altogether.'

12. At this stage, it will be also worthwhile to take note of the decision of the learned Single Judge of this Court in the matter of Mathur Alloy Steels Pvt. Ltd. and Anr. v. Union of India and Ors., reported in : (1993)IILLJ471Bom , wherein, while dealing with the point of limitation sought to be raised for the purpose of invoking powers under Section 14-B of the said Act, it was observed that:--

'Where the legislature had made no provisions for limitation, it would not be open to the Court to introduce any such limitation on the ground of fairness or justice. The words of Section 14-B are plain and unambiguous and it would be the duty of the Provident Fund Commissioner to give effect to the said provision without any consideration of limitation.'

Rejecting the contention that the belated claims made on a large scale may cause considerable inconvenience to the employer, it was held that -

'that is a consideration which the Legislature may take into account and if the Legislature feels that fair play and justice require that some limitation should be prescribed it may proceed to do so. But in the absence of any provision, however, the Provident Fund Commissioner cannot import any such consideration in dealing with the proceedings under Section 14-B of the Act.'

13. It is also to be noted that a learned Single Judge of Punjab and Haryana High Court in Pioneer Sports Work's (Private) Ltd. v. State of Punjab and Anr., reported in , had taken a view that the delay in the imposition of damages may lull the employer into a sense of security and if immediate action had been taken it may not have made any further default in the later months and further that the damages having been levied after six years of the earlier default, the power exercised by the State Government in levying the damages under Section 14-B would be arbitrary. The said decision however was set aside by a Division Bench of Punjab and Haryana High Court in Letters Patent Appeal No. 296 of 1964, State of Punjab v. Amin Chand, reported in (1964) 37 FJR 92 and the said fact was reiterated by another Division Bench of the Punjab and Haryana High Court in T.C.M. Woolen Mills (Pvt.) Ltd., Ludhiana, v. The Regional Provident Fund Commissioner for Punjab and Haryana, reported in 1981 L. I. C. 267.

14. Bearing in mind the law laid down by the Apex Court in the above referred two decisions, it is clear that every employer of an establishment to which the Act applies is under a statutory obligation to comply with the requirements of the said Act in relation to the contributions to be made to the Fund and the said obligation is to be complied with in accordance with the provisions of the said Act and the Scheme. Any default on the part of an employer in performance of such statutory obligation would invite imposition of damages as contemplated under Section 14-B of the said Act. It being a statutory provision regarding imposition of the damages on account of default in compliance of the statutory obligation by the employer under the said Act, and in the absence of any power being given to the authorities under the said Act to waive such penalty altogether, it cannot be heard to contend that merely because the decision under Section 7-A of the said Act was taken after the date from which the Act was applicable to the establishment that it would automatically postpone the date for imposition of the damages under Section 14-B of the said Act. Certainly, it does not mean to say that in a given situation, the authorities should not exercise their discretion under Section 14B while imposing the penalty but it cannot be said that the authorities cannot impose damages for pre-discovery period. This conclusion is clearly revealed from the above referred two decisions of the Apex Court in relation to the powers of the authorities under Section 14-B of the said Act and at the same time it is also revealed that such-authorities are duty bound to consider the issue of imposition of damages under the said provisions of law in accordance with the statutory guidelines.

15. At this stage, attention is drawn to a Circular No. E. II-128 dated 24th October, 1973 and 3rd January, 1974 and in particular Clause (i) of the said Circular provides that the damages on the current contributions may be levied in accordance with the new rates, and in the case of discovered factories in respect of which coverage notices were issued prior to 1-11-1973, damages at rates existing before issue of these orders may be levied. The said Circular is in relation to the procedure and guidelines to be followed in regard to levy of damages prior to 1st November, 1973. Apparently, Clause (i) in the said circular deals with the discretion to be exercised by the authorities in the matter of levy of damages. It does not speak about the right of waiver of damages being given to the authorities and, in any case, no such right can be given under any circular once the Apex Court, in no uncertain terms, has held that the authorities under the Statute have no right of waiver of penalty or the damages and, any circular in contravention of the said ruling would be non-est for all purposes.

16. As already observed above, there being no power granted to the authorities to waive the penalty altogether, once it is found that there was a default by the employer in complying with the statutory obligation under the said Act, the question of granting total exemption from the levy of damages even for pre-discovery period cannot arise. Contention of the petitioner therefore that the respondents erred in imposing damages for pre-discovery period is to be rejected. In view of the Apex Courts decisions in S.V. College's case and Organo Chemical Industries cases, with respect, I am unable to persuade myself to agree with the decision of Calcutta High Court in Aluminium Corporation's case relied upon by the learned Advocate for the petitioner.

17. As regards the last contention regarding the percentage of damages and alleged error committed by the authorities in that regard, it is to be seen that the Division Bench of this Court in Union of India and Ors. v. Super Processors, reported in 1993 1 CLR 457, after considering the various decisions of the Apex Court, held that 'the guidelines are merely to regulate the manner in which discretion on levying penalty/damages has to be exercised and by their very nature, those guidelines have to be applied when an occasion arises for exercising discretion in determining the quantum of damages.' At the same time, it was also held that :

'At the time when the damages are determined, if the revised guidelines are in force, then those guidelines must be applied. The officer cannot go back to the old guidelines which are already discarded as being less satisfactory than the revised guidelines. On a plain interpretation, therefore, of the guidelines for exercising discretion while determining damages, the guidelines which are in force at the time when an occasion arises for determining the quantum of damages, must be applied. Such an occasion may arise either because a case is pending or it may arise if the matter is remanded to the officer for a fresh determination or it may arise in any other circumstances. But if the officer has to exercise his discretion afresh in any such matter, he will be governed by the guidelines in force at that time. There is no question, in such a situation, of referring to old discarded guidelines which were found to be unsatisfactory or problematic, simply because the default relates to a period prior to the coming into force of such guidelines.'

It was further ruled that :

'When the exercise of discretion is governed by more rational and generally better guidelines, such guidelines must be applied from the date when they come into existence whenever an opportunity arises thereafter for their application.'

Taking note of the amendment to Section 14-B, which came into force from 1st September, 1991, the Division Bench held that -

'The only change which is brought about in Section 14-B is to the effect that such damages are now no longer to be determined by the Central Provident Fund Commissioner of his officers exercising their discretion. These damages are now to be determined by the Central Provident Fund Commissioner or his officers in accordance with what may be specified in the scheme. The scheme has also accordingly been modified from September, 1991. A new Clause 32-A has been added to the Scheme prescribing the rate of damages depending upon the period of default in question. When the default for a period of less than two months, the rate of damages prescribed is 17% of arrears per annum; and it goes upto a maximum of 37% of the arrears of per annum - subject to of course to the maximum laid down under Section 14-B. There is also a discretion given to the Central Board to reduce or waive the damages in the circumstances which are spelt out in Clause 32-B. Once again, there is no increase in the maximum damages which are provided under the Scheme and under Section 14-B. The amended Scheme, therefore, will now be applicable if damages are required to be calculated afresh by the Central Provident Fund Commissioner. Since the new Scheme does not increase the maximum penalty or damages which are leviable, it does not violate Article 20(1) of the Constitution. Since the latest scheme is considered more rational, there is no reason why that scheme should not be applied if the damages are required to be calculated afresh.'

18. The law on the point of percentage of damages to be applied for different periods of default is well settled by the above decision of a Division Bench, wherein, it has been clearly ruled that the amended scheme has to be followed while imposing the damages.

19. Applying the law as discussed above to the facts of the case in hand it is apparent that as regards the period from August, 1979 to February, 1992, the authorities have levied 10% per annum compound interest to recover the loss of interest occurred to organization for the said period. Apparently, there is no such provision in Section 14B which could empower the authorities to claim the compound interest. The guidelines nowhere provide for 10% compound interest. However, considering the law laid down by the Apex Court and this Court on the point of exercise of discretion depending upon the facts of each case, no fault can be found for imposing the interest for the loss to the organization and considering the facts of the case in hand, the imposition of interest for the said period could have been at the rate of 10% per annum but certainly not at the rate of 10% compound interest along with the damages at the rate of 10%. Justification for imposing such reduced penalty for the said period is merely that the decision in the inquiry under Section 7A was pronounced in April, 1992. However, the dispute which was sought to be raised regarding applicability of the said Act to the establishment of the petitioner was not on account of the point of law as such, but on the contention that the petitioner had employed less than 20 persons at any given point of time and the basis for such contention was that the petitioner had employed 19 full-time employees and 3 trainees. Being so, the fact that the establishment had availed the services of more than 20 persons during the pre-discovery period was to the knowledge of the employer and considering the law laid down by the Apex Court and this Court regarding the obligation of the employer to comply with his duties enumerated under the said Act from the time when the said Act applies to the establishment and considering that the petitioner had full knowledge about the number of persons, whose services were availed for running the establishment, the said imposition of damages with simple interest even for the pre-discovery period cannot be found fault with. Nevertheless, since the appropriate decision on a dispute raised by the petitioner was delivered in May, 1992, the petitioner would be justified in contending for the reduction in percentage of damages and the exercise of discretion in that regard by the authorities.

20. At this stage, it is also to be noted that Section 2(f) will define the expression 'employee' was amended in the year 1988 by the Act No. 33 of 1988 to include persons engaged as apprentices not being apprenticed under the Act, 1961 or under the Standing Orders of the Establishment as and from 1st August, 1988, the date on which the said Act No. 33 of 1988 came into force. Being so, it can be said that there was genuine ground for the petitioner to dispute the applicability of the Act prior to August, 1988. Nevertheless, once it is held that the said Act was applicable from 1979 onwards, considering the law laid down by the Apex Court, the liability to pay damages from the year of application of the said Act cannot be totally denied. Being so, the petitioner would be justified in contending that the authorities should have exercised discretion to restrict the damages at the rate of 10% for the period prior to August, 1988 and not to restrict the same for the period prior to March, 1981.

21. As regards the period from September, 1991 onwards, there is no dispute that the penalty levied is as per the new scheme introduced from September, 1991.

22. In the result, therefore, the Writ Petition partly succeeds. The impugned order is hereby modified to say that the interest payable for the period from August, 1979 to February, 1992 shall be simple interest at the rate of 10% per annum and further that the damages at the rate of 10% per annum shall stand imposed for the period from August, 1979 till July, 1988; and from August, 1988 till August, 1991, it shall be 17% per annum. For the rest of the period, the damages shall be as they are imposed by the authorities under the impugned order. Rule is made absolute in above terms with no order as to costs.

23. It is brought to the notice of this Court that, at the time of admission of the Petition, the petitioner has deposited an amount of Rs. 50,000/- in this Court. In case, it is already invested in the nationalized bank and the interest accrued thereon, the respondents shall be entitled to withdraw the same and accordingly to give credit to the said amount while computing the total liability in relation to the damages payable by the petitioner in terms of the order passed today modifying the impugned order. In case any excess amount found, needless to say, the same will have to be refunded to the petitioner.