The Management of Industrial Rubber Products Vs. the Regional Provident Fund Commissioner - Court Judgment

Excerpt:
- orders.m. abdul wahab, j.1. w.p. no 10733 of 1987 is for quashing the order of the respondent dated july 24, 1987 claiming a sum of rs. 19,549.60 from the petitioner.2. the case of the petitioner is that the petitioner is a partnership firm engaged in the manufacture of rubber products for automobiles at its factory at a-21/22 industrial estate, guindy, madras as covered under the employees' provident fund and miscellaneous provisions act, 1952 (hereinafter referred to as the act) in earlier proceedings dated august 20, 1979 in tn/sdc/336/accts/79 the respondent levied damages of rs. 55,175.05 for the period march, 1975 to february, 1978. by order dated june, 14 1986 in w.p. no. 4443 of 1979 this court re-mended the matter for fresh disposal. after remittance, the impugned order dated july, 24, 1987 has been passed. the respondent by its notice dated march 5, 1987 called upon the petitioner to show-cases as to why the levy of damages under section 14-b of the act should not be made for the period from march, 1978 to june, 1978, august, 1978 to september 1978, november 1978 to november 1979, january 1980, to march 1980, may 1980 to february 1981. a detailed representation was made setting out the tragedy relating to the death of the senior partner and his family in an air- crash on october 16, 1976, power-cut, strike of the workmen etc. after considering the representation, the damage for the period july, 1978 to august, 1979 were deleted since the payments were in time. in respect of 25 months, the damage was levied at 20% amounting to rs. 20,009.30, since there has been delay of only a few days.3. the respondent filed a counter- affidavit. in the counter -affidavit it is stated that with regard to the belated payment due for the period from march, 1975 to february, 1978 a notice dated march 20, 1979 was issued. the levy of damage was reduced in view of the difficulties experienced by the petitioner. the financial difficulties and the demise of the senior partner in air-crash, power-cut cannot be accepted by the respondent as reasons for not levying damage. section 14b of the act, does not provide for any limitation for recovery of damages regarding the belated payment. para 38 of the scheme speaks of the time limit for paying the provident fund contribution, both employees and employers and the same should be remitted within 15 days of the close of each month. when the employers failed to remit the damages, the organisation reported the said non-payment to the special tahsildar to recover it as arrears of land revenue as per section 8 of the act. after taking into consideration of the facts represented, the levy has been made. a reading of the counter shows that the damages were levied to compensate loss to the organisation as well as the employees by way of interest and also to penalise the erring employer to warn him not to respect the delay in future. the respondent has also stated that after considering the difficulties contained on the representation only the damages have been levied.4. counsel for the respondent contended that the levy of damage under the act is not a damage within the meaning of the act. he cited a decision in hindustan malleables and forgings, pvt., ltd, v. regional provident fund commissioner and ors. 1978 ii lln 178 wherein the division bench of the patna high court has held '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 hence, in assessing the damages, the competent authority is not bound only to take into account the loss to the beneficiaries under the scheme'. therefore in my view, the said case does not support the contention that there is no necessity to ascertain or assess the damage at all.5. in regional provident fund commissioner, tamilnadu v. south india flour mills (p) ltd and ors. : (1985)illj283mad it is true that the damages contemplated under the provident fund act is not the same as the damages within the meaning of the indian contract act. but the said decision also does not state there need not be any ascertainment or assessment of damages.6. in similar circumstances, i have taken the view in snap tap machine accessories (india) pvt. ltd. v. regional provident fund commissioner, madras (w.p.no. 8154 of 1987) on june 25, 1996 which is as follows:'therefore, it is not correct to say that the supreme court has altogether eschewed the view that there must be assessment or determination of the loss sustained by the department or organization. on the other hand, the word reparation for the amount of loss suffered by the employees is an indication that there must be assessment or ascertainment of the damages.'therefore, without actual determination or assessment the respondent cannot simply levy penalty.7. since the aforesaid decisions hold good in these two cases also, i am of the view that the impugned order cannot be sustained. in these circumstances, the writ petitions deserve to be allowed. accordingly, these writ petitions deserve to be allowed. accordingly, these writ petitions are allowed. however, there will be no order as to costs.

Judgment:
ORDER

S.M. Abdul wahab, J.

1. W.P. No 10733 of 1987 is for quashing the order of the respondent dated July 24, 1987 claiming a sum of Rs. 19,549.60 from the petitioner.

2. The case of the petitioner is that the petitioner is a partnership firm engaged in the manufacture of rubber products for automobiles at its factory at A-21/22 Industrial Estate, Guindy, Madras as covered under the Employees' Provident Fund and Miscellaneous Provisions Act, 1952 (hereinafter referred to as the Act) In earlier proceedings dated August 20, 1979 in TN/SDC/336/Accts/79 the respondent levied damages of Rs. 55,175.05 for the period March, 1975 to February, 1978. By order dated June, 14 1986 in W.P. No. 4443 of 1979 this court re-mended the matter for fresh disposal. After remittance, the impugned order dated July, 24, 1987 has been passed. The respondent by its notice dated March 5, 1987 called upon the petitioner to show-cases as to why the levy of damages under Section 14-B of the Act should not be made for the period from March, 1978 to June, 1978, August, 1978 to September 1978, November 1978 to November 1979, January 1980, to March 1980, May 1980 to February 1981. A detailed representation was made setting out the tragedy relating to the death of the senior partner and his family in an air- crash on October 16, 1976, Power-cut, strike of the workmen etc. After considering the representation, the damage for the period July, 1978 to August, 1979 were deleted since the payments were in time. In respect of 25 months, the damage was levied at 20% amounting to Rs. 20,009.30, since there has been delay of only a few days.

3. The respondent filed a counter- affidavit. In the counter -affidavit it is stated that with regard to the belated payment due for the period from March, 1975 to February, 1978 a notice dated March 20, 1979 was issued. The levy of damage was reduced in view of the difficulties experienced by the petitioner. The financial difficulties and the demise of the senior partner in air-crash, power-cut cannot be accepted by the respondent as reasons for not levying damage. Section 14B of the Act, does not provide for any limitation for recovery of damages regarding the belated Payment. Para 38 of the Scheme speaks of the time limit for paying the Provident Fund Contribution, both employees and employers and the same should be remitted within 15 days of the close of each month. When the employers failed to remit the damages, the organisation reported the said non-payment to the special Tahsildar to recover it as arrears of land revenue as per Section 8 of the Act. After taking into consideration of the facts represented, the levy has been made. A reading of the counter shows that the damages were levied to compensate loss to the organisation as well as the employees by way of interest and also to penalise the erring employer to warn him not to respect the delay in future. The respondent has also stated that after considering the difficulties contained on the representation only the damages have been levied.

4. Counsel for the respondent contended that the levy of damage under the Act is not a damage within the meaning of the Act. He cited a decision in Hindustan Malleables and Forgings, Pvt., Ltd, v. Regional Provident Fund Commissioner and Ors. 1978 II LLN 178 wherein the Division Bench of the Patna High Court has held '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 Hence, in assessing the damages, the competent authority is not bound only to take into account the loss to the beneficiaries under the scheme'. Therefore in my view, the said case does not support the contention that there is no necessity to ascertain or assess the damage at all.

5. In Regional Provident Fund Commissioner, Tamilnadu v. South India Flour Mills (P) Ltd and Ors. : (1985)ILLJ283Mad it is true that the damages contemplated under the Provident Fund Act is not the same as the damages within the meaning of the Indian Contract Act. But the said decision also does not state there need not be any ascertainment or assessment of damages.

6. In similar circumstances, I have taken the view in Snap Tap Machine Accessories (India) Pvt. Ltd. v. Regional Provident Fund Commissioner, Madras (W.P.No. 8154 of 1987) on June 25, 1996 which is as follows:

'Therefore, it is not correct to say that the Supreme Court has altogether eschewed the view that there must be assessment or determination of the loss sustained by the department or organization. On the other hand, the word reparation for the amount of loss suffered by the employees is an indication that there must be assessment or ascertainment of the damages.'

Therefore, without actual determination or assessment the respondent cannot simply levy penalty.

7. Since the aforesaid decisions hold good in these two cases also, I am of the view that the impugned order cannot be sustained. In these circumstances, the writ petitions deserve to be allowed. Accordingly, these writ petitions deserve to be allowed. Accordingly, these writ petitions are allowed. However, there will be no order as to costs.