Kshetriya Shree Gandhi Ashram ... vs The Employee Provident Fund And ...
2021 Latest Caselaw 9201 ALL

HIGH COURT OF JUDICATURE AT ALLAHABAD
 
 

AFR
 
Court No. - 32
 

 
Case :- WRIT - C No. - 11522 of 2021
 

 
Petitioner :- Kshetriya Shree Gandhi Ashram Camp Office
 
Respondent :- The Employee Provident Fund And Another
 
Counsel for Petitioner :- Rajesh Tewari,Satyajit Mukerji
 
Counsel for Respondent :- Sachindra Upadhyay
 

 
Hon'ble Rohit Ranjan Agarwal,J.

1. Heard Sri Rajesh Tewari, learned counsel for the petitioner and Sri Sachindra Upadhyay, learned counsel for respondent Nos. 1 and 2.

2. This writ petition has been filed seeking quashing of order dated 26.02.2021 passed by respondent No.1 in appeal filed before Appellate Tribunal as well as recovery order dated 02.03.2021 passed by respondent No.2.

3. The facts, as disclosed in the petition, are that the petitioner is a registered society and has been established with an object of popularizing hand woven cloth by helping rural population of the country and to develop Cottage Industry. On 05.01.2021, an order was passed under Section 14-B as well as 7-Q of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 (hereinafter called as "1952 Act") directing for payment of damages and penal interest of Rs.33,73,011/- on the ground that employer has not remitted the Provident Fund and allied dues within stipulated time as per Sections 6, 6A, 6C of 1952 Act and also not deposited the administrative charges for the period 01.4.2017 to 24.02.2020.

4. Against the said order, an appeal was preferred by the petitioner before respondent No.1 on 09.02.2021. The Tribunal on 26.02.2021 required the petitioner to make pre-deposit of the full amount assessed under Section 7-Q of 1952 Act as well as 50% of the amount assessed under Section 14B of 1952 Act. The petitioner is aggrieved by the said order.

5. It has been contended by learned counsel for the petitioner that appeal lies to the Tribunal under Section 7-I of the 1952 Act and orders passed under Sections 7-A, 7-B, 7-C or Section 14-B are only appellable and no appeal lies against the order passed under Section 7-Q. Further Section 7-O mandates deposit of 75% of the amount as determined under Section 7-A of 1952 Act, and thus there is no requirement for pre-deposit for any appeal filed against the order under Section 14B and Section 7Q of 1952 Act. It was further contended that the Appellate Tribunal should have decided the appeal on merit without asking for pre-deposit of the amount as it was against the statutory provisions of Section 7-O of 1952 Act. It was further contended that the Apex Court in case of Arcot Textile Mills Limited vs. Regional Provident Fund Commissioner and others (2013)16 SCC 1 has held that when a composite order is passed under Section 14-B and 7-Q then such an order is appellable and in case the order under Section 7-Q is passed independently, no appeal lies against the said order. Reliance has been placed upon decision of Apex Court in case of Shiv Harbal Research Laboratory vs. Assistant Provident Fund Commissioner, Laws (SC) 2010 (4) 121; SAM (India) Builtwell (P.) Ltd. vs. Assistant Provident Fund Commissioner 2018 (157) FLR 410 and Old Village Industries Ltd. vs. The Asstt. Provident Fund (2005) LLJ 742 Delhi High Court.

6. Sri Sachindra Upadhyay, learned counsel appearing for the respondent defending the order of Tribunal as well as respondent No.2 could not add anything more.

7. Having heard counsel for the parties and perusal of record it appears that the sole question before this Court is to the determination of fact whether in view of provisions, as contained in 1952 Act, any mandatory deposit of 75% of the amount has to be made in view of Section 7-O in appeal filed under Section 7-I against the composite order passed under Section 14-B and Section 7-Q of the 1952 Act?

8. In order to appreciate controversy in issue, a glance of relevant provisions of Sections 7-A, 7-I, 7-O, and 7-Q is necessary. Relevant sections are extracted here as under :

"7A. Determination of moneys due from employers

(1) The Central Provident Fund Commissioner, any Additional Central Provident Fund Commissioner, any Deputy Provident Fund Commissioner, any Regional Provident Fund Commissioner, or any Assistant Provident Fund Commissioner may, by order,--

(a) in a case where a dispute arises regarding the applicability of this Act to an establishment, decide such dispute; and

(b) determine the amount due from any employer under any provision of this Act, the Scheme or the3[Pension] Scheme or the Insurance Scheme, as the case may be, and for any of the aforesaid purposes may conduct such inquiry as he may deem necessary.

(2) The officer conducting the inquiry under sub-section (1) shall, for the purposes of such inquiry, have the same powers as are vested in a court under the Code of Civil Procedure, 1908 (5 of 1908), for trying a suit in respect of the following matters, namely:--

(a) enforcing the attendance of any person or examining him on oath;

(b) requiring the discovery and production of documents;

(c) receiving evidence on affidavit;

(d) issuing commissions for the examination of witnesses ;

and any such inquiry shall be deemed to be a judicial proceeding within the meaning of sections 193 and 228, and for the purpose of section 196, of the Indian Penal Code.

(3) No order shall be made under sub-section (1), unless the employer concerned] is given a reasonable opportunity of representing his case.

(3A) Where the employer, employee or any other person required to attend the inquiry under sub-section (1) fails to attend such inquiry without assigning any valid reason or fails to produce any document or to file any report or return when called upon to do so, the officer conducting the inquiry may decide the applicability of the Act or determine the amount due from any employer, as the case may be, on the basis of the evidence adduced during such inquiry and other documents available on record.

(4) Where an order under sub-section (1) is passed against an employer ex parte, he may, within three months from the date of communication of such order, apply to the officer for setting aside such order and if he satisfies the officer that the show-cause notice was not duly served or that he was prevented by any sufficient cause from appearing when the inquiry was held, the officer shall make an order setting aside his earlier order and shall appoint a date for proceeding with the inquiry:

Provided that no such order shall be set aside merely on the ground that there has been an irregularity in the service of the show-cause notice if the officer is satisfied that the employer had notice of the date of hearing and had sufficient time to appear before the officer.

Explanation.--Where an appeal has been preferred under this Act against an order passed ex parte and such appeal has been disposed of otherwise than on the ground that the appellant has withdrawn the appeal, no application shall lie under this sub-section for setting aside the ex parte order.

(5) No order passed under this section shall be set aside on any application under sub-section (4) unless notice thereof has been served on the opposite party.

7I. Appeals to Tribunal

(1) Any person aggrieved by a notification issued by the Central Government, or an order passed by the Central Government or any authority, under the proviso to sub-section (3), or subsection (4) of section 1, or section 3, or sub-section (1) of section 7A, or section 7B [except an order rejecting an application for review referred to in sub-section (5) thereof], or section 7C, or section 14B, may prefer an appeal to a Tribunal against such notification or order.

(2) Every appeal under sub-section (1) shall be filed in such form and manner, within such time and be accompanied by such fees, as may be prescribed.

7-O. Deposit of amount due, on filing appeal- No appeal by the employer shall be entertained by a Tribunal unless he has deposited with it seventy-five per cent, of the amount due from him as determined by an officer referred to in section 7A:

Provided that the Tribunal may, for reasons to be recorded in writing, waive or reduce the amount to be deposited under this section.]

7Q. Interest payable by the employer- The employer shall be liable to pay simple interest at the rate of twelve per cent, per annum or at such higher rate as may be specified in the Scheme on any amount due from him under this Act from the date on which the amount has become so due till the date of its actual payment:

Provided that higher rate of interest specified in the Scheme shall not exceed the lending rate of interest charged by any scheduled bank."

9. From careful reading of Section 7-I, it transpires that appeal lies against determination order passed under Section 7-A as well as review orders passed under Section 7-B and determination of escaped amount under Section 7-C as well as orders under Section 14-B. The orders passed under Section 7-Q are not appellable under Section 7-I of 1952 Act. Further Section 7-O mandates for pre-deposit of 75% of the amount passed under Section 7-A which is in regard to the determination of the amount by the officers referred therein.

10. Thus, it is clear that requirement of pre-deposit is only when there is determination/assessment order made by the authority, while the order under Section 14-B is passed for quantifying penal damages upon the petitioner for not remitting the provident fund dues within time. Moreover, Section 7-Q mandates for the imposition of interest upon the employer at a rate of 12% p.a. when the actual payment has not been made on the due date, but no remedy has been provided under the Act for challenging the order passed under Section 7-Q of the Act.

11. The decision of Apex Court in case of Arcot Textile Mills Ltd. (supra) provides for an appeal under Section 7-I in case where the order passed under Section 14-B and 7-Q are composite orders. Thus, it can be safely said that the composite order passed under Section 14-B and 7-Q when appealed under Section 7-I, there is no mandatory requirement for making pre-deposit in view of Section 7-O of the Act.

12. The finding recorded by the Appellate Tribunal on 26.02.2021 that Section 7-O mandates an employer to deposit statutory amount of 75% of the amount due before his appeal is entertained by a Tribunal determined by an officer referred to in Section 7-A is totally against the statutory provision of 1952 Act.

13. In Shiv Harbal Research Laboratory (supra), the Apex Court while dealing with this issue had categorically held that there was no requirement for complying the provision of Section 7-O in appeal filed under Section 7-I against the order passed under Section 14B and 7Q of the Act. Paras 4 and 5 of the judgment are extracted here as under :

"4. Apart from the above, the provision for preferring an appeal in respect of an order under Section 14-B is contained in Section 7-Iof the above Act which provides for appeals to the Tribunal, inter alia against orders passed under Section 14-B. Sub-section (2) of Section 7-I indicates that every appeal under sub-section (1) shall be filed in such form and manner, within such time and be accompanied by such fees, as may be prescribed. There is nothing to indicate that any part of the amount awarded under Section 14-B was required to be deposited at the time of filing of the appeal.

5. When specific provision has been made within regard to appeals under Section 7-A and under Section 7-O, a definite provision has been indicated for deposit of 75% of the awarded amount and there is no such provision in Section 7-I, we cannot read the principles of Section 7-O into the provisions of Section 7-I in relation to appeals under section 14-B of the above Act."

14. Further the order dated 05.1.2021 passed by respondent No.2 under Section 14-B and 7-Q also appears to be non speaking as the Apex Court in case of Mcleod Russel India Limited vs. Regional Provident Fund Commissioner, Jalpaiguri and others (2014) 15 SCC 263 held as under :

"In HMT Ltd., this Court noted the beneficial nature of the ESIC Act; that subordinate legislation must conform to the provisions of the parent Act. Despite giving due regard to the use of the words "may recover damages by way of penalty", and mindful that mens rea and actus reus to contravene a statutory provision are necessary ingredients for levy of damages, this Court set aside the interference of the High Court vis-à-vis the imposition of damages and further held that imposition of damages by way of penalty was not mandated in each and every case. The dispute was remitted back to the High Court for fresh consideration, i.e. to proceed on the premise that the levy of penalty under the Act was not a mere formality, a foregone conclusion or an inexorable imposition; and that the circumstances surrounding the failure to deposit the contribution of the employees concerned would also have to be cogitated upon. This decision does not prescribe that damages or penalties cannot or ought not to be imposed. Further, the presence or absence of mens rea and/or actus reus would be a determinative factor in imposing damages Under Section 14B, as also the quantum thereof since it is not inflexible that 100 per cent of the arrears has to be imposed in all the cases. Alternatively stated, if damages have been imposed Under Section 14B it will be only logical that mens rea and/or actus reus was prevailing at the relevant time. We may also note that this Court had yet again reiterated the well-known but oft ignored principle that High Courts or any Appellate Authority created by a statute should not substitute their perspective of discretion on that of the lower Adjudicatory Authority if the impugned Order does not otherwise manifest perversity in the process of decision taking. HMT Ltd. does not proscribe imposition of damages; that would negate the intent of the legislature. The submission of the Petitioner before us is that the liability was of the erstwhile management and since the Petitioner was not the "employer" at the relevant time, default much less deliberate and wilful default on the part of the Petitioner was absent. However, it seems to us that once these damages have been levied, the quantification and imposition could be recovered from the party which has assumed the management of the concerned establishment concerned."

15. Thus, having considered the argument as well as the pleadings of the parties, I find that the order dated 26.02.2021 passed by respondent No.1 and the recovery order issued by respondent No. 2 on 02.3.2021 are totally against the statutory provision 7-O of the Act of 1952 and thus they are hereby quashed. The matter is remitted back to the Appellate Tribunal respondent No.1 to hear and decide the appeal of the petitioner expeditiously preferably within next three months from the date of production of a copy of this order downloaded from the website of this Court.

16. Writ petition stands partly allowed.

Order Date :- 2.8.2021

Kushal