Bombay High Court
Rajwade Mandal Peoples ... vs Regional Provident Fund ... on 12 December, 2017
Bench: R.V. Ghuge
1
IN THE HIGH COURT OF JUDICATURE OF BOMBAY
BENCH AT AURANGABAD
WRIT PETITION NO.2341 OF 1996
The Rajwade Mandal People's
Co-operative Bank Ltd.,
Dhule - PETITIONER
VERSUS
1. Regional Provident Fund
Commissioner,
Office of the Sub Regional Employees
Provident Fund Organisation,
Wani House, Opp.Runanubandh
Karyalaya,
New Bombay-Agra Road,
Nasik - 422 011.
2. The Union of India,
Through : The Ministry of
Law and Judiciary and Company
Affairs,
Aaykar Bhavan,
Churchgate,
Bombay - 400 020 - RESPONDENTS
Mr.P.M.Shah, Sr.Counsel with Mr.M.M.Jadhav h/f Mr.S.P.Shah,
Advocate for the petitioner.
Mr.K.B.Choudhary, Advocate for respondent No.1.
CORAM : RAVINDRA V. GHUGE, J.)
DATE : 12/12/2017
ORAL JUDGMENT :
1. The petitioner is aggrieved by the order dated 12/12/1994
passed by the PF Authorities thereby directing payment of
khs/DEC. 2017/2341
Rs.79,960/- towards damages u/s 14-B.
2. By order dated 18/01/1995, this Court had granted an ex-
parte interim relief in terms of prayer clause "B" while admitting the
petition and issuing notice. By virtue of the ad-interim order, the
impugned order has been stayed.
3. Mr.Shah, learned Senior Advocate has strenuously criticized
the impugned order and his submissions can be summarized as
under :-
[a] The petitioner started the Co-operative Bank in 1933.
[b] In 1940, it started a sort of a scheme for depositing employees'
contribution and the employer's contribution in a separate
bank account opened with the Dhule District Central Co-
operative Bank, Dhule.
[c] By notice dated 05/01/1989, the respondents/authorities
informed the petitioner that it is covered by the Employees'
Provident Fund and Misc.Provisions Act, 1952 (In short, EPF
Act). The coverage was made effective from 30/07/1988.
[d] In March 1989, the amount of provident fund dues were
deposited by the petitioner.
[e] A hearing was conducted by the respondents/authorities and
khs/DEC. 2017/2341
by the order dated 12/12/1994, damages u/s 14-B were sought
to be recovered from an amount of Rs.79,960/-
[f] There is no intentional and deliberate failure on the part of the
petitioner in depositing the PF subscriptions.
[g] There is no mens rea on the part of the petitioner in failing to
deposit the PF subscriptions.
[h] For the pre discovery period, excessive damages are sought to
be recovered.
[i] No damages can be imposed for the pre discovery period.
[j] The petitioner/bank had no knowledge as to whether the EPF
Act had become applicable to the petitioner Bank.
[k] Further deposits were regularly made.
[l] If there is no wilful, intentional and deliberate failure in
depositing the PF contributions, damages should not be imposed.
4. Mr.Choudhary, learned Advocate for the respondents/ PF
authorities has drawn my attention to the provisions of the PF Act.
He submits that there is no question of mens rea in failing to deposit
the PF contributions. A definite scheme has been framed under the
PF Act and there is a machinery provided for enforcing the recovery
of dues of PF contributions. Since it is a part of social security
legislation, certain stringent provisions in the nature of 14-B for
khs/DEC. 2017/2341
imposing damages and recovery interest u/s 7-Q are provided. He,
therefore, submits that owing to the ex-parte ad interim relief, the
money which belongs to the PF beneficiaries and the interest which
they are legally entitled to, has been deprived as the petitioner has
not deposited a single penny with the PF Authorities.
5. I have considered the submissions of the learned Advocates as
are recorded above.
6. The judgment cited by the petitioner under the Employees
State Insurance Act, 1948 in the matter of Emp. State Insurance
Corporation Vs. H.M.T. Ltd., and another, AIR 2008 SC 132, in my
view, would not be applicable to the case in hand. Though the levy
of damages is not mandatory, Section 14-B has been provided to
ensure that the defaulting employer is made to pay the damages.
7. It has been consistently held by the Hon'ble Apex Court and
especially in the matter of M/s K.Streetlite Electric Corporation Vs.
Regional Provident Fund Commissioner, Haryana [AIR 2001 SC 1818]
that though the damages may not be in the nature of imposing any
punishment, the proceedings initiated for the recovery of dues,
entitles the RPFC/PF authorities to award damages since the legal
khs/DEC. 2017/2341
obligation cast upon an employer in making timely deposit of PF
accumulations, has been violated.
8. In so far as the contention of the petitioner as regards the pre
discovery period is concerned, I find from the impugned order that
the PF authorities have imposed only 10% damages for the pre
discovery period. In fact, the PF Authorities are obliged to search for
defaulting employers and the EPF Act provides for a mechanism for
discovering such defaulting employers. In fact, the pre discovery
period is normally synonymous with the act of an employer in
evading the payment of contributions under the PF Act. Yet, the PF
Authorities have taken into account that the petitioner was earlier
operating a private scheme claimed to be of the nature of Provident
Fund for its employees.
9. Taking that aspect into account, only 10% damages have been
imposed upon the petitioner though the PF Authorities could have
imposed higher damages. In fact, the competent authority has
considered the written submissions of the petitioner and has taken
into account its bonafides and the investments it has made in fixed
deposits in a bank and has therefore concluded that levy of 100%
damages would not be proper. In this backdrop, damages @ 10% to
khs/DEC. 2017/2341
22% and on 3 counts, upto 25% have been levied by the concerned
authority.
10. It is also seen from the impugned order that where ever
possible, the PF Authorities have shown leniency even for the periods
of violation by the employer post discovery and has imposed damages
@ 22% on one count and 17% on another count.
11. The Hon'ble Apex Court in the matter of Syed Yakoob
Vs.K.S.Radhakrishnan and others [AIR 1964 SC 477] and Surya Dev
Rai Vs. Ram Chander Rai [2003(6) SCC 682] has laid down the law
that this court can exercise its supervisory or writ jurisdiction only
when the impugned order appears to be perverse, erroneous and
likely to cause gross injustice. In the instant case, neither do I find
that the impugned order is perverse or erroneous, nor can I ignore
the fact that this amount of about Rs.80,000/- having not been
deposited by the petitioner, has led to the loss of interest for the past
22 years, which amount is liable to be paid to the PF beneficiaries
who are workers / employees working with the petitioner/Co-
operative Bank.
12. Considering the above, this petition, being devoid of merit, is
khs/DEC. 2017/2341
dismissed. Rule is discharged.
13. Needless to state, the petitioner shall deposit the amount of
Rs.80,000/- alongwith interest @ 7% from 12/12/1994 on the said
amount within a period of 4 weeks from today, failing which, the said
amount shall carry enhanced interest @ 12% from 12/12/1994.
( RAVINDRA V. GHUGE, J.)
khs/DEC. 2017/2341
