The West Bengal Power Development ... vs Union Of India & Others
2021 Latest Caselaw 6635 Cal

                    IN THE HIGH COURT AT CALCUTTA
                   CONSTITUTIONAL WRIT JURISDICTION
                             APELLATE SIDE

 The Hon'ble JUSTICE SUVRA GHOSH

                              W.P.A. 2045 of 2017

         The West Bengal Power Development Corporation Limited
                                   Vs.
                        Union of India & Others.


 For the Petitioner:                   Mr. Ranajay De, Adv.,


 For the P.F. Authority:               Mr. S.C. Prasad, Adv.
                                       Mr. N.K. Gupta, Adv.,

 Hearing concluded on: 14.12.2021

 Date: 24.12.2021



SUVRA GHOSH, J. :-

1. The petitioner pleads violation of principles of natural justice.


2. The contention of the petitioner, in a nutshell, is that by Notification No.

   558-Power/IV dated 28th June 2001 issued by the Secretary to the

   Government of West Bengal, Department of Power (the petitioner herein)

   took over M/s. Bandel Thermal Power Station (hereinafter referred to as

   BTPS) with all its assets and liabilities as on 1st April, 2001 with effect

   from the said date. On 30th July, 2015/31st July 2015 respondent no. 3

issued summons under section 14B of the Employees Provident Funds

and Miscellaneous Provisions Act, 1952 against BTPS for the period April

1996 to December 2003. A demand of Rs. 9,60,683/- was made against

respondent no. 4 for the period 1st April, 1996 to 31st December, 2013

under section 14B/7Q of the Act of 1952 by way of penalty and interest

upon observation that during the said period certain payments were made

beyond time. The claim was subsequently revised to a period from 1st

March, 1995 to 14th November, 2000. The petitioner submitted a

representation before respondent no. 3 stating that it has no knowledge

as to when and in respect of which persons contribution was deposited

and also, no record was available to the petitioner with regard to strength

and identification of the employees for the relevant period. The petitioner

requested respondent no. 3 to direct respondent no. 4 to provide

necessary records and particulars to enable the petitioner to place its case

before the authority. By an order dated 16th November, 2016 revised claim

to the tune of Rs. 9, 52,863/- was slapped upon the petitioner who was

directed to deposit the said amount within 10 days from the date of

receipt of the order.

3. Being aggrieved by the said order, the petitioner has filed the present writ

petition.

4. The prayer of the writ petitioner is set out hereunder:-

(a) Issue of a Writ of Mandamus and/or

Writ in the nature thereof commanding

the Respondent No.2 and 3 or each one

of them forthwith cancel, set aside,

withdraw and/or rescind the impugned

order dated 16.11.2016 (being

Annexure- P/8) passed by the

Respondent No. 3.

(b) Issue of a Writ of Certiorari and/or Writ

in the nature thereof commanding the

Respondent No.2 and 3 or each one of

them to produce records relating to the

impugned order dated 16.11.2016 being

Annexure-P/8 passed by the

Respondent No. 3 for their examination

and for quashing the same if found

illegal, void and contrary to law and for

doing conscionable justice to the parties;

(c) Issue of a Writ of Prohibition and/or Writ

in the nature thereof commanding the

Respondents not to take any steps or

any further step pursuant to the

impugned order dated 16.11.2016 being

Annexure-P/8 till the disposal of the

instant Application.

5. It is submitted on behalf of the petitioner that the liability of the petitioner

begins only from 1st April, 2001 when the petitioner took over M/s. BTPS.

The notice under section 14B of the 1952 Act issued against BTPS was

handed over to the petitioner following which the petitioner submitted the

representation before the Assistant Provident Fund Commissioner

(damage) on 18th May, 2016 requesting the authority for providing the

relevant records along with particulars of the employees including proper

identification from 1st March, 1995 to 14th November, 2000 for taking

appropriate steps in the matter. The finding arrived at by the authority

that the petitioner who is the principal employer, used to deduct 18%

from the work contract bills towards provident fund which was never

deposited, has no basis. The order impugned is also silent as to why

highest penalty was imposed upon the petitioner despite such penalty

being the discretion of the authority, moreso, as there was no observation

of malice of any manner against the petitioner. The amount of damages

and interest payable by the petitioner was decided by the authority

arbitrarily and the innocuous claim of the petitioner for production and

inspection of documents was not acceded to.

6. The writ petition was filed on 24th January, 2017 and notice of the same

was served upon the provident fund authority on 25th January, 2017. On

27th January, 2017 notice under section 8F (3) (X) of the 1952 Act was

issued upon the State Bank and the State Bank had to remit the entire

amount of Rs. 9,52,,863/- on the same date. Upon intimating this court

of the said development, the court directed the provident fund authorities

to keep the recovered amount in a short term fixed deposit with any

nationalised bank within a period of 7 days from the date of order and to

continue to renew the same from time to time until further orders of the

court.

7. Learned counsel for the petitioner has further submitted that though there

is a provision for appeal under section 7(I) of the Act, the petitioner is

entitled to claim relief in the writ petition on the ground of violation of

principles of natural justice.

8. In support of his contention, learned counsel for the petitioner has placed

reliance on several authorities. The authority in Arambagh Hatcheries Ltd

v/s. Employees Provident Fund Organisation reported in LAWS(CAL) 2011

9 166 observes that damages under section 14B of the Employees'

Provident Funds and Miscellaneous Provisions Act, 1952 may be

recovered from the employer for delayed payment of contribution under

the scheme. But the term "may" used in the provision cannot be

construed as "shall". Learned counsel has next placed reliance on

Paramount Leathers v/s. Regional Provident Fund Commissioner reported

in LAWS(CAL) 2010 12 72. In the said judgment, the Hon'ble Division

Bench of this Court held that an order in which the authority fails to

exercise its jurisdiction or decide the dispute by a speaking order is

amenable to writ jurisdiction. Reliance is also placed in the authority in

Mangal Keshav Securities Limited v/s. Assistant Provident Fund

Commissioner reported in 2021 LLR 974 which observes that though the

Provident Fund Authority has the power to make coercive recovery of

unpaid provident fund dues, powers of garnishee recovery must be

exercised with due care and caution and after affording reasonable

opportunity to the company to prefer an appeal unless it is pointed out

that the company/employer would divert its fund lying in the bank

account to frustrate recovery.

9. On the issue of delay in initiation of the proceedings under section 14B of

the Act, learned counsel has relied upon the authority in Regional

Provident Fund Commissioner, Jalpaiguri v/s. Darjeeling Dooars

Plantation (Tea) Limited reported in LAWS(CAL) 2015 6 40. In the said

judgment, a coordinate bench of this court has observed that though

section 14B of the Act does not provide for any limitation for initiation of

proceedings, the power should be exercised within a reasonable period.

The next authority referred to by learned counsel is Assistant Provident

Fund Commissioner, Epfo And Anr. v/s. The Management Of Rsl Textiles

India Pvt. Ltd. reported in LAWS(SC) 2017 1 27 wherein it is held by the

Hon'ble Supreme Court that the presence or absence of mens rea and/or

actus reus would be a determining factor in imposing damages under

section 14B.

10. In opposing the contention of the petitioner, learned counsel for the

provident fund authority, respondent nos. 2 and 3 herein, has submitted

that alternative remedy under section 7(I) of the Act is available to the

petitioner and the present writ petition is not maintainable. Notice under

section 14B was issued on 31st July, 2015 stating that the petitioner

being the principal employer failed to deposit the proportionate provident

fund of the employees to the tune of 18% from their bill. It was recorded

and is also not in dispute that BTPS was the exclusive contractor at the

relevant time. As the present management is a logical continuity of the

erstwhile management, it cannot be said that the documents relating to

the period under consideration were not in custody or within the

knowledge of the petitioner. The production of Form-6A indicates that the

beneficiaries were identified and the provident fund dues quantified.

According to the learned counsel, the principal employer, i.e. the

petitioner used to deduct provident fund to the tune of 18% from the

salary of employees till respondent no. 4 got its separate provident fund

code number. The matter was extensively heard by the provident fund

authority upon giving opportunity of hearing to the petitioner and

respondent no. 4 and upon consideration of the documents produced

before it, the authority came to the conclusion that the petitioner was

liable to pay the damages and interest from 1st March, 1995 to November

2000. Ample opportunity was given to the parties for taking any objection

to the revised calculation but no such objection was raised. Damage was

calculated in terms of para-32A of the Employees' Provident Fund

Schemes, 1952. Dues under section 7A which was assessed by the

authority were paid belatedly for which damages and interest have

accrued. The identification of employees does not apply in such a case.

The writ petition is, therefore, devoid of merits and is liable to be rejected.

11. Learned counsel has placed reliance on the judgment in Tirrihannah

Company Ltd. v/s. Regional Provident Fund Commissioner-I & Ors. in

M.A.T. 42 of 2021 wherein an Hon'ble Division Bench of this Court has

held that the writ proceedings is concerned with the decision making

process and not the decision itself. In Employees' State Insurance

Corporation v/s. M/s. Harrison Malayalam Pvt. Ltd., reported in AIR 1993

Supreme Court 2655 it is held that the obligation to make contribution

does not depend on whether the particular employee ceases to be

employee after the contribution period and after the benefit period expire.

12. The legal proposition in Organo Chemical Industries And Another v/s.

Union of India And Others reported in (1979) 4 Supreme Court Cases 573

is that imposition of damages under section 14B is meant to penalise the

defaulting employer and also to provide reparation for the amount of loss

suffered by the employees.

13. I have considered the submissions made on behalf of the parties.

14. It is on record that the petitioner, being the principal employer was

directed to pay an amount of Rs. 9, 52,863/- in the proceedings under

section 14B/7Q of the 1952 Act and during pendency of the writ petition

a notice under section 8F(3)(X) of the Act was issued upon the State Bank

which was constrained to remit the said amount on the same date. An

Hon'ble Division Bench of this Court directed the provident fund

authorities to keep the said amount in a short term fixed deposit with any

nationalised bank within a period of 7 days from the date of order and to

continue to renew the same from time to time until further orders of the

court.

15. At the outset, learned counsel for respondents no. 2 and 3 has challenged

the maintainability of the writ petition on the ground that there is a

provision for appeal against the order impugned under section 7-I of the

Act of 1952 and as such, an alternative efficacious remedy is available to

the petitioner. In this connection, the observation of the Hon'ble Supreme

Court in Whirlpool Corporation v/s. Registrar of Trade Marks, Mumbai

and others reported in (1998) 8 Supreme Court Cases 1 may be relevant.

In the said report, the Hon'ble Supreme Court has held that existence of

alternative statutory remedy is not an absolute bar to High Court's

jurisdiction under Article 226 of the Constitution of India. Alternative

remedy would not operate as a bar in at least three contingencies:- (i)

where the writ petition seeks enforcement of any fundamental right; (ii)

where there is violation of principles of natural justice; or (iii) where the

order or the proceedings are wholly without jurisdiction or; (iv) the vires of

an Act is challenged. In referring to the said report the Hon'ble Division

Bench of this Court has also made similar observations in Paramount

Leathers (supra).

16. In the case in hand, learned counsel for the petitioner is aggrieved with

the decision making process of the authority on the ground that relevant

documents relating to the claim were not supplied to him and the decision

was arrived at arbitrarily. A case of violation of principles of natural

justice prima facie being made out by the petitioner, the writ petition

cannot be dismissed on the ground of alternative remedy. Also, affidavits

have been used in the writ petition and when such affidavit is used by the

respondents, dismissal of a writ petition on the ground of availability of

alternative remedy is not wholly just and proper. [Paramount Leathers

(supra)]. Therefore the writ petition is maintainable and shall be dealt

with on merits.

17. In dealing with the merits of the case, section 14B of the Act of 1952 is set

out:-

"[14-B. Power to recover damages.-

Where an employer makes default in

the payment of any contribution to the

Fund, the Pension Fund or the

Insurance 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 or in the payment of any

charges payable under any other

provision of this Act or of any Scheme or

Insurance Scheme or under any of the

conditions specified under Section 17,

the Central Provident Fund

Commissioner or such other 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 such damages, not exceeding

the amount of arrears, as may be

specified in the Scheme.

[Provided that before levying and

recovering such damages, the employer

shall be given a reasonable opportunity

of being heard:]"

18. Therefore the provident fund authority has discretionary power to recover

damages by way of penalty from the petitioner and such discretion has to

be exercised by way of application of mind by the authority. In exercise of

such discretion, the authority is at liberty to impose or waive the penalty

upon hearing the employer and upon application of mind [Arambagh

Hatcheries Limited (supra)].

19. A plethora of decisions of the Hon'ble Supreme Court demonstrate that in

view of the punitive nature of the power exercised under section 14B, an

order under section 14B must be a speaking order containing the reasons

in support of it. In determining the damages to be imposed under section

14B, the mens rea or actus reus prevailing at the relevant time should be

given due consideration. [Assistant Provident Fund Commissioner, Epfo

and Another (supra)].

20. In the present case, the petitioner claims that a maximum of 12% of the

salary of the employee can be deducted as proportionate provident fund

contribution but the order impugned demonstrates that 18% was

deducted by the petitioner from the work contract bills towards provident

fund till the employer received its own provident fund code. It also

appears from the order that the authority had no knowledge whether copy

of Form-6A was supplied to the petitioner in course of the hearing. The

petitioner has denied receipt of the said form. During the hearing, the

petitioner submitted a representation before the authority on 15th

November, 2016, wherein he requested the authority to provide detailed

calculation regarding the revised claim. The order impugned is silent as to

whether such representation was dealt with and in fact, the order

impugned was passed on the same date, i.e., on 15th November, 2016.

The submission of the petitioner of not having the documents relating to

the period under consideration was brushed aside as an alibi taken by the

petitioner for absolving him of his responsibility. Payment of damages and

interest from March, 1995 to November 2000 was thrust upon the

petitioner on the anvil of submission made on behalf of the establishment,

i.e., respondent no. 4 who agreed to pay the dues after the period

November 2000. No explanation is offered as to the reason for reduction of

the claim amount by only Rs. 7,820/- thought the period of claim was

revised to 04/1996-11/2000 from 04/96-12/2013. The authority's

observation that the petitioner deducted provident fund @ 18% is not

supported by any document. No malice in the conduct of the petitioner in

not depositing the provident fund dues within the statutory period of time

has been inferred by the authority. In the order impugned itself the

authority has stated that several issues remained to be ascertained. But

the order is silent as to whether such issues were actually ascertained by

the authority.

21. It is trite law that the authority is under obligation to apply its mind

before imposing damages under section 14B. The power of imposing

damages being discretionary, the respondent authority ought to have

given cogent reasons for imposing the highest penalty. Consideration of

extent of penalty has not found place within the four corners of the order.

22. The petitioner submitted a representation before the authority on 18th

May, 2016 requesting the authority to provide the relevant records and

documents and also the deposits along with particulars of the employees

including proper identification from 1st March, 1995 to 14th November,

2000. The authority has shed its responsibility by holding that the

petitioner ought to possess the relevant documents as he is a logical

continuity of the erstwhile management. Admittedly the petitioner took

over the management of the fourth respondent with effect from

28/06/2001 and was not concerned with the administration thereof

earlier. Only because the petitioner is a logical continuity of the erstwhile

management, it cannot be ipso facto inferred that the petitioner was in

possession of all relevant documents pertaining to the company.

23. The order impugned was passed on 15th November, 2016. Even before

expiry of the statutory period of appeal, the provident fund authority

issued notice under section 8F (3) (X) of the Act of 1952 upon the State

Bank and caused the bank to remit the amount of Rs. 9,52,863/- on the

same date. Notice of the writ petition was also served upon the authority

prior to issuance of the notice under section 8F (3) (X) of the Act of 1952

despite which the amount was attached.

24. Upon consideration of the submissions made on behalf of the parties and

material on record, this court is of the view that the order impugned

should be set aside/quashed and the provident fund authority should

reconsider the issue upon due consideration of the representations

submitted by the petitioner and upon taking necessary steps for providing

all the relevant documents and records as required/requested by the

petitioner. The amount recovered from the State Bank of India should

continue to remain in the short-term fixed deposit account as directed

earlier till the matter is reconsidered by the provident fund authority as

directed hereinabove. The authority should also afford reasonable

opportunity of hearing to both the parties, in accordance with law.

25. With the above directions and observations, W.P.A. 2045 of 2017 is

allowed.

26. The order impugned dated 15th November, 2016 is hereby quashed/set

aside.

27. There shall, however, be no order as to costs.

28. Urgent certified website copies of this judgment, if applied for, be supplied

to the parties expeditiously on compliance with the usual formalities.

(Suvra Ghosh, J)