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SCA/17935/2003 5/ 5 JUDGMENT
IN
THE HIGH COURT OF GUJARAT AT AHMEDABAD
SPECIAL
CIVIL APPLICATION No. 17935 of 2003
For
Approval and Signature:
HONOURABLE
MR.JUSTICE D.H.WAGHELA
Sd/-
=========================================================
1
Whether
Reporters of Local Papers may be allowed to see the judgment ?
2
To be
referred to the Reporter or not ?
3
Whether
their Lordships wish to see the fair copy of the judgment ?
4
Whether
this case involves a substantial question of law as to the
interpretation of the constitution of India, 1950 or any order
made thereunder ?
5
Whether
it is to be circulated to the civil judge ? 1
& 2 YES; 3 to 5 NO
=========================================================
C
U SHAH PREPARATORY SCHOOL & 1 - Petitioner(s)
Versus
ASSISTANT
PROVIDENT FUND COMMISSIONER - Respondent(s)
=========================================================
Appearance
:
MR
SI NANAVATI Senior Counsel for M/s.NANAVATI & NANAVATI
for
Petitioners : 1 - 2.
MR PJ MEHTA for Respondent : 1,
MR
BHAGYODAYA MISHRA for Respondent :
1,
=========================================================
CORAM
:
HONOURABLE
MR.JUSTICE D.H.WAGHELA
Date
: 14/11/2011
ORAL
JUDGMENT
1. The
petitioner – educational institution has invoked Articles 226 and 227
of the Constitution to challenge the order
dated 01.12.2003 of Assistant Provident Commissioner as illegal and
oppressive. By the impugned order dated 01.12.2003, in exercise of
powers conferred under section 14-B of the Employees’ Provident
Funds and Miscellaneous Provisions Act, 1952 (for short, “the
Act”), the respondent has imposed, by way of damages, penalty
of Rs.1,54,326/- and ordered the petitioner to pay within 15 days.
That amount of damages is sought to be levied admittedly on the
basis that provident fund dues were paid by the petitioner after
respective due dates, as detailed in show cause notice dated
06.06.2003. According to that show cause notice, payment of
provident fund dues had fallen due in respect of the period from
February 1982 to June 1988.
2. It was
the case of the petitioner before the respondent and before this
Court that validity of the Government of India Notification No.SO.986
of 1982 had been challenged before the Apex Court in several
petitions and, on account of injunction granted by the Apex Court,
operation and execution of that notification was stayed. The Apex
Court dismissed the writ petitions and upheld validity of the
notification by order dated 29.1.1988. The petitioner institution was
allotted Code number for provident fund account on 26.7.1988
mentioning the application of the Act and the Schemes thereunder with
effect from 01.4.1982. It was, on that basis, submitted that
retrospective allotment of Code number to the petitioner could not
operate or be effective in view of the injunction granted by the
Supreme Court and the respondent ought not to have levied any amount
by way of damages for the period during which the notification in
question was stayed.
3. There
is no dispute about the fact that the aforesaid notification was
under challenge before the Supreme Court and that issue was decided
by the Apex Court in D.A.V.College and Another v.
Regional Provident Fund Commissioner and Others reported in 1988 (2)
L.L.J. 218. The operative part of that judgment reads
as under:-
“2. We
direct that the petitioners shall comply with the Act and the scheme
framed thereunder regularly with effect from February 1, 1988.
Whatever arrears they have to pay under the Act and the schemes in
respect of the period between March 1, 1982 and February 1, 1988
shall be paid by each of the petitioners within such time as may be
granted by the Regional Provident Fund Commissioner. If the
petitioners pay all the arrears payable from March 1, 1981 upto
February 1, 1988 in accordance with the directions of the Regional
Provident Fund Commissioner, he shall not levy any damages for the
delay in payment of the arrears. Having regard to the special facts
of these cases, the subscribers (the employees) shall not be entitled
to any interest on the arrears. The Writ Petitions are disposed of
accordingly. No costs.”
4. In
view of the clear observations and directions of the Apex Court as
quoted hereinabove and there being no dispute about the averments
that operation of the notification dated 19.2.1982 was stayed by the
Apex Court, the petitioner could not have been faulted for not
depositing the provident fund dues regularly and within time during
the period from March 1, 1981 to February 1, 1988. There was also no
dispute about the fact that the petitioner is an educational
institution, not carrying on any business or commercial activity, and
the show cause notice for levy of damages was issued as late as in
June, 2003. Long before that, the petitioner had already paid the
provident fund dues in August, 1988, according to the submission.
5. As
against the above facts, the impugned order relied upon the
provisions of section 14-B of the Act which prescribed no period of
limitation for recovery of damages. According to the plain language
of section 14-B of the Act, where an employer makes default in
payment of any contribution to the Fund, or in the transfer of
accumulations required to be transferred by him, or in the payment
of any charges payable under any other provision of the Act, or any
Scheme, the Provident Fund Commissioner or such other officer as may
be authorized may recover from the employer by way of penalty such
damages, not exceeding the amount of arrears, as may be specified in
the Scheme. Applying the provisions of section 14-B in the facts of
the present case, it would appear that the employer could not be
inferred to have consciously made default in payment of any
contribution when application of the Act itself was under challenge
and the notification dated 19.2.1982 was inoperative. Even
otherwise, provisions of section 14-B leaves some discretion to the
authority in the matter of imposing penalty insofar as the maximum
limit for such penalty is prescribed. When the Hon’ble Apex Court
had, in the case pending before it, clearly directed not to levy any
damages for the delay in payment of arrears in respect of delay in
payment of provident fund dues for the period between March 1, 1982
and February 1, 1988, the respondent was required to follow suit and
not impose the penalty mainly on account of the fact that the
petitioner was not a party before the Supreme Court in the matter
between D.A.V.College and Another v. Regional Provident Fund
Commissioner and Others.
6. Under
the above circumstances, the impugned order is found to be arbitrary
and unjustified, in the peculiar facts of the case, and hence
required to be set aside. Rule is made absolute accordingly, with no
order as to costs.
7. The
amount deposited pursuant to the interim order made herein shall be
refunded to the petitioner with interest that may have accrued
thereon on account of its investment in Fixed Deposit.
Sd/-
(
D.H.Waghela, J.)
(KMG
Thilake)
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