{"id":231857,"date":"2009-12-08T00:00:00","date_gmt":"2009-12-07T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/national-textile-corporation-vs-central-board-of-provident-fund-on-8-december-2009"},"modified":"2016-01-21T02:16:08","modified_gmt":"2016-01-20T20:46:08","slug":"national-textile-corporation-vs-central-board-of-provident-fund-on-8-december-2009","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/national-textile-corporation-vs-central-board-of-provident-fund-on-8-december-2009","title":{"rendered":"National Textile Corporation vs Central Board Of Provident Fund on 8 December, 2009"},"content":{"rendered":"
Bombay High Court<\/div>\n
National Textile Corporation vs Central Board Of Provident Fund on 8 December, 2009<\/div>\n
Bench: B. P. Dharmadhikari<\/div>\n
                                          1\n\n\n\n                 IN THE HIGH COURT OF JUDICATURE AT BOMBAY\n\n\n\n\n                                                                         \n                           NAGPUR BENCH, NAGPUR.\n\n\n\n\n                                                 \n                     WRIT PETITION Nos. 1717 & 5440 OF 2005.\n\n\n\n\n                                                \n                                       *******\n\n\n\n\n                                          \n    WRIT PETITION NO. 1717\/2005.\n                            \n    1.National Textile Corporation\n    (Maharashtra North) Limited, a\n                           \n    Subsidiary Company of the National\n    Textile Corporation Limited, a \n    Government of India Undertaking\n     having its Registered Office at NTC House\n    15, N.M. Marg, Mumbai 400 038\n         \n\n\n    through its Unit Mills namely Model Mills\n      \n\n\n\n    Umrer Road, Nagpur through \n    the Unit General Manager.\n\n    2.Model  Mills, \n    previously Unit of National Textile\n\n\n\n\n\n    Corporation (Maharashtra North), Limited,\n    Umred Road, Nagpur, through\n    its General Manager.                                       ....PETITIONERS. \n\n\n\n\n\n                                       VERSUS\n\n\n    1.Central Board of Provident Fund,\n    Employees Provident Fund Organization,\n    Bhavishya Nidhi Bhavan, 14 Bhikaji Cama\n    Place, New Delhi 110 066.\n\n\n\n\n                                                 ::: Downloaded on - 09\/06\/2013 15:23:32 :::\n                                             2\n\n\n\n    2.Director [Recovery],\n\n\n\n\n                                                                               \n    Employees Provident Fund Organization\n    Bhavishya Nidhi Bhavan,  14 Bhikaji Cama\n    Place, New Delhi 110 066.\n\n\n\n\n                                                       \n    3.Assistant Commissioner of Provident \n    Funds and Recovery Officer, Employees\n    Provident Fund Organization, (Maharashtra \n\n\n\n\n                                                      \n    and Goa), Office of the Regional Provident\n    Fund Commissioner, Bhavishya Nidhi Bhavan,\n    132A, Ridge Road, Raghuji Nagar,\n    Nagpur. \n\n\n\n\n                                            \n    4.Deonath s\/o Maroti Parate,\n                            \n    aged about 50 years, Occ - Retired,\n    R\/o. Ravi Nagar, Nagpur.\n                           \n    5.Ranjan V. Sagdeo,\n    aged Major, Occ - Retired,\n    R\/o. Laxmi narayan Apartment,\n    Near Dinanath High School,\n    Dhantoli, Nagpur.\n         \n\n\n    6.Laxmiprasad Shrivastava,\n      \n\n\n\n    aged Major, Occ - Retired,\n    R\/o. Near Corporation School,\n    Bajeria, Nagpur.\n\n\n\n\n\n    7.Suresh N. Malviya, \n    aged Major, Occ - Retired,\n    R\/o. Near Gandhi Chowk, \n    Sadar, Nagpur.\n\n\n\n\n\n    8.Ramesh s\/o Uttamrao Kshirsagar,\n    aged Major, Occ - Retired,\n    R\/o. 61, Gajanan  Nagar, \n    Wardha Road, Nagpur.                              ....RESPONDENTS.\n                                                          INTERVENORS.\n\n\n                                          *******\n\n\n\n\n                                                       ::: Downloaded on - 09\/06\/2013 15:23:32 :::\n                                              3\n\n\n\n    WRIT PETITION NO. 5440\/2005.\n\n\n\n\n                                                                                 \n    1.Model  Mills, Nagpur\n    a Unit of National Textile Corporation \n\n\n\n\n                                                         \n    (Maharashtra North), Limited,\n    a Subsidiary Company of the National\n    Textile Corporation Limited,\n    a Government of India Undertaking,\n\n\n\n\n                                                        \n    Umred Road, Ganeshpeth, Nagpur, \n    through its General Manager.                          ....PETITIONER.\n\n\n\n\n                                             \n                                          VERSUS\n                              \n    1.Assistant Provident  Fund Commissioner,\n    Provident Fund Organization,   Bhavishya Nidhi \n                             \n    Bhavan, 132A, Ridge Road, Raghuji Nagar,\n    Nagpur. \n\n     2.Recovery Officer, \n    Provident Fund Organization,   Bhavishya Nidhi \n         \n\n\n    Bhavan, 132A, Ridge Road, Raghuji Nagar,\n    Nagpur. \n      \n\n\n\n    3.Rashtriya Mill Mazdoor Sangh,\n    Baidyanath Chowk, Great Nag Road,\n    Nagpur - 440 003.\n\n\n\n\n\n    through its President.                             ....RESPONDENTS.\n                                                           INTERVENOR.\n\n\n                                ----------------------------------- \n\n\n\n\n\n              Mr.  M.G. Bhangde, Senior Advocate with \n              Mr.R.B. Puranik, Advocate for petitioners.\n              Mr. R.S. Sundaram, Advocate for Respondent- Department.\n              Mr. S. Ahirkar and Mr.R.R. Patil, Advocates \n              for  intervenors.\n                                ------------------------------------\n\n\n\n\n                                                         ::: Downloaded on - 09\/06\/2013 15:23:32 :::\n                                                4\n\n\n\n\n                          CORAM :               B.P. DHARMADHIKARI,  J.  \n<\/pre>\n
    Date of reserving the Judgment.             -                 13.11.2009\n    Date of Pronouncement.                      -                 08.12.2009\n\n\n\n\n                                                           \n                \n\n    JUDGEMENT.   \n\n\n\n\n                                              \n<\/pre>\n
    1.         These petitions are between same parties and arise out of recovery of <\/p>\n
    arrears on account of Provident Fund dues.  In Writ Petition No.1717 of 2005, <\/p>\n
    the   petitioner   has   challenged   order   of     attachment   dated   14.03.2005   & <\/p>\n
    04.06.2004 and   pray for a direction to Central Board of Provident Fund to <\/p>\n
    consider its application dated 09.09.2002 for waiver of damages in accordance <\/p>\n
    with the BIFR order dated 25.07.2002  under Rehabilitation Scheme.  National <\/p>\n
    Textile Corporation  (NTC) is the petitioner  in this  petition.   Unit of NTC at <\/p>\n
    Nagpur by name ‘Model Mills’ is petitioner in Writ Petition No.5440 of 2005.\n<\/p>\n
    The challenge therein is to notice dated 15.04.2004 issued under Section 7A by <\/p>\n
    the   Regional   Provident   Fund   Commissioner,   order   dated   05.10.2004   based <\/p>\n
    upon it by the  said Authority, and further order dated 06.09.2005 passed by <\/p>\n
    the Employees Provident Fund Appellate Tribunal, upholding that order.\n<\/p>\n
    2.         Basic facts up to sanction of BIFR are not in dispute in the present <\/p>\n
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\n                                                    5<\/span><\/p>\n
    matters.     The NTC   is a Government of India Enterprise and its Maharashtra <\/p>\n
    North Subsidiary is engaged in  manufacture of Textile  and Textile goods in <\/p>\n
    northern region.  Government of India nationalized 109 ailing Textile mills in <\/p>\n
    Maharashtra under the Sick Textile Undertaking  (Nationalization) Act, 1974 <\/p>\n
    (hereinafter referred as “the 1974 Act” for short). National Textile Corporation <\/p>\n
    Limited,  New Delhi was initially given  responsibility of managing these  109 <\/p>\n
    textile mills.  However, later on 9 subsidiary companies were formed including <\/p>\n
    the petitioner and mills\/units were handed over to respective subsidiaries.  The <\/p>\n
    petitioner in Writ Petition No. 1717\/2005 was having ownership, management <\/p>\n
    and supervision over 18 textile mills out of which 13 were located in Mumbai <\/p>\n
    and 5 in North Maharashtra. Model Mills at Nagpur is one such unit.\n<\/p>\n
    3.          It is not in dispute that a Reference under Section 15[1] of the SICA <\/p>\n
    came   to   be   submitted   on   17.05.1993.     Petitioner   was   declared     sick   under <\/p>\n
    section 3[1][o] of that Act and under section 17 [3], IDBI was appointed as <\/p>\n
    operating   agency.     These   proceedings   were   registered   as   BIFR   Case   No.<\/p>\n
    536\/1992.     On   25.07.2002   BIFR   sanctioned   rehabilitation   scheme   under <\/p>\n
    section   18   of   the   1974   Act.     Said   Rehabilitation   Scheme   also   contained <\/p>\n
    constitution of Asset Sale Committee for sale of assets with the unit mills.  Out <\/p>\n
    of total 18 mills, only 8 were found to be viable and Model Mills was in list of <\/p>\n
    10   un-viable   mills.     The   viable   mills   were   to   be   revived   by   modernization, <\/p>\n
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\n                                                    6<\/span><\/p>\n
    renovation   etc.,   by   adopting   various   measures.   Properties   of   un-viable   units <\/p>\n
    were to be sold for such revival.\n<\/p>\n
    4.         BIFR considered total cost of rehabilitation  scheme, amount which <\/p>\n
    can be fetched by sale of assets and amount  to be raised by NTC through loans <\/p>\n
    etc.  Various financial institutions like Banks, Ministry of Textile, Government <\/p>\n
    of   India,   CBDT,   MSEB   and   Tata   Electric   Company   as   also   promoters   were <\/p>\n
    requested   to   adopt   various   measures   as   suggested   in   the   scheme   and   to <\/p>\n
    cooperate in the implementation of the rehabilitation scheme.  It also includes <\/p>\n
    measures   like     bringing   about   settlement   of   Statutory   dues   under   various <\/p>\n
    Labour Laws including Provident Fund and ESI.  As a part of said exercise, vide <\/p>\n
    paragraph no.6.0 C[c][d][i] the PF and ESI dues were to be paid within two <\/p>\n
    years and  relevant clause – paragraph reads as under :\n<\/p>\n
                  “Para 6.0 C[c][v][ix]
\n                              To consider to waive the penalties and damages
\n                  levied on PF\/ESI dues.   To consider  to pay PF and ESI
\n                  dues   [after   waiver   damages   and   penalties]   in   2   years, <\/p>\n
                  after sanction of the scheme by Board.   The dues of un-
\n                  viable mills would be paid in the first year and the dues of
\n                  viable mills would be paid in second year.”\n<\/p><\/blockquote>\n
    5.         The   appropriate   Government   under   Industrial   Disputes   Act   on <\/p>\n
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\n                                                 7<\/span><\/p>\n
    01.06.2004 permitted closure of Model Mills and that order was  implemented <\/p>\n
    by notice issued on 05.06.2004.   In the meanwhile Assistant Provident Fund <\/p>\n
    Commissioner,   has   started   proceedings   for   recovery   of   contribution   under <\/p>\n
    Section 7A and damages under Section 14B of the Employees Provident Fund <\/p>\n
    and Miscellaneous Provisions Act, 1952 (hereinafter referred to as “the PF Act”\n<\/p>\n
    for   short), and issued recovery   certificate on 05.05.2003.   The contribution <\/p>\n
    amount   of   Rs,   10,17,291\/-   and   damages   under   section   14B   worth   Rs.\n<\/p>\n
    1,96,10,449\/-   were   to   be   paid.     By   revenue   recovery   certificate   dated <\/p>\n
    08.04.2004   demand   was   for   Rs.   47,84,259\/-   towards   contribution   and   Rs.\n<\/p>\n
    1,97,80,640\/- towards damages.   There was also a demand for Rs. 84,888\/-\n<\/p>\n
    towards contribution  and Rs. 1,52,129\/- towards damages.  There was another <\/p>\n
    R.R.C. Dated 28.04.2004.    Petitioners  contend that  the  RRC’s  were satisfied <\/p>\n
    and there were no arrears of contribution towards P.F. Fund.   Their effort is to <\/p>\n
    show that what is outstanding is only   damages under section 14B of the PF <\/p>\n
    Act.\n<\/p>\n
    6.         Because   of   the   provision   in   paragraph   no.6   quoted   above,   under <\/p>\n
    rehabilitation   scheme,   application   for   grant   of   waiver   of   damages   was <\/p>\n
    submitted   by   the   petitioner   on   09.09.2002   before   respondent   no.1   Central <\/p>\n
    Board, which  is  still pending.    On  07.06.2004  the  respondent no.2 Director <\/p>\n
    [Recovery], issued notices to Regional Provident Fund Commissioners not to <\/p>\n
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\n                                                    8<\/span><\/p>\n
    take any coercive action against the petitioner.  However, on 04.06.2004 itself <\/p>\n
    respondent no.3 Recovery Officer at Nagpur had issued memo of attachment of <\/p>\n
    several   movable   properties.     The   petitioner   wanted   to   identify   certain <\/p>\n
    machinery for the purpose of its shifting to other viable mills or to buyers, but <\/p>\n
    the   said   exercise   was   not   allowed   to   be   undertaken.       On   14.03.2005 <\/p>\n
    immovable   properties   namely   5   bungalows     along   with   land   ad-measuring <\/p>\n
    6040 sq. mts. and building along with land ad-measuring 1,16,257 sq. mts., <\/p>\n
    were   attached.     With   the   result,   petitioners   could   not   proceed   further   with <\/p>\n
    rehabilitation scheme sanctioned by BIFR.   The process undertaken by Assets <\/p>\n
    Sale  Committee  to verify   and identify  the  properties  for  their  sale  to raise <\/p>\n
    Funds for revival of viable units also got affected.  In this background in Writ <\/p>\n
    Petition   No.1717\/2005,   these   orders   attaching   movables   and   immovable <\/p>\n
    properties have been challenged.\n<\/p>\n
    7.          In  Writ  Petition  No. 5440\/2005,  petitioners  have  pointed  out  that <\/p>\n
    their establishment of Model Mills is exempted from provisions of PF Act and it <\/p>\n
    has got its own scheme which has been duly recognized on 22.08.1974 which <\/p>\n
    regulates & governs the PF Fund with its Trustees.     They have been making <\/p>\n
    compliances   with   P.F.   Act   and   other   obligations   were   of   Board   of   Trustees <\/p>\n
    under Model  Mills P.F. Scheme i.e. MMPF  scheme and have  also submitted <\/p>\n
    their   accounts   and   returns   within   time   to   the   Statutory   authorities.     The <\/p>\n
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\n                                                  9<\/span><\/p>\n
    amount   of   contribution   was   invested   in   securities   recognized   by   the <\/p>\n
    Government of India and members were given interest at the rates declared by <\/p>\n
    its Board of Trustees from time to time.  No objection was taken in this respect <\/p>\n
    at any time by the Provident Fund officials, however, later on the Provident <\/p>\n
    Fund officials claimed that under MMPF Scheme also interest should have been <\/p>\n
    given at 12% to its members and its action of crediting interest at 10% on PF <\/p>\n
    contribution of members was illegal and unsustainable.     On account of this <\/p>\n
    difference in rate of interest, various amounts were sought to be recovered and <\/p>\n
    for non payment of this difference in rate of interest , damages under section <\/p>\n
    14B were also levied.\n<\/p>\n
    8.         Petitioners received notice under section 7A of PF Act in this respect <\/p>\n
    and   on   25.08.2004,     and   filed   their   detailed   submissions   raising   various <\/p>\n
    objections   as   preliminary   objections.     Instead   of   deciding   those   preliminary <\/p>\n
    objections,   on   05.10.2004   the   Assistant   Provident   Fund   Commissioner   at <\/p>\n
    Nagpur   worked   out   demand   of   Rs.   4,83,43,831\/-   towards   difference   on <\/p>\n
    account of less payment of interest.  This order was challenged by petitioners <\/p>\n
    by filing Appeal bearing No. ATA 107[9]\/2005 before the Employees Provident <\/p>\n
    Fund Appellate Tribunal at New Delhi and, that appeal came to be dismissed <\/p>\n
    on 06.09.2005.  These orders are questioned in Writ Petition No. 5440\/2005.\n<\/p>\n
    The grievance in short is about arrears worked out on account of difference in <\/p>\n
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\n                                                  10<\/span><\/p>\n
    rate of interest and damages thereupon.\n<\/p>\n
    9.         In this background, I have heard Shri M.G. Bhangde, learned Senior <\/p>\n
    Counsel with Shri R.B. Puranik, learned counsel for petitioners and Shri R.S.\n<\/p>\n
    Sundaram, learned counsel  for Respondents.   Shri S. Ahirkar  and Shri R.R.\n<\/p>\n
    Patil, learned counsel appeared for  intervenors i.e. the affected employees.\n<\/p>\n
    10.        By inviting attention to the provisions of Section 32 of the 1974 Act <\/p>\n
    and judgment of Division Bench of this Court reported at 2009 [6] Mh.L.J. 108 <\/p>\n
    (Vadilal Dairy International Ltd., Mumbai .vrs. State of Maharashtra), learned <\/p>\n
    Senior   Counsel   has   contended   that   the   rehabilitation   scheme   sanctioned   by <\/p>\n
    BIFR   has   overriding   effect   and   in   view   of   its   paragraph   no.6,   the   P.F.\n<\/p>\n
    Authorities   could   not   have   proceeded   further   to   effect   coercive   recovery <\/p>\n
    without  deciding   application   for   exemption   filed   by   the   petitioners   on <\/p>\n
    09.09.2002, which is still pending.    He has also invited attention to provisions <\/p>\n
    of Section 14B to show the obligation to consider such waiver statutorily cast <\/p>\n
    upon the employer.   Provisions of paragraph 32B of Statutory Scheme [P.F.\n<\/p>\n
    Scheme 1952] are also relied upon by him for this purpose.  He points out that <\/p>\n
    there is valid challenge to levy of interest under section 7 [Q] of P.F. Act  & to <\/p>\n
    demand   of   damages   raised   upon   it   and   hence,   notice   dated   15.04.2004   or <\/p>\n
    order dated 05.10.2004 passed by the Assistant Provident Fund Commissioner <\/p>\n
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\n                                                   11<\/span><\/p>\n
    and   order   dated   06.09.2005   passed   by   the   Appellate   Tribunal   are <\/p>\n
    unsustainable.\n<\/p>\n
    11.        In   order   to   show   that   there   was   no   obligation   upon   the   Trustees <\/p>\n
    functioning under the MMPF Scheme to pay interest at 12%, apart from the <\/p>\n
    provisions   of   paragraph   no.6   mentioned   above,   he   has   invited   attention   to <\/p>\n
    other clauses including paragraph nos. 6 [c][b][ix], which casts such obligation <\/p>\n
    upon the Provident Fund Officials.  He has also pointed out that on 27.09.2002 <\/p>\n
    in   SLP   (Civil)   No.   16732\/1997     the   Hon’ble   Apex   Court   has   directed <\/p>\n
    implementation of rehabilitation scheme sanctioned by BIFR, after noticing that <\/p>\n
    it has  been approved   by all concerned.   Thereafter  also the  representation <\/p>\n
    dated 09.09.2002  came to be  made and it is still pending.\n<\/p>\n
    12.        In this background, he has also invited attention to the provisions of <\/p>\n
    para no.60 of the Statutory Scheme to urge that the said para does not apply <\/p>\n
    automatically to the   Model Mills PF Scheme.   He has in support relied upon <\/p>\n
    the   provisions   of   Employees     Provident   Fund   (Amendment)   Scheme,   2000 <\/p>\n
    which introduced paragraph no.27AA, with clause 19 and 20 to urge that those <\/p>\n
    clauses   for   the   first   time   made   a   departure   and   required   Trustees   of   an <\/p>\n
    exempted establishment to declare interest not lower than the rate declared by <\/p>\n
    the   Central   Government   in   para   no.60.     The   responsibility   to   make   up   the <\/p>\n
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\n                                                  12<\/span><\/p>\n
    deficiency,   if   any,   because   of   this   enhanced   interest   was   cast   upon   the <\/p>\n
    employer.\n<\/p>\n
    13.         In view  of the   Statutory  provisions,  he  relied   upon the  judgment <\/p>\n
    reported at 2007 [8] SCC 338 (Dhampur Sugar Mills Ltd. .vrs. State of U.P. and <\/p>\n
    others), to urge that the powers to waive conferred upon the Central Board of <\/p>\n
    P.F.     was accompanied by corresponding duty upon it.   He has stated that, <\/p>\n
    ignoring the representation pending before it and also  statutory obligation, the <\/p>\n
    local authorities at Nagpur high handedly and malafidely attached the movable <\/p>\n
    properties on 04.06.2004.  He points out that permission to close industry was <\/p>\n
    given by the appropriate  Government on 01.06.2004 and the establishment of <\/p>\n
    Model Mills was closed on 05.06.2004.  On 04.06.2004 itself the Superior P.F.\n<\/p>\n
    Officials from New Delhi had sent  fax message to local authorities not to take <\/p>\n
    any coercive steps against the petitioners.  This Fax message was  confirmed by <\/p>\n
    communication dated 07.06.2004, but then this communication and Fax were <\/p>\n
    both disobeyed   by the local authorities.   Learned Senior Counsel states that <\/p>\n
    second attachment has been made on 14.03.2005 in further    violation.   He <\/p>\n
    further   states   no   amends   were   made   thereafter   and   entire   working   of <\/p>\n
    rehabilitation scheme was thus jeopardized by the said local officers.\n<\/p>\n
    14.         Attention has been invited to   provisions of Model Mills Scheme to <\/p>\n
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\n                                                  13<\/span><\/p>\n
    show  that  the   exemption  granted  was  subject  to conditions  specified  in  the <\/p>\n
    Schedule   annexed   thereto   and   no   provisions   thereunder   required   the   MM <\/p>\n
    Board of Trustees  i.e. the Board of Trustees of Model Mills Provident Fund to <\/p>\n
    declare interest at same rate at which the Central Government declared in para <\/p>\n
    no.60 of the Statutory Scheme.    He further pointed out that the MM Board of <\/p>\n
    Trustees   consisted   of   equal   number   of   representatives   of   employees   and <\/p>\n
    employer and after its constitution, the employer ceased to have control on it.\n<\/p>\n
    A show cause notice to the employer and action taken against the employer, is <\/p>\n
    therefore, unsustainable.     According to him, the action ought to have been <\/p>\n
    taken against the Board of Trustees and objection raised in this respect by the <\/p>\n
    Model   Mills   has   not   been   looked   into   by   the   Competent   Authority   while <\/p>\n
    deciding Section 7A proceedings or then by the Appellate Authority.\n<\/p>\n
    15.        He   has   invited   attention   to   Clause   Nos.   13   and   14   of   the   MMPF <\/p>\n
    Scheme to show that only obligation upon the MM Board of Trustees was to <\/p>\n
    see that the rate of PF contribution does not fall below the statutory rate.   He <\/p>\n
    has further pointed out that as per its Clause 14, employer submitted Audited <\/p>\n
    Balance Sheets from time to time.\n<\/p>\n
    16.        Attention is invited to Rules framed by the employer to regulate the <\/p>\n
    Provident Fund to show powers of MM Board of Trustees.  Obligation was cast <\/p>\n
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\n                                                      14<\/span><\/p>\n
    upon the employer to pay penal interest, if, Provident Fund contribution was <\/p>\n
    not offered to Trust, within time.  Rule  8 deals with investing of P.F. Money, <\/p>\n
    and Rule 9 show that the expenses for  management of Fund were to be  borne <\/p>\n
    by the employer and loss only was to be borne by the Fund. Rule 23 is also <\/p>\n
    pressed into service to show how interest   and income actually realized, was <\/p>\n
    required   to be applied to the account of individual member annually on 31st <\/p>\n
    March.     It   is   also   pointed   out   that   this   Rule   24   enabled   the   MM   Board   of <\/p>\n
    Trustees to determine rate of interest.\n<\/p>\n
    17.         Show cause notice dated 15.04.2004 is then pointed out to urge that <\/p>\n
    it did not point  out any breach of any Rule or any provisions of the MMPF <\/p>\n
    Scheme.     Provisions   of   Statutory   Scheme   in   paragraph   no.60   about   rate   of <\/p>\n
    interest   and   its   application   on   monthly   running   balance   are   not   at   all <\/p>\n
    applicable.   It is stated that, the issue is squarely covered by the judgment of <\/p>\n
    Division Bench of Calcutta High Court reported at 1996 II CLR 890 (Electric <\/p>\n
    Lamp Manufacturers (India) Ltd. .vrs. Regional Provident Fund Commissioner <\/p>\n
    and others).     It is further argued that, provisions of paragraph 27AA of the <\/p>\n
    Statutory Scheme added on 06.01.2001 cannot be applied retrospectively, and <\/p>\n
    there   is   no   such   plea   of   retrospective   application.     He   has   relied   upon   the <\/p>\n
    judgment   of   Hon’ble   Apex   Court   reported   at     (1998)   6  SCC   35   (Jiyajeerao <\/p>\n
    Cotton Mills Employees .vrs. Dev Kumar Holani and others) to urge that Model <\/p>\n
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\n                                                   15<\/span><\/p>\n
    Mills  P.F. Scheme is  determinative  in the  matter  and reference  to Statutory <\/p>\n
    Scheme   framed   under   P.F.   Scheme   1952   by   Respondent   Department   is <\/p>\n
    misconceived.\n<\/p>\n
    18.         Lastly, it is urged that interest payable to a member under the P.F.\n<\/p>\n
    Scheme   as   benefit   to   show   that   payment   of   interest   is   in   the   nature   of <\/p>\n
    compensation,   he   has   relied   upon   judgment   reported   at   2009   [7]   SCC   372 <\/p>\n
    (Thazhathe Purayil Sarabi and others .vrs. Union of India and  another )  and <\/p>\n
    2009   (11)   Scale   597   (Sri   Venkateswara   Syndicate   .vrs.   Oriental   Insurance <\/p>\n
    Company  ).   To   show     this   nature   of   interest   and   that   it   could   not   have <\/p>\n
    retrospective effect, he has relied upon the judgment   of Hon’ble Apex Court <\/p>\n
    reported at 2009 [3] Scale 115 ( M\/s. Rampur Fertilizer Ltd .vrs. M\/s. Vigyan <\/p>\n
    Chemical Industries ).\n<\/p>\n
    19.         Shri   Sundaram,   learned   counsel   for   respondent   has   stated   that <\/p>\n
    properties   were   attached   when   it   was   found   that,   the   petitioners   were <\/p>\n
    attempting to dispose of the same without paying the P.F. dues, and he further <\/p>\n
    states that the Fax Message dated 04.06.1994 was not received by the local <\/p>\n
    authorities   at   Nagpur.     According   to   him,   grievance   in   Writ   Petition   No. <\/p>\n
    1717\/1995  is   only  about   excessive   attachment.     He   invites   attention  to   the <\/p>\n
    orders dated 16.06.2005 passed in the matter to show that,   now the entire <\/p>\n
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\n                                                  16<\/span><\/p>\n
    property is sold out and amount of Rs. 9 Crores is available for appropriation <\/p>\n
    because   of   Bank   Guarantee.     He   therefore,   states   that   representation     of <\/p>\n
    petitioner   made     on   28.02.2005   [09.09.2005]   should   be   directed   to   be <\/p>\n
    disposed   of   within   time   bound   manner   and   the   Writ   Petition   may   thus   be <\/p>\n
    disposed of.\n<\/p>\n
    20.        Without prejudice  to this  stand, the learned counsel contends that <\/p>\n
    the rehabilitation scheme sanctioned by BIFR does not contain any reasons why <\/p>\n
    waiver   was   recommended   and   hence   said   recommendation   was   not     at   all <\/p>\n
    binding upon the respondent.   He has invited attention to the provisions of <\/p>\n
    Clause 7.02 incorporating General Terms and Conditions and its sub-clause [vi] <\/p>\n
    to urge that certain additional compliances were expected from petitioners, and <\/p>\n
    petitioners have not made those compliances.   Clause XII is also pressed into <\/p>\n
    service to show that the rehabilitation scheme placed embargo upon the right <\/p>\n
    of the petitioner to dispose of any movable  or immovable properties.\n<\/p>\n
    21.        In   this   background   by   placing   reliance   upon   second   proviso   to <\/p>\n
    Section 14B of the PF Act, it is urged that the said provision has come into <\/p>\n
    force from 01.09.1991  and paragraph no.32-B of the Statutory P.F. Scheme <\/p>\n
    enables the Central Board to consider waiver only if reasons were recorded by <\/p>\n
    the BIFR.  He argues that there is no clause or any reason  in BIFR Scheme for <\/p>\n
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\n                                                  17<\/span><\/p>\n
    waiver of P.F. Damages.  He has placed reliance upon the judgment reported at <\/p>\n
    2001   [2]   Mh.L.J.   169   (Ralliwolf   Ltd.   .vs.   Regional   Provident   Fund <\/p>\n
    Commissioner  ) to urge that the PF Contribution and Scheme has been given <\/p>\n
    precedence and priority.   He has invited  attention to certain charts produced <\/p>\n
    during hearing to show  the nature of amount outstanding.  He further states <\/p>\n
    that   there   were   certain   meetings   between   the   parties   to     resolve   the <\/p>\n
    controversy and invites attention to the communication dated 13.06.2007 to <\/p>\n
    show   the   compliances   demanded   from   petitioners.     He   states   that   those <\/p>\n
    compliances are  still not effected.   He  relies  upon the  provisions  of  Section <\/p>\n
    11[2] of the P.F. Act to show that the superior pedestal given to the P.F. Fund <\/p>\n
    and its recovery by the parliament.  He also relies upon the judgment reported <\/p>\n
    at 2009 [13] Scale 280 (Maharashtra State Co-operative Bank ltd. .vrs. The <\/p>\n
    Assistant   Provident   Fund   Commissioner  ),   to   support   his   contentions.     He <\/p>\n
    reiterates   that   provisions   of   Section   32   of   the   Sick   Industries   Companies <\/p>\n
    (Special Provisions) Act, 1985   do not override the P.F. Act in any way, and <\/p>\n
    hence, the attachment for recovery of PF dues and interest\/damages cannot be <\/p>\n
    assailed.\n<\/p>\n
    22.         In Writ Petition No. 5440\/2005, Shri Sundaram, learned counsel has <\/p>\n
    contended that the exemption given to the MMPF Scheme is conditional and <\/p>\n
    subject to compliances with conditions specified  in Schedule annexed to order <\/p>\n
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\n                                            18<\/span><\/p>\n
    dated 22.08.1974.    He further states  that,  it is also subject to provisions of <\/p>\n
    Section 17[1] of the P.F. Act, and hence interest as per paragraph no.60 of the <\/p>\n
    Statutory Scheme is required to be paid by the MM Board of Trustees.   He <\/p>\n
    points out that there is no provision about interest under that scheme.  Rule 47 <\/p>\n
    of the Rules, framed by the  MM Board of Trustees is relied upon to state that <\/p>\n
    in absence of any such provision, the provisions of paragraph 60 of statutory <\/p>\n
    scheme about rate of interest and also about mode and manner of computing <\/p>\n
    and applying it, automatically come into play.    He argues that Rule 23 of this <\/p>\n
    MMPF Rules is not in consonance with paragraph no.60.  He also relies upon <\/p>\n
    the provisions of Rules 8 and 9 to urge that the petitioners should have shown <\/p>\n
    that the interest  payable & earned on their investment was 10% only and not <\/p>\n
    12%.  Attention is invited to provisions of Section 17[1][a] of the P.F. Act to <\/p>\n
    point out that exemption to establishment is because of enjoyment of interest <\/p>\n
    at more rate.   He relies upon the provisions of sub-section [1][A][a] of said <\/p>\n
    Section to show that penalty for such violation is upon the establishment i.e. <\/p>\n
    the employer. About duties of its Board of Trustees and the obligation of such <\/p>\n
    Board , Section 17[1][B]  is relied upon to show that the P.F. Act contemplates <\/p>\n
    action against Trustees only in limited situations and hence here show cause <\/p>\n
    notice was given to petitioner – employer.   For   same purpose provisions of <\/p>\n
    Rule 15 of the Rules framed by the MM Board of Trustees  are also relied upon.\n<\/p>\n
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\n                                                     19<\/span><\/p>\n
    23.         Shri Sundaram, learned counsel stresses over paragraph no.27A and <\/p>\n
    27AA,   as   also   clauses   19   and   20   as   incorporated   in   Scheduled   appended <\/p>\n
    thereto,   and   asserts   that   they   have   retrospective   operation   and   it   is   only   a <\/p>\n
    declaratory measure.   He has drawn support from 1997 [3] SCC 472 (Allied <\/p>\n
    Motors (P) Ltd. .vrs. Commissioner of Income Tax, Delhi)   and 1997 [1] SCC <\/p>\n
    352 (Brij Mohan Das Laxman Das .vrs. Commissioner of Income Tax, Amritsar), <\/p>\n
    to substantiate his contentions.\n<\/p>\n
    24.<\/p>\n
                He also states that later judgment recognizes payment of interest as a <\/p>\n
    facility formality  i.e., benefit.  He has attempted to distinguish the judgment <\/p>\n
    on which learned Senior Counsel has placed reliance. He has concluded his <\/p>\n
    arguments by stating that, there is no merit in either of the petitions, and also <\/p>\n
    in grievance made against the local officers by the petitioners.\n<\/p>\n
    25.         In his reply arguments, Shri Bhangde, learned Senior Advocate has <\/p>\n
    stated   that   Asset   Sale   Committee   has   been   constituted   under   BIFR <\/p>\n
    Rehabilitation Scheme and the Scheme permits sale of certain properties.   He <\/p>\n
    contends that, because of this provision and Section 32, the Provident Fund <\/p>\n
    department   cannot   object   to   such   sale.     He   has   invited   attention   to   Writ <\/p>\n
    Petition  to  show the    other  challenges  in writ  petition   and to  provisions  as <\/p>\n
    contained in BIFR Scheme which requires PF Authorities i.e. Central Board to <\/p>\n
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\n                                                   20<\/span><\/p>\n
    consider the issue of waiver.   The concession in the matter of repayment as <\/p>\n
    contained in the BIFR scheme are also relied upon by him and he further states <\/p>\n
    that, properties identified for sale by Asset Sale Committee cannot be objected <\/p>\n
    to by anybody.  He has in this respect attempted to distinguish the judgment of <\/p>\n
    this Court in the case of Ralliwolf Ltd. [supra], and judgment of Hon’ble Apex <\/p>\n
    Court in the case of Maharashtra State Cooperative Bank Ltd.[supra].  He has <\/p>\n
    also relied upon   paragraph   [c] of letter dated 13.06.2007 to assail the high <\/p>\n
    handed action of respondents.\n<\/p>\n
    26.         While replying to the arguments of Shri Sundaram in Writ Petition <\/p>\n
    No. 5454\/2005, he states that paragraph no.60 of the Statutory Provident Fund <\/p>\n
    Scheme,   1952   cannot   be   extended   to   petitioners   and   the   controversy   is <\/p>\n
    squarely   covered  in   their   favour   in   view   of   the   division   bench  judgment   of <\/p>\n
    Calcutta   High  Court  in  the  case   of  Electric   Lamp  Manufactures   (India)   Ltd.\n<\/p>\n
    (supra), and the judgment of Hon’ble Apex Court mentioned above.  He states <\/p>\n
    that section 17[1]-A of the P.F. Act consider criminal liability, while in present <\/p>\n
    matter, the Court is required to consider civil liability of employer.  He further <\/p>\n
    argues   that,   there   is   no   plea   or   contention   that   paragraph   27AA   of   the <\/p>\n
    Statutory   Provident   Fund   Scheme   is   retrospective   or   only   declaratory.       He <\/p>\n
    states that, when liability is imposed for the first time, provision cannot be read <\/p>\n
    as retrospective or merely declaratory.   He again points out that there is no <\/p>\n
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\n                                                      21<\/span><\/p>\n
    show cause notice to petitioner that their P.F. Scheme is   in conflict with the <\/p>\n
    Statutory   Provident   Fund   Scheme   or   any   Statutory   provisions   and   the <\/p>\n
    impugned orders also do not contain any reasons on those lines.     He states <\/p>\n
    that the validity of impugned action or orders need to be scrutinized in the <\/p>\n
    light of the reasons recorded and those reasons cannot be supplemented.  He <\/p>\n
    states   that   because   of   Rule   23   in   the   MMPF   Scheme,   paragraph   60   of   the <\/p>\n
    Statutory   scheme   cannot   apply   and   there   is   no   decision   by   the   Regional <\/p>\n
    Provident Fund Commissioner on this conflict as required by Rule 47 of the <\/p>\n
    MMPF Scheme.   He relies upon the judgment reported at 1970 [3] SCC 119 <\/p>\n
    ( M\/s. D.N. Roy and others .vrs. The State of Bihar and othes)  to urge that, <\/p>\n
    how show cause notice in the present matter is misconceived and also   upon <\/p>\n
    the   judgment   reported   at   2003   [5]   SCC   106   (Union   of   India   .vrs.   GTC <\/p>\n
    Industries   Ltd.  Bombay),  to  show   how  the  orders   passed  by  the  Competent <\/p>\n
    Authority or Appellate Tribunal needs to be judged.  He points out that Rule 23 <\/p>\n
    of the MMPF Scheme was without any objections and  valid from 1974 to 1991 <\/p>\n
    and   it   cannot   became   bad   after   1992.     He   states   that   action   of   Central <\/p>\n
    Government   in   declaring   the     rate   of   interest     at   a   particular   rate   is   not <\/p>\n
    sufficient   to   urge   that,   there   is   any   conflict   between   the   said   Rule   23   and <\/p>\n
    paragraph  no.60  of   the  Statutory  Scheme.    He   states  that   the  provisions  of <\/p>\n
    Section 17[1][a] of the P.F. Act do not contemplate payment of interest at rate <\/p>\n
    specified in paragraph no.60  as provident fund benefit.  He further states that <\/p>\n
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\n                                                    22<\/span><\/p>\n
    as return and accounts were furnished regularly by the MM Board of Trustees <\/p>\n
    to   Provident   Fund   Department,   burden   was   upon   them   to   show   that   the <\/p>\n
    petitioners were receiving interest at higher rate, but were paying the same at <\/p>\n
    lower rate to the members\/employees.   He argues that a show cause notice <\/p>\n
    then   ought to have contained such a ground and at least impugned orders <\/p>\n
    ought   to   have   disclosed   such   reasons.     He   states   that   the   resolution   dated <\/p>\n
    01.03.1993 deciding the rate of interest to be 10% was never objected to or <\/p>\n
    challenged by the respondents.ig<\/p>\n
    28.         After   Shri   Bhangde,   learned   Senior   Counsel   finished   his     reply <\/p>\n
    arguments, Shri Sundaram, learned counsel for respondents  tried to urge that <\/p>\n
    after   nationalization,   Central   Government   was   appropriate   Government   for <\/p>\n
    Model Mills and hence any separate notification about rate of interest was not <\/p>\n
    necessary.  He further tried to contend that, the provisions of paragraph no.60 <\/p>\n
    have been incorporated by reference in MMPF Scheme.  However, because of <\/p>\n
    strong objection of petitioners and also because of absence of any such plea or <\/p>\n
    reasoning   on   record,   Shri   Sundaram,     learned   counsel,   did   not   press   these <\/p>\n
    arguments.\n<\/p>\n
    29.         It  will   be   appropriate   to  first   consider  the   judgment   cited   by   Shri <\/p>\n
    Sundaram, to show primacy given to recovery of Provident Fund dues.   Said <\/p>\n
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\n                                                   23<\/span><\/p>\n
    judgment   reported   at          Ralliwolf   Ltd.   .vs.   Regional   Provident   Fund <\/p>\n
    Commissioner [supra],  shows that there the learned Single Judge was required <\/p>\n
    to consider the issue in the light of provisions of Section 22[1] of SICA and <\/p>\n
    provisions of Section 32  did not fall for consideration.  Facts therein also show <\/p>\n
    that   the   employees   were   contending   that,   the   contribution   of   employees   is <\/p>\n
    infact   deduction   from   wages   which   are   due   and   payable   to   them.       In <\/p>\n
    paragraph no.19, learned Single Judge has considered the powers   with the <\/p>\n
    Central Board to reduce or waive damages in relation to Sick Company and in <\/p>\n
    paragraph no.20, it has been noticed that there was no provision by which the <\/p>\n
    liability of employer to pay the   contribution of employer or contribution of <\/p>\n
    employee has been excused or exempted.   The obligation to deduct employees <\/p>\n
    contribution     together   with   his   own   contribution   of   employer   of   such   sick <\/p>\n
    industry   continues   to   subsists   and   the   immunity   conferred   upon   such <\/p>\n
    undertaking   needed   to   be   confined   to   the   specifications   thereof   by   the <\/p>\n
    Parliament and not beyond it.   Consideration in paragraph no.21 shows that <\/p>\n
    the employer there had deducted contribution of employees, but the same were <\/p>\n
    not   paid   into     the   Fund   and   the   money   was     unlawfully   retained   by   the <\/p>\n
    employer.  It is thus apparent that, the question of waiver of damages only was <\/p>\n
    not for consideration before this Court.  The observations in paragraph  no.25 <\/p>\n
    show that, this court found that, the Provident Fund and other dues payable <\/p>\n
    under the PF Act are part of legitimate Statutory entitlement of workers, and <\/p>\n
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\n                                                  24<\/span><\/p>\n
    stand of some footing as payment of wages.   In present matter, the employer <\/p>\n
    has attempted to show that what is sought to be recovered from it is an amount <\/p>\n
    on account of difference in rate of interest and   damages   calculated on that <\/p>\n
    account under section 14[B].  During hearing the petitioner have also produced <\/p>\n
    charts which substantiate this stand.  Charts also show that some recoveries are <\/p>\n
    stayed by  the Appellate Tribunal.  These details are not in dispute before me.\n<\/p>\n
    30.        The petitioners have relied upon the Division Bench judgment in the <\/p>\n
    case   of  Vadilal   Dairy   International   Ltd.,   Mumbai   .vrs.   State   of   Maharashtra <\/p>\n
    [supra],   which   squarely   considers   the   provisions   of   Section   32   thereof.\n<\/p>\n
    Section 32 [1]  gives overriding effect to the scheme made under SICA in so far <\/p>\n
    as the P.F. Act is concerned.   In paragraph no.8, the Division  Bench of this <\/p>\n
    Court has found that the nature thereof is clear and once scheme is sanctioned, <\/p>\n
    it has effect not withstanding inconsistent provision therewith contained in any <\/p>\n
    other   law.     Paragraph   no.14   of   that   scheme   before   the   Division   Bench <\/p>\n
    contained   certain   observations   about   the   relief   against   the   Sales   Tax <\/p>\n
    Department.  The BIFR noticed that the said relief  was in lines with the State <\/p>\n
    Government   Policy   and   the     company   should   follow   up   matter   with   the <\/p>\n
    Industries Department.  The Division Bench has found that, even if under Sales <\/p>\n
    Tax Act it was open to the department to charge interest and impose penalty, <\/p>\n
    considering the scheme as sanctioned it  would not be open to the authorities <\/p>\n
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\n                                                    25<\/span><\/p>\n
    including   the   quasi   judicial   authorities   under   the   Act   to   order   payment   of <\/p>\n
    interest or penalty contrary to that scheme.   The Second Appellate Authority <\/p>\n
    under Sales Tax Act was   found   to have  acted without  jurisdiction  to that <\/p>\n
    extent.  It is therefore, obvious that, this judgment which considers the scheme <\/p>\n
    sanctioned under the SICA and its overriding effect because of its section 32 <\/p>\n
    applies even to the facts before this Court.  It needs to be mentioned that, the <\/p>\n
    recovery from petitioners in dispute before this Court is in relation to amount <\/p>\n
    on account of  difference in  rate  of  interest and damages calculated on that <\/p>\n
    account.  Provident Fund dues i.e. contribution of employer or employee is not <\/p>\n
    at all in dispute.\n<\/p>\n
    31.         The judgment of Hon’ble Apex Court in the case of Maharashtra State <\/p>\n
    Co-operative   Bank   ltd.   .vrs.   The   Assistant   Provident   Fund   Commissioner <\/p>\n
    [supra], was in the matter of Sale of Sugar bags pledged by Sugar Factory with <\/p>\n
    a Cooperative  Bank as security for repayment of loan.   The Provident Fund <\/p>\n
    authorities   attached   those   sugar   bags   for   payment   of   Provident   Fund   dues <\/p>\n
    payable by the employer of the factory.  In paragraph no.18 the Hon’ble Apex <\/p>\n
    Court has found that, in the shape of Provident Fund Act the legislature made <\/p>\n
    comprehensive   provisions   for   recovery   of   dues   by   way   of   attachment   of <\/p>\n
    movable   and   immovable   property.     In   paragraph   no.20,   question   whether <\/p>\n
    provisions   of   Section   11[2]   of   the   PF   Act   applied   against   other   debts   like <\/p>\n
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\n                                                    26<\/span><\/p>\n
    mortgage, pledge etc., has been considered and it has been held that language <\/p>\n
    of Section 11 was very clear and priority   given to   Provident Fund dues in <\/p>\n
    Section 11 is not hedged with any limitation or condition.  In paragraph no.21 <\/p>\n
    and   onwards   other   judgments   taking   similar   view   are   also     considered.\n<\/p>\n
    Provisions of Section 11 shows that where employer is adjudged insolvent or <\/p>\n
    being Company an order for its winding up is made, amount due from him\/it <\/p>\n
    in  respect   of   any  contribution  payable   to   Fund,   damages   recoverable   under <\/p>\n
    section   14B   is   deemed  to   be   included     amongst   other   debts   to   be   paid   in <\/p>\n
    priority to all other debts as per Section 530 of the Companies Act, 1956.  The <\/p>\n
    judgment therefore was not require to  consider the scheme sanctioned by the <\/p>\n
    BIFR or then effect of Section 32 of the SICA.   It is also clear that, the said <\/p>\n
    priority of debt payment does not militate in any way with precedence given to <\/p>\n
    the   rehabilitation   scheme   by   Section   32   of   the   SICA   and   both   operate   in <\/p>\n
    distinct fields.\n<\/p>\n
    32.         The relevant sub-clause [ix] clause [b] of BIFR scheme which deals <\/p>\n
    with  reliefs and concessions is already reproduced above. This clause appears <\/p>\n
    in part of BIFR scheme dealing with obligation of Government of India and <\/p>\n
    Ministry of Textiles.  It requires the Provident Fund authorities i.e., the Central <\/p>\n
    Board to consider the waiving penalties and damages.  It is important to note <\/p>\n
    that,   it   does   not   expect   the   Provident   Fund   authorities   to   waives   Provident <\/p>\n
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\n                                                  27<\/span><\/p>\n
    Fund contribution to be made by the employer or deducted from wages of the <\/p>\n
    employees.     It   further   requires   the   Central   Board   to   consider   payment   of <\/p>\n
    Provident Fund dues in two years after the sanction of  rehabilitation scheme <\/p>\n
    by   the   Board.     However,   these   Provident   Fund   dues   are   after   waiver   of <\/p>\n
    damages and penalties  i.e. without damages and penalties.   It contemplates <\/p>\n
    that dues towards contribution of un-viable mills are to be paid in first year and <\/p>\n
    dues of viable mills are to be paid in second year. Properties of un-viable mills <\/p>\n
    are to be sold or shifted to help viable mills and hence, after such sale, the P.F.\n<\/p>\n
    dues  (without   damages  or  penalties)  of  such  un-viable  mills  are   to be  paid <\/p>\n
    within 1 year. For clearing these dues of viable mills, time  of 2 years is given.\n<\/p>\n
    The   corresponding   obligation   on   Provident   Fund   authorities   is   in   second <\/p>\n
    proviso to section 14B of the PF Act.  Section 14B, second proviso enables the <\/p>\n
    Central Board to reduce or waives such damages in case of present petitioners.\n<\/p>\n
    Similarly, paragraph no.32B of the Statutory Provident Fund Scheme, 1952 in <\/p>\n
    its clause-B also expects Central  Board to exercise that  power in  cases where <\/p>\n
    BIFR for reasons to be recorded in a scheme in this behalf recommends.     It <\/p>\n
    permits waiver of damages up to 100%.   Here BIFR has recommended such <\/p>\n
    waiver of damages and penalties.  However, contention of respondent is that, <\/p>\n
    the said recommendation is without any reasons.  First of all the Central Board <\/p>\n
    has to consider the representation made by the petitioners for such waiver and <\/p>\n
    then it has to record such conclusions.   Such conclusions cannot be reached <\/p>\n
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\n                                                    28<\/span><\/p>\n
    only   by   reading   sub   clause   [ix]   reproduced   above,   but   entire   rehabilitation <\/p>\n
    scheme needs to be looked into for the said purpose.  The total number of NTC <\/p>\n
    Mills declared un-viable, the  number of those  mills found viable, mode and <\/p>\n
    manner in which the movable and immovable properties of un-vaible mills are <\/p>\n
    to   be   utilized   for   restoration   of   viable   mills,   constitution   of   Assets   sale <\/p>\n
    Committee for it are some of the relevant factors, which need to weighed for <\/p>\n
    said  purpose.    At  this   juncture   it  is  premature  for   this  Court  to   record  any <\/p>\n
    finding in that respect.  Shri Sundaram, learned counsel has fairly stated that, a <\/p>\n
    direction to Board to consider the said application for waiver can be issued in <\/p>\n
    the matter.  Hence, I do not find it necessary to delve more  into that aspect at <\/p>\n
    this stage.\n<\/p>\n
    33.         This   bring   me   to   the   consideration   of   challenge   in   relation   to <\/p>\n
    automatic   application   of   paragraph   no.60   of   the   Statutory   Scheme   to   the <\/p>\n
    MMPF Scheme.   Paragraph No.60 of the Statutory PF Scheme, 1952 requires <\/p>\n
    Commissioner  to credit  to the  account of each member, interest at the  rate <\/p>\n
    determined by the Central Government in consultation with the Central Board.\n<\/p>\n
    It  also requires  interest  to   be  credited   to  the  members   account  on   monthly <\/p>\n
    running balance basis.  Rule 23 of the Rules under  MMPF Scheme enables the <\/p>\n
    MM Board of Trustees to determine such rate of interest and it also requires the <\/p>\n
    same to be credited to the account of individual member as on 31st  March of <\/p>\n
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\n                                                     29<\/span><\/p>\n
    the preceding year.  The question is, which provision will apply in the present <\/p>\n
    matter.\n<\/p>\n
    34.         The   grant   of     exemption   to   Provident   Fund   of   Model   Mills   under <\/p>\n
    Section   17[1]   of   the   PF   Act   on   22.08.1974   is   not   in     dispute.     The   said <\/p>\n
    exemption   is   subject   to   the   conditions   specified   in   the   schedule   annexed <\/p>\n
    thereto and those conditions  are in addition  to the conditions mentioned in <\/p>\n
    Section   17[1].     In   schedule   annexed     along   with   the   said   exemption   order <\/p>\n
    dated 22.08.1974, the obligation upon the employer is to invest the Provident <\/p>\n
    Fund   amounts   in   securities   of   Central   Government.     There   is   no   express <\/p>\n
    provision linking rate of interest in it with rate declared   under para 60.   Its <\/p>\n
    clause 13, requires employer to enhance rate of   Provident Fund contribution <\/p>\n
    proportionately, if the Statutory rate or contribution for it under section 6 of <\/p>\n
    the PF Act is increased.       This requirement is followed by a sentence which <\/p>\n
    states that “but the purpose for such proportionate enhancement is to see that the  <\/p>\n
    benefits under the scheme of establishment may not become less favorable than the  <\/p>\n
    benefits   of  the Statutory  Provident  Fund  Scheme.”   This clause 13 therefore, <\/p>\n
    expressly stipulates  enhancement in  rate  of Provident  Fund contribution  i.e. <\/p>\n
    portion to be deducted from wages of employees.   The said clause cannot be <\/p>\n
    read to mean that, it also requires MM Board of Trustees \/ Employer to give <\/p>\n
    interest at rate declared by the Central Government in paragraph no.60 of the <\/p>\n
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\n                                                   30<\/span><\/p>\n
    Statutory scheme or to apply interest declared by it   in accordance with the <\/p>\n
    scheme of the said paragraph no.60.   The other provisions in the schedule deal <\/p>\n
    with  the    submission  of the   audited  balance  sheet, facility for  inspection  of <\/p>\n
    accounts etc., which do not have any bearing on this issue.  The rules framed <\/p>\n
    by the MM Board of Trustees to regulate the Provident Fund are also approved <\/p>\n
    by the Department.   As per Rule 3 the MM Board of Trustee have exclusive <\/p>\n
    administration and control of the Provident Fund and income, subject to any <\/p>\n
    instructions issued by the Regional Provident Fund Commissioner.  Rule 6 casts <\/p>\n
    obligation   upon   the   employer   to   hand   over   monthly   contribution   to   the <\/p>\n
    Fund\/BOT on or before 15th day of  the next of month and in default there of, <\/p>\n
    the employer is obliged to pay penal interest at such rate as may be levied by <\/p>\n
    the Regional Provident Fund Commissioner.  Rule 8 deals  with investment of <\/p>\n
    Provident Fund in prescribed Government Securities.   Rule 9 states that, all <\/p>\n
    expenses in relation to management of Fund are to be borne by the employer, <\/p>\n
    while any loss arising from any change in investment or from depreciation   in <\/p>\n
    market value of investment has to be borne by the Fund.  Rule 15  makes the <\/p>\n
    Trustees responsible for any money that, actually came into their hand.  Rule <\/p>\n
    23 which deals with interest is as under –\n<\/p>\n
                 “Rule No.23 : Interest :\n<\/p><\/blockquote>\n
                             The   interest   and   income   actually   realized   and
\n                 received   on   investments   during   a   year   ending   on   31st
\n                 March,   in   each   year   shall   be   utilized   towards   crediting  <\/p>\n
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\n                                                      31<\/span><\/p>\n
                   members   individual   account   with   interest   on   the   total
\n                   amount standing to the credit of each member as on 31st <\/p>\n
                   March of the preceding year after, deducting non-refunded  <\/p>\n
                   amount,   the   interest     and   income,   while   settling   the
\n                   accounts or transfer of provident Fund Account, should be
\n                   paid upto the end of the month preceding that in which the  <\/p>\n
                   account   is   settled   or   transferred.     For   the   broken   period
\n                   interest should be paid at the rate declared for the previous
\n                   year.  The rate of interest shall be determined by the Board  <\/p>\n
                   of Trustees from year to year after taking into account total  <\/p>\n
                   actual yield at investment and income.”\n<\/p><\/blockquote>\n
    35.          Rule 47 of this Rules is  heavily relied upon by the  department.  It is <\/p>\n
    as under –\n<\/p>\n
                  “Rule No.[47] : Contribution Irrevocable:\n<\/p><\/blockquote>\n
                              The   Trust   created   by   these   rules   and   the
\n                  contributions to the fund shall be irrevocable, save with the  <\/p>\n
                  consent of all the beneficiaries for the time being, and the
\n                  Mills shall not be entitled to claim the returns of any portion
\n                  of its own contribution whether provisionally or finally.\n<\/p><\/blockquote>\n
                              If   the   Provident   Fund   Rules   of   the
\n                  Mills\/Establishment   which   are   not   beneficial   and   are   in
\n                  conflict   with   the   provisions     of   the   Employees’   Provident
\n                  Fund   and   Misc.   Provisions   Act,   1952   and   E.P.F.   Scheme,
\n                  1952 the letter shall prevail.   Whether a particular rule of  <\/p>\n
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\n                                                       32<\/span><\/p>\n
                  the   Mills   \/   Establishment   is     beneficial   or   not;   shall   be
\n                  decided   by   the   Regional   Provident   Fund   Commissioner,  <\/p>\n
                  whose decision shall be final. In the absence of any provision  <\/p>\n
                  the   corresponding   provisions   of   the   Employees’   Provident
\n                  Fund   and   Misc.   Provisions   Act,   1952   and   E.P.F.   Scheme
\n                  1952 shall prevail.”\n<\/p><\/blockquote>\n
    This Rule shows that in case of conflict between the said Rules and P.F Act, <\/p>\n
    1952 or Statutory Provident Fund Scheme 1953, the PF Act 1952 and Statutory <\/p>\n
    Scheme prevail.  However, it also states that whether PF Rules of employer are <\/p>\n
    more   beneficial   or   then   the   Statutory   provisions   are   more   beneficial   is   the <\/p>\n
    question to be decided by the Regional Provident Fund Commissioner and his <\/p>\n
    decision is final.  Admittedly, in the present matter there is no decision by the <\/p>\n
    Regional  Provident Fund Commissioner that, the provisions of paragraph no.\n<\/p>\n
    60 of the Statutory P.F. Scheme 1952 are more beneficial than Rule 23 of the <\/p>\n
    MM PF Rules.   Said Rule 47 also contemplates that, if, there is no provisions in <\/p>\n
    the employers scheme or employers rule, the corresponding provisions of PF <\/p>\n
    Act   or   Statutory   Scheme   will   prevail.       It   is   also   important   to   note   that, <\/p>\n
    employer was not given any show cause notice that provisions of Rule 23 of the <\/p>\n
    MM   PF   Rules,   are   less   beneficial   in   the   matter   of   award   of   interest   to   the <\/p>\n
    members.\n<\/p>\n
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\n                                                   33<\/span><\/p>\n
    36.        The exemption granted is under section 17[1].  Under section 17[1]<\/p>\n
    [a] the exemption can be granted when appropriate Government is   satisfied <\/p>\n
    that the Rules of the  establishment to be exempted are not less favorable than <\/p>\n
    those specified in section 6 in so far as the rates  of contribution  are concerned <\/p>\n
    and employees are in enjoyment of “other Provident Fund benefits which on <\/p>\n
    the whole are not less favorable” to the employees than  the benefits provided <\/p>\n
    under   the   PF   Act   or   the   Statutory   scheme.     This   exemption   is   already <\/p>\n
    admittedly  granted by the  appropriate  Government to the  petitioners and it <\/p>\n
    was in force till the closure of  Model Mills on 05.06.2005.  It is obvious that <\/p>\n
    the appropriate Government was then satisfied that the employees of Model <\/p>\n
    Mills were in enjoyment of other benefits which were not less favorable.  While <\/p>\n
    considering the provisions of Rule 47 above, the requirement of recording a <\/p>\n
    satisfaction   by  the   Regional  Provident  Fund  Commissioner   in  this  respect  is <\/p>\n
    already highlighted by me.   It is therefore, obvious that unless the Regional <\/p>\n
    Provident Fund Commissioner after hearing the petitioners and the employees <\/p>\n
    and for reasons to be recorded, finds that the provisions of paragraph no.60 are <\/p>\n
    more beneficial, the respondent cannot insist upon payment of interest in terms <\/p>\n
    of the said  paragraph no.60 of the Statutory P.F Scheme.  Till such satisfaction <\/p>\n
    is   reached,   the   exemption   given   to   the   petitioners   and   opinion   reached   or <\/p>\n
    finding reached by the appropriate Government under section 17[1][a] of the <\/p>\n
    P.F. Act has to prevail, and deserves to be honoured.  It is  equally important to <\/p>\n
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\n                                                      34<\/span><\/p>\n
    note   that,   the   comparison   has   to   be   in   relation   to   the   MMPF   Scheme   and <\/p>\n
    Statutory P.F. Scheme “on the whole”.  In other words, one has to also find out <\/p>\n
    the other benefits flowing from a particular scheme and its impart jointly on <\/p>\n
    whole   scheme   and   scrutiny   cannot   be   restricted   only   to   one   particular <\/p>\n
    paragraph or rule.   It is apparent that, the provisions of section 17[1][a], are <\/p>\n
    therefore not sufficient to enable the respondents to   import paragraph 60 of <\/p>\n
    the Statutory Scheme of 1952 in MMPF Scheme.\n<\/p>\n
    37.<\/p>\n
                The   respondents   have   tried   to   urge     that,   the   obligation   to   pay <\/p>\n
    interest as per clause 60  is  cast  upon  the  petitioners,  because  of paragraph <\/p>\n
    27AA   added   to  the  PF     Statutory   Scheme.     It   is   to   be   noted   that,   the   said <\/p>\n
    amendment has come into force from 06.01.2001.  Its opening part itself shows <\/p>\n
    that, paragraph 27AA prescribed terms and conditions for exemption applicable <\/p>\n
    to “all exemptions already granted or to be granted hereinafter” under section <\/p>\n
    17 of the  PF Act.     Clause 19, states that the interest to be credited to the <\/p>\n
    account of each employee   shall not be lower than the rate declared by the <\/p>\n
    Central Government in paragraph no.60 of the Statutory scheme.   Clause 20 <\/p>\n
    states that, if such Board of Trustees of exempted establishment are unable to <\/p>\n
    pay interest at  said rate declared by the central Government, the deficiencies is <\/p>\n
    to be made good by the employer.  The discussions  above, clearly shows that, <\/p>\n
    for the first time such arrangement has been made by the legislature in the <\/p>\n
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\n                                                      35<\/span><\/p>\n
    field.  Clause 19 itself shows that the interest needs to be credited on opening <\/p>\n
    balance as on the first day of the accounting year and it only requires rate of <\/p>\n
    interest declared by the Central Government to be adopted.  It does not require <\/p>\n
    mode and manner of crediting interest stipulated in paragraph no.60 i.e. on <\/p>\n
    monthly running balance basis   to be followed.   This is   sufficient to indicate <\/p>\n
    that,   the   scheme   framing   authority   was   aware   that,   there   was   no   such <\/p>\n
    obligation upon exempted establishment earlier.   The limited amendment to <\/p>\n
    add compliance with only some part of para 60 shows the absence of intention <\/p>\n
    to apply entire paragraph 60 of statutory scheme. It also derogates from its <\/p>\n
    alleged   clarificatory   or   declaratory   character.   It   reveals   inappropriateness   in <\/p>\n
    stand of Respondents to apply the government declared rate of interest also to <\/p>\n
    MMPF Scheme.\n<\/p>\n
    38.         In Allied Motors (P) Ltd. .vrs. Commissioner of Income Tax, (supra), <\/p>\n
    the   Hon’ble   Apex   Court   has   considered   the   interpretation   of   the   provision <\/p>\n
    inserted   to   remedy   unintended   consequences   and   to   make     the   proviso <\/p>\n
    workable.  It has been held that a proviso which  speaks of obvious omission in <\/p>\n
    the   section   and   is   required   to   be   read   into   section   to   give   it   a   reasonable <\/p>\n
    interpretation,  is required to be treated as retrospective in operation so that, a <\/p>\n
    reasonable interpretation can be given to  whole section.  It is apparent that the <\/p>\n
    respondents have not come up with a case that paragraph no.27AA has been <\/p>\n
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\n                                                      36<\/span><\/p>\n
    added or clause nos. 19 and 20 have been added with a view to fill in some <\/p>\n
    omission.     The   judgment   therefore,   has   no   relevance.   The   consideration   of <\/p>\n
    limited   effect   of     paragraph   27AA   in   statutory   scheme   and   it   being   non-\n<\/p>\n
    declaratory above also shows that this ruling of Hon. Apex Court is not relevant <\/p>\n
    here.\n<\/p>\n
                Judgment   in   the   case   of  Brij   Mohan   Das   Laxman   Das   .vrs.\n<\/p>\n
    Commissioner   of   Income   Tax,   Amritsar    (supra),   also   relied   upon   by   Shri <\/p>\n
    Sundaram, learned counsel   again considers the explanation added to clause <\/p>\n
    [b]   of   Section   40   of   the   Income   Tax   Act,   1941.     The   explanation   no.2, <\/p>\n
    expressly provided that where an individual is partner in firm on behalf of or <\/p>\n
    for   the   benefit   of   any   other   person,     any  interest   paid   by   the   firm   to   such <\/p>\n
    individual otherwise than as partners, in representative capacity shall not be <\/p>\n
    taken into account for the purpose of clause [b].  The explanation were added <\/p>\n
    from   01.04.1985   and   prior   to   that,   there   was   conflict   of   opinion   amongst <\/p>\n
    several     High   Courts.     The   amending   Act   did   not   satisfy   whether   the <\/p>\n
    explanation was to have retrospective effect.  After considering the  provisions <\/p>\n
    in paragraph no.5 and view reached by majority of High Courts in paragraph <\/p>\n
    no.6,   in   paragraph   no.8   the   Hon’ble   Apex   Court   has   observed   that,   the <\/p>\n
    explanation-   2   did   not   preclude   an   individual   who   happen   to   be   partner <\/p>\n
    representing the HUF from depositing his personal funds with the partnership <\/p>\n
    and receiving interest thereon.   The Hon’ble Apex Court concluded that the <\/p>\n
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\n                                                    37<\/span><\/p>\n
    amendment was legislative recognition of the theory of different capacities of <\/p>\n
    individual  which  he  may  hold and  hence  such theory and recognition    was <\/p>\n
    available for party prior to 01.04.1985 also. It was thus found to take note of <\/p>\n
    already   existing   feature.     The   judgment   therefore,   clearly   shows   that   the <\/p>\n
    amendment was found to be declaratory in nature and therefore, retrospective.\n<\/p>\n
    39.         2009 [8] Scale 685   (M\/s. Delta Engineers .vrs. State  of Goa and <\/p>\n
    others), considers the relevant Rules were amended in 1992 and first schedule <\/p>\n
    relating   to   open   lands   was   amended   to   include   the     words   “and\/or   open <\/p>\n
    riverine land” after the words “open plots”  The Rules were further amended in <\/p>\n
    1994 by adding  Rule  54A which  required user  of  such riverine land to pay <\/p>\n
    rental charge of Re.1\/- per square meter per month in advance.  The question <\/p>\n
    before the Hon’ble Apex Court was whether the said rental charges could have <\/p>\n
    been   claimed   by     Port   Authorities   retrospectively   for   the   period   from <\/p>\n
    05.04.1984 to 03.03.1994.   The Hon’ble Apex Court has in paragraph no.22 <\/p>\n
    noticed that there was no such provision earlier and hence for earlier period <\/p>\n
    Port   Authorities   could   not   have   levied   any   such   fee.       In   paragraph   no.24 <\/p>\n
    question whether 1992 and 1994 amendment to the Rules were retrospective <\/p>\n
    or not, has been considered and it has been held that, the statute   has prima <\/p>\n
    facie prospective operation, unless it is expressly or by necessary implication <\/p>\n
    made to have retrospective operation.   Where the object of the statutes is to <\/p>\n
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\n                                                 38<\/span><\/p>\n
    affect vested rights or to impose new burden, it is deemed to be prospective <\/p>\n
    unless there are words in statute sufficient to show the  intention of legislature <\/p>\n
    to  affect existing rights.\n<\/p>\n
    40.        In   the   present   matter,   paragraph   no.27AA   clearly   states   that   all <\/p>\n
    exemptions already granted or to be granted after its coming into force under <\/p>\n
    section 17 are subject to the terms and conditions as given in Appendix “A”.\n<\/p>\n
    Thus, the use of word ‘shall’ and language of this paragraph clearly shows that <\/p>\n
    from   06.01.2001   all   exemptions   whether   already   granted   or   to   be   granted <\/p>\n
    thereafter   are  regulated  by  Appendix  “A”.  The  language  no where  indicates <\/p>\n
    intention of legislature to cast obligation upon the exempted establishment to <\/p>\n
    abide by   clause 19 and clause 20, even after period prior to 06.01.2001.   I <\/p>\n
    have already found that clause 19 and 20 cast a new obligation not existing till <\/p>\n
    then, therefore, the contention of respondent that paragraph no.27AA with its <\/p>\n
    Appendix -A, has got retrospective effect is without any merit.\n<\/p>\n
    41.        Interest payable to a member under the Scheme is definitely a factor <\/p>\n
    to be considered to find out whether the scheme of exempted establishment  or <\/p>\n
    Statutory Provident Fund scheme is better for him.   The word ‘other Provident <\/p>\n
    Fund benefits’ in section 17[1][a], therefore, needs to be given widest possible <\/p>\n
    interpretation.   I am therefore, not in a position to accept the contention of <\/p>\n
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\n                                                      39<\/span><\/p>\n
    learned Senior Advocate that interest declared by the MM Board of Trustees <\/p>\n
    under Rule 23 or declared by the Central Government in paragraph no.60 of <\/p>\n
    the Statutory Provident Fund Scheme is not a “benefit”.   In this view of the <\/p>\n
    matter, I do not find it necessary to refer to judgment in the case of Thazhathe <\/p>\n
    Purayil Sarabi and others .vrs. Union of India and   another (supra)  and   Sri <\/p>\n
    Venkateswara   Syndicate   .vrs.   Oriental   Insurance   Company   (supra),   cited   by <\/p>\n
    him.     Even   if   interest   is   presumed   to   be   a   compensation,   still   it   also   has <\/p>\n
    character as a benefit flowing from the investment to the contributory of the <\/p>\n
    Provident   Fund.    M\/s.   Rampur   Fertilizer   Ltd   .vrs.   M\/s.   Vigyan   Chemical <\/p>\n
    Industries (supra), also need not to be considered for said purpose. Paragraph <\/p>\n
    no.12 there  further, considers the case of retrospective  obligation and holds <\/p>\n
    that   the   transactions   with   which   the   Hon’ble   High   Court   was   dealing,   took <\/p>\n
    place prior to 23.09.1992 and suit itself was filed on 31.10.1991 i.e. before <\/p>\n
    coming into force of Interest on Delayed Payment to Small Scale and Ancillary <\/p>\n
    Industrial Undertaking Act, 1993.  The said Act came into force on 23.09.1992.\n<\/p>\n
    42.         The   judgment of   Hon. Calcutta High Court in the case of  Electric <\/p>\n
    Lamp Manufacturers (India) Ltd. .vrs. Regional Provident Fund Commissioner <\/p>\n
    and others  (supra), considers some what similar facts.  Shri Sundaram, learned <\/p>\n
    counsel has tried to distinguish this division bench judgment by urging that, the <\/p>\n
    exempted   establishment   there   was   admittedly   earning   interest   at   less   than <\/p>\n
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\n                                                   40<\/span><\/p>\n
    statutory rate of interest of 12%.     However, that cannot be a distinguishing <\/p>\n
    feature   at   all,   and   in   any   case,   in   present   matter   the   Provident   Fund <\/p>\n
    department has never come up with a case that MM Board of Trustees was <\/p>\n
    receiving interest from Government securities at higher rate and still  credited <\/p>\n
    to the account of the members interest only at 10%.  The MMPF Scheme and <\/p>\n
    Rules   framed   thereunder,   are   not   alleged   to   have   been   violated   and <\/p>\n
    department     which   has   received   returns   of   account   and   audited   statements <\/p>\n
    regularly   from   the   MM   Board   of   Trustees   has   not   come   up   with   any   such <\/p>\n
    specific case.  Show cause notice issued to petitioners is also not containing any <\/p>\n
    such ground.\n<\/p>\n
    43.        Perusal of the judgment of Hon’ble Division bench of Calcutta High <\/p>\n
    Court above, shows that  there the exempted establishment was paying interest <\/p>\n
    at   10%   and   hence   on   02.04.1991,   petitioner   employer   there   expressed   his <\/p>\n
    difficulty as regards payment of minimum rate of interest as increased by the <\/p>\n
    Central   Government   periodically.     Clarification   was   sought   from   the <\/p>\n
    department   about   the   conditions   imposed   while   granting   exemption.     The <\/p>\n
    department   advised   the   petitioner   to   surrender   exemption   granted   under <\/p>\n
    section 17[1] and to seek exemption under paragraph no.27A of the Statutory <\/p>\n
    Scheme of 1952.  In terms of clause 20 of Appendix of said paragraph no.27A, <\/p>\n
    employer was to make good the deficiencies on account of difference in rate of <\/p>\n
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\n                                                      41<\/span><\/p>\n
    interest.       In   paragraph   no.13   the   Calcutta   High   Court   noticed   that,   the <\/p>\n
    questions before it was whether, petitioner employer was liable to make good <\/p>\n
    the deficiencies about payment of interest in terms of  notification issued by the <\/p>\n
    Central Government.  In paragraph no.17 provisions of Section 17 are looked <\/p>\n
    into   and   it   has   been   noticed   that   in   terms   of   scheme   thereof   a   pattern   of <\/p>\n
    investment   was   fixed   and   investment   had   been   made   accordingly.       The <\/p>\n
    investments also received due recognition.  In paragraph no.20 the High Court <\/p>\n
    there observed that, the employer had no other liability once a notification of <\/p>\n
    exemption under section 17 was issued.   It also observed that, the liability if <\/p>\n
    any, was only in terms of section 6 or Clause [a] of sub-clause [3] of Section <\/p>\n
    17.   In paragraph no.22 it is found that once a Trust is constituted by such <\/p>\n
    employer, he has no say in the  matter.   Though the  PF Act is  beneficial, it <\/p>\n
    cannot be   construed so as to operate in a different field and make a person <\/p>\n
    liable for that, for which he is not answerable under the said Act or the scheme <\/p>\n
    framed   therein. Paragraph No.60 of the statutory scheme is held to impose <\/p>\n
    duty upon the Commissioner and not upon the trustees.  The question whether <\/p>\n
    Board of Trustees is required to pay same interest which may be declared by <\/p>\n
    the   Central   Government   in   terms   of   paragraph   no.60   was   not   considered <\/p>\n
    because action by department was not against the Board of Trustees.  Position <\/p>\n
    before me is not different, and here provident fund department has not taken <\/p>\n
    any action against the MM Board of Trustee.  However, it is to be noticed that <\/p>\n
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\n                                                    42<\/span><\/p>\n
    the Division Bench of Calcutta High Court also noticed that, its attention was <\/p>\n
    not drawn to any provisions of the Scheme which require Board of Trustee to <\/p>\n
    declare   interest  at  the   same   rate.   In   paragraph  no.24   the   Hon’ble  Division <\/p>\n
    Bench   has   noticed   that   in   terms   of   clause   16   of   the   scheme   framed   under <\/p>\n
    Section 17 of the P.F. Act, Central Government could have issued a notification <\/p>\n
    imposing additional conditions, but unless it is done, the Board of Trustees or <\/p>\n
    the employer cannot be saddled with additional liability.\n<\/p>\n
    44.<\/p>\n
                The Division Bench however, did not accept the contentions of the <\/p>\n
    department   that   sub-section   [1]   of   Section   17   needed   to   be   construed  in   a <\/p>\n
    manner conducive to provide for same facilities as would be conferred by the <\/p>\n
    Central Government.   It further accepted that,  rate  of interest is  one of the <\/p>\n
    facilities which can be conferred upon, under P.F. Act.   In paragraph no. 25 <\/p>\n
    while recording reasons for rejecting contention of provident fund department, <\/p>\n
    the Division Bench has noticed that,  Board of Trustees is not expected to pay <\/p>\n
    enhanced   interest   at   a   rate   which   they   may   not   earn   from   their   source   of <\/p>\n
    investments.  It also found that any other construction of Section 17[1] would <\/p>\n
    jeopardized  the exempted scheme itself.  It found that, to impose any other or <\/p>\n
    further monetary liability, a condition in that respect must be specifically added <\/p>\n
    in   the   exemption   order.     The   Hon’ble   Division   Bench   concluded   that   any <\/p>\n
    condition de-hors exemption notification cannot be thrust upon the employer.\n<\/p>\n
                                                                  ::: Downloaded on – 09\/06\/2013 15:23:32 :::<\/span>
\n                                                   43<\/span><\/p>\n
    45.        Thus, the judgment clearly shows that matter needs to be examined <\/p>\n
    in the light of order of exemption and here it is not the case of respondents <\/p>\n
    that, the securities in which the MM Board of Trustees invested the amount <\/p>\n
    were   not   protected   by   it   or   then   the   Model   Mills   did   not   shoulder   the <\/p>\n
    expenditure of the administration of the scheme.   In short the provident fund <\/p>\n
    department is not alleging any breach or violation of exemption order or of <\/p>\n
    MMPF scheme or Rules framed thereunder.\n<\/p>\n
    46.        In   Jiyajeerao Cotton Mills Employees .vrs. Dev Kumar Holani and <\/p>\n
    others  [supra],   the   Hon’ble   Apex   Court   has   considered   some   what   similar <\/p>\n
    situation.     There   the   Central   Government   forwarded   to   appropriate <\/p>\n
    Government revised conditions for   granting exemption under Section 17[1] <\/p>\n
    and one such   condition  was that any amendment to statutory P.F. Scheme <\/p>\n
    more   beneficial   to   the   employees   than   the   existing   one,   shall   become <\/p>\n
    automatically   applicable.     Because   of   this   condition,   the   provident   fund <\/p>\n
    department   claimed   difference   between   interest   which   was   given   at   rate <\/p>\n
    declared by the Board of Trustees and rate of interest declared by the Central <\/p>\n
    Government.     The   Regional   Provident   Fund   Commissioner,   held   that   the <\/p>\n
    revised   condition   cannot   be   implemented   unless   the   same   were   notified   in <\/p>\n
    official gazette by the appropriate Government.  The employees challenged the <\/p>\n
                                                                ::: Downloaded on – 09\/06\/2013 15:23:32 :::<\/span>
\n                                                    44<\/span><\/p>\n
    same in Writ Petition before the High Court and the High Court held that, not <\/p>\n
    paying   interest     at   higher   rate   was   in   contravention   of   the   P.F.   Act   and <\/p>\n
    Statutory Scheme.   The Hon’ble Apex Court in petition filed before it by the <\/p>\n
    establishment\/department,   found   that   the   employer   had   its   own   Rules   and <\/p>\n
    because   of   exemption,   the   Statutory   P.F.     Scheme   do   not   apply   to   it.     In <\/p>\n
    paragraph   no.9,   the   Hon’ble   Apex   Court   found   that,   the   High   Court   was <\/p>\n
    therefore,   clearly   wrong   in   applying   paragraph   No.60   of   the   Statutory   P.F.\n<\/p>\n
    Scheme to the  said establishment.     It also found that the proposed revised <\/p>\n
    terms   and   conditions   do   not   and   could   not   have   become   applicable <\/p>\n
    automatically unless they were incorporated by appropriate government in the <\/p>\n
    notification granting exemption under Section 17[1][a]   of the P.F. Act.   The <\/p>\n
    view of the Regional Provident Fund Commissioner was therefore, upheld by <\/p>\n
    the Hon’ble Apex Court.\n<\/p>\n
    47.         The judgment of Hon’ble Apex Court above and of Division Bench of <\/p>\n
    Calcutta   High   Court   considers   provision   of   Section   17[1][a],   and   also <\/p>\n
    paragraph No.60 and it has been held that unless and until obligation to pay <\/p>\n
    interest at rate declared by the Central Government is specifically incorporated <\/p>\n
    in   the   order   of   exemption,   exempted   establishment   is   not   expected   to   pay <\/p>\n
    interest at that rate.  Both these judgments considers the relevant provisions for <\/p>\n
    reaching said conclusion.   Efforts of Shri Sundaram, learned counsel to show <\/p>\n
                                                                  ::: Downloaded on – 09\/06\/2013 15:23:32 :::<\/span>
\n                                                     45<\/span><\/p>\n
    that the judgments have been reached because of absence of notification, must <\/p>\n
    be held to be without any substance.   The relevant provision considered above, <\/p>\n
    clearly show that petitioners are not statutorily required to pay interest at 12% <\/p>\n
    and therefore action of paying interest at rate declared by the MM Board of <\/p>\n
    Trustees cannot be stated to be either illegal or improper, or in contravention <\/p>\n
    of   the   provisions   of   the   P.F.   Act,   1952   or   Statutory   P.F.   Scheme   framed <\/p>\n
    thereunder.\n<\/p>\n
    48.<\/p>\n
                Learned   Senior   Counsel,   has   relied   upon   the   judgment   of   Hon’ble <\/p>\n
    Apex Court in the case of    M\/s. D.N. Roy and others .vrs. The State of Bihar <\/p>\n
    and others (supra), to urge that a specific show cause notice and opportunity to <\/p>\n
    MM Board of Trustee in the matter or in the alternative to the petitioner was <\/p>\n
    necessary.  He has urged that the arguments about earning more interest by the <\/p>\n
    MM   Board   of   Trustee  are   without   any  notice   to   petitioner.     In   view   of   the <\/p>\n
    finding   already   reached   above,   though   I   find   that   show   cause   notice   under <\/p>\n
    section 7A does not raise any such ground, it is not  necessary to consider the <\/p>\n
    said judgment.  In Union of India .vrs. GTC Industries Ltd. Bombay [supra], the <\/p>\n
    Hon’ble Apex Court has stated that the quasi judicial order must be evaluated <\/p>\n
    on the basis of reasoning contained therein, and not on the basis of pleas put <\/p>\n
    forward   by   person   seeking   to   sustain   order   in   its   counter   affidavit   or   oral <\/p>\n
    arguments before the court.  This is settled legal position and again in view of <\/p>\n
                                                                  ::: Downloaded on – 09\/06\/2013 15:23:32 :::<\/span>
\n                                                      46<\/span><\/p>\n
    the finding already reached above, I do not find it necessary to go in to more <\/p>\n
    details   here.   It   may   be   noted   here   that   recoveries   sought   here   are   also   for <\/p>\n
    period prior to 6\/1\/2001 and necessary period-wise breakup or liabilities are <\/p>\n
    not ascertained or crystallized as yet.\n<\/p>\n
    49.         The provisions of Section 32 of the SICA give overriding effect to the <\/p>\n
    rehabilitation scheme framed for petitioners by BIFR.  The Hon’ble Apex Court <\/p>\n
    has   already   observed   that   the   scheme   is   accepted   by   all   concerned   and   it <\/p>\n
    should be implemented. The Director, Recovery of respondents has restrained <\/p>\n
    local   authorities   from   taking   any   coercive   steps   against   the   petitioner <\/p>\n
    establishment.     Record   show   that   a   Fax   Message   dated   04.06.2004   was <\/p>\n
    forwarded by the said Authority to all concerned, including the authorities at <\/p>\n
    Nagpur.     Inspite   of   this,   the   movables   of   petitioners   were   attached   on <\/p>\n
    04.06.1994   itself   and     immovable   properties   have   been   attached   on <\/p>\n
    14.03.2005.  The stand that Fax Message dated 04.06.2004 was not received  is <\/p>\n
    during oral arguments before this Court.   There is no affidavit filed for said <\/p>\n
    purpose.     The   receipt   of   communication   -a   letter   to   confirm   fax,     dated <\/p>\n
    07.06.2004   is   not   in   dispute.     If   after   receipt   of   confirmation   letter   dated <\/p>\n
    07.06.2004   the   Authorities   at   Nagpur   learnt   about   the   error   committed   by <\/p>\n
    them   one fails to understand how\/why amends were not made by releasing <\/p>\n
    the   said  property   from  attachment.    It   is   not  understood   why   more  than   9 <\/p>\n
                                                                    ::: Downloaded on – 09\/06\/2013 15:23:32 :::<\/span>
\n                                                   47<\/span><\/p>\n
    months   thereafter, immovable properties were   attached in its violation.   All <\/p>\n
    this shows that there is some substance in the allegations of malafides on the <\/p>\n
    part of the local authorities  by the petitioners.  It is to be noted that properties <\/p>\n
    for sale wee to be identified by the Assets sale Committee and funds derived <\/p>\n
    from sale thereof were to be utilized for discharging various liabilities and for <\/p>\n
    revival of the viable mills.  Thus the entire design in sanctioned BIFR scheme <\/p>\n
    was thus jeopardized because of such high handed action on the part of the <\/p>\n
    local officers\/authorities of the respondent.  It appears that the employees and <\/p>\n
    their recognized trade union were also opposing the sale of assets and then it <\/p>\n
    had filed proceedings   to stall the execution of the scheme sanctioned by the <\/p>\n
    BIFR on 25.07.2002. The said scheme and appellate order dated 20.11.2007 <\/p>\n
    passed by the Appellate Authority for Industrial and Financial Reconstruction, <\/p>\n
    along with the permit of closure dated 01.06.2004 were questioned before this <\/p>\n
    Court   by   the   said   Trade   Union   in   Writ   Petition   No.   5907\/2007.     The   Writ <\/p>\n
    Petition was dismissed summarily on 15.01.2008 by the Division Bench of this <\/p>\n
    Court.   In view of this development it cannot be said that the BIFR Scheme <\/p>\n
    could not be implemented only because of the high handed or arbitrary action <\/p>\n
    on the part of the local provident fund authorities.   The request for grant of <\/p>\n
    exemplary costs against them in the matter  however needs to be considered.\n<\/p>\n
    It is also to be noted that the petitioners have not joined any individual officer <\/p>\n
    at   Nagpur   in   his   personal   capacity   and   have   not   made   any   allegations   of <\/p>\n
                                                                ::: Downloaded on – 09\/06\/2013 15:23:32 :::<\/span>
\n                                                      48<\/span><\/p>\n
    malafides   against   him.   The   intervenor   employees     are   bound   by   the   BIFR <\/p>\n
    Scheme for rehabilitation and can not attempt to defeat or dilute it in any way.\n<\/p>\n
    50.         The judgment of Hon’ble Apex Court in the case of  Dhampur Sugar <\/p>\n
    Mills Ltd. .vrs. State of U.P. And others  [supra], relied upon by the learned <\/p>\n
    Senior Counsel to show that when an enabling   power is conferred   upon a <\/p>\n
    particular authority for public reasons and public benefit,  duty to exercise that <\/p>\n
    powers can also be inferred.  Discussion on various precedents by the Hon’ble <\/p>\n
    Apex Court in paragraph nos. 37 to 57 of this judgment has been relied upon to <\/p>\n
    show   that   because   of   second     proviso   to   section   14[B]   of   the   P.F.   Act, <\/p>\n
    paragraph no.32[B] of the Statutory P.F. Scheme and Section 32 of the SICA, <\/p>\n
    the     Central   Board   of   P.F.   Department     is   under   obligation   to   consider   the <\/p>\n
    representation of the petitioners for exemption. The power to waive given to <\/p>\n
    Central   P.F.   Board   is   definitely   in   larger   public   interest   and   said     Board   is <\/p>\n
    therefore   obliged   to   and   can   not   refuse   to   exercise   that   power.     It   is   not <\/p>\n
    necessary   for   this   court   to   record   any   finding   in   this   respect   because   Shri <\/p>\n
    Sundaram, learned counsel has expressly stated that the Central Board can be <\/p>\n
    directed   to   consider   the   same   in   time   bound   manner.     Perusal   of <\/p>\n
    communication   dated   13.06.2007   produced   before   the   Court   during   final <\/p>\n
    arguments   and   admitted   by   both   the   parties,   show   that   there   was   some <\/p>\n
    discussion going on in the matter between the parties.   It also show that the <\/p>\n
                                                                    ::: Downloaded on – 09\/06\/2013 15:23:33 :::<\/span>
\n                                                    49<\/span><\/p>\n
    Central Provident Fund Commissioner has directed Regional Provident Fund <\/p>\n
    Commissioner   not   to   take   any   coercive   action   against   the   NTC   Mills   which <\/p>\n
    includes   MM   Mills   in   respect   of   dues,   interest   and   damages   until   further <\/p>\n
    instructions from the Head Office.  In these circumstances, it is apparent that <\/p>\n
    the directions to decide the said representation dated 09.09.2002 need to be <\/p>\n
    issued in the present matter.\n<\/p>\n
    51.         In view of this discussion above, it is apparent that the respondents <\/p>\n
    are not entitled to claim alleged amounts on account of difference in rate of <\/p>\n
    interest   declared   by   the   Commissioner   in   paragraph   no.60   of   the   Statutory <\/p>\n
    Scheme and by MM Board of Trustees under Rule 23 of the MM PF Scheme.  It <\/p>\n
    therefore, follows that demand for damages on that account is unsustainable.\n<\/p>\n
    The show cause notice dated 15.04.2004 at Annexure-C with Writ Petition No. <\/p>\n
    5440\/2005 or order dated 05.10.2004 based upon it, by the respondent no.1 <\/p>\n
    Assistant  Provident   Fund  Commissioner  and  further  order  dated  06.09.2005 <\/p>\n
    passed   by   the   EPF   Tribunal   at   Annexure-H   along   with   the   said   petition   in <\/p>\n
    Appeal No. 107[a]\/2005 are accordingly quashed and set aside.  The said Writ <\/p>\n
    Petition is thus allowed.   However, it is made clear that   the respondents are <\/p>\n
    free to issue fresh notices as per law giving period wise breakups and after <\/p>\n
    giving opportunity to  the petitioners,  are free to recover it in accordance with <\/p>\n
    law.   This   exercise   is   subject   to   result   of   hearing   in   and   consideration   of <\/p>\n
                                                                  ::: Downloaded on – 09\/06\/2013 15:23:33 :::<\/span>
\n                                                     50<\/span><\/p>\n
    application   of   petitioner   dated   9\/9\/2002   as   per   directions   below   in   W.P.\n<\/p>\n
    1717\/2005.\n<\/p>\n
    52.         Writ Petition  No. 1717\/2005 is allowed.   The order of attachment <\/p>\n
    dated   14.03.2005   and   04.06.2004   issued   by   the   respondent   no.3   Recovery <\/p>\n
    Officer therein are quashed and set aside.  The respondent no.1 Central Board <\/p>\n
    in   that   petition   is   directed   to   consider   the   application   dated   09.09.2002 <\/p>\n
    submitted   by   the   petitioner   for   waiver   of   damages   in   the   light   of   the   BIFR <\/p>\n
    Scheme and orders dated 25.07.2002.  The said decision be taken as early as <\/p>\n
    possible and in any case by 31.03.2010, after hearing the petitioners.  The Bank <\/p>\n
    guarantee for amount of Rs. 9 Crores furnished by the petitioners in terms of <\/p>\n
    interim order dated 16.06.2005 shall be kept alive till 31.03.2010<\/p>\n
    53.          Both the Writ Petitions are allowed accordingly with costs, and the <\/p>\n
    cost are  quantified  at Rs.  15000\/- each. Respondents  to recover  these  costs <\/p>\n
    from its officers who ignored fax message and communication dated 7\/6\/2004 <\/p>\n
    and proceeded with attachment of movables or immovables. Rule accordingly <\/p>\n
    in both the Writ Petition in the aforesaid terms.\n<\/p>\n
                                                                  JUDGE
\n    Rgd.\n<\/p>\n
                                                                   ::: Downloaded on – 09\/06\/2013 15:23:33 :::<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"
Bombay High Court National Textile Corporation vs Central Board Of Provident Fund on 8 December, 2009 Bench: B. P. Dharmadhikari 1 IN THE HIGH COURT OF JUDICATURE AT BOMBAY NAGPUR BENCH, NAGPUR. WRIT PETITION Nos. 1717 & 5440 OF 2005. ******* WRIT PETITION NO. 1717\/2005. 1.National Textile Corporation (Maharashtra North) Limited, a Subsidiary Company of […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[11,8],"tags":[],"class_list":["post-231857","post","type-post","status-publish","format-standard","hentry","category-bombay-high-court","category-high-court"],"yoast_head":"\nNational Textile Corporation vs Central Board Of Provident Fund on 8 December, 2009 - Free Judgements of Supreme Court & High Court | Legal India<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.legalindia.com\/judgments\/national-textile-corporation-vs-central-board-of-provident-fund-on-8-december-2009\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"National Textile Corporation vs Central Board Of Provident Fund on 8 December, 2009 - 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