CoramThe Honourable Mr v. Regional Provident Fund Commissioner,Employees Provident Fund,Tamil Nadu & Pondicherry,22-23, Royapettah High Road,Chennai

IN THE HIGH COURT OF JUDICATURE AT MADRASDated : 23-1-2007CoramThe Honourable Mr.Justice P.SATHASIVAMandThe Honourable Mr.Justice N.PAUL VASANTHAKUMARW.A.No.1190 of 2002Elegant Garments,rep.by itsManaging Partner,Nungambakkam,Chennai - 34....Appellant/PetitionerVs.Regional Provident Fund Commissioner,Employees Provident Fund,Tamil Nadu & Pondicherry,22-23, Royapettah High Road,Chennai - 14....Respondent/RespondentThis Writ Appeal has been filed under Clause 15 of LettersPatent against the order of the learned single Judge inW.P.No.15116 of 1994 dated 5.3.2002.W.P.No.15116 of 1994:-Petition presented under Article 226 of the Constitution ofIndia to issue a Writ of Certiorari calling for the records of therespondent in his proceedings TN/30041/SDC-4/9495/144 dated 20.5.94and quash the same.For Appellant:Mr.M.RamalingamFor Respondent:Ms.K.Gunasekar, ACGSCJ U D G M E N TN. PAUL VASANTHAKUMAR, J.This writ appeal is filed against the order of the learnedsingle Judge dated 5.3.2002 made in W.P.No.15116 of 1994 dismissingthe writ petition filed by the appellant challenging the order ofthe respondent imposing damages for the belated remittance of theprovident fund contribution. https://hcservices.ecourts.gov.in/hcservices/

2.The brief facts necessary for disposal of this writappeal are that by letter dated 29.10.1984 the appellant GarmentExport Firm requested the respondent to allot Provident Fund Codenumber so as to enable the appellant to deduct provident fundsubscription from its employees, but there was no reply. On16.12.1984 the first respondent requested the Enforcement Officerto examine the applicability of the Act to the appellantestablishment and submit a coverage proposal along with necessaryGovernment order and the copy of the said letter was marked to theappellant. The Provident Fund Inspector visited the appellantfactory and all the relevant documents were furnished before theInspector and it was submitted before him that the Act can beapplied only from November, 1984. It is the further case of theappellant that in spite of the best efforts taken, the respondentfailed to allot code number to the appellant establishment andafter the exemption period eligible under section 16(1)(b) of theAct, the appellant deducted subscription from the employees, whowere eligible to become as members under the Act and kept the moneysafely in the bank. The appellant have to deposit both thesubscription deducted from the employees with the equal amount ofcontributions of the appellant for those eligible members fromNovember, 1984. Since Code numbers for the establishment as wellas to the subscribers were not allotted, the appellant could notremit the amount collected from the employees periodically, to therespondent. Since there was delay on the part of the respondent inallotting code number, appellant filed W.P.No.2428 of 1986 beforethis Court and pursuant to the direction issued by this Court on29.4.1991, respondent by his proceedings dated 18.2.1992 allottedthe code number TN/30041 to the appellant and immediately theappellant remitted the entire contribution of the employer andemployees to the respondent.3.Respondent, by his proceeding dated 27.12.1993 issued anotice and called upon the appellant to explain as to why damagesshould not be levied from 1984-85 to 1992-93 for the belatedremittance of Provident Fund contributions in respect of itsemployees. The appellant by its authorised representative appearedbefore the respondent and stated their objections by letter dated27.4.1994. The plea raised by the appellant was that there was nodelay in payment of contribution and due to the delay in allottingthe code number there was delay in remittance. Immediately afterthe allotment of the code number the appellant remitted the entireamount and in spite of the objection and explanation given by theappellant, the respondent by order dated 20.5.1994 imposed damagesto the tune of Rs.2,89,984/- computed under section 14-A of theEmployees Provident Fund and Miscellaneous Provisions Act, 1952.The said order was challenged by the appellant in the above writpetition. https://hcservices.ecourts.gov.in/hcservices/

4.The respondent filed counter affidavit wherein it isstated that the appellant is duty bound to remit the provident fundcontributions and even if the code number is not allotted, theappellant could have remitted the amount to the principal employeror could have remitted the amount in its own separate account.According to the respondent, when these two options were availableand the same having not been utilised by the appellant, therespondent is entitled to levy damages for the unreasonable belatedpayment under section 14-B of the Act.5.The learned single Judge considering the rivalsubmissions and in the light of the statutory provisions, dismissedthe writ petition, as against which this writ appeal is preferred.6.The learned counsel for the appellant argued that due tothe delay in allotment of the code number only the appellant hasnot remitted the Employees Provident Fund contributions and therespondent having delayed the allotment of code number, is notjustified in imposing heavy damages on the appellant. The learnedcounsel also argued that without any basis the damage amount ofRs.2,89,984/- has been ordered to be remitted.7.The learned counsel for the respondent submitted thateven if the allotment of code number is delayed, nothing preventedthe appellant from remitting the contribution with the principalemployer or at least the appellant could have paid the amount inits own separate account and under section 14-B of the EmployeesProvident Fund and Miscellaneous Provisions Act, 1952, therespondent is entitled to claim damages for the belated payment.According to the learned counsel, the amount was arrived at basedon the guidelines issued in clause 32-A of the Employees ProvidentFund Scheme, 1952. The learned counsel also submitted that similarissue was considered by the Honourable Supreme Court in thedecision reported in (1997) 1 SCC 241 (Regional Provident FundCommissioner v. S.D.College, Hoshiarpur and Others).8.We have considered the rival submissions of the learnedcounsel appearing for the appellant as well as the respondent.9.For proper appreciation, clause 32-A is extractedhereunder, https://hcservices.ecourts.gov.in/hcservices/ "32-A. Recovery of damages for default inpayment of any contribution:-(1) Where an employermakes default in the payment of any contribution tothe Fund, or in the transfer of accumulationsrequired to be transferred by him under sub-section(2) of section 15 or sub-section (5) of section 17of the Act or in the payment of any charges payableunder any other provision of the Act or Scheme orunder any of the conditions specified under section17 of the Act, the Central Provident FundCommissioner or such officer as may be authorised bythe Central Government, by notification in theOfficial Gazette, in this behalf, may recover fromthe employer by way of penalty, damages at the ratesgiven below:---------------------------------------------Period of default Rate of damages (percentage of arrears per annum)--------------------------------------------(a) Less than two monthsSeventeen(b) Two months and aboveTwenty-twobut less four months(c) Four months and aboveTwenty sevenbut less than sixmonths(d)Six months and aboveThirty seven-------------------------------------------(2)The damages shall be calculated to thenearest rupee, 50 paise or more to be counted as thenearest higher rupee and fraction of a rupee lessthan 50 paise to be ignored."10.In the decision reported in (1997) 1 SCC 241 (RegionalProvident Fund Commissioner v. S.D.College, Hoshiarpur and Others)in para 10 the Honourable Supreme Court considered the scope ofsection 14-B, which reads as follows, https://hcservices.ecourts.gov.in/hcservices/ "10.A reading of Section 14-B of the Actwould indicate that the employer is under anobligation under the statute to comply with thepayment of the amount. In the event of hiscommitting default in the payment of thecontribution to the fund or in the payment ofany charges payable under any other provisionsof the Act or any scheme or insurance scheme orany of the conditions specified in Section 17,the Central Provident Fund Commissioner or suchother officer as may be authorised by theCentral Government may, by notification in theOfficial Gazette in this behalf, recover fromthe employer, by way of penalty, such damages,not exceeding the amount of arrears, as may bespecified in the scheme. The second provisoonly lifts the embargo in the event of theindustry becoming sick and it was reconstructedunder the provisions of Section 4 of the SickIndustrial Companies (Special Provisions) Act,1985 subject to such terms and conditions asmay be specified in the scheme ofrehabilitation. In other words, the Actenvisages the imposition of damages for delayedpayments. The Act is a beneficial welfarelegislation to ensure health and other benefitsto the employees. The employer under the Actis under a statutory obligation to deduct thespecified percentage of the contribution fromthe employee's salary and matchingcontribution, the entire amount is required tobe deposited in the fund within 15 days afterthe date of the collection, every month."11.The delay in allotment of code number will not be aground for non-remittance as other alternate mode of payments areavailable, particularly the appellant could have remitted theprovident fund contribution amount in a separate account. Therespondent herein has taken a decision on the facts of the case andimposed damages to be paid by the appellant. Since all the factspleaded by the appellant were considered by the respondent anddecision was taken in terms of section 14-B and Clause 32-A of theScheme, the said decision cannot be treated as perverse finding,warranting interference under Article 226 of Constitution of India.The learned single Judge rightly upheld the order of the respondentand dismissed the writ petition. https://hcservices.ecourts.gov.in/hcservices/

12.Having regard to the judgment of the Honourable SupremeCourt cited supra and as we do not find any illegality in the orderof the respondent dated 20.5.1994 as well as in the order of thelearned single Judge dated 5.3.2002, we dismiss the writ appeal.No costs.13.The learned counsel for the appellant submitted thatduring the pendency of the proceedings, appellant remittedRs.1,00,000/-. Therefore, the appellant is directed to pay theremaining amount of Rs.1,89,984/- within a period of two monthsfrom the date of receipt of copy of this order.vr/Sd/Asst.Registrar/true copy/Sub Asst.RegistrarToThe Regional Provident Fund Commissioner,Employees Provident Fund,Tamil Nadu & Pondicherry,22-23, Royapettah High Road,Chennai - 14.+ 1 cc to Mr. M. Ramalingam, Advocate, SR No.4421+ 1 cc to Mr. K. Gunasekar, ACGSC, Advocate, SR No.4428BV(CO)SR/2.2.2007 Judgment in W.A.No.1190 of 2002