Orissa High Court
Case Details
Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Designation: AR-CUM-SR. SECRETARY Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 18-Nov-2024 19:06:30 IN THE HIGH COURT OF ORISSA AT CUTTACK W.P.(C) No.11687 of 2016 (In the matter of an application under Articles 226 and 227 of the Constitution of India, 1950). Bishnu Ch.Pati …. Petitioner(s) -versus- Odisha State Warehousing Corporation …. Opposite Party (s) Advocates appeared in the case through Hybrid Mode: For Petitioner(s) For Opposite Party (s) : : Mr. B. S. Triapthy-1, Adv. Mr. B. K. Sahoo, Adv. CORAM: DR. JUSTICE S.K. PANIGRAHI DATE OF HEARING:-23.07.2024 DATE OF JUDGMENT: -29.10.2024 Dr. S.K. Panigrahi, J. 1. In the present Writ Petition, the petitioner challenges the inaction of the Opposite Party Corporation in denying the petitioner his legitimate entitlement to interest on his provident fund dues from March 1, 2010, onwards. This denial is asserted to be in direct violation of the Odisha State Warehousing Corporation Employees Provident Fund Regulations, 1969, as well as the statutory resolutions issued by the Finance Department of the State Government, which require the Page 1 of 12
Facts
Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Designation: AR-CUM-SR. SECRETARY Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 18-Nov-2024 19:06:30 payment of interest on accumulations in both the General Provident Fund (GPF) and the Contributory Provident Fund (CPF). I. FACTUAL MATRIX OF THE CASE: 1. The brief facts of the case are as follows: (i) The Odisha State Warehousing Corporation (“Corporation”) is a statutory, state-owned entity created under the Warehousing Corporations Act, 1962. The petitioner, who retired on 31.01.2010, on superannuation, held the position of Zonal Manager in Balasore at the time of his retirement. (ii) The Odisha State Warehousing Corporation Employees Provident Fund Regulations, 1969 (“Regulations 1969”) were established under Section 42 of the Warehousing Corporations Act, 1962, with the prior sanction of the State Government. These regulations govern provident fund benefits for Corporation employees and became effective from 01.04.1970. The Government of Odisha has periodically prescribed interest rates applicable to Corporation employees. (iii) Following his retirement, the petitioner requested the Corporation to release his provident fund (PF) dues with accrued interest. However, his request was not entertained. (iv) The Corporation made partial disbursements to the petitioner as follows: Date 23.11.2010 23.11.2010 Amount Remark Rs.4,40,997/- Paid to Petitioner Rs.4,40,997/- Paid to Petitioner Page 2 of 12 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Designation: AR-CUM-SR. SECRETARY Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 18-Nov-2024 19:06:30 16.6.2011 Rs.51,172/- Paid to Corporation’s (viii) 3.8.2013 Rs.3,90,850/- Paid to petitioner liability (v) At its 143rd meeting on 23.09.2013, the Corporation’s Board of Directors resolved to approve interest payments on delayed CPF dues for retired/deceased employees, clarifying that settled cases would not be reopened. (vi) Despite repeated requests, the Corporation delayed payment of the petitioner’s CPF dues. Although a payment of ₹3,90,850/- was made on 03.10.2013, the Corporation did not provide payment particulars. The petitioner submitted representations on 05.10.2013, and 23.10.2013, requesting details on his CPF account balance as of his retirement date, the interest accrued up to 05.10.2013, and any remaining balance for future disbursement. (vii) The petitioner received no response regarding his CPF account particulars, both pre- and post-retirement. On 08.11.2013, he submitted a detailed representation to the Corporation’s Chairman/ estimating his accrued interest as ₹1,61,397/- up to October 2013, with ongoing accrual due to delayed payment. (viii) During his service, the petitioner faced two disciplinary actions: one on 12.12.2008, concerning alleged unauthorized leave, and another on 28.01.2010, regarding alleged possession of disproportionate assets. The petitioner filed writ petitions (WP(C) No. 2883/2009 and WP(C) No. Page 3 of 12 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Designation: AR-CUM-SR. SECRETARY Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 18-Nov-2024 19:06:30 19108/2010) to challenge these proceedings. On 23.12.2011, the Court quashed the proceedings and directed the Corporation to release all retiral benefits within three months. Notwithstanding this directive, the Corporation delayed the release of his CPF dues, withholding the final amount of ₹3,90,850 until 03.08.2013, without updating accrued interest. (ix) The Corporation subsequently referred the petitioner’s case to its EPF Committee to determine whether it fell under “settled” or “unsettled” cases, obtaining legal opinion affirming the petitioner’s entitlement to interest until his dues were fully paid. (x) The Corporation calculated the petitioner’s interest entitlement at ₹1,91,166 as of June 2015, and presented the matter at its 149th Board meeting on 23.07.2015. The Board, referencing its prior decision in 2013, deemed further action unnecessary. (xi) Upon further denial of interest payment, with no response to his earlier requests, the petitioner submitted further representations to the Managing Director on 22.10.2014, and 11.11.2014, and to the Principal Secretary of the Co-operation Department on 06.04.2015. Following this, the Chairman referred the matter to the Managing Director, who then requested the petitioner to attend a meeting on 18.04.2015, per letter No. 1282 dated 15.04.2015. At this meeting, the petitioner presented his grievances, and the Managing Director assured him that he would facilitate the release of the interest claimed. However, no relief was ultimately granted and no interest was paid to the petitioner. Page 4 of 12 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Designation: AR-CUM-SR. SECRETARY Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 18-Nov-2024 19:06:30 II. 2. SUBMISSIONS ON BEHALF OF THE PETITIONER: Learned counsel for the Petitioner earnestly made the following submissions in support of his contentions: (i). Under Regulation 12 of the 1969 Regulations, “interest” is to be calculated on both employee’s contributions and Corporation’s contributions at rates prescribed periodically by the Government of Odisha, aligning with the interest rates for Government GPF. Interest credits must be recorded separately for Corporation and member’s contributions. (ii). On 31st March of each year, or as soon as possible thereafter, the Corporation must: (i) notify the interest rate for deposits held by each fund subscriber, (ii) prepare an account of total accrued interest, and (iii) credit each subscriber’s account with the due interest, calculated on the monthly balance products from the previous year. (iii). The petitioner, through the RTI Act, received Corporation note sheets indicating that his case does not fall under “Settled Cases,” which are defined as cases where final payments were accepted without objection. Notably, the last CPF payment on 05.08.2013 only included interest up to 28.02.2010, despite ongoing objections from the petitioner. Hence, the petitioner’s case should not be considered a “Settled Case.” (iv). Under Sections 4(1) and 4(2)(b) of the Interest Act, 1978, the petitioner is entitled to interest on outstanding CPF dues until the full payment is made. Page 5 of 12 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Designation: AR-CUM-SR. SECRETARY Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 18-Nov-2024 19:06:30 (v). Based on the Board’s decision in the 143rd meeting, the petitioner qualifies for interest on delayed CPF payments, as his case is not classified as a “Settled Case.” The term “Settled Cases,” as defined by the Corporation, refers to cases where final payments were accepted without dispute. (vi). Given the clear delay in paying the petitioner’s CPF dues in installments, with the final payment on 05.08.2013, calculated only up to 28.02.2010/ Regulation 12 has been breached/ prompting the petitioner’s objections. Therefore, his case does not meet the criteria for a “Settled Case,” and he is entitled to the reliefs sought. (vii). Even if it is assumed (without admission) that the petitioner’s case falls under “Settled Cases,” the interpretation of “Settled Cases” and the Board’s 143rd meeting decision contradicts Regulation 12 of the 1969 Regulations, which requires interest calculation up to the payment date (in this case, 05.08.2013). (viii). It is a well-established legal principle that statutory provisions cannot be overridden. Consequently/ the Board’s decisions must align with Regulation 12 of the 1969 Regulations, entitling the petitioner to the reliefs requested. III. SUBMISSIONS ON BEHALF OF THE OPPOSITE PARTIES: 3. (i)
Legal Reasoning
11. Upon careful consideration of the facts and circumstances in the present case, this Court is of the opinion that the Petitioner is entitled to interest
Arguments
Per contra, learned counsel for the Opposite Parties earnestly made the following submissions in support of his contentions:: The petitioner in this case has prayed for payment of balance amount of CPF dues along with interest on such delayed payment @ 18% quarterly Page 6 of 12 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Designation: AR-CUM-SR. SECRETARY Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 18-Nov-2024 19:06:30 compounded with effect from 01.03.2010 in terms of regulation 12 of Regulation 1969 read with section 4(1) of interest act 1978. (ii) The petitioner has been paid all his CPF dues with interest upto the date of his retirement as per the provisions laid down in OSWC EPF Regulation 1969. The manner of payment made to the petitioner is described as: ₹4,40,997 on 23.11.2010; ₹51,172 on 16.06.2011 (adjusted for certain dues); and ₹3,90,850 on 05.08.2013. Interest was calculated only up to 28.02.2010, rather than up to the actual dates of payment, as statutorily required. (iii) During the service period the petitioner was proceeded against for misconduct and disobedience of office order. Being aggrieved by the action of the authority, he filed WP(C) No. 2833/2009 in this court and obtained a stay order with a direction not to take any final decision on the disciplinary proceeding. As such, a portion of CPF dues i.e. leave salary of the petitioner could not be paid. After disposal of the said Writ Petition on 23.12.2011 and finalization of CPF audit for the year 2009-10, total CPF dues with interest upto the date of his retirement was paid to him on 03.08.2013 which was pursuant to the direction of this Court and as per the statutory provisions laid down in the OSWC EPF Regulation 1969. (iv) Since all the CPF-dues with interest upto the date of his retirement has been paid on 03.08.2013 as per the provisions laid down in OSWC EPF Regulation, further claim by the petitioner is not maintainable. Page 7 of 12 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Designation: AR-CUM-SR. SECRETARY Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 18-Nov-2024 19:06:30 (v) It is not correct that the Managing Director assured the petitioner to release the the amount claimed by him. There is no such order passed by the Managing Director for release of the amount as claimed by the petitioner. (vi) There is no deliberate delay in releasing the CPF dues of the petitioner. 90% of CPF dues were paid on 23.11.2010 as per resolution 2 of OSWC BPF committee dated 20.11.2010. As soon as the CPF audit for the year 2009-10 was finalized, his 10% CPF dues with interest was released on 3.8.2013. (vii) On the request of the petitioner, the proposal for payment of interest on delay release of CPF dues of retired employees was placed in the 143rd BOD meeting held on 23.9.2013. The decision of the Board is reproduced hereunder:- “The Board resolved to approve the proposal to make payment of interest on delay payment of CPF dues in favour of the retired/deceased employees of the OSWC who have not received their pending dues for want of finalization of audit with a stipulation that the settled cases are not be reopened again” (viii) In the 149th BoD meeting held on 23.7.2015 also the Board agreed with the decision taken on the matter in the previous Board meeting dated 23.9.2013. (ix) Since the petitioner was paid all the CPF dues with interest upto the date of his retirement, prior to the decision of the 143rd BOD meeting held on 23.9.2013; after finalization of CPF audit, his case deserves no merit for consideration. Page 8 of 12 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Designation: AR-CUM-SR. SECRETARY Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 18-Nov-2024 19:06:30 (x) The claim made by the petitioner in his representation dated 27.7.2015 has got no basis since all his dues has been paid as per provisions laid down in the Regulation followed in the Corporation to that effect. (xi) The Managing Director of the corporation has acted upon on direction of the government in PG & Pension Administration Department by furnishing a detailed position on the matter coming within the purview of the OSWC EFP Regulation 1969& as per the decision taken by the apex Body i.e. Board of Directors. (xii) The payment of interest on CPF is governed by the OSWC EPF Regulation 1969. As per paragraph 19 of the regulation, interest ceases from the date of retirement or death of the employee. Paragraph 19 of the OSWCEPF Regulation 1969 is relevant in this context which mandates the followings:- “interest to cease on termination of service, death of subscriber- interest on all sums standing in the books of the fund to the credit of a subscriber, shall cease on the date on which he leaves the service of the corporation or on the date of his death, whichever is earlier” (xiii) As per decision of the 143rd BoD meeting held on 23.9.2013, the petitioner’s case is not coming under “unsettled category” because all the CPF dues along with interest upto the date of his retirement was paid to him on 3.8.2013 after finalization of CPF audit for the year 2009- 10. The OSWC Board categorically decided to make payment of interest on delayed payment of CPF dues in favour of retired / deceased employees of the corporation who have not received their pending dues Page 9 of 12 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Designation: AR-CUM-SR. SECRETARY Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 18-Nov-2024 19:06:30 for want of finalization of audit with a stipulation that the settled cases are not to be reopened again. IV. COURT’S REASONING AND ANALYSIS: 4. Heard the counsels for the parties and perused the materials placed on record. 5. It is admitted fact that the Opp. Party/Corporation delayed paying the PF dues to the petitioner for around 3 years after the retirement of the petitioner i.e. ₹4,40,997/- on 23.11.2010; ₹51,172 on 16.06.2011 (adjusted for certain dues); and ₹3,90,850/- on 05.08.2013. Interest was calculated only up to 28.02.2010, rather than up to the actual dates of payment, as statutorily required. 6. 7. The Opp. Party/Corporation became liable to pay interest from the day it became due till actual disbursement. During all this period, the petitioner was deprived of the use of that money. From the above facts/ it is evident that the petitioner’s case cannot be considered “settled” because the Corporation has yet to fulfill its statutory obligation by paying the interest due on the delayed provident fund (PF) payments. Although the principal amounts were eventually disbursed in installments; the interest was only calculated up to 28.02.2010, rather than the actual dates of payment. This discrepancy goes against statutory requirements and deprives the petitioner of the interest accrued during the extended delay. Page 10 of 12 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Designation: AR-CUM-SR. SECRETARY Reason: Authentication Location: ORISSA HIGH COURT, CUTTACK Date: 18-Nov-2024 19:06:30 8. While dealing with a similar matter, the Supreme Court in H. Gangahanume Gowda v. Karnataka Agro Industries Corporation Ltd.1 has held that the provident fund amount or the gratuity amount has to be paid by the employer immediately on the retirement of the employee or on the cessation of his service and the employee would be entitled to interest if there is a delay on the part of the employer in payment of such amounts. 9. Similar sentiment has been echoed in Alok Shanker Pandey v. Union of India &Ors.2 wherein the Apex Court has held that interest is neither a penalty nor punishment but it is a normal accretion on capital; that the person who thereon (which otherwise would have been earned by the person who was entitled to that amount), equity demands that the person who kept the money should pay the principal amount to the person to whom it is due with interest. 10. In the light of these rulings, it is clear that withholding accrued interest not only fails statutory compliance but also breaches principles of fairness/ as it unjustly benefits the Corporation at the petitioner’s expense. Until this outstanding interest is settled/ the petitioner’s case remains “unsettled”, as full payment extends beyond the principal to include all financial increments due over the period of delay. V. CONCLUSION: