J.A. Trivedi Brothers and another vs Union of India and others

G.P. Singh, J.—By this petition under Article 226 of the Constitution the petitioners, who arc ex-proprietors of certain coal mines, pray for quashing of revenue recovery certificates Annexures K and S, as also for issue of a writ in the nature of mandamus restraining the respondents from recovering the dues relating to provident fund scheme and damages.

Petitioner No. 1 M/s J. A Trivedi Brothers is a partnership firm, which held two coal mines in District Chhindwara, Madhya Pradesh. These n ines are (1) Ghorawari Hirdagarh Colliery and (2) West Barkuhi Colliery. Petitioner No. 2 Ramesh Chandra was nominated u/s 76 of the Mines Act, 1952, and was deemed to be the owner of the mines for purposes of the Act. The management of the coal mines was taken over by the Central Government under the Coal Mines (Taking Over of Management) Act, 1973, fiom 30th January 1973. Thereafter, by the Coal Mines (Nationalisation) Act, 1973, coal mines were nationalised and the right, title and interest of the owners in the mines stood transferred and vested in the Central Government from 1st May 1973.

The coal mines held by the petitioners came within the definition of coal mines under the Coal Mines Provident Fund and Bonus Schemes Act, 1948. The petitioner firm was required to make contribution to the provident fund in accordance with the coal mines provident fund scheme framed u/s 3 of the Act. As provided u/s 10D of the Act, the petitioner firm was liable to deposit the contributions payable by the employer as also the contributions payable by the employees at the rate specified in the scheme. The petitioners did not deposit these contributions for certain months during the years 1964, 1965, 1967 and 1968.

On 22nd February 1969 the Coal Mines Provident Fund Commissioner wrote to the petitioners that a sum of Rs. 3,15,866.30 was in arrears as provident fund contributions and that the same be deposited within 30 days along with damages at the rate of 25 per cent amounting to Rs. 78,966.58. The petitioners were also asked to file objections, if any within 15 days. This communication was in respect of West Barkuhi Colliery. After receipt of this letter, the petitioners explained the circumstances as to why the contributions were not deposited in time. They requested for instalments for payment of the arrears and also prayed that no damages or penalty be imposed. By letter dated 7th July 1969 the Commissioner agreed to grant instalments for payment of the arrears. It was further mentioned in this letter that on failure of the petitioners either to pay the current contributions or the instalments to clear the arrears, facility of instalments will be withdrawn without further reference. It is pertinent to note that in this letter the Commissioner did not refer to the penalty of Rs. 78,966.58 which he had proposed to impose u/s 1 of in his Letter dated 22nd February 1969. The letter dated 7th July 1969 refers only to the arrears of contributions and not to any damages. By implication it appears that at that stage the Commissioner agreed to in request of the petitioners not to impose any damages. It appears that the petitioners did not pay the instalments regularly and there was also some default in payment of current provident fund contributions. The Commissioner by his letter dated 20th February 1970 referred to the lapses of the petitioners and requested them to take early steps for payment of the provident fund contributions and the monthly instalments within 15 days. It was also stated in the letter that on failure of payment within 15 days, the facility of instalments will be withdrawn and cases will be initiated to recover entire dues along with damages to the extent of 25 per cent on the total dues. The petitioners, in reply to this, explained their difficulties and prayed for some further time. It appears that the Commissioner took steps for recovery of arrears and damages as arrears of land revenue u/s 10A of the Act. Consequently, certificate for recovery of Rs. 3,54,586.91 as arrears and Rs. 81,803.44 as damages was issued on 28th May 1970 by the Collector, Dhanbad, under the Revenue Recovery Act, 1890. The amount claimed under this certificate, which is Annexure K, as already stated relates to West Barkuhi Colliery.

As regards Ghorawari Hirdagarh Colliery, the Commissioner by his letter dated 21st February 1969 wrote to the petitioners that provident fund contributions amounting to Rs. 2,23,597.66 were in arrears. The petitioners were required to pay the same within 30 days. They were also required to pay damages at the rate of 25 per cent amounting to Rs. 55,899.42. The petitioners were also invited to file objections within 15 days. On receipt of this letter, the petitioners prayed for instalments and objected to damages. The Commissioner by his letter dated 9th July 1969 agreed to grant the facility of instalments for clearing the arrears. In this letter he further wrote that on failure to pay the instalments or the current contributions the facility of instalments to clear the arrears will be withdrawn. It will be seen that in this letter the Commissioner did not say anything about the damages that he proposed to impose in his letter dated 21st February 1969 u/s 10F of the Act. It seems that there were defaults in payment of instalments on which the Commissioner on 19th February 1970 wrote that if the arrears were not cleared within 15 days, the facility of instalments will be withdrawn and cases will be initiated for recovering the entire dues along with damages at 25 per cent. The petitioners made representation explaining their difficulties and requesting for further time. The Commissioner, however, did not accede to this request and initiated proceedings u/s 10A of the Act for recovery of the arrears of provident fund contributions and damages at 25 per cent. Consequently, revenue recovery certificate Annexure S was issued by the Collector, Dhanbad, under the Revenue Recovery Act, 1890. This certificate, which pertains to Ghorawari Hirdagarh Colliery, is for Rs. 3,14,848.62 as arrears and Rs. 61,159.75 as damages.

The first contention raised by the learned counsel for the petitioners is that the Coal Mines (Taking Over of Management) Act, 1973, and the Coal Mines (Nationalisation) Act, 1973, contain machinery for recovery of arrears of provident fund and that by implication the method of recovery prescribed by section 10A of the Provident Fund Act is repealed.

Under the Taking Over of Management Act, the management of the mines vested in the Central Government from 31st January 1973. Section 7 of this Act provides for payment of compensation to the owner of the coal mine. Sub-section (4) of this section provides for deduction by the Central Government from the amount payable, all sums equal to the amount of arrears due to the employees in relation to a provident fund, pension fund, gratuity fund etc., and as wages. Sub-section (5) of section 7 provides that the sums deducted shall be credited by the Central Government to the relevant fund or paid by that Government to the persons to whom the said sums are due. Sub-sections (4) and (5) of section 7 read as follows:

(4) Out of the amount payable under the foregoing Sub-sections, there shall be deducted by the Central Government, all sums equal to the amount of arrears due, on the appointed day, to the persons employed by the owner of a coal mine--

(a) in relation to a provident fund, pension fund, gratuity fund or any other fund established for the welfare of the persons employed by the owner of the coal mine, and

(b) as wages.

(5) All sums deducted under Sub-section (4) shall in accordance with such rules as may be made under this Act, be credited by the Central Government to the relevant fund or paid by that Government to the persons to whom the said sums are due, and on such credit or payment, the liability of the owner in respect of the amount of arrears due as aforesaid, shall, to the extent of such credit or payment, stand discharged.

u/s 3 of the Coal Mines (Nationalisation) Act, the mines vest in the Central Government absolutely from 1st May 1973. section 8 makes provision for payment of compensation as specified in the schedule. In respect of West Barkuhi Colliery the amount of compensation specified in the schedule is Rs. 2,16,000 and in respect of Ghorawari Hirdagarh Colliery the amount of compensation specified is Rs. 3,47,000. In addition to the amount payable u/s 8, the owners are entitle for payment of further amount u/s 9. The scheme for payment of compensation is provided in Chapter VI. Section 17 makes provision for appointment of Commissioner of Payments. u/s 18 the Central Government is required to pay in cash, within 30 days from the specified date, to the Commissioner for payment to the owner the amounts specified in sections 8 and 9. Section 20 provides that every person having a claim against the owner of a coal mine shall prefer such claim before the Commissioner within 30 days from the specified date. Section 21 makes provision for priority of claims in relation to arrears of provident fund etc. This section reads as follows:

Priority of claims in relation to arrears of provident fund etc.--(1) Every person employed by the owner of a coal mine or group of coal mines may make a claim to the Commissioner to the effect that the sums deducted under Sub-section (4) of section 7 of the Coal Mines (Taking Over of Management) Act, 1973, are not sufficient to meet fully the amount of arrears due to him, on the appointed day within the meaning of that Act, from the owner of such coal mine or group of coal mines.--

(a) in relation to a provident fund, pension fund, gratuity fund or any other fund established for the welfare of the persons employed by the owner of a coal mine or group of coal mines, or

(b) as wages,

and that a sum equal to the deficiency may be recovered from the amount specified in the Schedule against the owner of such coal mine or group of coal mines.

(2) Where a claim is made under Sub-section (1), the Commissioncr shall determine the extent of the deficiency and shall, after such determination, deduct in the first instance, out of the amount paid to him u/s 8, a sum equal to the extent of the deficiency determined by him under this Sub-section.

(3) All sums deducted by the Commissioner under Sub-section (2) shall, in accordance with such rules as may be made under this Act, be credited by the Commissioner to the relevant fund or be paid to the persons to whom such sums are due, and on such credit or payment, the liability of the owner in respect of all the amounts of arrears due as aforesaid shall stand discharged.

(4) The deductions made by the Commissioner under Sub-section (2) shall have priority over all other debts, whether secured or unsecured.

Section 22 relates to priority in relation to other claims. Sub-section (2) of this section, in so far as it is relevant, reads as follows:

(2) Notwithstanding anything contained in any other law for the time being in force, there shall be paid in priority to all other unsecured debts, not being the amounts advanced by the Central Government or the Custodian appointed under the Coal Mines (Taking Over of Management) Act, 1973, for the management of the coal mine,--

(c) all sums deducted by the employer from the salary or wages of any workman or other employee for credit to any provident fund, or any other fund established for the welfare of the employees of the coal mine but not deposited to the credit of the said fund.

The material provisions of the Coal Mines Provident Fund Act, 1948, which require consideration in this case, are contained in sections 7B, 10A and 10F. These sections read as follows:

7B. Determination of moneys due from employers:--(1) The Coal Mines Provident Fund Commissioner or any other officer duly authorised in this behalf by the Central Government may, by order, determine the amount due from any employer under any provision of this Act or of any scheme framed thereunder and for this purpose may conduct such enquiry as he may deem necessary.

(2) The officer conducting the enquiry under Sub-section (1) shall, for the purpose of such enquiry have the same powers as are vested in a Court under the Code of Civil Procedure, 1908 for trying a suit in respect of the following matters, namely--

(a) enforcing the attendance of any person or examining him on oath;

(b) requiring the discovery and production of documents;

(c) receiving evidence on affidavit;

(d) issuing commissions for the examination of witnesses;

and any such enquiry shall be deemed to be a judicial proceeding within the meaning of sections 193 and 228, and for the purpose of section 196 of the Indian Penal Code.

(3) No order determining the amount due from any employer shall be made under Sub-section (1) unless the employer is given a reasonable opportunity of representating his case.

(4) An order made under this section shall be final and shall not be questioned in any Court of law.

10A. Mode of recovery of money due from an employer:--Any amount due from an employer in respect of any contribution or bonus under any scheme framed under this Act or any accumulations required to be transferred under Sub-section (1) or Sub-section (3) of section 3D or any damages recoverable u/s 10F or any charges payable by the employer under this Act in respect of the administration of any such scheme may be recovered by the Central Government in the same manner as an arrear of land revenue.

10F. Power to recover damages:--Where an employer makes default in the payment of any contribution or bonus or any charges payable by him under any scheme framed under this Act, or where any person who is required to transfer provident fund accumulations in accordance with the provisions of section 3D makes default in the transfer of such accumulations, the Central Government may recover from such employer or person, as the case may be, such damages, not exceeding twenty-five per cent of the amount of arrears as it may think fit to impose.

Section 1OA of the Provident Fund Act clearly provides that the arrears of provident fund contributions can be recovered by the Central Government in the same manner as arrears of land revenue. It is also clear that the Taking Over of Management Act and the Nationalisation Act do not contain any express provision by which section 10A of the Provident Fund Act may have been repealed. The argument of the learned Advocate-General, however, is that the scheme of these Acts impliedly takes away the remedy of recovery of the contributions as arrears of land revenue. It is not disputed that the arrears of provident fund contributions relate to the period before the passing of these Acts. At the time when the contributions became due, the remedy u/s 10A was clearly available. The Taking Over of Management Act, no doubt, provides in Sub-sections (4) and (5) of section 7 that out of the amount payable to the owner, all sums equal to the amount of arrears due in relation to a provident fund shall be deducted and after deduction the same shall be credited to the provident fund. The remedy so provided, however, does not appear to be exclusive, It is clear that if the amount is recovered as arrears of land revenue from the owner no deduction would be made under Sub-section (4) of section 7. It is also clear that if a deduction is made under this provision the same amount would not be recovered as arrears of land revenue. It is well settled that implied repeal is not readily inferred and the mere provision of an additional remedy by a new Act does not take away an existing remedy. The reason is that normally there is no clash between the existing remedy and the additional remedy provided by the new Act and recourse to them can be taken in the alternative by the person for whose benefit the remedies are so provided. Moreover, it cannot be assumed that the amount payable to the owner u/s 7 of the Taking Over of Management Act would be sufficient in all cases to enable the deduction of the entire arrears in relation to a provident fund. That also shows that the liability of the owner for payment of arrears of provident fund contributions which had been incurred prior to the enactment of the Taking Over of Management Act continues which can be enforced, apart from section 7(4) of the Act, in accordance with the procedure prescribed by section 10A under the Provident Fund Act. As regards the Nationalisation Act, it is true that provision is made u/s 21 for recovery of arrears of provident fund from the amount of compensation. But this again is an additional remedy like section 7(4) of the Taking Over of Management Act. Moreover, the learned Advocate-General himself pointed out that as no date has been specified u/s 18, the provisions under sections 18, 20 and 21 are still not workable. As pointed out earlier, the provision of additional remedy by a new Act does not normally conflict with an existing remedy. Both the remedies can stand together and there cannot be an implied repeal of the existing remedy. In our opinion, therefore, the remedy provided u/s 10A of the Provident Fund Act continues to be effective for recovery of the arrears of provident fund contributions and other sums due under the Act before the management of the mines was taken over by the Central Government. It is, of course, true that it would be very hard on the owners to pay huge arrears when they are deprived of the mines and when they have not yet been paid the compensation to which they are entitled under the Taking Over of Management Act and Nationalisation Act. The hardship of the owners is, however, no consideration for holding that the remedy under the Provident Fund Act has ceased to be operative. The Central Government before recovering the amount of arrears u/s 10A of the Provident Fund Act under the certificate procedure can, however, consider the feasibility of recovery of arrears from the amount of compensation and the hardship involved in recovering the arrears directly from the owners, if possible, should be avoided. We are sure that if in a particular case it is possible to recover the entire arrears easily from the amount of compensation, steps will normally not be taken for recovering the same u/s 10A of the Act. But that is not to say that if the Central Government decides to recover the arrears u/s 10A, the recovery proceedings can be held to be illegal.

The first contention raised by the petitioners, therefore, fails.

The next contention of the learned counsel for the petitioners is that before steps for recovery are taken u/s 10A of the Act, there should be quantification of the arrears u/s 7B, after notice to the petitioners. It is also contended that penalty cannot be imposed without hearing the petitioners u/s 10F. We find sufficient force in this contention. It is true that to begin with an opportunity was given to the petitioners to come forward and to lodge their objections u/s 7B, but after the instalments were granted and certain payments were made no further quantification of the arrears was made after notice to the petitioners. As regards the West Barkuhi Colliery, the certificate of recovery issued at the instance of the Provident Fund Commissioner is for recovery of Rs. 3,54,586.91 as arrears of provident fund contributions and Rs. 81,803.44 as damages. The petitioners alleged that as regards the arrears of provident fund contributions only a sum of Rs. 1,22,108.30 was due and the rest of the amount had been paid to the Commissioner. This act is not disputed in the return. It is, therefore, clear that at the time when the certificate was issued certain payments were not taken into account. When the petitioners disputed the correctness of the amount, notice should have been issued again u/s 7A for quantification of the arrears. As regards damages, it will be seen that when the Commissioner granted instalments he impliedly accepted not to claim damages. That appears from the correspondence to which we have already referred. The Commissioner again decided to impose damages after there was default in payment of instalments. At this stage no notice was issued to the petitioners as to why damages should not be imposed. Damages are imposed and recovered u/s 10F. That section does not contain any express provision that before imposing and recovering damages notice should be issued to the defaulting party. The section merely prescribes the maximum amount of damages which the Central Government can recover. But it is not obligatory in every case that the Central Government must recover damages or that if it decides to recover damages it must recover the same at the maximum rate. Subject to the maximum prescribed, the matter is left to the discretion of the Central Government. The very fact that the Central Government has discretion in the matter goes to show that it is implicit in section 10F that it must hear the defaulting party before deciding to recover damages. It is quite likely that the defaulting party may satisfy that there were good reasons for not making the deposits in time and, therefore, it would not be just and proper to recover damages at all or to recover them at the maximum rate. These considerations imply that the power to recover damages u/s 10F is a quasi judicial power and must be exercised after notice to the party affected. We have already said that in the instant case after there was default in payment of instalments no notice was issued either for quantification of arrears or for fixation of damages. The procedure laid down in section 7B and implicit in section 10F was not followed. Under the scheme of the Provident Fund Act recovery as arrears of land revenue cannot be made unless proceedings are taken after due notice to the party affected. The certificates issued for recovery cannot, therefore, held to be legal.

The petition is allowed. The recovery certificates Annexures K and S are quashed. There shall be no order as to costs. The security amount shall be refunded to the petitioners.