Sirrocco Pressings (P) Ltd. and Others vs Regional Provident Fund Commissioner and Another

A.K. Sikri, C.J.—These writ petitions are preferred against the orders passed by the Regional Provident Fund Commissioner u/s 14(B) of the Employees'' Provident Fund & Misc. Provisions Act, 1952 levying damages for different periods of defaults in depositing the contribution of employers and employees share with the Provident Fund Authorities.

The challenge is laid on two counts. In the first instance, it is stated that the action for levying damages is taken belatedly for old period which was not permissible. Second argument is that there is no rational yardstick adopted by the Regional Provident Fund Commissioner in passing the impugned orders inasmuch as in certain cases where delay was more, damages at lessor percentage are levied and in certain other cases where delay in making in contribution is less, higher rate of damages is imposed.

In so far as question of delay is concerned, learned Counsel for the petitioner does not press the same and rightly so in view of the judgment of the Supreme Court in M/s. Hindustan Times Limited Vs. Union of India and Others,

In so far as the second aspect is concerned, two-fold submissions are made. It is submitted that in identical circumstances, Supreme Court in the case of M/s. K. Streetlite Electric Corporation Vs. Regional Provident Fund Commissioner, Haryana, has confined the damages leviable in such circumstances to the extent of 25% of the total damages imposed, by observing as under:--

The second contention need not be examined in the view we propose to take in the matter. Even if we hold that the Central Government instructions issued u/s 20 of the Act are not binding on the respondent still in assessing the damages it will be necessary for us to take note of the manner in which the amounts of damages have been levied and appropriately consider as to what would be the correct rate of damages to be imposed u/s 14-B of the Act. The statement of calculation prepared by the respondent regarding delay in payments discloses that the respondent has imposed damages at different rates, for example, for the month of July, 1976 the rate of damages is 50% whereas the period of default is over month, while in case of December, 1976 the damages imposed upon the appellant are at the rate of 20% though the period of delay is over two months, in the case of delay for April, 1988 damages imposed are at the rate of 30% though the period of delay is only one month. In certain cases, even for a delay of below 15 days, like October, 1977, damages at the rate of 85% have been imposed, while for another period though the delay is for six months 65% damages have been levied. Therefore, it is not possible to discern the rationale adopted by the respondent in the matter of imposition of penalty. In the circumstances, therefore, it would have been appropriate for us to set aside the order and remit the matter to the respondent, but we do not think that such an exercise is necessary after such a long period. In this case, the amount due towards provident fund has already been deposited and this Court, by order dated December 18, 1998, granted an interim relief to the extent of 75% of the amount of damages sought to be recovered, while out of the disputed amount of damages (that is, Rs. 88,731.25), 25% had already been directed to be deposited. In that view of the matter, we think, it is appropriate to confine the damages leviable in this case on an over all consideration to the extent of 25% of the total damages imposed.

Learned Counsel for the petitioner has also pointed out that there is an amendment to the Employees'' Provident Fund Scheme, 1952 and Clause 32-A which is added vide GSR No. 689(E) dated 26.9.2008, incorporates table stipulating the rates of damages for different periods of default and as per this the maximum rate of damage which can be levied is 25%. The said table is to the following effect:--

We find that in these cases also, there is no specific rationale in imposing the damages for different periods of defaults. Thus, going by the spirit of the aforesaid Clause 32-A of the Employees Provident Scheme, 1952 as well as ratio of the judgment in case M/s. K. Streetlite Electric Corporation (supra), we modify the impugned orders passed by the Regional Provident Fund Commissioner by confining the damages to the extent of 25% uniformly. With these observations, the writ petitions are disposed of.