Vinod vs Chief Welfare Fund Inspector

K.S. Radhakrishnan, J.—The question that has come up for consideration in these cases is whether the demand made towards penal interest under Paragraph 38(1) of the Toddy Workers'' Welfare Fund Scheme read with Section 9 of the Toddy Workers'' Welfare Fund Act is legal or not.

The Welfare Fund Inspector as well as Revenue Authorities of the respective districts issued notices to the writ petitioners demanding penal interest for the amount which fell due on 10th April of the succeeding year on the date of the final determination order. Before we examine the questions raised in these cases we may first examine the scope of the Act and the Scheme. Kerala Toddy Workers'' Welfare Fund Act, 1969 was enacted to provide for the constitution of a fund to promote the welfare of toddy workers in the State of Kerala. The Act proposed established of Toddy Workers'' Welfare Fund to which the employer and the employee would contribute equally. Scheme called the Toddy Workers'' Welfare Fund Scheme, 1969 was framed by the Government. A Board called Toddy Workers'' Welfare Fund Board was also constituted to administer the fund in accordance with the scheme so framed. The fund would be utilised for the general welfare of the workers. Quantum of welfare fund and the time and manner of payment of the contribution by the employers are regulated under Sections 4 and 8A of the Act as well as paragraphs 30 and 38(1) of the Scheme. As per Section 4 of the Act and paragraph 30 of the Scheme the quantum of the welfare fund payable by the employer is 21% (employer''s share 8%, gratuity share 5% and the employees contribution 8%) of the wages payable by the employers to each of the employee per year. Section 8A provides for payment of monthly advance contribution equivalent to one-twelfth of the amount payable annually in respect of his shop according to the latest determination u/s 8 of the Act. The advance welfare fund contribution for a month falls due on 5th of the succeeding month.

There is a statutory obligation on every employer under paragraph 38(1) of the Scheme to file a monthly statement in form No. 4A showing wages, welfare fund contribution etc. Employer shall also send a consolidated statement showing the total amount of wages of each month and the Welfare Fund Payable by him for the year, the amount remitted u/s 8A and the chalan/draft/cheque for the balance amount payable by him on or before the following 10th April. There is also a legal obligation cast on the employer to remit advance welfare fund contribution u/s 8A and if he fails to discharge the obligation the said amount would be recovered with interest at the rate of 18% per annum from 5th of the succeeding month. Scheme cast a further obligation on the part of the employer to file a consolidated statement showing the total wages and the welfare fund contribution of his employees for a year and to remit the balance amount payable as per statement after deducting the advance contribution already paid on or before 10th April in accordance with Section 4 read with paragraph 38(1) of the Scheme. The Chief Welfare Fund Inspector and the Welfare Fund Officers working under the Act and the Scheme found that in very many case they failed to collect penal interest for the delayed payment of the amount on the 10th April of succeeding year till date of determination order. In the determination orders issued u/s 8 of the Act interest portion also could have been included. In Trichur District interest portion was included in the order and the amount was recovered. In certain Districts the officers failed to collect the interest portion. This is an error committed in the office.

We may indicate in this connection that the Kerala Toddy Workers'' Welfare Fund Act, 1969 was amended in the year 1996 and Section 8B was inserted which enables the Chief Welfare Fund Inspector or any other Welfare Fund Inspector who has passed an order under Sub-section (1) of Section 8 against which no appeal has been made to the Government as provided in Sub-section (5), may on application or otherwise at any time within four years from the date of passing such order, rectify any error apparent on the fact of the record. Circular No. 224 dated 18.5.1998 was also issued by the Board to that effect followed by another circular dated 13.8.1998 by which Welfare Fund Inspectors were directed to review the determination orders already passed under Sub-section (1) of Section 8 of the Kerala Toddy Workers'' Welfare Fund Act, 1969 and to rectify defects if any in the calculation of interest in accordance with para 38(1) of the Scheme. Contention was raised by some of the writ petitioners that orders issued under circular dated 13.8.1998 and 18.5.1998 by the Welfare Fund Inspector are beyond the scope of the Act and Scheme and consequently all actions taken by the Welfare Fund Inspectors are without jurisdiction. Counsel also referred to some of the decisions to establish their contention.

Counsel appearing for Writ Petitioners also submitted that demand for penal interest is without any authority of law. Reliance was also placed on the decision of the Supreme Court in Maruti Wire Industries Pvt. Ltd. v. Sales Tax Officer, 1st Circle, Mattancherry 2001 (2) KLT 100. We have perused the aid decision. The same has no application in the facts of these cases. In these cases we are concerned with the Toddy Workers'' Welfare Fund Act and the Scheme. We have to examine the issue raised with reference to the provisions of the Act and Scheme. Maruti Wire Industries case was dealing with a separate legislation and no parallels can be drawn to advance the case of the petitioners.

We may indicate that a statutory obligation is cast on the writ petitioner to see that the entire contribution as provided u/s 4 is paid. A legal obligation also is cast on the employer under paragraph 38(1) of the Scheme to file a monthly statement in Form No. 4A showing wages, welfare fund contribution etc. Statutory obligation is also cast on the employer to send a consolidated statement showing the total amount of wages of each month and the Welfare Fund payable by him for the year, the amount remitted u/s 8A and the Chalan/draft/cheque for the balance amount payable by him on or before the following 10th April. It is obligatory on the part of the employer to file a consolidated statement showing the total wages and the welfare fund contribution of his employees for a year and to remit the balance amount payable as per the statement after deducting the advance contribution already paid by him on or before 10th April as per the provisions contained in Section 4 of the Act read with paragraph 38(1) of the Scheme. We are of the view consequence of not remitting the amount due in time as per the Scheme would amount to arrears within the meaning of Section 9 of the Act. The amount due from the petitioners is evidently not on the basis of any final determination order as such but on the basis of Section read with paragraph 38 of the Scheme. Section 8 is intended to given a finality to the proceedings after conducting such enquiry as the officer deems necessary. Mere fact that there was delay in issuing determination order shall not be taken advantage by the petitioners. If there is any delay in making statutory contribution by the writ petitioners as per Section 4 paragraph 38 of the Scheme it will amount of arrears and they are obliged to pay interest u/s 9 of the Act if the amount is in arrears. Section 9 stipulates that any amount due from the employer in pursuance of the provisions of the Act or the scheme may, if the amount is in arrear, be recovered together with interest thereon at the rate of 18% per annum in the same manner as an arrear of land revenue. We have already indicated that the amount due from the petitioners is not determined by the final determination order. What is the amount to be payable is well covered u/s 4 and paragraph 38 of the Scheme. This is a case where petitioners failed to remit the amount which they were bound to remit u/s 4 and paragraph 38 in time, that is, before 10th April of the succeeding year. They kept the amount with them till the final determination order is passed. Consequently they are bound to pay interest for the said amount in arrears. We therefore find no infirmity in the judgment of the learned single Judge to be interfered with in these appeals.

Writ Appeals would stand dismissed.