Important Point
A prejudice on account of delay could arise if it was proved that it was “irretrievable”.

Headnote:Employees Provident Fund and Miscellaneous Provisions Act, 1952 -Section 14-B-Employees Provident Scheme, 1952-Para 38.10-Delay in remitting employees provident fund contribution with in period stipulated-Damages Levied-Writ Petition dismissed by High Court in limine without giving reasons-Appeal-Delay of fourteen years in initiating action-Damages levied because of delay in realisation of amounts paid by cheque-Amount credited into account of department beyond grace period of five days-Plea of strike not proved -Plea that department deemed to have dropped proceedings in 1971 did not have legs to stand-No plea of any irretrievable prejudice either in reply to show cause notice or in writ petition.
       Held : The fact that proceedings are initiated or demand for damages is made after several years cannot by itself be a ground for drawing an inference of waiver or that the employer was lulled into a belief that no proceedings under Section 14B would be taken; mere delay in initiating action under Section 14B cannot amount to prejudice inasmuch as the delay on the part of the department, would have only allowed the employer to use the monies for his own purposes or for his business especially when there is no additional provision for charging interest. However, the employer can claim prejudice if there is proof that between the period of default and the date of initiation of action under Section 14B, he has changed his position to his detriment to such an extent that if the recovery is made after a large number of years, the prejudice to him is of an “irretrievable” nature; he might also claim prejudice upon proof of loss of all the relevant records and/or non-availability of the personnel who were, several years back in charge of these payments and provided he further establishes that there is no other way he can reconstruct the record or produce evidence; or there are other similar grounds which could lead to “irretrievable” prejudice; further, in such cases of “irretrievable” prejudice, the defaulter must take the necessary pleas in defence in the reply to the show cause notice and must satisfy the concerned authority with acceptable material; if those pleas are rejected, he cannot raise them in the High Court unless there is a clear pleading in the writ petition to that effect. (Para 26)
       Further held : In the present case before us, no doubt there is delay of 14 years in initiating action and the damages are levied because of the delay in realisation of the amounts paid by cheque where the amounts were credited into the account of the department beyond the grace period of 5 days. The plea of strike, even assuming it to be relevant, was not proved. The plea of the appellant that the department must be deemed to have dropped the proceedings in 1971 did not also have any legs to stand. There is no plea of any irretrievable prejudice either in the reply to the show cause or in the writ petition. (Para 27)

Judgment

M. Jagannadha Rao, J.-This is an appeal preferred against the judgment of the Delhi High Court dated 28.8.1980 in C.W.P. No. 843 of 1980 dismissing the Writ Petition of the Petitioner. The writ petition was filed questioning the order of the Regional Provident Fund Commissioner dated 7.5.1980 passed under Section 14-B of the Employees Provident Fund and Miscellaneous Provisions Act, 1952 (hereinafter called the ‘Act’) levying damages in a sum of Rs. 44,220.00 and Rs. 1,035.50 for delay in remitting the employees provident fund contribution within the period stipulated in Para 38.10 of the Employees Provident Scheme, 1952 for the period July 65, October 65, December 65, January 66 to March 66, August 66, July 67, August 67, May 68, July 68 to November 68.

2. The writ petition was dismissed by a Division Bench of the High Court on 28.8.80 by a non-speaking order merely saying “dismissed”. It is against the said judgment that this appeal has been preferred.

The facts of the case are as follows :

3. The appellant is the employer. On account of delay in payment of provident fund contributions, a notice was issued on 23.2.71 by the Department complaining of delays in remitting the provident fund amounts for the period July 65, October 65, December 65 to March 1966, August 1966, September 1966, December 1966 to February 67, July 67 to August 67, January 68, April 68 to November 68 and September 1972 and stating that the amounts were credited in the accounts of the department only after 20th of the ‘following’ months. The appellant was requested to inform whether the cheques for these months were “tendered” “on or before 20th of the following month” to which the payment relates. The appellant sent a letter dated 19.12.1972 giving only the dates on which the cheques were signed by the appellant. Therefore, the department sent a further letter dated 10.1.1973 asking the appellant to furnish “proof of the dates of presentation of cheques”.

It does not appear that the appellant sent any further reply to the Department. However, there was also no further correspondence from the side of the department. We only have the show cause notice dated 24.3.79 by the department asking the appellant as to why, consequent to delay in the remittal of the PF contributions, damages in a sum of Rs. 51,970.10 and administrative charges in a sum of Rs. 1215.10 should not be recovered for the period from July 1965 to September 1972.

4. The appellant’s representative attended the hearing of the case on 1.5.79 and 3.7.79 and finally filed a reply on 5.2.80 raising various contentions. A copy of the letter dated 23.10.1979 from the Bank giving details was also enclosed. After referring to various contentions and rejecting some of them, the Regional Provident Fund Commissioner stated that the payments for September 1966 and September 1972 were as stipulated in Para 38 of the Scheme, and going by the dates of the challans and treating those dates as the dates of presentation of cheques in the Bank, the deposits for December 66, January 67, February 67, January 68, April 68 and June 68 were “treated to have been deposited ......... within the time stipulated in para 38” of the Scheme whereas the rest of the payments were treated as belated and amenable to demages. There was also on proof of strikes by the workers for the period 23rd July to 16th September 1968. The interpretation of para 38 of the Scheme that “the question of payment of contribution should arise only after employees share of contribution has been deducted from their wages” was rejected, in view of para 30, 32 of the Scheme. It was also stated that for collection of the amounts under Section 14B, there was no period of limitation. The delay was “immaterial”. It was however stated that no formal orders were passed by his predecessor “deciding not to raise any demand”, as contended by the appellant in the appellant’s reply dated 5.2.80. In the result the impugned order dated 7.5.

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1998 Supreme(SC) 9

Important PointA prejudice on account of delay could arise if it was proved that it was “irretrievable”.

Cases Referred (9)

Important Point
A prejudice on account of delay could arise if it was proved that it was “irretrievable”.