JUDGMENT

Rajendra Babu, J.-A notice dated December 30, 1986 was served upon the appellant to show cause why damages under Section 14-B of the Employees Provident Funds and Misc. Provisions Act, 1952 (hereinafter referred to as the Act ) for period from July 1976 to June 1980 be imposed upon the appellant. On March 13, 1987 an order was made by the respondent imposing damages to the extent of Rs. 88,731.25 on account of belated deposit of the amount towards the provident fund. The appellant claimed that delay in depositing the amount in certain cases is only for a few days; that even so the respondent had assessed the damages in most of the cases at 100% and that the actual loss suffered by the respondent is only to the extent of Rs. 664/-. Challenging the order dated March 13, 1987 the appellant filed a writ petition in the High Court contending that the order is not in accordance with the instructions issued on November 3, 1982; that the order has been passed at a very belated stage inasmuch as for the period ending in July 1976 the notice has been issued in the year 1987; that para 32(A) was inserted into the scheme after the amendment of the Act as under :

Period of Default Rate of Damages    (%age of arrears    per annum)

(a) Less than two months 17

(b) Two months and above but less than four months 22

(c) Four months and above but less than six months 27

(d) Six months and above 37

2. The writ petition was resisted by the respondent by taking the stand that the damages have been levied in accordance with law. The Division Bench of the High Court dismissed the writ petition filed by the appellant. Hence this appeal by special leave.

3. In this appeal, it is contended that :

(i) the action has been initiated very late inasmuch as the proceedings had been initiated from 10 to 6 years later than the default stated to have been committed by the appellant; and

(ii) the Central Government had instructed under Section 20 of the Act that the damages at the rate of 25% per annum can be levied.

4. These two contentions stood rejected by the High Court. Firstly, that delay in initiating proceedings under Section 14-B of the Act will not be a ground for setting aside an order imposing damages unless specific plea of prejudice is raised before the Provident Fund Commissioner and established and further that the instructions given by the Central Government do not have any binding force. The High Court adverted to the decision of this Court in Hindustan Times Ltd. v. Union of India & Ors.1, to reach this conclusion. In that case, this Court examined the scheme of the provisions of the Act in relation to delay in passing of the order. It was stated that the mere fact that the proceedings are initiated or demand for damages is made after several years cannot, by itself, be a ground for drawing an inference of waiver of that the employer was lulled into a belief that no proceedings under Section 14-B would be taken and mere delay in initiating such action cannot amount to prejudice inasmuch as such delay would result in allowing the employer to use the monies for his own purposes or for his business especially when there is no additional provision for charging interest on such amount. 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 14-B he has altered 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, and such prejudice can also be established by stating reason of non-availability of records of the personnel by which evidence it could be established that there was some basis for delay