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2011 Supreme(Cal) 1283
HIGH COURT OF CALCUTTA
DEBASISH KAR GUPTA, J.
Arambagh Hatcheries Ltd. - Appellant
Versus
Employees Provident Fund Organisation - Respondent
W. P. No. 1610 of 2006
Decided on : Sep 15,2011
S. C. Prasad, Soumya Majumdar, Sunny Nandy
The power to levy damages under section 14B of the Employees' Provident Fund (Miscellaneous Provisions) Act, 1952, is discretionary, and the authority is required to form an opinion before imposing damages.
Headnote:
EMPLOYEES' PROVIDENT FUND - DAMAGES - LEVY - DISCRETIONARY POWER - INTERPRETATION OF SECTION 14B - EMPLOYEES' PROVIDENT FUND (MISCELLANEOUS PROVISIONS) ACT, 1952.
Fact of the Case:
The petitioner, a company, challenged an order levying damages under section 14B of the Employees' Provident Fund (Miscellaneous Provisions) Act, 1952, for belated payment of its contribution under the Employees' Provident Fund Scheme, 1952.
Finding of the Court:
The court held that the power to levy damages under section 14B is discretionary and the authority is required to form an opinion before imposing damages. The court found that the impugned order did not consider the grounds taken in the representation of the petitioner and thus, violated the provisions of section 14B.
Issues: 1. Whether the levy of damages under section 14B of the Employees' Provident Fund (Miscellaneous Provisions) Act, 1952, is mandatory or discretionary? 2. Whether the authority is required to form an opinion before imposing damages under section 14B?
Ratio Decidendi: 1. The court interpreted the term "may" used in section 14B as discretionary, relying on the settled principle of law that a penal provision has to be interpreted strictly. 2. The court held that the authority is required to form an opinion before imposing damages under section 14B, as the power to levy damages is discretionary.
Final Decision: The court quashed the impugned order insofar as the assessment of damages under section 14B is concerned and directed the authority to reconsider the question of levy of damages afresh in light of the observations made in the judgment.
1. THE Judgment of the Court was as follows:
The Court: This writ application is directed against an order dated September 21, 2006 passed by the respondent No.2 levying damages under section 14B of the Employees' Provident Fund (Miscellaneous Provisions) Act, 1952 (hereinafter referred to as the said Act) for belated payment of the contribution of the petitioner-company under the Employees' Provident Fund Scheme, 1952 for the period from June, 2002 to August, 2005.
2. APART from assessing damages under the provisions of section 14B of the said Act, the interest has also been levied under section 7Q of the said Act which is not the subject-matter of scrutiny of this Court in this writ application.
3. THE respondent No.2 issued a show-cause notice dated August 7, 2007 to the petitioner-company for levying damages under section 14B of the said Act for belated payment of its contribution under the Employees' Provident Fund Scheme, 1952 (hereinafter referred to as the said Scheme). The petitioner submitted its representation dated August 17, 2006 praying for exemption from payment of the above damages. The respondent Nq.3 passed the impugned order dated September 21, 2006 levying a sum of Rs.25,61,671/- towards damages upon the petitioner-company under section 14B of the said Act for belated payment of its contribution towards the said Scheme.
4. IT is submitted by Mr. Soumya Majumdar, learned Counsel appearing for the petitioner, that after amendment of the provisions of section 14B of the said Act. levying of damages is a penalty. According to him, the authority is under obligation to form an opinion in view of the language used by the Legislature in the above provision. According to him, the word "may" used in the above section does not mean or purport "shall" because a penal provision is to be interpreted strictly.
5. DRAWING attention of this Court towards the impugned order, it is submitted by Mr. Majumdar that it is an outcome of non-application of mind. The reason for rejecting the prayer of the petitioner to exempt levying damages was of having no power in view of the provisions of second proviso to section 14B of the said Act. According to him the prayer of the petitioner was not considered applying mind on its proper perspective.
6. MR. Majumdar relies upon the decisions of P. T. Rqjan v. T. P. M. Sahir and Ors., reported in (2003)8 SCC 498, Employees' State Insurance Corporation v. HMT Ltd. and Anr., reported in (2008)3 SCC 35, Assistant Controller of Central Excise, Rajainundry v. Duncan Agro Industries Ltd. and Ors. reported in (2000)7 SCC 53 and an unreported decision of a Single Bench of this Court of October 30, 2009 in the matter of Crystal Cable Industries Ltd. and Anr. v. Union of India and Ors. (In Re: WP 2571 fW) of 2006).
7. ON the other hand it is submitted by Mr. Shiv Chandra Prasad that this writ application is not maintainable on the ground of availability of alternative forum under the provisions of the said Act. It is also submitted by Mr. Prasad that on a harmonious reading of the provisions of section 14B of the said Act and 32A of the said Scheme it appears that the levy of damages is a mandatory provision and the same can only be exempted in accordance with the provisions of second proviso to section 14B of the said Act.
8. DRAWING attention of this Court towards the impugned order it is submitted by Mr. Prasad that the prayer of the petitioner was rejected taking into consideration the provisions of second proviso to section 14B of the said Act. Mr. Prasad further submits that financial constraints cannot be considered as a ground for granting exemption in view of the settled principles of law.
9. MR. Prasad relies upon the decisions of Asstt P.F. Commissioners, Employees' Provident Fund Organisation v. Paixm Kumar Agarwala and Ors. reported in (2008)1 CHN 469, Regional Provident Fund Commissioner v. S. D. College, Hoshiarpur and Ors. reported in AIR 1997-SC 3645, Dalgaon Agro Industries L
