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2015 Supreme(Del) 405
High Court of Delhi
VED PRAKASH VAISH, J.
M/s. DCM Shriram Consolidated Ltd. – Appellant
Versus
The Employees Provident Funds Appellate Tribunal & Others –Respondent
W.P.(C) No. 3743 of 2011
Decided On : 13-03-2015
For the Petitioner:Naveen Kumar, Rashmi, Advocates.
For the Respondents:Balraj Diwan, Advocate.
The main legal point established in the judgment is the quasi-judicial nature of the authority's power under Section 14-B of the EPF Act, the need for a reasoned decision after considering the principles of natural justice and relevant facts and circumstances, and the obligation to decide the quantum of damages after considering proper facts and circumstances.
Headnote:
EPF Act - Employees Provident Fund - Section 7-I, Section 14 B - The court discussed the provisions of the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952, particularly Section 7-I and Section 14 B, and their interpretation in the context of the case. The court highlighted the nature of damages under Section 14-B, the purpose of the provision, and the factors to be considered before imposing damages. The court emphasized the quasi-judicial nature of the authority's power under Section 14-B and the need for a reasoned decision after considering the principles of natural justice and relevant facts and circumstances.
Fact of the Case:
The petitioner, a manufacturing unit covered under the EPF Act, contested the liability to pay PF contribution on Good Work Reward. The Regional Provident Fund Commissioner held the petitioner liable, leading to a series of legal proceedings. The Assistant Provident Fund Commissioner imposed damages on the petitioner for delaying the payment of contribution.
Finding of the Court:
The court considered the contentions of both parties and the facts of the case. It emphasized the purpose of the EPF Act as a beneficial legislation for the future of industrial workers and the provisions related to the recovery of damages under Section 14-B. The court acknowledged the quasi-judicial nature of the authority's power and the need for a reasoned decision after considering the principles of natural justice and relevant facts and circumstances.
Issues: The issues revolved around the interpretation of the EPF Act, particularly the liability to pay PF contribution on Good Work Reward and the imposition of damages under Section 14-B.
Ratio Decidendi: The court emphasized the need for the authority to apply its mind to the facts of the case, pass a reasoned decision after following principles of natural justice, and consider factors such as the period of delay, frequency of defaults, and amount involved before imposing damages under Section 14-B. The court highlighted the quasi-judicial nature of the authority's power and the obligation to decide the quantum of damages after considering proper facts and circumstances.
Final Decision: The court directed the petitioner to deposit 50% of the damages as calculated by the Assistant Provident Fund Commissioner, with the already deposited amount to be adjusted. The court emphasized that the observations made were specific to the peculiar facts and circumstances of the case and should not be taken as a precedent.
1. By way of the present petition the petitioner impugns the order dated 28.03.2011 passed by the Presiding Officer, Employees Provident Fund Appellate Tribunal (respondent No.1 herein) wherein the statutory appeal filed by the petitioner under Section 7-I of the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 (hereinafter referred to as “EPF Act”) was dismissed and also impugns the order dated 03.02.2006 wherein the Assistant Provident Funds Commissioner (respondent No.3 herein) imposed damages to the tune of Rs.19,69,566/- (Rupees Nineteen lakh sixty nine thousand five hundred and sixty six) on the petitioner under Section 14 B of the EPF Act.
2. Succinctly stating the case of the petitioner is that the petitioner’s manufacturing unit M/s. Shriram Fertiliser and Chemicals is covered under the EPF Act since the year 1960 and has been allotted a P.F. Code No. RJ/337 for making Provident Fund contributions which the petitioner has been diligently depositing since then. On 20.05.1983, the Inspector of Provident Fund visited and inspected the accounts of the petitioner for the month of April, 1983 and observed in his report dated 20.05.1983 that the Good Work Reward paid by the petitioner to its workers was subject to provident fund contributions. Against the said observation the petitioner filed its reply dated 18.06.1983 by submitting that the Good Work Reward was in the nature of an overtime payment and it was not included in the scope of basic wages under Section 2(b) of the EPF Act so as to be liable for contributions under the EPF Act.
3. Thereafter, on 14.11.1983 the Regional Provident Fund Commissioner issued a notice under Section 7-A of the EPF Act proposing to conduct an enquiry for determining the amount payable by the petitioner on account of Good Work Reward. The said notice was duly replied by the petitioner vide reply dated 18.10.1985 reiterating its stand that Good Work Reward was paid as an overtime allowance in consideration of the employees working beyond their normal working hours in certain contingencies and was in a nature of allowance similar to overtime allowance as excluded from the definition of basic wages under Section 2(b) of the EPF Act. Despite this, the Regional Provident Fund Commissioner vide its order dated 15.05.1985 held that the petitioner was liable to pay PF contribution in respect of Good Work Reward and adjourned the matter for determining the exact amount of liability.
4. Against the said order, the petitioner preferred a Civil Writ Petition before the High Court of Rajasthan reiterating his earlier stand. On 18.10.1985, the petitioner without prejudice to its rights and contentions filed month wise details of payment made under the head of Good Work Reward.
5. On 06.05.1986, the Regional Provident Fund Commissioner proceeded to determine the amount of liability of the petitioner even during the pendency of the writ petition filed by petitioner before the High Court of Rajasthan. Considering the month wise details of payment of Good Work Reward the amount of liability of the petitioner was determined as Rs.28,53,895/- (Rupees Twenty eight lakhs fifty three thousand eight hundred ninety five) on account of Good Work Reward paid by the petitioner to its employees between the period from 1968 to 1983.
6. Against the said order, the petitioner filed a writ petition bearing No.1112/1986 before the High Court of Rajasthan. Vide its order dated 12.08.1986, High Court of Rajasthan declined to pass any stay order against the operation of impugned order therein, however, it extended the time of payment of dues/ contributions for a further period of two months from the date of its own order.
7. In compliance of the order dated 12.08.1986, passed by High Court of Rajasthan in S.B. Civil Writ Petition No.1112/1986, the petitioner deposited the entire amount calculated as per order dated 06.05.1986.
8. Finally, on 02.07.1997 the writ petition No.1112/1986 was disposed of
