The main legal point established in the judgment is that the Employees Provident Fund Commissioner has discretion to levy damages and determine the quantum under Section 14B of the Employees Provident Fund and Miscellaneous Provisions Act, 1952.

Pradeep Nandrajog, J.

1. We are called upon to decide two issues in the instant appeal. The first is whether the Employees Provident Fund Commissioner is obliged to levy damages under Section 14B of the Employees Provident Fund Miscellaneous Provisions Act, 1952 and while doing so is the authority bound to levy the damages prescribed in the table in Para 32A of the Employees Provident Fund Scheme, 1952. The second is whether the penalty can be levied under Section 14B if by the date proceedings are initiated under Section 14B the assessee has paid the necessary dues under the Employees Provident Fund and Miscellaneous Provisions Act, 1952.

2. The two issues arise because vide impugned decision dated January 28, 2011 allowing W.P. (C) No. 10387/2006 filed by the respondent, the view taken by the learned Single Judge is that the Act and the Scheme contemplate all relevant factors to be considered if there is a delay in making deposit of the provident fund dues as per the Act while deciding whether at all and thereafter, what quantum of penalty needs to be levied. Striking down the order passed by the appellant on January 16, 2006, which proceeded on the assumption that the Commissioner had no discretion in the matter of levying penalty and levied penalty as per the table prescribed in Para 32A of the Scheme, the learned Single Judge has further held that albeit belatedly, but if the necessary sum has been deposited, the proceedings under Section 14B of the Act cannot be commenced.

3. The journey towards our destination must therefore commence by noting Section 14B of the Employees Provident Fund and Miscellaneous Provisions Act, 1952 and Paragraph 32A and 32B of the Employees Provident Fund Scheme, 1952. They read as under:-

Section 14B. Power to recover damages:-

Where an employer makes default in the payment of any contribution to the Fund the Pension Fund or the Insurance Fund or in the transfer of accumulations required to be transferred by him under sub-section 2 of section 15 or subsection 5 of section 17 or in the payment of any charges payable under any other provision of this Act or of any Scheme or Insurance Scheme or under any of the conditions specified under section 17, the Central Provident Fund Commissioner or such other officer as may be authorised by the Central Government, by notification in the Official Gazette, in this behalf may recover from the employer by way of penalty such damages, not exceeding the amount of arrears, as may be specified in the Scheme.

Provided that before levying and recovering such damages, the employer shall be given a reasonable opportunity of being heard.

Provided further that the Central Board may reduce or waive the damages levied under this section in relation to an establishment which is a sick industrial company and in respect of which a scheme for rehabilitation has been sanctioned by the Board for Industrial and Financial Reconstruction established under section 4 of the Sick Industrial Companies (Special Provisions) Act, 1985 (1 of 1986), subject to such terms and conditions as may be specified in the Scheme.

Para 32A. Recovery of damages for default in payment of any contribution:-

(1) Where an employer makes default in the payment of any contribution to the fund, or in the transfer of accumulations required to be transferred by him under sub-section (2) of section 15 or sub-section (5) of section 17 of the Act or in the payment of any charges payable under any other provisions of the Act or Scheme or under any of the conditions specified under section 17 of the Act, the Central Provident Fund Commissioner or such officer as may be authorised by the Central Government by notification in the Official Gazette, in this behalf, may recover from the employer by way of penalty, damages at the rates given below:-

S. No.	Period of default	Rates of damages (percentage of