Back
2016 Supreme(Del) 2715
IN THE HIGH COURT OF DELHI AT NEW DELHI
SANJIV KHANNA & SUNITA GUPTA, JJ.
M/S NET 4 INDIA LTD. - Petitioner
Versus
UNION OF INDIA AND ANR. - Respondents
W.P.(C) 6673 of 2016
Decided On : 02-08-2016
For the Petitioner:Mr. Ranvir Singh and Mr. S.P. Arora, Advocates.
For the Respondent:Ms. Anubha Bhardwaj and Mr. Dev. P. Bhardwaj, Mr. R.C. Chawla, Standing counsel along with Ms. Inderjeet Sidhu, Advocates.
Headnote:
Employees Provident Fund Act - Challenge to Section 7Q - Summary of Acts and Sections: Section 7Q, Section 14B, Article 14, Article 19(1)(g), Article 265 - The court discussed the vires of Section 7Q of the Employees Provident Fund Act, 1952 and its constitutionality in relation to constitutional rights granted under Article 14, 19(1)(g) and Article 265 of the Constitution of India. The court also referred to the decision of the Supreme Court in Organo Chemical Industries vs. UOI, 1979 (4) SCC 573, M/s. System Stampings & Anr. vs. EPFAT & Ors., 2008 (2) LLJ 939 Del, and Roma Henny Security Services P. Ltd. vs. Central Board of Trustees, 2012 (132) DRJ 753 (FB) to support the arguments.
Fact of the Case:
The petitioner challenged the vires of Section 7Q of the Employees Provident Fund Act, 1952 as being unconstitutional and violative of constitutional rights granted under Article 14, 19(1)(g) and Article 265 of the Constitution of India. The petitioner also sought a refund of a specific amount along with interest and the setting aside of a specific order.
Finding of the Court:
The court dismissed the challenge to the constitutional validity of Section 7Q of the Act. However, the petitioner was given the liberty to file a representation/objections before the Authorities with regard to the computation of interest under Section 7Q, and the authorities were directed to pass a speaking order after considering the petitioner's representation.
Issues: The issues included the constitutionality of Section 7Q of the Employees Provident Fund Act, 1952, the refund of a specific amount along with interest, and the setting aside of a specific order.
Ratio Decidendi: The court held that the absence of any provision for appeal does not imply that the Regional Provident Fund Commissioner is invested with arbitrary or uncontrolled power, without any guidelines. The court also emphasized the right to file objections with regard to the computation of interest under Section 7Q and the authorities' obligation to pass a speaking order after considering the petitioner's representation.
Final Decision: The petition was partly allowed, dismissing the challenge to the constitutional validity of Section 7Q of the Act. The petitioner was given the liberty to file a representation/objections before the Authorities with regard to the computation of interest under Section 7Q, and the authorities were directed to pass a speaking order after considering the petitioner's representation.
SANJIV KHANNA, J.
1. M/s. Net 4 India Ltd. by this writ petition has challenged the vires of Section 7Q of the Employees Provident Fund Act, 1952 (Act) as being unconstitutional and violative of constitutional rights granted under Article 14, 19(1)(g) and Article 265 of the Constitution of India. In addition, the petitioner has prayed for direction to the Assistant Provident Fund Commissioner (respondent No. 2) to refund Rs.6,00,375/- along with interest. Another prayer made in the writ petition is for setting aside and quashing of the order dated 16th February, 2016 issued under the cover of letter dated 17th February, 2016.
2. The challenge to Section 7Q of the Act is primarily predicated on the ground that the establishment does not have the right to appeal. Reliance is placed upon the decision of a Division Bench of this Court in M/s. Wire Netting Stores, Delhi and Another vs. The Regional Provident Fund Commissioner & Others, ILR (1984) 1 Del 76. The levy of interest u/s 7Q has been challenged on the ground of irrationality, being arbitrary and unjustifiable, as delay or non deposit entails penalty in the form of damages levied u/s 14B of the Act. Attention is drawn to the decision of the Supreme Court in Organo Chemical Industries vs. UOI, 1979 (4) SCC 573, a decision of the Division Bench of this Court to which one of us (Sanjiv Khanna, J.) was also a party- in M/s. System Stampings & Anr. vs. EPFAT & Ors., 2008 (2) LLJ 939 Del and a judgment of Full Bench of this Court in Roma Henny Security Services P. Ltd. vs. Central Board of Trustees, 2012 (132) DRJ 753 (FB). It is submitted that the interest chargeable is included in damages imposed u/s 14B and, therefore, the respondents could not have passed a separate order under Section 7Q levying interest. Referring to Organo Chemicals (supra) it is urged that the legislature could not have overruled or overstepped the ratio expounded without removing the basis and foundation of the said judgment as it amounts to usurpation and negates the power of judicial review.
3. The petitioner has challenged the order u/s 14B of the Act imposing damages of Rs.25,94,814/- before the Appellate Tribunal. During the course of hearing, reference was made to the order dated 5th May, 2016 passed by the Appellate Tribunal in the Appeal No. ATA No. 551(4)/2016 preferred by the petitioner. The order records that the petitioner/Establishment had already deposited the 7Q amount. The prayer made in the writ petition reflects that the interest amount has been deposited. It is, however, stated at the Bar that Rs.6,03,095/- as against the demand of Rs.16,98,827/- towards interest under Section 7Q of the Act has been deposited.
4. In order to decide the contentions raised, we would like to first refer to the decision of the Supreme Court in Organo Chemical Industries (supra) wherein the provision of Section 14B was examined and elucidated upon. A.P. Sen, J. in his judgment, referring to the expression ‘damages’ as used in Section 14 B had held as under:-
“11. In support of the petition, learned Counsel for the petitioners assails the impugned order on two grounds, namely, (i) Section 14B of the Act is violative of Article 14 of the Constitution as it confers un-guided, uncontrolled and arbitrary power on the Regional Provident Fund Commissioner to impose damages which may be to the extent of 100% i.e., equal to the amount of arrears. The conferral of such unguided, uncanalised and arbitrary power on the Regional Provident Fund Commissioner to arrive at a decision, without any guide-lines whatsoever, makes Section 14B constitutionally invalid as offending against Article 14, and (ii) Section 14B deals with the power to recover damages. It is not the power to impose penalties. The word 'damages' in Section 14B must, therefore, be understood in the legal sense. Damages must have some correlation w
