Employer's liability to pay damages under S.14-B of the Employees' Provident Funds Act is limited to representing the actual loss caused by the default and should not exceed it.

1. The petitioner-Company is an establishment Coming within the ambit of the Employees' Provident Funds Act, 1952 (hereinafter called 'the Act'), and the Scheme framed thereunder. Exts. P3 dated 13-3-1969, P4 dated 31-8-1970, P8 dated 27-2-1971 and P9 dated 15-6-1973 relating respectively to the periods February-November, 1967; December 1967-December 1969; January-March 1970; and April 1970-March 1971 were issued to the petitioner under S.14-B of the Act. The petitioner was called upon to pay damages at the rate of 25% of the amounts of arrears alleged to be due from it. The case of the petitioner is' that, at the time of the impugned orders Exts. P3, P4, P8 and P9, no amount was due from it under the provisions of the Act or the Scheme, and consequently the respondents have no power to recover damages from the petitioner. The petitioner further states that in any case what is recoverable under S.14-B is only damages in respect of the loss caused by its default in remitting the amount, towards Provident Fund on the due dates.

2. I shall now read the relevant provisions concerning the petitioner's liability towards Provident Fund. S.6 reads as follows:

"The contribution which shall be paid by the employer to the Fund shall be six and a quarter per cent of the basic wages, dearness allowance and retaining allowance (if any) for the time being payable to each of the employees (whether employed by him directly or by or through a contractor), and the employee's contribution shall be equal to the contribution payable by the employer in respect of him and may, if any employee so desires and if the Scheme makes provision therefor, be an amount not exceeding eight and one third per cent of his basic wages, dearness allowance and retaining allowance (if any):

S. 14.(2A) imposes a penalty upon any person who contravenes or makes default in complying with any provision of the Act. It reads as follows:

"Whoever contravenes or makes default in complying with any provision of this Act or of any condition subject to which exemption was granted under S.17 shall, if no other penalty is elsewhere provided by or under this Act for such contravention or non-compliance, be punishable with imprisonment which may extend to three months, or with fine which may extend to one thousand rupees, or with both."

3. The impugned orders, as stated earlier, have been issued under S.14-B which reads as under:

"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-s. (2) of S.15 or sub-s. (5) of S.17 or in the payment of any charges payable under any other provision of this Act or of any Scheme or under any of the conditions specified under S.17, the appropriate Government may recover from the employer such damages, not exceeding twenty-five percent of the amount of arrears, as it may think fit to impose."

4. The amounts are due for payment within fifteen days of the close of the month as provided under Para.38(2) of the Scheme. The petitioner having failed to remit the amounts within the stipulated time was called upon to pay a fine under S.14(2A). This fine was paid by it in full.

5. The question that arises for consideration is whether the petitioner is liable to pay damages under S.14-B if no amount was subsisting on the date of the order passed under the section; and if so, whether it is liable to pay any amount in excess of the actual damages caused by its default?

6. S.14-B clearly indicates that an employer is liable to pay damages if be has made default in payment of the contribution. Merely because the amount had been paid earlier to the order under S.14-B, it cannot be contended that there was no default in payment on the due date if the amount was paid only subsequent to the due date. Any delay in paying the amount under S.6 causes Joss to the beneficiaries of the Scheme: such as loss of interest and the like. This is the loss that is sought to