The competent authority has the power to impose damages under Section 14(B) of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952, to compensate employees for the loss suffered due to delayed remittances and to penalize the employer for the default. However, the delay in initiating action under Section 14(B) should be reasonable, and the competent authority should consider mitigating factors when determining the quantum of damages.

The petitioner herein is an establishment which is subjected to the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 (hereinafter referred to as 'the Act'). The establishment, it is said, was originally known as M/s. N. Balasubramaniam, which was allegedly closed on January 4, 1981 and restarted on April 13, 1981, under a new management. According to the petitioner at the alleged closure, M/s. N. Balasubramaniam paid off and settled all their employees and some of the employees who sought settlement of their provident fund accounts with the respondent. Ex. employees of M/s. N. Balasubramaniam, however, were appointed by the petitioner from April 13, 1981 under new account numbers for the provident fund contributions. The respondent, however, maintained that the transfer of the establishment to the petitioner did not make it a new establishment altogether for the purposes of recovery of the contributions as per law and the petitioner, in view of the same, made remittances for the period April, 1981 to September, 1981 in November, 1981 and February, 1982 to the old account number of the previous owners M/s. N. Balasubramaniam, By a communication, however, dated September 20, 1984, the respondent intimated the petitioner that it had delayed the payment of contributions and other dues for the periods mentioned therein and called upon the petitioner to show cause why damage should not be levied under Sec. 14(B) of the Act. The petitioner, by letter dated October 15, 1984, replied.

(1) On account of frequent labour unrest the unit situate then at K.R.S.I. Estate, Thiruvottiur till September, 1970 was shifted to Thiruvanmiyur in 1971;

(2) There were huge arrears of outstanding from customers like Enfields India Ltd.;(3) The unit under the old management was closed on January 4, 1981 and the claims of the workmen were settled.

(4) the Unit was restarted only on April 13, 1981;

(5) the petitioner regarded the re-start of the unit under its management only as a fresh start of the contributions and remittances, hence, accordingly, the new accounts.

When however, the petitioner was informed that remittances were required to be made in continuity of the previous contributions and the shifting of the undertaking was not a ground for any new account for remittances, it made contributions as above.

The petitioner, however, contended that it was not possible to trace out the old records from April, 1969 onwards to prove all its contentions and sought for time to trace out the records. When, however, the petitioner was called on November 15, 1984 to represent its case with documentary evidence, it replied on the said date that it was unable to trace the records and files from the year 1969 to 1975 and prayed for further time. Further time was allowed to the petitioner.

The petitioner, however, failed to trace the old records, and at the hearing on December 21, 1984, the Manager of the petitioner appeared and submitted that the notice for damages was issued in October, 1984 in respect of a period fifteen years ago and the petitioner, in view of the lapse of time, could neither confirm nor deny the allegations and that in any event the petitioner establishment was closed down from December, 1983. The respondent, however, under the impugned order dated February 20, 1985, has held that the financial difficulties cannot be accepted as a valid excuse sufficient to condone the delay in making contributions and in view of the fact that the unit was closed permanently and taking a lenient view, levied damages as per the statement enclosed with the order.

2. There has been, according to the petitioner itself, delay in the remittances of the provident fund contributions caused for the reasons stated by it. Learned counsel for the petitioner has contended :

(1) that the respondent has not applied its mind is disclosed by the fact that the notice proposed imposition of damages for several periods of delay in making remittances of the con