JUDGMENT

Sri S.K. Mishra, J.

1. Heard Shri T.A. Khan, Sr. Advocate assisted by Shri Vinay Bhatt, Advocate for the petitioner and Shri Bhupendra Singh Bisht, Advocate for the respondents.

2. In this writ petition, the petitioner, being a company incorporated under the Companies Act, has prayed to issue a writ of Certiorari quashing the order dated 26.03.2009 and order dated 28.10.2009 passed by Regional Provident Fund Commissioner - respondent no. 2 and further to quash the order dated 02.05.2011 passed by Appellate Tribunal, Employees Provident Fund, Delhi.

3. Petitioner Company was suffering heavy financial loss to the tune of Rs. 420.86 lakhs in 2000-01. Hence, the matter was referred to Board for Industrial and Financial Reconstruction (for short “BIFR") established under Section 4 of the Sick Industries Companies (Special Provisions) Act, 1985 (for short “the Act, 1985"). Because of the financial loss sustained by the Petitioner – Company, it was declared sick industry on 21.07.2004. In that proceedings, the Provident Commissioner was also a party. On 09.06.2003, respondent no. 2 issued a demand for payment of interest on delayed contribution of provident fund under Section 7Q and damages under Section 14-B of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 (for short “the Act, 1952"). On 05.05.2004, a review order was passed and impugned amount was reduced to Rs. 3,42,153. On 18.11.2008, again, another order was passed by respondent no. 2 showing the interest and damages for the period of August, 1997 to December 2002 to the tune of Rs. 22,85,019/-. On 26.03.2009, another order was passed by the respondent no. 2 for recovery of interest and damages to the tune of Rs. 4,02,832/-. Orders dated 18.11.2008 and 26.03.2009 were reviewed and after adjusting Rs. 3,42,153/-, which were deposited by the petitioner, as per first review order, the amount of Rs. 15,37,061/- was shown as outstanding against the petitioner. An appeal was filed under Section 7-I of the Act, which was dismissed on 02.05.2011. Such orders have been assailed in this writ petition.

4. Shri T.A. Khan, learned Senior Counsel appearing for the petitioner submits that the finding recorded by Regional Provident Fund Commissioner as well as by the Appellate Tribunal are erroneous in the sense that they have considered the Employees' Provident Funds Scheme, 1952 (for short “the Scheme") superior to the Act and that as per the provisions of Section 14-B of the Act, 1952, it is mandatory on the part of the Prescribed Authority to impose damages. He further submits that in an appropriate situation, if there is no criminal intent or mens rea, on the part of the employer, in delaying the deposit of the employees' contribution to the Provident Fund or there are mitigating circumstances, like in the present one that the Company is under financial duress and bankruptcy, the Authority has jurisdiction to waive the damages. However, as far as the interest part is concerned, it cannot be waived by the Authority.

5. In order to understand the controversy involved in the present case properly and appreciate the arguments, it would be necessary to look into the various provisions of the Act, 1952. Section 7Q provides for interest payable by the employer, which reads as under:

“7-Q Interest payable by the employer - The employer shall be liable to pay simple interest at the rate of twelve per cent per annum or at such higher rate as may be specified in the Scheme on any amount due from him under this Act from the date on which the amount has become so due till the date of tis actual payment.

Provided that higher rate of interest specified in the Scheme shall not exceed the lending rate of interest charged by any scheduled bank."

6. Section 14-B of the Act, 1952 provides for power to recover damages. It reads as follows:

“Section 14-B Power to recover damages - Where an employer makes default in the payment of any contribution to the Fund 2[, the 3[Pension] Fu