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1997 Supreme(MP) 75
S.K. Dubey, J.
Gram Sewa Samiti
vs
Regional Commissioner,
Decided On : 13 February, 1997
The enforcing agency has the discretion to determine the amount of damages to be levied under Section 14B of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952, based on the facts and circumstances of each case.
Headnote:
EMPLOYEES' PROVIDENT FUNDS AND MISCELLANEOUS PROVISIONS ACT, 1952 - SECTION 14B - LEVY OF DAMAGES - DAMAGES LEVIED FOR DEFAULT IN PAYMENT OF CONTRIBUTIONS - INTERPRETATION OF SECTION 14B - DISCRETION OF ENFORCING AGENCY - JUDICIAL REVIEW.
Fact of the Case:
Petitioner, a registered society engaged in village service and cottage industries, challenged the levy of damages under Section 14B of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 (the Act) for default in payment of contributions from May 1962 to February 1982. The petitioner contended that the provisions of the Act were not applicable to its establishment and that the delay in payment was bona fide due to the contest of applicability. The respondent, after considering the petitioner's reply to the show-cause notice, passed an order imposing damages amounting to Rs. 2,66,550.45.
Finding of the Court:
The court held that Section 14B of the Act empowers the enforcing agency to levy damages for default in payment of contributions, and that the damages can be levied up to a maximum of 100%. The court further held that the enforcing agency has the discretion to determine the amount of damages based on the facts and circumstances of each case, and that the grant of a stay by the High Court or the Supreme Court does not absolve the petitioner from its liability to deposit the contributions under the Act and Scheme.
Issues: 1. Whether the provisions of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 are applicable to the petitioner's establishment. 2. Whether the delay in payment of contributions was bona fide. 3. Whether the damages levied under Section 14B of the Act are excessive.
Ratio Decidendi: 1. The court held that the petitioner's establishment is covered under the provisions of the Act as it is engaged in commercial activities and manufactures commercial articles for sale. 2. The court held that the petitioner's contest of the applicability of the Act was bona fide, but that it did not absolve the petitioner from its liability to deposit the contributions under the Act and Scheme. 3. The court held that the damages levied under Section 14B of the Act are not excessive, as they are within the limit prescribed by the Act and are based on the facts and circumstances of the case.
Final Decision: The petition was dismissed, and the petitioner was directed to bear its own costs.
S.K. Dubey, J.
1. By this petition, under Article 226 of the Constitution of India the petitioner seeks a writ of mandamus or any other suitable writ, direction or order for quashment of Annexure-P/5 dated January 4, 1985 order of levy of damages under Section 14B of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 (for short 'the Act'), for the period from May 1962 to February 1982 totalling Rs. 2,65,550.45.
2. Facts: The petitioner is a registered society under the Societies Registration Act, 1960 and also under the M.P. Public Trusts Act, 1951 established with donations for carrying out and functioning since 1948 with its head office at Raipur and branch office at many places in the State of M.P. Petitioner avers that the society has been established with the object of village service by providing employment to the rural labour and for getting their leisure hours utilized. In pursuance of the objectives of the society, it is running spinning and weaving centres in order to propagate the cult of village and cottage industries and also runs centres for demonstration and training. It is also running Amber Charkha Training School. Besides, with the same object, it runs centres of 2 saop making by hand, Tel Ghani and shoe making by manual labour, and has also established a saw mill and carpentry for manufacture of parts and implements for Amber Charkha and Kargha. It is asserted that all the activities of the society are carried on without any profit motive, each activity of the petitioner society is subsidized by the Government. The members of the society are neither partners nor share-holders having any money; to be utilized for carrying out of the activities of the society.
3. Respondent vide letter No. PFC/ 1273/ HP/1095 dated June 30, 1967-Annexure R.1 applied the provisions of the Act and the Scheme on the petitioner's establishment w.e.f. May 1, 1962. The petitioner contended that the provisions of the Act are not applicable, the petitioner society had its own provident fund scheme in the establishment as there is no profit motive or trading and commercial activity so as to apply the provisions of the Act in view of the notification G.S.R. 346 dated March 13, 1962 in exercise of the powers conferred by clause (b) of Sub-section (3) of Section 1 of the Act. The petitioner challenged the notice under Section 7A of the Act by Miscellaneous Petition No. 240/69 wherein Division Bench of this Court stayed the proceedings for determination of money due from the petitioner under the provisions of the Act and Scheme. Writ petition was dismissed by the Division Bench on January 5, 1971 vide order Annexure-R-III holding that it is a trading and commercial establishment within the meaning of the notification as the petitioner-society manufactures commercial articles and sells them, it is an industry. The petitioner filed a Special Leave Petition, on grant of leave in Appeal (Civil) No. 1918/71 on August 10, 1971, while modifying the order dated June 8, 1971 the Supreme Court extended the time to the petitioner for furnishing bank guarantees to the satisfaction of the Registrar of Supreme Court in sum of Rs. 2,25,000/- Thereafter, the petitioner in view of the law laid down by the Supreme Court in Bangalore Water Supply and Sewerage Board v. A. Rajappa and others (1978-I-LLJ-349) applied for withdrawal of the appeal, the withdrawal of the appeal was allowed on December 2, 1981 vacating the stay order dated August 10, 1971. As there was no order for release of Bank guarantee the petitioner approached the Hon'ble Supreme Court, the Supreme Court vide order-Annexure 5 P/2 dated March 4, 1983 directed release of the Bank guarantee so that the petitioner may deposit the amount due from April 30, 1962 for a period of more than 20 years. The petitioner deposited the contribution according to the provisions of the Act and Scheme to the extent of Rs. 2,27,315,57 for the period from May 1, 1962 to February 28, 1982 vid
