- (1.) Petitioner aggrieved by the order dated 4-7-2005 Annexure-A of the Assistant Provident Funds Commissioner determining damages of Rs. 12,24,368/- under Section 14B of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 and Rs. 1,19,157/- as interest under Section 7Q of the Act, filed appeal registered as No. ATA 714(6)2005 before the Employees' Provident Fund Appellate Tribunal, New Delhi, which when dismissed by order dated 1st October, 2010, Annexure-F, has presented this petition. Learned Counsel for the petitioner submits that this petition is restricted to one of challenge over determination of damages under Section 14B of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 while Rs. 1,19,157/- determined as interest under Section 7Q has been made good vide Annexure-D.
(2.) A learned Single Judge by order dated 21st August, 2012 in The Regional Provident Fund Commissioner, Bangalore and Another v Kaytee Switchgear Limited, Bangalore, 2012 6 KarLJ 398 (W.P. No. 588 of 2012 (L-PF) and connected with writ petitions) observed that: Just because that different rates are prescribed in Para 32-A of the Employees' Provident Funds Scheme, 1952, it is not mandatory to levy the damage at such rate. For the delayed period, Section 7Q itself makes the employer liable to pay interest not less than 12% per annum or at such higher rate of interest. As such, the employees' interest is protected by way of contribution and even case of delayed contribution, by way of interest. As far as damage is concerned, it is by way of penalty and it is in these circumstances, the legislation has conferred a discretion on the Commissioner by using the word 'may recover' both under Section 14B of the Act and also Para 32-A of the Scheme and on interpretation of these provisions, even the Apex Court has observed that, the discretion vests with the Commissioner to consider the mitigating circumstances and pass speaking order supported by reason, it makes absolutely clear that the Commissioner is conferred with discretionary power to levy the damages.
(3.) Having examined the orders of the first respondent-Assistant Provident Fund Commissioner and that of the Appellate Tribunal, what is patent is that discretion is not exercised in the matter of considering, the explanation offered by the petitioner for the delay in the remittance of the contributions during the period from 1998-2003 when the petitioner was under the control of the Receiver appointed by the Court. In addition, what is also patent is the fact that the first respondent and the Appellate Tribunal did not notice that Paragraph 32-A of the Scheme limits the imposition of penalty to a maximum of 25% of the contribution remitted after a delay. Therefore, the imposition of damages to an extent of 100% of contribution for delayed remittance is unsustainable. In the result, this petition is allowed, the orders of the first respondent and that of the Appellate Tribunal are quashed and the proceeding remitted for consideration afresh and to pass an order after extending an opportunity of hearing to the petitioner, and in the light of the observations made in the decisions referred to supra.;