PUTHIYARA TILE WORKS Vs. UNION OF INDIA

JUDGEMENT

(1.) The short question that arises for consideration in this Original Petition is whether respondents 2 and 3 were justified in the facts and circumstances of the case, in initiating proceedings against the petitioner to recover damages under S.14B of the Employees' Provident Funds and Miscellaneous Provisions Act 1952 (for short, the Act).

(2.) Petitioner which is a partnership firm registered under the Indian Partnership Act, is engaged in the manufacture and sale of tiles and other allied clay products. It is admitted by the petitioner that there was default in making certain remittances to the Employees' Provident Fund, Family Pension Scheme etc., since the petitioner establishment had run into financial doldrums. It is contended by the petitioner that respondents 2 and 3 were very well aware of the predicament and the financial crisis that was being faced by the petitioner during the relevant period and therefore Ext. P5 and P7 demand notices issued by respondents 2 and 3 directing the petitioner to pay Rs. 3,98,669/- by was of damages as provided under S.14(B) of the Act are liable to be quashed.

(3.) It is not disputed by respondents 2 and 3 that petitioner firm was in deep financial crisis starting from 1987-88. Respondents 2 and 3 also admit that petitioner was declared as a sick unit by the Department of Industries and Commerce, Government of Kerala. However it is contended that so long as any scheme for rehabilitation had not been sanctioned by the Board for Industrial and Financial Reconstruction (BIFR) established under S.4 of the Sick Industrial Companies (Special Provisions) Act, 1985, petitioner could not claim any benefit or concession as a sick unit. It is also contended by respondents 2 and 3 that sufficient leniency was shown by them towards the petitioner in as much as damages were levied against the petitioner only at the rate of 25% per annum though petitioner was liable to be levied upto 100% of the arrears as damages for the delayed payment of the contribution.