- (1.) The petitioner is a factory registered under the Factories Act. It carries on the business of processing and manufacture of fruits, vegetables jams, Jellies and Syrups and squashes etc. It has 500 persons in employment working in the factory. The factory is covered by the provisions of the Employees' Provident Funds and Family Pension Fund Act, 1952 and the schemes framed thereunder. It appears that the petitioner did not pay in time its contributions to the provident fund account in respect of the period, June, 1964 and July, 1964 to March, 1970. The Regional Provident Fund Commissioner, U. P., Kanpur by an order dated the 17th January, 1975 (Annexure I to the writ petition) passed under Sec. 14-B of the Employees' Provident Funds Act, 1952 called upon the petitioner to pay e sum of Rs. 7,830.65 in Employees' Provident Fund Account No. 1 and Rs. 302.20 in employees' provident fund account No. II, by way of damages. The petitioner has challenged that order.
(2.) Under the scheme framed under the Employees' Provident Funds Act, 1952 (hereinafter referred to as the Act), every employer to whom the Act applies has a statutory duty to make payments of contributions and administrative charges by the 15th of every month and in case of default Section 14-B provides that the Government may recover from the employer such damages not exceeding 25 per cent of the amount of arrears, as it may think fit to impose. The contention of the learned counsel is that an order under Section 14-B for the levy and recovery of damages for non-payment of contributions in time should be passed as expeditiously as possible and if it is passed with inordinate delay the presumption can be drawn that the Government had condoned the delay. In support of this contention he relies upon a decision of the Punjab High Court in M/s. Amin Chand and Sons V/s. State of Punjab, 1965 AIR(P&H) 441 where it has been held that the purpose of Section 14-B is as much reformative as punitive and technically the damages should be levied immediately after the default and it is legitimate for the employer to have thought that the Government had decided not to exercise its discretion to levy damages after a lapse of several years. This case clearly supports the contention of the learned counsel for the petitioner. In the instant case also the arrears relate to the years 1964 to 1970 but the impugned order was passed as late as January, 1975. It, is not disputed that the arrears had actually been paid up even though late long before the impugned notice was issued. In the circumstances the petitioner was well within its rights to presume that the Government had condoned the delay and had decided not to demand any damages from the petitioner.
(3.) That apart, there is yet another serious infirmity in the impugned order. The petitioner had made a representation against the levy of damages. In that representation it was pointed out that the contributions to the provident fund scheme and the administrative charges had been paid upto date but due to some unavoidable circumstances and owing to financial difficulties the payments were delayed. The petitioner had also raised the point that the damages, if levied at all, must be levied expeditiously and had cited the decision of the Punjab High Court in the case of M/s. Amin Chand and Sons . He had also cited a few other decisions and raised a contention that it is proper for the authority to give a hearing to the petitioner and that the appropriate Government which could decide as to whether any damages should be levied under Section 14-B is the State Government and the power to fix the damages did not vest in the Accounts Officer or any other officer of the Fund and to support these contentions the petitioner relied upon 1970 Lab IC 96 (Mad) and (AIR 1969 Mys 196 = (1969 Lab IC 691). Clearly the petitioner has raised some factual and legal pleas and it was the duty of the Regional Provident Fund Commissioner to have dealt with those contentions. In the instant case nothing of the kind has been done. The pleas raised by the petitioner have been rejected in the following words : "The plea advanced by him in his reply is not tenable. Hence it is regretted that reason given by the employer for delay in the remittances under the Employees' Provident Funds and Family Pension Fund Act 1952 and the scheme framed thereunder cannot be accepted." This order clearly is a non-speaking order. It does not deal with any of the contentions raised by the petitioner and does not say as to why the pleas, raised by the petitioner are not tenable. An order under Section 14-B is a quasi-judicial in nature and it must be a speaking order. That is the minimum requirement of law. This view finds full support from a decision of the Supreme Court in M/s. Travancore Rayons Ltd. V/s. The Union of India, 1971 AIR(SC) 862 where it has been held that when judicial power is exercised by an authority normally performing executive or administrative functions, the Supreme Court insists upon disclosure oi reasons in support of the order on two grounds one, that the party aggrieved in a proceeding before the High Court or the Supreme Court has the opportunity to demonstrate that the reasons which persuaded the authority to reject his case were erroneous; the other, that the obligation to record reasons operates as a deterrent against possible arbitrary action by the executive authority invested with the judicial power. Ultimately the Supreme Court held that where the order of the State Government rejecting a revision under Section 36 merely stated that the Government having carefully considered the points made by the applicant, saw no reason to interfere with the order, the order being laconic is vitiated and should be set aside. Now in the instant case the Regional Provident Fund Commissioner beyond saying that the plea raised by the petitioner is not tenable and expressing regret for it has not disclosed any reason whatsoever as to why and how he came to that conclusion. In my opinion, the Regional Provident Fund Commissioner has committed a manifest error of law and his order cannot be sustained. In the result, the petition succeeds and is allowed. The order of the Regional Provident Fund Commissioner dated 17-1-1975, a copy whereof is Annexure '1' to the writ petition is quashed. The petitioner is entitled to costs.;