- (1.) Messrs International Electricals, 10-A, Industrial Area, Faridabad, district Gurgaon, hereinafter referred to as the petitioner-firm, was served by the Regional Provident Fund Commissioner, respondent No. 1, with memo. No. Acctts/Damages/V/PN/2750-59642, dated 22nd March, 1974 requesting it to show cause as to why damages should not be imposed upon it under Section 14-B of the Employees' Provident Funds and Family Pension Fund Act, 1952, hereinafter referred to as the Act, for the petitioner-firm's failure to remit the contributions and administrative and other charges in due time for the period April, 1971 to December, 1973. The petitioner-firm was required to appear before respondent No. 1 at Chandigarh on 5th May, 1974. Respondent No. 1, vide his order dated 23rd July, 1974, Annexure P. 5, accorded sanction for the recovery of damages amounting to Rs. 11,327.10 from the petitioner-firm on three counts, that is, damages on delayed payments of Provident Fund contributions; damages on delayed payments of Administrative charges; and damages on delayed payment of Family Pension Fund contributions. The petitioner-firm on coming to know of the said order on 7th August, 1974, through the said order of 23rd July, 1974 issued on 3rd August, 1974, deputed one Shri D.S. Gulati as its representative to make personal representation to respondent No. 1, which he did at Chandigarh on 19th August, 1974. In a separate representation dated 22nd August, 1974 the petitioner-firm allegedly explained circumstances which prevented the petitioner-firm for making the deposits in due time. Respondent No. 1, vide his letter dated 27th November, 1974 informed the petitioner-firm that he had not felt satisfied with the explanation contained in the representation and advised it to deposit the damages as sanctioned and intimated already. The petitioner-firm again represented to respondent No. 1 on 15th February, 1975. Failing to convince respondent No. 1 it thereafter represented to respondent No. 2, Central Provident Fund Commissioner, who vide his letter dated 15th January, 1976 informed the petitioner firm that he saw no reason to interfere with the order of respondent No. 1 passed on 23rd July, 1974, Annexure P. 5. This is said to have led the petitioner-firm to impugn the order of respondent No. 1 Annexure P.5, and that of respondent No. 2 Annexure P.12, inter-alia, on three grounds (which have been spelled out from the petition by us, as none has cared to represent the petitioner-firm before us) : (1) that the arrears having been deposited before the issuance of the show cause notice dated 22nd March, 1974 and there being no dues in arrears on the date of the issue of the notice, no damages could have been levied in law; (2) that reasonable opportunity had not been afforded by respondent No. 1 for showing cause as to why the contributions had been remitted belatedly; and (3) that the impugned order, Annexure P.5, stood vitiated by the fact that the quantum of damages had been arrived at without any application of mind and merely mechanically following the standard Table prescribing damages circulated to all the Regional Provident Fund Commissioners by the Government and thereafter by respondent No. 2.
(2.) Support for the contention based on the first ground was sought from two Single Bench decisions of this Court Messrs Amin Chand and Sons V. State of Punjab, 1965 AIR(P&H) 441and Pioneer Sports Works Private Ltd. Jullundur V. Punjab State and Others, 1967 CurLJ 506 which ind mention in the petition, and one of them being cited before the admitting Bench, as is clear from the admitting order.
(3.) The decision in Messrs Amin Chand and Sons was challenged in L.;.A. No. 296 of 1964 and the Letters Patent Bench in its order dated 11th February, 1969 set aside the decision of the Single Bench. An identical contention was advanced before the Letters Patent Bench to the effect that the power under Section 14-B of the Act could only be exercised if there were arrears due from an employer who had not paid the contributions due from him, but since the respondent-firm in that case had already paid all the contributions due from it, there was no question of arrears being due from it and no action could have been taken against it under Section 14-B of the Act. In support of the contention, following observations from an English decision Queen Anne s Bounty V. Tithe Redemption Commission, 1938 Ch 229, were cited : "Now 'arrears' is not a term of art but a well known word commonly used to describe sums overdue and payable in respect of periods of time, for example, unpaid annuities, unpaid interest, unpaid preference dividents - there is no real difficulty in applying the word 'arrears' (to sum due) and not to rights and liabilities in respect of sums which became due on account of tithe before the appointed day." Mehar Singh, C.J., speaking for the Bench, while repelling the contention had the following to say : "I have not quite been able to appreciate how this observation of the learned Judge is of any assistance to the argument of the respondent-firm. The arrears arose on the very date on which the respondent-firm defaulted in making payment of the contribution for the particular month on the date specified in paragraph 38 of the scheme. What probably the learned counsel for the respondent-firm means is that the arrears having once accrued did not continue to the date on which the State Government proceeded to act under Section 14-B which is true enough, but the words of the Section do not mean that in such circumstances the power given to the State Government has been taken away. The word 'arrears' appears in the last line of the section and rather refers to the quantum of damages which may be imposed by the State Government under the Section by saying that the same is not to exceed 25 per cent of the amount of arrears. The power of the State Government to proceed under that Section arises immediately as the employer makes the default. It is only when the quantum of the damages is to be imposed by the State Government that the measure of the arrears comes in and the damages are not to exceed 25 per cent of the same. This argument is completely without substance." With respect, we entirely concur in the view expressed by the learned Chief Justice.;