Holding

The Act provides no limitation period for assessment or recovery of damages under Section 14‑B, and a delay in initiating action does not amount to waiver or prejudice unless the employer pleads and proves irretrievable prejudice.

Summary

Hindustan Times Ltd., the employer, delayed remitting Employees' Provident Fund contributions for several periods between 1965 and 1968. The Department issued a notice in 1971 and, after a long lapse, a show‑cause notice in 1979, finally levying damages under Section 14‑B of the Employees' Provident Fund and Miscellaneous Provisions Act, 1952 in 1980 – a delay of about 14 years. The employer challenged the levy, arguing that the delay amounted to waiver, that a limitation period should be implied, and that the demand was arbitrary. The Delhi High Court dismissed the writ petition in limine without reasons. The Supreme Court held that the Act contains no provision prescribing any limitation period for assessment or recovery of damages under Section 14‑B, that the Limitation Act does not apply, and that mere delay does not constitute waiver or prejudice unless the employer can plead and prove "irretrievable prejudice". Explanations such as power cuts or financial difficulties were rejected as valid defenses. The Court also emphasized that the authority must apply its mind, give reasons and afford a hearing. Consequently, the appeal was dismissed and the levy of damages upheld.

Issues considered

The Employees' Provident Fund and Miscellaneous Provisions Act, 1952, contains any statutory limitation period for assessment or recovery of damages under Section 14‑B.
Whether a delay of many years in initiating action under Section 14‑B amounts to waiver or prejudice to the employer.
Whether the employer can rely on a defence of "irretrievable prejudice" and the procedural requirements for raising such a defence.
Whether the Department’s explanations (power cut, financial problems, delay in cheque realisation) excuse liability.
Whether the High Court was required to give reasons while dismissing the writ petition in limine.

Legislation cited

Employees' Provident Fund and Miscellaneous Provisions Act, 1952s. 14-B
Employees’ Provident Fund Scheme, 1952s. Clause 29, s. Clause 32(3), s. Clause 38
Indian Penal Code, 1860s. 405 Explanation‑I
Limitation Act, 1963

Subjects

Employees' Provident FundSection 14BDamagesLimitation periodWaiverPrejudiceIrretrievable prejudiceNatural justiceWrit petitionHigh Court dismissal

Judgment

A HINDUSTAN TIMES LTD.
v.
UNION OF INDIA AND ORS.

JANUARY 7, 1998

B [S.B. MAJMUDAR AND M. JAGANNADHA RAO, JJ.)

Labour Law:

Employees' Provident Fund and Miscellaneous Provisions Act, 1952:
c
Section-14-B-Employees' provident fund contributions-Delay in
remittance-Damages-Recovery of-Period of limitation---Applicability-
He/d : The Act does not prescribe a period of limitation for assessment or
recovery of damages.

D Section 14-B-Damages-Levy of-Delay in passing the order-
Irretrievable prejudice arising due to-Plea of-Held: Such a plea must be
taken before the department and proved-If the plea is rejected the same
cannot be raised before the High Court unless clearly pleaded-Mere delay
in initiating action under S. 14-B does not amount to prejudice-Constitution
E of India, I950, Arts. 226 and 227-Practice and Procedure.

Section 14-B-Damages-Levy of-Delay in passing order-Held: Does
not amount to waiver. Section I 4-B-E.mp/oyees' provident fund
contributions-Delay in remittance-Explanation for-Held: Power cut, strike,
financial problems, delay in realisation ofcheques or drafts etc. are not valid
F grounds to escape liability.

Section 14-B-Employees' provident fund contributions-Delay in
remittance-Order for recovery of damages-Passed after a long period-
Held: By itself does not vitiate the order of recovery damages.
(

Employees' Provident Fund Scheme, 1952 :
G
Paragraph 32(3)-Legal fiction-Held: Creates a fiction of
.entrustment-Penal code, 1860, S. 495 Expln. I. Constitution ofIndia, I950:
Article 226.
·•
Writ petition---Dismissal of-In limine-Reasons for-Held: Ought to
H be given, at least briefly, by High Court.
4
..
HINDUSTAN TIMES LTD. v. U.O.I. 5
Words and Phrases: "Irretrievable prejudice "-Meaning of A
~
The appellant delayed the remitting of employees' provident fund
contribution within the period stipulated in paragraph 38. 10 of the Employees'
provident fund Scheme, 1952. The Regional Provident fund Commissioner,
after a lapse of 14 years, levied damages under Section 14-B of the Employees'
Provident fund and Miscellaneous Provisions Act, 1952. B
)'
The appellant filed a writ petition before the High Court challenging
the aforesaid levy, .vhich was dismissed in limine by a non-speaking order
l'!erely saying "dismissed." Hence this appeal.
__'.;

On behalf of the appellant it was contended that the demand notice c
issned in respect of the alleged belated payment was arbitrary and
unreasonable that a period of limitation mnst be implied nnder the law for
it would be wholly unreasonable to allow the power of recovery of damages
to be exercised after a considerable lapse of time and that the demand was
dropped in 1971 and, therefore, it must be deemed to have been waived.
-(,
D
'f'.
-~

Dismissing the appeal, this Court

HELD : I.I. The Employees' Provident Fund and Miscellaneous
Provisions Act, 1952 does not contain any provision prescribing a p~riod of
limitation for assessment or recovery of damages. Initially, it was provided
E
that the arrears could be recovered in the same manner as arrears of land
revenue. But by Act 37/53 Section 14-B was amended providing for a special
procedure under Sections 8-B to 8-G. By Act 40173 Section ll"was amended
by making the amount a first charge on the assets of the establishment if
the arrears of employee's contribution were for a period of more then 6
months. By Act 33/88, the charge was extended to the employee's share of F
contribution as well. (14-C; D-E]

1.2. In spite of all these amendments, over a period of more then thirty
years, the Legislature did not think fit to make any provision prescribing
a period of limitation. This is significant and it is clear that it is not the·
legislative intention to prescribe any period of limitation for computing and G

,. ~
recovering the arrears. As the amounts are due to the Trust Fund and the
recovery is not by suit, the provisions of the Limitation Act, 1963 are not
attracted. [14-F-G]

.... Nityanand M Joshi v. LIC of India, (1970] 1 SCR 396; Bombay Gas
H
6 SUPREME COURT REPORTS [ 1998] I S.C.R.

A Co. Ltd. v. Gopal Bhiva, [19641 3 SCR 709; Mukri Gopalan v. Cheppilet,
[199515SCC5 and Coal Mines Provident Fund Commr., Dhanbadv. J. Lala
& Sons, [1976] 3 SCR 365, relied on.

R.P.F. Commr. v. K.T. Rolling Mills, [199511SCC181, affirmed.

B State of Punjab v. Amirchand, (1964) 37 FJR 92 (P&H); Biria Cotton
Spg. & Wvg. Mills Ltd. v. Union ofIndia, CWP 390178 dated 29-7-1983 (Del), <
Gandhidham 's case (1987) LIC 659 (Guj); Interstate Transport Agency v.
R.P.F. Commr., (1983) LIC 940 (Pat) and Northern India Press Works v. R.P.F.
Commr., (1983) LIC 1314 (All), approved.

C K. T Rolling Mills v. R.M. Gandhi, (1994) LLJ 66 (Born); Orissa Forest
Development Corproation Ltd. v. R.P.F. Commr., (1995) 71 IFLR 388 (Ori)
and Amirchand & Sons v. State of Punjab, AIR (1965) Pun 441; overruled.

State of Gujarat v. Patil Raghav Natha, [19691 2 SCC 187, held
inappilcable.
D
Nagendranath Dey v. Suresh Chandra Dey, ILR 60 Cal 1 (PC) and Ram
Chand v. Union of India, [1994] 1 SCC 45, referred to.

2. Mere delay on the part of the department could not be treated as
amounting to waiver. (18-BI
E
Divisional Engineer, APSEB v. RPF Commr., (1979) Lab IC (AP); Inter
State Transport Agency v. RPF Commr., (1983) LIC 940 (Pat) and State of
Punjab v. Amirchand (1964) 37 FJR 92 (P&H), approved.

3.1 The authority under Section 14-B has to apply his mind to the
F facts of the case and the reply to the show-cause notice and pass a reasoned
order after following the principles of natural justice and giving a reasonable
opportunity of being heard; the Regional Provident Fund Commissioner
usually takes into consideration the number of defaults, the period of delay,
the frequency of default and the amounts involved.118-D-EI

G 3.2 Default on the part of employer based on the plea of power cut,
financial problems relating to other indebtedness or the delay in realisations
of amounts paid by cheques or drafts, cannot be justifiable ground for the
employer to escape liability. 118-EI

Organo Chemical Industries v. Union of India, [198011SCR61, relied
I-T on.
-t HINDUSTAN TIMES LTD. v. U.0.1. 7
-'(

3.3 Mere delay in initiating action under Section 14-B cannot amount A
... to prejudice inasmuch as the delay on the part of the department, would have
only allowed the employer to use the monies for his own purposes or for his
business especially when there is no additional provision for charging interest.
However, the employer can claim prejudice if there is proof that between the
period of default and the date of initiation of action under Section 14-B, he
y has changed his position to his detriment to such an extent that if the B
recovery is made after a large number of years, the prejudice to him is of
an "irretrievable" nature, he might also claim prejudice upon proof of loss
of all the relevant records and/or non-availability of the personnel who were,
several years back in charge of those payments and provided he further
establishes that there is no other way he can reconstruct the record or c
produce evidence; or there are other similar grounds which could lead to
"irretrievable" prejudice; further, in such cases of"irretrievable" prejudice,
the defaulter must take the necessary pleas in defence in the reply to the
show-cause notice and must satisfy the concerned authority with acceptable
material; if those pleas are rejected, he cannot raise them in the High Court
unless there is a clear pleading in the writ petition to that effect. D

Gandhidham Spg. & Mfg. Co. Ltd. v. RPF Commr., (1987) Lab. IC 659
(Guj), S.T.G. P&D Mill, Prakriya v. RPF Commr., (1996) 72 FLR 823 (Born.),
Super Processors v. Union of India, (1992) Lab IC 808 (Born) and Sushma
Fabrics Pvt. Ltd., (1991) Lab IC 1946 (Born), approved. [18 F-H; 19 A-BJ
E
4. The Division Bench of the High Court ought to have given reasons,
at least briefly, while dismissing the writ petition in limine. [10-C]

Fuja Singh v. Jaspal Kaur, [1996] 4 SCC 461, relied on.

.... Pettit v. Dankley, [1971] 1 NSWLR 376 (CA), referred to. F

Michael Kirby, J: "On Writing Judgments", [1990] Vol. 64 Australian
Law Journal P. 691, referred to.

5. Paragraph 32(3) of the Employees' Provident Fund Scheme, 1952
provides that any sum deducted by an employer from the wages of an employee.
G

- ... "i'< under this Scheme shall be deemed to have been entrusted to him for the
purpose of paying the contribution in respect of which it was deducted. The
Scheme, therefore, creates a fiction of entrustment. [9-G; 12-D]

6. In the present case, no doubt there is a delay of 14 years in initiating H
8 SUPREME COURT REPORTS [1998] I S.C.R.

A action and the damages are levied because of the delay in realisation of the
amounts paid by cheque where the amounts were credited into the account r
of the department beyond the grace period of 5 days. The plea of strike, even
assuming it to be relevant, was not proved. The plea of the appellant that the
department must be deemed to have dropped the proceedings in 1971 after
issuing the notice of demand is also not sustainable. There is no plea of any
B irretrievable prejudice either in the reply to the show-cause notice or in the
writ petition. [19 C-D)

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 6251 of 1983.

C From the Judgment and Order dated 28.8.83 of the Delhi High Court in
C.W.P. No. of843of1980.

Dr. Shankar Ghose, Rishi Maheshwari and Ms. Gauri Rasgotra for
Mis. Khaitan & Co., for the Appellant.

D Harish Chander, Raj iv Nanda, Ms. Anubha Jain and Arvind Kr. Sharma
for the Respondents.

The Judgment of the Court was delivered by

M. JAGANNADHA RAO, J. This is an appeal preferred against the ·
E judgment of the Delhi High Court dated 28.8.1980 in C.W.P. No. 843of1980
dismissing the Writ Petition of the Petitioner. The writ petition was filed
questioning the order of the Regional Provident Fund Commissioner dated
7.5.1980 passed under section 14-B of the Employees Provident Fund &
·Miscellaneous Provisions Act, 1952 (hereinafter called the 'Act') levying
damages in a sum of Rs 44,220.00 and Rs. 1,035.50 for delay in remitting the
F employees provident fund contribution within the period stipulated in para
38.10 of the Employees Provident Scheme. 1952 forthe period July 65, October
65 December, 65 January 66 to March 66, August 66, July 67, August 67, May
68, July 68 to November 68.

The writ petition was dismissed by a Division Bench of the High Court
G on 28.8.80 by a non-speaking order merely saying "dismissed". It is against
the said judgment that this appeal has been preferred.

The facts of the case are as follows :

The appellant is the employer. On account of delay in payment of
H provident fund contributions, a notice was issued on 23.2.71 by the Department
t

HINDUSTAN TIMES LTD. v. U.O.l. [M. JAGANNADHA RAO, J.] 9
complaining of delays in remitting the provident fund amounts for the period A
July 65, October 65, December 65 to March J966, August 1966, September
1966, December 1966 to February 67, July 67 to August 67, January 68, April
68 to November 68 and September 1972 and stating that the amounts were
credited in the accounts of the department only after 20th of the 'following'
months. The appellant was requested to inform whether the cheques for these B
months were "tendered' "on or before 20th of the following month" to which
the payment relates. The appellant sent a letter dated 19.12.1972 giving only
the dates on which the cheques were signed by the appellant. Therefore, the
department sent a further letter dated 10.1.1973 asking the appellant to furnish
"proof of the dates of presentation of cheques".

It does not appear that the appellant sent any further reply to the
c
Department. However, there was also no further correspondence from the side
of the department. We only have the show cause notice dated 24.3.79 by the
department asking the appellant as to why, consequent to delay in the remittal
of the PF contributions, damages in a sum of Rs. 51,970.10 and administrative
charges in a sum of Rs. 1215 .10 should not be recovered for the period from D
July 1965 to September, 1972.

The appellant's representative 1ttended the hearing of the case 011
1.5.79 and 3.7.79 and finally filed a reply on 5.2.80 raising various contentions.
A copy of the letter dated 23 .10.1979 from the Bank giving details was also
enclosed. After referring to various contentions and rejecting some of them, E
the Regional Provident Fund Commissioner stated that the payments for
September 1966 and September 1972 were as stipulated in para, 38 of. the
' scheme and going by the dates of the challans and treating those dates as
the dates of presentation of cheques in the Bank, the deposits for December
66, January 67, February 67, January 68, April 68 and June 68 were "treated F
to have been deposited ..... within the time stipulated in para 38" of the Scheme
whereas the rest of the payments were treated as belated and amenable to
damages. There was also no proof of strikes by the workers for the period
23rd July to 16th September 1968. The inteipretation of para 38 of the Scheme
that "the question of payment of contribution should arise only after
employe_es share of contribution has been deducted from their wages" was G
rejected,
.
\in
I
view of para 30, 32 of the Scheme. It was also stated that for
collection of the amounts under Section 148, there was :io period on limitation.
The delay ~11s "immaterial": It was however stated that-no formal orders-were
passed by his predecessor "deciding not to raise any demand", as contended
by the appellant in the appellant's reply dated 5.2.80. In the result the impugned H
10 SUPREME COURT REPORTS [1998] l S.C.R.

A order dated 7.5.80 was passed for recovery of Rs. 44,220.00 as damages and
Rs. I 035.50 as administrative charges as compared to Rs. 51,990. l 0 and Rs.
1215.15 mentioned in the show cause notice.

In this appeal, learned Senior counsel for the employer Dr. Shankar
Ghosh contended that the demand notice issued on 7.5.80 in respect of
B alleged belated payments of the period from 1965 to 1968 was arbitrary and
unreasonable, that the demand was dropped in 1971 and must be deemed to
have been waived and that going by the dates of the cheques, the payments
must be deemed to be in time. We have heard Sri Harish Chandra for the
department.
c At the outset, we may say that ihe Division Bench of the High Court
of Delhi ought to have given reasons at least briefly, while dismissing the writ
petition in limine. As stated in Fauja Singh v. Jaspal Kaur, [1996] 4 SCC 461,
on the plainest consideration of justice, the High Court should have given
reasons. The absence or reasons has deprived the Supreme Court from knowing
D the circumstances which weighed with the High Court to dismiss the matter ,._
in limine. It was an unsatisfactory method of disposal. The necessity to
provide reasons, howsoever brief, in support of the High Courts' conclusions
is too obvious to be reiterated. Obligation to give reasons introduces clarity
and excludes or at any rate minimises the chances of arbitrariness and the
E higher forum can test the correctness of those reasons. It becomes difficult
for this Court in alt such cases to remit the matters to the High Court
inasmuch as by the time cases reach this Court, several years would have
passed.

In an article 'On Writing Judgments', Justice Michael Kirby of Australia
F [(1990) (Vol.64. Australian Law Journal p.691)] has approached the problem ,. ._
from the point of view of the litigam, the legal profession, the subordinate
Courts/tribunals, the brother Judges and the judges' own conscience. To the
litigant, the duty of the Judge is to uphold his own integrity and let the losing
party know why he lost the case. The legal profession is entitled to have it
demonstrated that the Judge had the correct principles in mind, had properly
G applied them and is entitled to examine the body of the Judgment for the
teaming and precedent that they provide and for the reassurance of the
quality of the judiciary which is still the centre-piece of our administration of
'( -
justice. It does not take long for the profession to come to know, including
through'. the written pages of published judgments, the lazy Judge, the Judge
H prone to errors of fact etc. The reputational considerations are important for
HINDUSTAN TIMES LTD. v. U.0.1. [M. JAGANNADHA RAO, J.] 11
the exercise of appellate rights for the Judges' own self~discipline for attempts A

- "' at improvement and the maintenance of the integrity and quality of our
judiciary. From the point of view of other Judges, the benefit that accrues to
the lower heirachy of Judges and tribunals is of utmost importance. Justice
Asprey of Australia had even said in Pettit, v. Dankley, (1971) (1) NSWLR
376 (CA) that the failure of a Court to give reasons is an encroachment upon
B
the right of appeal given to a litigant. In our view, the satisfaction which a
y reasoned Judgment gives to the losing party or his lawyer is the test of a
good Judgment. Disposal of cases is no doubt important but quality of the
judgment is equally, if not more, important. There is no point in shifting the
burden to the higher Court either to support the judgment by reasons or to
consider the evidence or law for the first time to see if the judgment needs c
a reversal.

We shall now proceed to take up the main issues arising in this appeal.

Section 14.B as amended by Act 40173 w.e.f. 1.11.1973, confers power
on the concerned authority to recover damages. Where an employer makes
D
default in the payment of any contribution to the Trust Fund the concerned
""' authority may recover from the employer by way of penalty such damages,
not exceeding the amount of arrears, as may be specified in the scheme. The
• section itself, after the 1973 amendment, now provides that before levying and
recovering damages, the employer shall be given a reasonable opportunity of E
being heard. The scheme referred to in Section 14-B is the Employees Provident
Scheme 1952, so far as provident fund contributions &re concerned.

Under clause 29 of the said Scheme, the contribution payable by the
employer shall be equal to the contribution payable by the employee. Under
clause 32(3). F
~
"any sum deducted by an employer from the wages of an employee
under this scheme shall be deemed to have been entrusted to him for
the purpose of paying the contribution in respect of which it was
deducted." G
Therefore, the scheme creates a fiction of entrustment.
_, -y·
Clause 38 deals with the mode of payment and says that the employer
shall, before paying the member his wages in respect of any period or part
of a period for which contributions are payable, deduct the employees H
12 SUPREME COURT REPORTS [1998] l S.C.R.

A contribution from his wages which together with his own contribution as well
as an administrative charge, shall be paid within 15 days of the close of every r
month into the Fund by separate bank drafts or cheques,

"Provided that if the payment is made by a cheque, it should be drawn
only on the local bank of the place in which deposits are made"
B
This is obviously meant for early clearance and for payment into the fund. x:

Clause 52 requires investment of the monies belonging to the Employees
Provident Fund. Clause 60 requires interest to be credited to the member's
account. The computation of damages shows that the department permits a
C 'grace period' of 5 days and it is only thereafter that the damages are
computed. Section 1I of the Act deals with 'penalties'. Further under section
405, Explanation-I of the Indian Penal Code, 1860, if a person being an
employer, deducts the employee's contribution from the wages payable to the
employees for crediting to a provident fund or family pension fund established
D by any law for the time being in force, the said amount shall be deemed to
have been entrusted with the amount of the contribution so deducted by him
and in default, the person could be liable for criminal breach of trust.

It appears that, soon after 1952 delays in remitting the contributions •
under the Act became chronic and the arrears payable to the Trust Fund
E increased from time to time. This was because initially the maximum damages
awardable was only 25% of the arref!'rs and no interest is payable. Therefore
by an Amendment in 1973 the damages were increased from 25% to a maximum
of 100%. The Statement of objects and Reasons of the Bill which became Act
40/73 stated that the arrears in 1959-60 were Rs. 3.65 crores; in March 1967,
F they were Rs. 5.96 crores, then by March 1970, they rose to 14.6 crores and
by March 1971 to Rs. 20.65 crores. It was stated there that the employers were
using these monies "in their business". The National Commission on Labour
recommended stringent measures in its I 16th Report which was endorsed by
the Estimates Committee, resulting in the 1973 Act.

G In Coal Mines Provident Fund Commissioner, Dhanbad & Other v. J.
Lala & Sons, [ 1976] 3 SCR 365, interpreting section I OF of the Coal Mines
Provident Fund and Bonus Scheme Act, 1948, it was stated by this Court that
by the use of the words 'may levy damages', in case of default in payment
"' -
of contribution and the words 'as it may think fit to impose', it was clear that
H the determination was not based on the inflexible application of a rigid formula
HINDUSTAN TIMES LTD. v. U.0.1. [M. JAGANNADHA RAO,!.] 13

and that by these words, the authorities were to apply their mind to the facts A
and circumstances of the case. As a duty was judicially imposed on the
authority, principles of natural justice were implied. In Organo Chemical
Industries & Another v. Union of India & Others, [1980] I SCR 61, where the
vires of the Act were upheld, this Court laid down that while passing orders
under section 14-B, the authority was acting in a 'quasi-judicial' capacity and B
was bound to give reasons for its orders. The levy was not necessarily
proportionate to the loss incurred by the employee inasmuch as it was partly
compensatory and partly penal.

Organo case itself was one where there were delays in payment of the
contributions and the explanations given were rejected. The order of the C
Commissioner rejecting the explanation of the employer was not interfered
with by the Supreme Court. There the default related to the period from March
to October I 975 and again from December 1975 to November, 1976. The show
cause notice was issued on 7 .6.1977 and in response, the appellants stated
that the remittal was delayed "due to difficulties beyond their control and ....
there were disputes between partners of the firm, there was a power-cut of D
60% ..... w.e.f. May 6, 1974 and there were huge amounts of loan payable to
the Haryana Financial Corporation". Ho\.vever, the Regional Provident
Commissioner by his orders dated 16.8.1977 rejected all these contentions and
held that the obligation to pay these contributions into the fund was
unqualified. The explanations of the employer were not acceptable. The default
E
could not be linked with the financial problems facing the establishment. It
was stated by the Commissioner that the 50% of the employee's contributions
was

"trust money with employer for deposit in the statutory fund. The
delay in the deposit on this part of the contributions amounted to p
breach of trust.. ....."

He also found that the appellants in that case were habitual defaulters and
that the maximum damages fixed under the _,Act was to be levied. When the
matter came to this Court, A.P. Sen, J. observed that the default was wilful
inasmuch as the appellants, G
"have been utilising the amounts deducted from the wages of their
employees, including their own contributions, as well as administrative
charges, in running their businessn

Krishna lyer,J. in his concurrent judgment, characterised such uses as H
14 SUPREME COURT REPORTS [ 1998] I S.C.R.

A amounting to •embezzlement'.
As to the manner in which the concerned authority could arrive at the
'damages', AP.Sen, J. stated that the authority usually takes into consideration,
- as was done in that case - the number of defaults, the period of delay, the
frequency of defaults and the amounts involved. The damages were to be
B compensatory and penal as well and hence principles of estimation of damages
under the law of Contract or Torts, were not applicable.

The first contention on behalf of the appellant in the context of section
14B is that a period of limitation must be implied under law for, according to ,..
the appellant, it will be wholly unreasonable to allow the power to be exercised
C after the lapse of a large number of years.

Now the Act does not contain any provision prescribing a period of
limitation for assessment or recovery of damages. The monies payable into
the Fund are for the ultimate benefit of the employees but there is no provision
by which the employees can directly recover these amounts. The power of
D computation and recovery are both vested in the Regional Provident
Commissioner or other officer as provided in section 14-B. Recovery is not
by way of suit. Initially, it was provided that the arrears could be recovered
in the same manner as arrears of land revenue. But by Act 37/53 section 14-
B was amended providing for a special procedure under section 8-B to 8-G.
E By. Act 40/73 section 11 was amended by making the amount a first charge
on the assets of the establishment if the arrears of employee's contribution
were for a period of more than 6 months. By Act 33/88, the charge was
extended to the employee's share of contribution as well. ·

In spite of all these amendments, over a period of more than thirty /
F years, the legislature did not think fit to make any provision prescribing a
period of limitation. This in our opinion is significant and it. is clear that it is
not the legislative intention to prescribe any period of limitation for computing
ilnd recovering the arrears. As the amounts are due to the Trust Fund lnd
the recovery is not by suit, the provisions of the Indian Limitation Act, 1963
G are not attracted. In Nityanand M Joshi v. Life Insurance Corporation of
India, [ 1970] I SCR 396, it has been held that the Limitation Act, 1963 has no
application to Labour Courts and, in our view, that principle is equally applicable
to recovery by the concerned authority under section 14-B. Further in Bombay
Gas Co. Ltd v. Gopal Bhiva, [1964]3 SCR 709, it has been held that in respect•
of an application under section 33(c){2) of the Industrial Disputes Act, 1947,
H there is no period of limitation. In that context, it was stated that the Courts
j

HINDUSTAN TIMES LTD. v. U.0.1. [M. JAGANNADHA RAO, J.] 15
could not imply a period of limitation. It was observed: A
"It seems that where the legislature has made no prov1s10n for
'
'""' limitation, it would not be open to the Court to introduce any such
limitation on the grounds of fairness or justice"

The above decisions have been recently accepted in Mukri Gopalan B
v. Cheppilet, [1995) 5 SCC 5 at p. 20-22 to which one of us (Majmudar,
)(
J.) was a party while dealing with the applicability of section 29(2) of
the Limitation Act, 1963 to Courts or Tribunals. We may also point out
in this connection that several High Courts have rightly taken the
view that there is no period of limitation for exercise of the power
under section 14B of the Act. • c
It is true that a principle has been laid down in State of Gujarat v. Patil
Raghav Natha, [1969) 2 SCC 187, while dealing with suo motu revisional
jurisdiction that though there is no period oflimitation prescribed for exercise
of that power, still such a power must be exercised within reasonable time. The
said judgment has been applied in matters relating to section 6 of the Land D
-<,
Acquisition Act in a large number of cases, which were all referred to recently
in Ram Chand v. Union of India, [1994) I SCC 45. In our view, this line of
cases cannot ordinarily apply to monies withheld by a defaulter, who holds
them in trust.
E
The reason is that while in the above cases decided by this Court the
exercise of powers by the authority at a very belated stage was likely to result
in the deprivation of property which rightly and lawfully belonged to the
person concerned, the position under section I 4B of the Act of an employer
is totally different. The employer who has defaulted in making over the
contributions to the Trust Fund had, on the other hand, the use of monies F
_,j._ which did not belong to him at all. Such a situation cannot be compared to
the above line of cases which involve prolonged suspense in regard to
deprivation of property. In fact, in cases under Section 14-B ifthe Regional
Provident Commissioner had made computations earlier and sent a demand
immediately after the amounts feil due, the defaulter would not have been able
to use these monies for his own purposes or for his business. In our opinion;
G
it does not lie in the mouth of such a person to say that by reason of delay
''t in the exercise of powers under section 14B, he has suffered loss. On the
other hand, the defaulter has obviously had the benefit of the 'boon of delay'
which "is so dear to debtors", as pointed out by the Privy Council in
Nagendranath Dev v. Suresh Chandra Dev, !LR 60 Cal. !(PC). In that case, H
16 SUPREME COURT REPORTS [1998] 1 S.C.R.

A it was obset"Ved that equitable considerations were out of place in matters of
limitation and the strict grammatical construction alone was the guide. Sir
Dinshaw Mulla stated:

"Nor in such a case as this is the judgment debtor prejudiced. He may
indeed obtain the boon of delay, which is so dear to debtors and if
B he is virtuously inclined there is nothing to prevent his paying what
he owes into Court."

The position of the employer in case of default under section 14-B is no
different.

C A learned Single Judge of the Bombay High Court in K. T Rolling Mills
v. R.M.Gandhi, (1994) LLJ. 66, was dealing with a case like the one before us
where the default occurred because of the delay in realisation of monies paid
by cheques. The recovery proceedings were initiated after 12 years and they
were quashed solely on the ground of unreasonable delay relying upon Patil
Raghav Natha's case, [1969] 2 SCC 187, and other C!!Ses. The said judgment
D was reversed in Regional Provident Fund Commissioner v. K. T Rolling Mills
Pvt. Ltd., [ 1995] I SCC 181, by this Court holding that while it was true that
normally powers for the exercise of which no period is prescribed were be
exercised within reasonable time, the order in that case was not liable to be
struck down not only because in Maharashtra there were 22. 189 establishments
E in 1985 - which made if difficult to monitor delays - but also because the
monies must have been used (by the employer) for its own purpose and that
too without paying interest, at the cost of ~hose for whose benefit it was
meant. Any different stand would, it was held, encourage the employers to
thwart the object of the Act, which could not be permitted. We are in respectful
agreement with the above observations.
F
We shall now refer to the Judgments of some of the High Courts to cull
out some broad guidelines. The Ofissa High Court in Orissa Forest
Development Corporation Ltd. & Another v. Regional Provident Fund
Commissioner, Orissa, (1995) 71IFLR388 (Orissa) and a Single Judge of the
.Punjab & Haryana High Court in Amirchand & Sons v. State of Punjab, AIR,
G (1965) Pun. 441 have held like the Single Judge of the Bombay High Court
in K. T Rolling Mills case, that if there was undue delay in initiating action
under section 14B which the Court thought was unreasonable, on that sole
ground the demand could be struck down. With great respect, this view is,
as already stated, clearly wrong. The Judgment of this Court in K. T Rolling
H Mills case, having been reversed by this Court, the above view is no longer
HINDUSTAN TIMES LTD. v. U.0.1. [M. JAGANNADHA RAO, J.] 17
good law. Jn fact, the Punjab judgment was rightly reversed in appeal in State A
• -\ of Punjab v. Amirchand, (1964) 37 FJR 92 (P&H). The view taken by the
learned Single Judge of the Punjab & Haryana High Court in 1965 has also
been rightly dissented by the Delhi High Court in Bir/a Cotton Spinning &
Weaving Mills Ltd. v. Union of India, (CWP 390/78) dated 29.7.83: by the
Gujarat High Court in Gandhidham case, (1987) LIC 659; the Patna High Court
in MIS Inter State Transport Agency, Sitamarhi v. Regional Provident Fund
B
)(
Commissioner, Patna, (1983) LIC 940, and the Allahabad High Court in The
~ Northern India Press Works v. Regional Provident Fund Commissioner, UP.
& Others, (1983)LIC 1314(All).

The Gujarat High Court in Gandhidham Spinning & Mfg. Co. Ltd. v.
Regional Provident Fund Commissioner & Another, (1987) Lab. J.C. 659 Guj.
c
(to which, one of us Majmudar, J. was a party), laid down a principle that
'prejudice' on account of delay could arise if it was proved that it was
"irretrievable". There it was observed that for purposes of section 14B, there
is no period of limitation prescribed and that for any negligence on the part
. -<, of the Department in taking proceedings the employees, who are third parties, D
cannot suffer. It was further observed:
...
"The only question that would really survive is the one whether on
the facts and circumstances of a given case, the show cause notice
issued after lapse of time can be said to be issued beyond reasonable
time. The test whether lapse of time is reasonable or no will depend E
upon the further fact whether the employer in the meantime has
changed his position to his detriment and is likely to be irretrievably
prejudiced by the belated issuance of such a show cause notice."

It was also stated that such a defence of irretrievable prejudice on
~ account of delay, was to be pleaded and proved in the reply to the show F
cause notice. We may add that if such a plea is rejected by the department,
it cannot be raised in the High Court unless specifically pleaded. The above
principl5! of prejudice laid down by Gujarat High Court in Gandhidham Spinning
& Mfg. Co. Ltd. Guj. has been followed by the Bombay High Court in S. T. G ..
P&D Mill Prakriya v. Regional Provident Fund Commissioner, Bombay, G
(1996) 72 FLR 823 Born.; Mis Super Processors v. Union ofIndia & another,
;-~ (1992) Lab. l.C.808 Born.

A different aspect of prejudice was referred to in Mis Sushma Fabrics
Pvt. Ltd., v. Union ofIndia & another, (1991) Lab. I.C.1946 Born. by a learned
Single Judge of the Bombay High Court. It was stated that in some cases H
18 SUPREME COURT REPORTS [1998] 1 S.C.R.

A there could be serious prejudice on account of abnormal delay in taking
proceedings under section 148, either because the records or accounts of the
defaulter are lost or on account of the concerned personnel acquainted with
the facts of a by-gone period no longer being available for unearthing the
facts. But such pleas must be raised before the department and strictly
B proved. In case such facts are proved it is possible in some cases that there
is irretrievable prejudice.

It has also been held rightly that mere delay on the part of the department
could not be treated as amounting to waiver (Divisional Engineer, APSEB v.
RPF Commissioner, (1979) Lab. LC. AP 187; Mis Inter State Transport Agency
C v. RPF Commissioner, (1983) LIC 940 Patna; State of Punjab v. Amirchand,
(1964) 37 FJR 92 P&H. This view is, in our opinion, correct.

We have already stated that in Organo, [1980) 1 SCR 61, the Regional
Provident Fund Commissioner held that power cut financial problems, disputes
between partners were not relevant explanations and that the said view was
D not interfered with by this Court.

From the aforesaid decisions, the following principles can be summarised:
The authority under Section 14-B has to apply his mind to the facts of the
case and the reply to the show cause notice and pass a reasoned order after
following principles of natural justice and giving a reasonable opportunity of
E being heard; the Regional Provident Fund Commissioner usually takes into
consideration the number of defaults, the period of delay, the frequency of
default and the amounts involved; default on the part of the employer based
on plea of power cut, financial problems relating to other indebtedness or the
delay in realisations of amounts paid by the cheques or drafts, cannot be
p justifiable grounds for the employer to escape liability; there is no period of
limitation prescribed by the legislature for initiating action for recovery of
damages under section 148. The fact that proceedings are initiated or demand
for damages is made after several years cannot by itself be a ground for
drawing an inference of waiver or that the employer was lulled into a belief
that no proceedings under section l 4B would be taken; mere delay in initiating
G action under section 14B cannot amount to prejudice inasmuch as the delay
on the part of the department, would have only allowed the employer to use
the monies for his own purposes or for his business especially when there
is no additional provision for charging interest. However, the employer can
claim prejudice if there is proof that between the period of default and the date
H of initiation of action under section 14 B, he has changed his position to his
HINDUSTAN TIMES LTD. v. U.0.1. [M . .IAGANNADHA RAO, J.) 19
detriment to such an extent that if the recovery is made after a large number A
of years, the prejudice to him is of an "irretrievable" nature; he might also
claim prejudice upon proof of loss of all the relevant records and/or non-
availability of the personnel who were, several years back in charge of these
payments and provided he further establishes that there is no other way he
can reconstruct the record or produce evidence; or there are other similar
grounds which could lead to "irretrievable" prejudice; further, in such cases B
of "irretrievable" prejudice, the defaulter must take the necessary pleas in
defence in the reply to the show cause notice and must satisfy the concerned
authority with acceptable material; if those pleas are rejected, he cannot raise
them in the High Court unless there is a clear pleading in the writ petition to
that effect. C
_ In the present case before us, no doubt there is delay of 14 years in
initiating action and the damages are levied because of the delay in realisation
of the amounts paid by cheque where the amounts were credited into the
accounts of the department beyond the grace period of 5 days. The plea of
-«'. strike, even assuming it to be relevant, was not proved. The plea of the D
appellant that the department must be deemed to have dropped the proceedings
in 1971 did not also have any legs to stand. There is no plea of any irretrievable
prejudice either in the reply to the show cause or in the writ petition.

For the aforesaid reasons, this appeal fails and is dismissed. There shall
be no order as to costs.

V.S.S. Appeal dismissed.