REGIONAL PROVIDENT FUND COMMISSIONERversusM/S K.T ROLLING MILLS PVT. LTD.

          REGIONAL PROVIDENT FUND COMMISSIONER                               A
                                    v.
                 MIS K. TROLLING MILLS PVT. LTD.

                         NOVEMBER 22, 1994

              (KULDIP SINGH AND B.L. HANSARIA, JJ.]                          B

     Employees Provident Funds and Miscellaneous Provisions Act, 1952-
Section 14-B- Default in depositing contribution-Delay of 12 years in
initiating proceedings-Whether order levying damages merits to be struck
down on ground ofdelay-Held, No.
                                                                             c
     The respondent has defaulted the contribution both of its own as
well as of the employees in time. The default related to the period from
July, 68 to 6ctober, 77, relating to which proceeding came to be
initiated in 1985. The Commissioner after applying his mind to the
period of delay as well as to the quantum, imposed damages. The High
Court held that the delay in initiating proceedings was unreasonable         D
and set aside the order of the Commissioner. This appeal has been filed
against the judgment of the High Court.

    Allowing the appeal, this Court

    HELD: 1.1 When a power is conferred by statute without                   E
mentioning the period within which it could be invoked, the same has to
be dorae within reasonable period, as all powers must be exercised
reasonably, and exercise of the same within reasonable period would be
a facet of reasonableness. (645 G)

    1.2 In the instant case, though the general period of delay of 12        F
years is quite long, unreasonably long, but if it is borne in mind that in
view of large number of establishments in the State of Mahara.shtra,
default at hand came to notice only in April, 1985, the killing effect of
delay gets eroded. This Court does not, therefore, think if the order
merits to be struck down on the ground of delay, when it is also kept in     G
mind that the delay in default related even to the contribution of the
employees which money the respondent (after deducting the same from
the wages of the employees) must have used for its own purpose and
that too without paying any interest, at the cost of those for whose
benefit it was meant. Any different stand would encourage the
employers to thwart the object of the Act, which cannot be permitted.        H
                                   643
    644                      SUPREME COURT REPORTS           [1994) SUPP. 5 S.C.R

A   However the respondent would not be called upon to pay any interest
    on the damages as fixed by the Commissioner, if it woul!i pay the entire
    amount within two months. On the failure of the respondent to so pay,
    it shall have to pay interest at the rate of 18% from the date of this
    judgment till full realisation.

B      Christian Medical College and Anr. v. Regional Provident Fund
    Commissioner, (1989) Supp 2 SCC 95, distinguished. (646 C, D, G)

         Organo Chemical Industries v. Union Of India, (1980) 1 SCR 41,
    relied on.

        Regional Provident Fund Commissioner v. Sri Krishna Metal
c   Manufacturing Company, (1962) Supp. 3 SCR 815 and Regional Provi-
    dent Fund Commissioner v. Shibu Metal Works, [1965) 2 SCR 72, referred
    to.

          CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1639of1994.

D      From the Judgment and Order dated 12.7.93 of the Bombay High
    Court A.No. 384/93 in W.P.No. 3271 of 1987.                   .

          J.D. Jain, S.A. Matto, C.V.S. Rao for Anil Katiyar for the Appellant.

          K.K Mohan and Pramod Dayal for the Respondents.
E
          The Judgment of the Court was delivered by

         HANSARIA, J. The Employees, Provident Funds and Miscellaneous
    Provisions Act, 1952, hereinafter the 'Act', was enacted to serve beneficent
    purpose and it does constitute a welfare measure, as it seeks to create a fund
    which could be drawn upon by certain categories of employees working in
F   factories and some establishments to meet pressing demands so also to
    provide pension after the employees have ceased to be in service. So the
    Act has to be construed in such a way, ia1 case two views be possible, which
    advances the object. This has been the outlook of the court for over three
    decades by now, as the same was first focussed in Regional Provident Fund
    Commissioner v. Sri Krishna Metal Manufacturing Company, [1962]
G
    (Supp.) 3 SCR 815 and was reiterated in Regional Provident Fund
    Commissioner v. Shibu Metal Works, [1965] 2 SCR 72.

       2. The purpose of the aforesaid prologue is to find out as to when
    power under Section 14-B of the Act should be allowed to be used and
    whether it would in consonance with the object sought to be achieved by
H
        P. F. COMMISSIONER v. ROLLING MILLS [HANSARIA, J.]            645

the Act if delay in invoking the power is allowed to stand in the way. As in A
the present case we are concerned with the order of the Regional Provident
Fund Commissioner, Maharashtra, (the Commissioner) levying damages on
the respondent for default in the payment of the contribution in exercise of
power under Section 14-B, let it be noted what this Court had said about
this Section in Organo Chemical Industries v. Union of India, (1980] I
SCR 41. In that case this Court was called upon to decide the B
constitutionality of Section 14-B, which was challenged as violative of
Article 14 having conferred unguided power. It rejected the contention. It
also spelt out the purpose of imposition of damages, stating that the same
was meant to penalize defaulting employer, as also to provide reparation for
the amount of loss suffered by the employees. It was pointed out that it is
not only a warning to employers in general not to commit a breach of the C
statutory requirements, but at the same time it is meant to provide
compensation or redress to the beneficiaries i.e. to recompense the
employees for the loss sustained by them.

     3. There is no dispute in the present case that the respondent had
defaulted in depositing the contributions both its own and as well as of the D
employees in time. The Commissioner, after applying his mind to the
period of delay as well as to the quantum, imposed a sum of Rs. 52,034.80
as .damages. The order of the Commissioner came to be challenged before
the Bombay High Court by the respondent who has set aside the order
solely on the ground that the proceeding was bad because of unreasonable
delay in initiating the same. The Court pointed out that though Section 14-B E
has not laid down any period of limitation, the power has to be exercised
within reasonable time. As the default related to the period from July 68 to
October 77, relating to which proceedings came to be initiated in 1985, the
High Court regarded the delay as unreasonable, and so, fatal. The Regional
Provident Fund Commissioner has preferred this appeal with the aid of F
Article 136 of the Constitution.

     4. There can be no dispute in law that when a power is conferred by
statute without mentioning the period within which it could be invoked, the
same has to be done within reasonable period, as all powers must be
exercised reasonably, and exercise of the same within reasonable period G
would be a facet of reasonableness. When this appeal was heard by us on
7.9.94 and when this aspect of the matter came to our notice, we desired an
affidavit from the Commissioner to put on record regarding the point of
time when he knew about the default and to explain the cause of delay.
Pursuant to that order, the Commissioner filed his affidavit on 10.11.94,
according to which the power of levying damages came to be delegated to H
    646                       SUPREME COURT REPORTS            (1994] SUPP. 5 S.C.R

A   the Commissioner by an order dated 17.10.73. As, however, large number
    of establishments were in existence in the State of Maharashtra - the
    number of which 1985 was 22, 189 - and there was only one Regional
    Provident Fund Commissioner having power to levy damages, delay was
    caused in detection of the cases of belated payment. According to the
    affidavit, the default at hand was located on 19.4.85 and the damages came
B   to be levied by order dated 5.11.86.

         5. The aforesaid shows that the delay was of 12 years viewed generally
    and was 1-1/2 years qua the case at hand. Though the general period of
    delay is quite long, unreasonably long, but if it is borne in mind that in view
    of large number of establishments in the State of Maharashtra, default at
c   hand come to notice only in April 1985, the killing effect of delay gets
    eroded. We do not, therefore, think ifthe order merits to be struck down on
    the ground of delay, when it is also kept in mind that the default :-elated
    even to the contribution of tire employees, which money the respondent
    (after deducting the same from the wages of the employees) must have used
    for its own purpose and that too without paying any interest, at the cost of
D   those for whose benefit it was meant. Any different stand would encourage
    the employers to thwart the object of the Act, which cannot be pennitted.

         6. Shri Mohan, learned counsel for the respondent, pleads that keeping
    in view what had been ordered by this Court in Christian Medical College,
    and Brown Memorial Hospital v. Regional Provident Fund Commissioner,
E   [1989] Supp 2 SCC 95, we may not sustain the order of the Commissioner.
    In that case dues were not paid in time because of some controversy as to
    whether hospitals are covered by the Act. It was, therefore, contended that
    as the appellants would be complying with the provisions of the Act and
    would pay all the arrears, damages for dalayed payment of the arrears may
    not be approved. This Court, having regard to the facts of that case,
F   accepted the submission. The facts of the present case are entirely different.

         7. We, therefore, set aside the impugned Judgment of the High Court.
    But then we state that the respondent would not be called upon to pay any
    interest on the damages as fixed by the Commissioner, if it would pay the
    entire amount within two months from today. On the failure of the
G   respondent to so pay, it shall have to pay interest at the rate of 18% from
    today till full realization.

           8. The appeal is allowed accordingly. No order as to costs.

    A.G.                                                          Appeal allowed.