THE REGIONAL PROVIDENT FUND COMMISSIONERversusS.D. COLLEGE, HOSHIARPUR AND ORS.

      THE REGIONAL PROVIDENT FUND COMMISSIONER                                A
                                    v.
             S.D. COLLEGE, HOSHIARPUR AND ORS.

                          OCTOBER 28, 1996

           [K. RAMASWAMY AND G.B. PATTANAIK, JJ.)                             B

     Employees Provident Fund and Miscellaneous Provisions Act. 1952:
S.14-B-Non-compliance with the provisions ofthe Act-Levy ofdamages-
Contribution amount not deposited to the Fund-Instead kept in University
account-Penalty imposed-Waiver of-No discretion left to the
Commissioner to totally waive the penalty-Discretion to decide the rate C
at which the penalty is computed-25% of damages computed by way of
penalty-Since amount deposited in fixed deposit with 9% interest, balance
amount to be deposited within six weeks.

     CIVIL APPELLATE JURISDICTION : Civil Appeal No. 14576-77                 D
of 1996.

     From the Judgment and Order dated 6.12.95 of the Punjab and
Haryana High Court in C.W.P. No. 637 and 692 of 1995.

     R. Venugopal Reddy, T.C. Sharma and C.V.S. Rao for the Appellant.        E

     S.K. Mehta, Dhruv Mehta, Fezlin Anam and Ms. Monica Mehta for
Punjab University.

     Randhir Jain for the Respondents.
                                                                              F
     The following Order of the Court was delivered :

     Delay condoned.

     Leave granted.                                                           G

     We have heard learned counsel on both sides.

     These appeals by special leave arise from the judgment of the Division
Bench of the Punjab and Haryana High Court made on December 6, 1995           H
                                    27
    28                      SUPREME COURT REPORTS [1996] SUPP. 8 S.C.R.


A in CWP Nos. 637 and 692 of 1995.

        The admitted position is that the appellant had applied the provisions
  of Employees Provident Fund and Miscellaneous Provisions Act, 1952
  (for short, the 'Act') to the respondent Institution by notification dated
  March 6, 1982. Calling the notification in question, the respondents had
B filed writ petition in this Court. This court by judgment dated January 29,
  1988 had held that the Act would apply to the educational institutions and,
  therefore, they are required to comply with the notification issued under
  the Act. This Court had directed thus:

              "Shri S.K. Bagga, learned counsel appears for the petitioners.
c             We do not find any substance in the contention of the petitioners
              in these cases that the Employees' Provident Funds and
              Miscellaneous Provisions Act, 1952 (hereinafter referred to as
              'the Act') has no application to the educational institutions, who
              are petitioners in these cases. We, therefore, dismiss all these
              cases.
D
              We direct that the petitioners shall comply with the Act and the
              schemes framed thereunder regularly with effect from 1.2.1988.
              Whatever arrears they have to pay under the Act and the schemes
              in respect of the period between 1.3.1982 and 1.2.1988 shall be
              paid by each of the petitioners within such time as may be granted
E
              by the Regional Provident Fund Commissioner. Jfthe petitioners
              pay all the arrears payable from I st March, 1982 upto I st
              February 1988 in accordance with the directions of the Regional
              Provident Fund Commissioner he shall not levy any damages
              for the delay in payment of the arrears. Having regard to the
F             special facts of these cases the subscribers (the employees) shall
              not be entitled to any interest on the arrears. The writ petitions
              are disposed of accordingly. No costs."

         In spite of the directions issued by this Court, instead of complying
G with the orders of this Court, the respondents continued to deposit the
    amounts with the University. The respondents, thus, have not complied
    with the law. Consequently, the appellant exercising the power under Section
    14-B of the Act levied damages @ 25% of the amount payable by the
    respondents. The respondents filed writ petitions against the appellant in
    the High Court. The High Court in the impugned order has held that the
H   appellant is not liable to levy damages on the respondents. Thus, these
            REGNL. PROVIDENT FUND COMMR. v. S.D. COLLEGE                      29


     appeals by special leave.                                                       A
               Section 14-B of the Act reads as under :

               "14-B. Power to recover damages. Where an employer makes
               default in the payment of any contribution to the Fund (the
               Family Fund or the Insurance Fund) or in the transfer of              B
               accumulations required to be transferred by him under sub-section
               (2) of Section 17 or in the payment of any charges payable
               under any other provision of this Act or of any scheme or
               insurance scheme or under any of the conditions specified under
·~
               Section 17, the Central Provident Fund Commissioner of such
               other officer as may be authorised by the Central Government,         C
               by notification in the Official Gazette in this behalf may recover
               from the employer by way of penalty such damages, not
               exceeding the amount of arrears, as may be specified in the
               scheme;

               Provided that before levying and recovering such damages, the         D
               employer shall be given a reasonable opportunity of being heard:

               Provided further that the Central Board may reduce or waive
               the damages levied under this Section in relation to. an
               establishment which is a sick industrial company and in respect       E
               of which a scheme for rehabilitation has been sanctioned by the
               Board for Industrial and Financial Reconstruction established
               under Section 4 of the Sick Industrial Companies (Special
               Provisions) Act, 1985 subject to such terms and conditions as
               may be specified in the scheme."
                                                                                     F
           Shri Randhir Jain, learned counsel for the respondent, contends that
     after the judgment by this Court, the respondents have applied for
     permission to the University for withdrawal of the amount. After the receipt
     of the direction issued by the University on June 7, 1990, they had
     redeposited the amount to the tune of Rs. 6, 40,122.70 together with other      G
     charges in a sum of Rs. 58,736.70. There was no intentional delay on the
     part of the respondents is not depositing the amount and, trerefore, the
     High Court was right in directing not to recover the damages under Section
     14-B of the Act. This Court on July 10, 1996 issued notice stating as to
     why the respondents are not liable to pay the interest for the failure to pay
     the G.P.F. from February 1988 to May 1990 in the light of the admission         H
    30                       SUPREME COURT REPORTS [1996] SUPP. 8 S.C.R.


A   made by them in paragraph 6 of their reply letter dated October 26, 1994.

          Now, an affidavit has been filed on behalf of the respondents stating
    that they have deposited the amount in the University and the amounts
    was kept in fixed deposits earning interests @ l l %; since a direction was
    issued to comply with the direction to redeposit the amount, after premature
B   encasement, they returned it with 9"/o interest and the same was deposited
    and therefore, they are not liable to pay the damages that are determined
    by the Regional Provident Fund Commissioner under the impugned order
    as assailed in the writ petition. Having regard to the contention, the question
    that arises for consideration is: whether the appellant is entitled to recover
    damages?
c
          A reading of Section 14-B of the Act would indicate that the employer
    is under an obligation under the statute to comply with the payment of the
    amount. In the event of his committing default in the payment of the
    contribution to the fund or in the payment of any charges payable under
    any other provisions of the Act or any scheme or insurance scheme or any
D   of the conditions specified in Section 17, the Central Provident Fund
    Commissioner or such other officer as may be authorised by the Central
    Government may, by notification in the official Gazette in this behalf,
    recover from the employer, by way of penalty, such damages noi exceeding
    the amount of arrears, as may be specified in the scheme. The second
E   proviso only lifts the embargo in the event of the industry becoming sick
    and it was reconstructed under the provisions of Section 4 of the Sick            •
    Industrial Companies (Special Provisions) Act, 1985 subject to such ·terms
    and conditions as may be specified in the scheme of rehabilitation. In
    other words, the Act envisages the imposition of damages for delayed
    payments. The Act is a beneficial welfare legislation to ensure health and
F   other benefits to the employees. The employer under the Act is under a
    statutory obligation to deduct the specified percentage of the contribution
    from the employee's salary and matching contribution, the entire amount
    is required to be deposited in the fund within 15 days after the date of the
    collection, every month.
G
          Thereby the employer is under a statutory obligation to deposit the
    amount to the credit of the Fund every month. In the event of any default
    committed in that behalf, Section 14-B steps in and calls upon the employer
    to pay damages by way of penalty, the maximum of which is the
    accumulated arrears. The Regional Provident Fund Commissioner is given
H   discretion only to reduce a percentage of damages and he has no power to
        REGNL. PROVIDENT FUND COMMR. v. S.D. COLLEGE                       31

waive penantly altogether. In this case, admittedly, after the judgment,          A
there was no reason for the respondent to deposit the amount with the
University. We can understand that, since there was a scheme framed by
the University and the respondent was under an obligation to comply with
the scheme, they can 1 have a feeling of doubt as to whether they should
abide by the scheme framed by the University or under the Act. Since they
had filed the writ petition in this Court, this Court gave direction on January   B
29, 1988 directing the respondents to deposit the contribution with the
appellant. Thereby the respondents have a statutory obligation to deposit
the amount from February 1988 onwards. Therefore, there is no justification
whatsoever to deposit and keep depositing the amount in the University
account after the judgment of this Court. The mere fact that the University
has given permission to redeposit the amount with the appellant does not          C
enable the respondents to take shelter thereunder for non-deposit of the
amount in the Fund.

       Under these circumstances, we do not think that there is any
justification in the contention for waiver of the penalty imposed by the
Regional Provident Fund Commissioner. As held earlier, there is no                D
discretion left to the Commissioner to totally waive the penalty. What was
left to his discretion is the rate at which it is to be computed by way of
 penalty. In this case, admittedly, 25% of the damages was computed as
 penalty. Since the respondent had deposited the amount in fixed deposit
and it earned 9% interest thereon, the balance amount is required to be           E
deposited and the respondent is directed to deposit the balance amount
 within six weeks from today.

     The appeals are accordingly allowed. The writ petition stands
dismissed. No costs.
                                                                                  F
G.N.                                                        Appeals allowed.