ORGANO CHEMICAL INDUSTRIES Vs. UNION OF INDIA

JUDGEMENT

(1.) THIS is a petition under Article 32 of the Constitution by M/s. Organo Chemical Industries, Sonepat directed against an order of the Regional Provident Fund Commissioner, Chandigarh, dated 12/10/1977 by which he imposed a penalty of Rs. 94,996.80 on the petitioners as damages under S. 14-B of the Employees Provident Funds and Miscellaneous Provisions Act, 1952, for delayed remittances of the Employees' Provident Fund, Family Pension Scheme contributions of their employees, including their own contributions, and the administrative charges thereon.

(2.) ORGANO Chemical Industries, an 'establishment' within the meaning of S. 1(3) of the Employees Provident Funds and Miscellaneous Provisions Act, 1952 (hereinafter referred to as 'the Act') to which the Act applies, committed defaults in payments of Provident Fund and Family Pension Scheme dues for the period from March to October 1975 and again for the period from December 197 5/11/1976 to the extent of Rs. 92,687.00 and of administrative charges amounting to Rs 2,309.80 i. e. Rs. 91,996.80 in all. The Regional Provident Fund Commissioner, Chandi- garh, accordingly, issued a show cause notice dated 7/06/1977 requiring the petitioners to show cause why damages should not be levied under S. 14-B of the Act. The notice was accompanied by a statement showing a break-up of the various amounts in arrears and the extent of delay in respect of each payment and the details of damages proposed to be imposed on the belated payments. The period of delay in payment of the amounts remitted varied from a few months to a year. It was proposed to levy damages at a uniform rate of hundred per cent on each of the amounts in arrears. In response to the notice, the petitioners tried to explain away the delay by alleging that it was due to difficulties beyond their control and, therefore, the payments could not be made in time viz., the facts that there were disputes between the partners of the firm as a result of which, there was a loss of Rs. 1,40,165.15, there was a power-cut of 60% by the Haryana Electricity Board w.e.f. 6/05/1974, which compelled the <PG>578</PG> petitioners to purchase a generating set to tide over the difficulties and that the establishment had borrowed huge sums from the Haryana Financial Corporation and in payment of which it had defaulted for want of financial resources etc. It was, accordingly, contended that the default, if any, was not wilful as they had no intention to commit a default. The Regional Provident Fund Commissioner after giving to the petitioners the opportunity of a hearing by his reasoned order dated 16/08/1977 considered in detail each of the grounds taken in mitigation of the defaults and came to the conclusion that none of the grounds alleged furnished a legal justification for the delay in making contributions in time. As regards the alleged dispute among the partners leading to a loss of Rs. 1,40,165.15, he observed :

(3.) IT would thus be manifest that the petitioners instead of making their contributions, deliberately made wilful defaults on one pretext or another and have been utilising the amounts deducted from the wages of their employees, including their own contributions as well as administrative charges, in running their business. The Regional Provident Fund Commissioner, therefore, rightly observed that the petitioners having regard to their past record must be visited with the maximum penalty.