HARRISONS MALAYALAM LTD Vs. REGIONAL PROVIDENT FUND

JUDGEMENT

(1.) These writ petitions arise under the Employees Provident Funds and Miscellaneous Provisions Act (hereinafter referred to as the Act) and the Employees Provident Funds Scheme (hereinafter referred to as the Scheme), where, in a series of cases on the question of imposition of damages under Section 14B of the Act, after remand by the Employees Provident Fund Appellate Tribunal (hereinafter referred to as the Tribunal), the original authorities have passed orders directly contradictory to the specific findings of the Tribunal on questions of law, which amounts to negation of the rule of law by the original adjudicating authorities. Facts are simple. The petitioner, a company registered under the Companies Act, who is engaged in the business of planting tea and rubber, delayed payment of contributions under the Act because of the financial difficulties, which plagued the plantation industry in India, particularly in Kerala, a decade or so ago. Each Regional Provident Fund Commissioner (hereinafter referred to as the Commissioner), having jurisdiction over the particular plantation belonging to the petitioner-company, passed orders under Section 14B of the Act, imposing damages calculated as per the sliding table clause 32A of the Scheme, holding that financial difficulty is not a factor which can be taken into account for deciding the liability for and quantum of damages under Section 14B, since damages are liable to be imposed strictly in accordance with clause 32A of the Scheme. The petitioner filed appeals against the orders of the Commissioners before the Tribunal. In a common order in 28 appeals relating to different plantations of the petitioner, the Tribunal, following judgments of the Rajasthan and Kerala High Courts on the subject, after holding that financial difficulties are relevant considerations for determining the quantum of damages under Section 14B and that in case of mitigating circumstances the original authority can apply lesser rates than those prescribed under clause 32A of the Scheme, remanded the cases for fresh consideration by the original authorities, keeping in mind the principles laid down in the said judgments and- the observations made by the Tribunal. After remand, the original authorities again considered the matter and imposed the same damages earlier imposed as per the orders, which were set aside by the Tribunal, holding that the authority has no power to reduce or waive damages on the ground of financial difficulties of the employer and that damages are leviable as per the sliding table provided under paragraph 32A of the Scheme. That common order is under challenge in these five writ petitions.

(2.) At the outset, I am constrained to state that the attitude of the Commissioners are against the well-established canons of judicial principles and propriety on the question of precedents. A lower authority in the legal hierarchy is bound to comply with the decisions of the higher authority, that too, a judicial authority. The Tribunal is the appellate authority competent to set aside orders of the Commissioner and to direct the adjudicating authority as to how the orders are to be passed. The adjudicating authority is statutorily bound by the decision and direction of the Tribunal and the adjudicating authority has no manner of authority to pass orders contrary to the decision of the Tribunal, which exactly has been done in these cases, that too by two different Commissioners. If this is permitted, the result would be sheer anarchy. Although the impugned orders are liable to be set aside on that ground alone, I am inclined to take this opportunity to restate the law on the subject as to whether financial difficulty can be considered as a mitigating factor in the matter of imposition of damages under Section 14B of the Act and whether clause 32A of the Scheme is a structured formula of invariable application irrespective of all other considerations in all circumstances without reference to the reasons for the delay, for future guidance.

(3.) The standing counsel for the Provident Fund Organisation would seek to sustain the orders on the ground that as per the several Supreme Court decisions on the subject, financial difficulties are not a ground for mitigation of damages under Section 14B and once delay is admitted, imposition of damages calculated as per the sliding table provided under paragraph 32A of the Scheme is automatic and the authority competent to impose damages has no discretion in the matter. Therefore, there cannot be any reduction in the damages taking into account factors like financial stringency is the contention raised.