HARISH SAKHARAM SAVARDEKAR Vs. UNION OF INDIA

JUDGEMENT

(1.) THIS petition under Article 266 of the Constitution takes exception to an order for damages made under section 14-B of the Employees Provident fund and Miscellaneous Provisions Act, 1952 - hereinafter referred to as the Act.

(2.) PETITIONER was the proprietor of a concern doing business in the name and style of M/s. Himachem Laboratories at Bhandup, Bombay. On 13/15th April, 1978, the petitioner and his employees made an application to the 2nd respondent, hereinafter referred to as the Commissioner, for coverage under section 1 (4) of the Act. The Commissioner on 13th July, 1978 allotted a Code number to the petitioner and declared the provisions of the Act and scheme framed under the said Act to be applicable to the petitioners establishment as from 1st April, 1978. On 20th October, 1984, the Commissioner gave a notice with particulars to the petitioner calling upon him to show cause why an order for levy of damages should not be made against him under section 14b of the Act vide the particularised delay in the remittances of contributions. To the notice, the petitioner gave a reply on 10th January, 1985 the stand being that he was a technical man and had appointed one person to look after the office work which included attending to the remittance of contributions under the Act etc. that remittances had been made in due time, that he was engaged in attending to the factory work as also raising of finance from Bank and that had the lapse been brought to his notice earlier, he would have taken steps in proper time. Petitioner also gave an assurance that in future there would be no defaults in the remittance of contributions. The Commissioner in his order dated 19th April, 1985 negatived the defences raised and imposed damages at different rates for different periods covered by the notice - the period ranging from April 1978 to September 1982. The damages imposed upon the petitioner inclusive of administrative charges totalled Rs. 34, 707. 95 ps. Petitioner was called upon to pay this sum, failing, which the same was to recovered as an arrears of land revenue.

(3.) IN the petition taking exception to the order of the Commissioner, two grounds urged are - (i) that the liability to remit the contributions began as from the issue of the notification dated 2nd December, 1980. It is true that in the applications moved by the petitioner and his employees, it was suggested that the coverage be with effect from 1st April, 1978. But it is contended that whatever the petitioner and his employees may have said, the Act applied to the petitioners establishment only from the date of issue of the notification. Now the notification itself does mention the date of its operativeness as being 1st April, 1978. Petitioner and his employees had in their applications given this date as the date of operativeness of the Act and the Scheme. Learned Counsel representing the petitioner contends that issue of a the Scheme. Learned Counsel representing the petitioner contends that issue of a notification under section 14 was an exercise of legislative power and no such power could be exercised with retrospective effect. Reliance is placed upon the (Income -Tax Officer, Alleppy v. I. M. C. Ponnoose and others) reported in A. I. R. 1970 S. C. 385. The question arising in that case was about the validity of a notification issued by the Government of Kerala empowering certain Revenue officers including the Taluka Tahsildar to exercise the powers of a Tax Recovery officer under the Income-Tax Act, 1961. That is not the question arising in the instant case. The point here is as to date from which the obligations cast by the Act upon the employer become enforceable vis-a-vis the business being conducted by the petitioner. Section 1 (4) deals with voluntary coverage and the two conditions necessary for the attractability thereof are i) it being made appear to the Central Government that the provisions of the Act should be made applicable to an establishment, which conclusion it can reach either upon an application made to it or otherwise that the employer and the majority of the employees in relation to an establishment and ii) the issue of a notification applying the provisions of the Act to the establishment. The mere making of an application by an employer and the majority of the employees for voluntary coverage is not enough. The said application is the basis whereon the Central Government is enabled to take a decision. That decision has to be promulgated by a notification in the Official Gazette. It is only when this process is completed that the Act and Scheme under it, can be said to have become applicable to the institution concerned. No authority is needed for the proposition that the notification would take effect from the date it is published. This of course is subject to the power of the authority concerned to notify with retrospective effect. It was the lack of such a power which led to the amendment to section 1 (4) under the Employees Provident Fund and Miscellaneous Provisions (Amendment) Act, 1988, (Act No. XIII of 1988 ). The amendment came in on 2nd June, 1988 and after the said amendment, section 1 (4) reads thus:-