SUSHMA FABRICS PRIVATE LIMITED Vs. UNION OF INDIA

JUDGEMENT

(1.) A private company takes exception in these two petitions to the imposition of damages upon it under section 14-B of the Employees Provident Fund and Miscellaneous Provisions Act, 1952 (Act ).

(2.) PETITIONER, a private limited company, was in the business of manufacturing and weaving nylon yarn and fabrics. Its factory was at Thane and administrative office at Princess Street, Bombay. The two were treated as separate establishments for the purpose of coverage under the Act-the separate existence being in the form of allotment of two different code numbers. Petitioner delayed remittance of contributions to the fund for the factory as also the office. The delay was for periods falling between 1970 to 1978. On 15-5-1978 petitioner replied to the 2nd respondents (R. P. F. C.) notice dated 5th May, 1978 calling upon it to show cause why action should not be taken against it for the delay. The reply sought condonation of the delay on the ground that it was due to the sudden leaving of employment by their Chief Accountant who used to attend to these matters. His replacement was attending to the completion of the pending work. Recitals appearing in the notice annexure would be checked up with the companys records and an explanation submitted within a month. There the matter rested until 20th March, 1984 when the R. P. F. C. gave a notice calling upon petitioner to show-cause why damages under section 14-B vis-a-vis one account should not be imposed for the delay in remittances for the period August 1974 to August 1978. Petitioner replied to the said notice pleading that its factory had been closed as from 30th November, 1976 and the office from August 1978. At the date of giving the reply the company had no staff and the Board of directors were not conversant with the working of the administrative side. The greater part of the record was also not traceable. The delay was minimal and attributable to administrative difficulties in the contributions being intimated to the R. P. F. C. This delay, if it could be so termed, was unintentional and had not occasioned any loss to the members. A plea was made that the R. P. F. C. refrain from imposing any damages whatsoever. The R. P. F. C. considered the reply and passed an order on 3rd May 1984 directing the petitioner to pay damages of Rs. 14,909. 50 failing which action would be taken to recover the amount as an arrear of land revenue. The 1984 petition challenges the above order. In regard to the other account a personal hearing was given to a representative of the petitioner on 30th September, 1987. The R. P. F. C. on 14th December, 1987 by a detailed order assessed the damages at Rs. 90,593. 30. Petitioner on 29th February, 1988 addressed a communication to the said officer complaining that it had come to know of the above order through a notice of demand pasted at its old office. A copy of the order was sought and after obtaining the same, petitioner moved the 1988 petition. Orders admitting the two petitions have resulted in petitioner depositing 25% of the sums demanded and furnishing a Bank guarantee vis-a-vis the balance in the order of 1987.

(3.) A number of grounds have been advanced in the petitions to impugn the orders. At the hearing learned Counsel for the petitioner pressed only four viz (1) Delay in the intimation of proceedings by the R. P. F. C. depriving his client of access to the records and personal which could have explained the lapses; (2) Implied condonation of the delay indicated by R. P. F. Cs inaction for near about 6 years and more after receipt of petitioners reply dated 15th May, 1978; (3) The impugned orders not showing the authoritys awareness of damages assessable under section 14-B having two different aspects i. e. compensatory and punitive; and (4) The orders showing arbitrariness by imposition of unexplained different rates for different periods. The R. P. F. C. refutes the charges summarised above. The plea of delay is not maintainable as there is no period prescribed within which action is to be initiated. The inference of condonation was not permissible. The orders differentiated between the compensatory and punitive aspects of damages awarded under section 14-B. The difference in rates for fixing damages payable was based on relevant considerations like period of delay, loss occasioned to members and frequency of default etc.