AVON SCALE COMPANY Vs. REGIONAL PROVIDENT FUND COMMISSIONER

JUDGEMENT

(1.) THE petitioner-firm is carrying on its business at Sonepat and is subject to the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 (hereinafter referred to as "the Act" ). The petitioner-firm made a default in paying employees' provident fund, family pension fund contribution, insurance fund contributions and administrative charges/inspection charges for the period April 1979, to December, 1986. On account of this default, the respondent served a notice dated October 6, 1987 (Annexure P-1), under Section 14-B of the Act calling upon the petitioner-firm to show cause as to why damages under different heads be not imposed and recovered from the petitioner-firm as the firm had defaulted to pay contributions in time. In response to the said notice, the petitioner firm submitted a detailed reply explaining the circumstances which prevented it from making deposit within the stipulated time. The respondent, after considering the reply, ordered that a sum of Rs. 1,19,303 be recovered from the petitioner-firm. This amount also included a sum of Rs. 4,296. 99 due to the statutory fund on account of interest payable to the beneficiaries.

(2.) THE petitioner-firm has impugned the order dated July 11, 1989 (Annexure P-3), passed by the respondent, by way of this writ petition Mr. Roshan Lal Sharma, learned counsel for the petitioner-firm, has fairly conceded that opportunity of hearing was given to the petitioner-firm at the timeof determination of the damages. He, therefore, does not challenge the impugned order on the ground that the petitioner was not given reasonable opportunity to show cause against such determination. His first challenge to the impugned order is two-fold. Firstly, that the damages to be assessed by the Regional Provident Fund Commissioner (hereinafter referred to as "the Commissioner") must have some correlation with the loss suffered as a result of delayed payment. Secondly, damages have been mechanically assessed by applying the sliding formula without taking into consideration the explanation submitted by the petitioner-firm in reply to the show cause notice with regard to delay in payment into the respective funds.

(3.) ON the other hand, learned counsel for the respondent has submitted that it was the statutory duty of the employer to deposit the contribution as provided under the Act and the Scheme framed thereunder on the date fixed for payment and the same having not been paid in time, the Commissioner was justified in levying the damages. He also submitted that the damages so ascertained by the authority under the Act need not have correlation with the loss suffered as a result of the delayed payment. In reply to the second challenge of learned counsel for the petitioner, he has contended that the sliding formula was only taken as a guideline and the assessment of damages was made only after taking into consideration the explanation submitted by the petitioner-firm.