2010(2) ALL MR 283
IN THE HIGH COURT OF JUDICATURE AT BOMBAY(NAGPUR BENCH)

B.P. DHARMADHIKARI, J.

National Textile Corporation (Maharashtra North) Ltd. & Anr.Vs.Central Board Of Provident Fund & Ors.

Writ Petition Nos.1717 of 2005,Writ Petition Nos. 5440 of 2005

8th December, 2009

Petitioner Counsel: Mr. M. G. BHANGDE,Mr. R. B. PURANIK
Respondent Counsel: Mr. R. S. SUNDARAM,Mr. S. AHIRKAR , Mr. R. R. PATIL

(A) Interpretation of Statutes - Object of statutes - When object of statute is to affect vested rights or to impose new burden, it is deemed to be prospective unless there are words in statute sufficient to show intention of legislature to affect existing rights. 2009 ALL SCR 1813 - Rel. on. (Paras 38 and 39)

(B) Employees' Provident Fund (Amendment) Scheme (2000), Para No.27AA, Cls.19, 20 - Employees' Provident Fund and Miscellaneous Provisions Act (1952), S.17(1)(a) - Clause 19 and 20 cast a new obligation not existing till then - Therefore, the contention that paragraph no.27AA with its Appendix-A, has got retrospective effect, held, is without any merit.

In the present matter, paragraph no.27AA clearly states that all exemptions already granted or to be granted after its coming into force under section 17 are subject to the terms and conditions as given in Appendix "A". Thus, the use of word 'shall' and language of this paragraph clearly shows that from 06.01.2001 all exemptions whether already granted or to be granted thereafter are regulated by Appendix "A". The language no where indicates intention of legislature to cast obligation upon the exempted establishment to abide by clause 19 and clause 20, even after period prior to 06.01.2001. Clauses 19 and 20 cast a new obligation not existing till then, therefore, the contention of respondent that paragraph no.27AA with its Appendix-A, has got retrospective effect is without any merit. Interest payable to a member under the Scheme is definitely a factor to be considered to find out whether the scheme of exempted establishment or Statutory Provident Fund scheme is better for him. The word 'other Provident Fund benefits' in section 17[1][a], therefore, needs to be given widest possible interpretation. 2009 ALL SCR 1813 - Rel. on. [Para 39,40]

(C) Employees' Provident Fund and Miscellaneous Provisions Act (1952), S.14(B) - Sick Industrial Companies (Special Provisions) Act (1985), S.32 - Power to waive given to Central P.F. Board - Power is in larger public interest and the Board is therefore, obliged to and cannot refuse to exercise that power. (Para 49)

Cases Cited:
Vadilal Dairy International Ltd., Mumbai Vs. State of Maharashtra, 2009(6) Mh.L.J. 108 [Para 10,29]
Dhampur Sugar Mills Ltd. Vs. State of U.P., 2007(8) SCC 338 [Para 13,49]
Electric Lamp Manufacturers (India) Ltd. Vs. Regional Provident Fund Commissioner, 1996(II) CLR 890 [Para 17,26,41]
Jiyajeerao Cotton Mills Employees Vs. Dev Kumar Holani, (1998)6 SCC 35 [Para 17,45]
Thazhathe Purayil Sarabi Vs. Union of India, 2009(7) SCC 372 [Para 18,40]
Sri Venkateswara Syndicate Vs. Oriental Insurance Company, 2009(11) Scale 597 [Para 18,40]
M/s. Rampur Fertilizer Ltd Vs. M/s. Vigyan Chemical Industries, 2009 ALL SCR 1147 : 2009(3) Scale 115 [Para 18,40]
Ralliwolf Ltd. Vs. Regional Provident Fund Commissioner, 2001(2) Mh.L.J. 169 [Para 21,25,28]
Maharashtra State Co-operative Bank Ltd. Vs. Assistant Provident Fund Commissioner [Para 21,25,30]
Allied Motors (P) Ltd. Vs. Commissioner of Income Tax, Delhi, 1997(3) SCC 472 [Para 23,37]
Brij Mohan Das Laxman Das Vs. Commissioner of Income Tax, Amritsar, 1997(1) SCC 352 [Para 23,37]
M/s. D. N. Roy Vs. State of Bihar, 1970(3) SCC 119 [Para 26,47]
Union of India Vs. GTC Industries Ltd. Bombay, 2003(5) SCC 106 [Para 26,47]
M/s. Delta Engineers Vs. State of Goa [Para 38]


JUDGMENT

JUDGMENT:- These petitions are between same parties and arise out of recovery of arrears on account of Provident Fund dues. In Writ Petition No.1717 of 2005, the petitioner has challenged order of attachment dated 14.03.2005 & 04.06.2004 and pray for a direction to Central Board of Provident Fund to consider its application dated 09.09.2002 for waiver of damages in accordance with the BIFR order dated 25.07.2002 under Rehabilitation Scheme. National Textile Corporation (NTC) is the petitioner in this petition. Unit of NTC at Nagpur by name 'Model Mills' is petitioner in Writ Petition No.5440 of 2005. The challenge therein is to notice dated 15.04.2004 issued under Section 7-A by the Regional Provident Fund Commissioner, order dated 05.10.2004 based upon it by the said Authority, and further order dated 06.09.2005 passed by the Employees Provident Fund Appellate Tribunal, upholding that order.

2. Basic facts up to sanction of BIFR are not in dispute in the present matters. The NTC is a Government of India Enterprise and its Maharashtra North Subsidiary is engaged in manufacture of Textile and Textile goods in northern region. Government of India nationalized 109 ailing Textile mills in Maharashtra under the Sick Textile Undertaking (Nationalization) Act, 1974 (hereinafter referred as "the 1974 Act" for short). National Textile Corporation Limited, New Delhi was initially given responsibility of managing these 109 textile mills. However, later on 9 subsidiary companies were formed including the petitioner and mills/units were handed over to respective subsidiaries. The petitioner in Writ Petition No.1717/2005 was having ownership, management and supervision over 18 textile mills out of which 13 were located in Mumbai and 5 in North Maharashtra. Model Mills at Nagpur is one such unit.

3. It is not in dispute that a Reference under Section 15[1] of the SICA came to be submitted on 17.05.1993. Petitioner was declared sick under section 3[1][o] of that Act and under section 17[3], IDBI was appointed as operating agency. These proceedings were registered as BIFR Case No.536/1992. On 25.07.2002 BIFR sanctioned rehabilitation scheme under section 18 of the 1974 Act. Said Rehabilitation Scheme also contained constitution of Asset Sale Committee for sale of assets with the unit mills. Out of total 18 mills, only 8 were found to be viable and Model Mills was in list of 10 un-viable mills. The viable mills were to be revived by modernization, renovation etc., by adopting various measures. Properties of un-viable units were to be sold for such revival.

4. BIFR considered total cost of rehabilitation scheme, amount which can be fetched by sale of assets and amount to be raised by NTC through loans etc. Various financial institutions like Banks, Ministry of Textile, Government of India, CBDT, MSEB and Tata Electric Company as also promoters were requested to adopt various measures as suggested in the scheme and to cooperate in the implementation of the rehabilitation scheme. It also includes measures like bringing about settlement of Statutory dues under various Labour Laws including Provident Fund and ESI. As a part of said exercise, vide paragraph no.6.0 C[c][d][i] the PF and ESI dues were to be paid within two years and relevant clause - paragraph reads as under:

"Para 6.0 C[c][v][ix]

To consider to waive the penalties and damages levied on PF/ESI dues. To consider to pay PF and ESI dues [after waiver damages and penalties] in 2 years, after sanction of the scheme by Board. The dues of un-viable mills would be paid in the first year and the dues of viable mills would be paid in second year."

5. The appropriate Government under Industrial Disputes Act on 01.06.2004 permitted closure of Model Mills and that order was implemented by notice issued on 05.06.2004. In the meanwhile Assistant Provident Fund Commissioner, has started proceedings for recovery of contribution under Section 7-A and damages under Section 14-B of the Employees Provident Fund and Miscellaneous Provisions Act, 1952 (hereinafter referred to as "the PF Act" for short), and issued recovery certificate on 05.05.2003. The contribution amount of Rs.10,17,291/- and damages under section 14-B worth Rs.1,96,10,449/- were to be paid. By revenue recovery certificate dated 08.04.2004 demand was for Rs.47,84,259/- towards contribution and Rs.1,97,80,640/- towards damages. There was also a demand for Rs.84,888/- towards contribution and Rs.1,52,129/- towards damages. There was another R.R.C. Dated 28.04.2004. Petitioners contend that the RRC's were satisfied and there were no arrears of contribution towards P.F. Fund. Their effort is to show that what is outstanding is only damages under section 14-B of the PF Act.

6. Because of the provision in paragraph no.6 quoted above, under rehabilitation scheme, application for grant of waiver of damages was submitted by the petitioner on 09.09.2002 before respondent no.1 Central Board, which is still pending. On 07.06.2004 the respondent no.2 Director [Recovery], issued notices to Regional Provident Fund Commissioners not to take any coercive action against the petitioner. However, on 04.06.2004 itself respondent no.3 Recovery Officer at Nagpur had issued memo of attachment of several movable properties. The petitioner wanted to identify certain machinery for the purpose of its shifting to other viable mills or to buyers, but the said exercise was not allowed to be undertaken. On 14.03.2005 immovable properties namely 5 bungalows along with land admeasuring 6040 sq. mts. and building along with land admeasuring 1,16,257 sq. mts., were attached. With the result, petitioners could not proceed further with rehabilitation scheme sanctioned by BIFR. The process undertaken by Assets Sale Committee to verify and identify the properties for their sale to raise Funds for revival of viable units also got affected. In this background in Writ Petition No.1717/2005, these orders attaching movables and immovable properties have been challenged.

7. In Writ Petition No.5440/2005, petitioners have pointed out that their establishment of Model Mills is exempted from provisions of PF Act and it has got its own scheme which has been duly recognized on 22.08.1974 which regulates & governs the PF Fund with its Trustees. They have been making compliances with P.F. Act and other obligations were of Board of Trustees under Model Mills P.F. Scheme i.e. MMPF scheme and have also submitted their accounts and returns within time to the Statutory authorities. The amount of contribution was invested in securities recognized by the Government of India and members were given interest at the rates declared by its Board of Trustees from time to time. No objection was taken in this respect at any time by the Provident Fund officials, however, later on the Provident Fund officials claimed that under MMPF Scheme also interest should have been given at 12% to its members and its action of crediting interest at 10% on PF contribution of members was illegal and unsustainable. On account of this difference in rate of interest, various amounts were sought to be recovered and for non payment of this difference in rate of interest, damages under section 14-B were also levied.

8. Petitioners received notice under section 7-A of PF Act in this respect and on 25.08.2004, and filed their detailed submissions raising various objections as preliminary objections. Instead of deciding those preliminary objections, on 05.10.2004 the Assistant Provident Fund Commissioner at Nagpur worked out demand of Rs.4,83,43,831/- towards difference on account of less payment of interest. This order was challenged by petitioners by filing Appeal bearing No.ATA 107[9]/2005 before the Employees Provident Fund Appellate Tribunal at New Delhi and, that appeal came to be dismissed on 06.09.2005. These orders are questioned in Writ Petition No.5440/2005. The grievance in short is about arrears worked out on account of difference in rate of interest and damages thereupon.

9. In this background, I have heard Shri. M. G. Bhangde, learned Senior Counsel with Shri. R.B. Puranik, learned counsel for petitioners and Shri. R. S. Sundaram, learned counsel for Respondents. Shri. S. Ahirkar and Shri. R. R. Patil, learned counsel appeared for intervenors i.e. the affected employees.

10. By inviting attention to the provisions of Section 32 of the 1974 Act and judgment of Division Bench of this Court reported at 2009(6) Mh.L.J. 108 (Vadilal Dairy International Ltd., Mumbai Vs. State of Maharashtra), learned Senior Counsel has contended that the rehabilitation scheme sanctioned by BIFR has overriding effect and in view of its paragraph no.6, the P.F. Authorities could not have proceeded further to effect coercive recovery without deciding application for exemption filed by the petitioners on 09.09.2002, which is still pending. He has also invited attention to provisions of Section 14-B to show the obligation to consider such waiver statutorily cast upon the employer. Provisions of paragraph 32-B of Statutory Scheme [P.F. Scheme 1952] are also relied upon by him for this purpose. He points out that there is valid challenge to levy of interest under section 7[Q] of P.F. Act & to demand of damages raised upon it and hence, notice dated 15.04.2004 or order dated 05.10.2004 passed by the Assistant Provident Fund Commissioner and order dated 06.09.2005 passed by the Appellate Tribunal are unsustainable.

11. In order to show that there was no obligation upon the Trustees functioning under the MMPF Scheme to pay interest at 12%, apart from the provisions of paragraph no.6 mentioned above, he has invited attention to other clauses including paragraph nos.6[c][b][ix], which casts such obligation upon the Provident Fund Officials. He has also pointed out that on 27.09.2002 in SLP (Civil) No.16732/1997 the Hon'ble Apex Court has directed implementation of rehabilitation scheme sanctioned by BIFR, after noticing that it has been approved by all concerned. Thereafter also the representation dated 09.09.2002 came to be made and it is still pending.

12. In this background, he has also invited attention to the provisions of para no.60 of the Statutory Scheme to urge that the said para does not apply automatically to the Model Mills PF Scheme. He has in support relied upon the provisions of Employees Provident Fund (Amendment) Scheme, 2000 which introduced paragraph no.27-AA, with clause 19 and 20 to urge that those clauses for the first time made a departure and required Trustees of an exempted establishment to declare interest not lower than the rate declared by the Central Government in para no.60. The responsibility to make up the deficiency, if any, because of this enhanced interest was cast upon the employer.

13. In view of the Statutory provisions, he relied upon the judgment reported at 2007(8) SCC 338 (Dhampur Sugar Mills Ltd. Vs. State of U.P. and others), to urge that the powers to waive conferred upon the Central Board of P.F. was accompanied by corresponding duty upon it. He has stated that, ignoring the representation pending before it and also statutory obligation, the local authorities at Nagpur high handedly and malafidely attached the movable properties on 04.06.2004. He points out that permission to close industry was given by the appropriate Government on 01.06.2004 and the establishment of Model Mills was closed on 05.06.2004. On 04.06.2004 itself the Superior P.F. Officials from New Delhi had sent fax message to local authorities not to take any coercive steps against the petitioners. This Fax message was confirmed by communication dated 07.06.2004, but then this communication and Fax were both disobeyed by the local authorities. Learned Senior Counsel states that second attachment has been made on 14.03.2005 in further violation. He further states no amends were made thereafter and entire working of rehabilitation scheme was thus jeopardized by the said local officers.

14. Attention has been invited to provisions of Model Mills Scheme to show that the exemption granted was subject to conditions specified in the Schedule annexed thereto and no provisions thereunder required the MM Board of Trustees i.e. the Board of Trustees of Model Mills Provident Fund to declare interest at same rate at which the Central Government declared in para no.60 of the Statutory Scheme. He further pointed out that the MM Board of Trustees consisted of equal number of representatives of employees and employer and after its constitution, the employer ceased to have control on it. A show cause notice to the employer and action taken against the employer, is therefore, unsustainable. According to him, the action ought to have been taken against the Board of Trustees and objection raised in this respect by the Model Mills has not been looked into by the Competent Authority while deciding Section 7-A proceedings or then by the Appellate Authority.

15. He has invited attention to Clause Nos.13 and 14 of the MMPF Scheme to show that only obligation upon the MM Board of Trustees was to see that the rate of PF contribution does not fall below the statutory rate. He has further pointed out that as per its Clause 14, employer submitted Audited Balance Sheets from time to time.

16. Attention is invited to Rules framed by the employer to regulate the Provident Fund to show powers of MM Board of Trustees. Obligation was cast upon the employer to pay penal interest, if, Provident Fund contribution was not offered to Trust, within time. Rule 8 deals with investing of P.F. Money, and Rule 9 show that the expenses for management of Fund were to be borne by the employer and loss only was to be borne by the Fund. Rule 23 is also pressed into service to show how interest and income actually realized, was required to be applied to the account of individual member annually on 31st March. It is also pointed out that this Rule 24 enabled the MM Board of Trustees to determine rate of interest.

17. Show cause notice dated 15.04.2004 is then pointed out to urge that it did not point out any breach of any Rule or any provisions of the MMPF Scheme. Provisions of Statutory Scheme in paragraph no.60 about rate of interest and its application on monthly running balance are not at all applicable. It is stated that, the issue is squarely covered by the judgment of Division Bench of Calcutta High Court reported at 1996(II) CLR 890 (Electric Lamp Manufacturers (India) Ltd. Vs. Regional Provident Fund Commissioner and others). It is further argued that, provisions of paragraph 27-AA of the Statutory Scheme added on 06.01.2001 cannot be applied retrospectively, and there is no such plea of retrospective application. He has relied upon the judgment of Hon'ble Apex Court reported at (1998)6 SCC 35 (Jiyajeerao Cotton Mills Employees Vs. Dev Kumar Holani and others) to urge that Model Mills P.F. Scheme is determinative in the matter and reference to Statutory Scheme framed under P.F. Scheme 1952 by Respondent Department is misconceived.

18. Lastly, it is urged that interest payable to a member under the P.F. Scheme as benefit to show that payment of interest is in the nature of compensation, he has relied upon judgment reported at 2009(7) SCC 372 (Thazhathe Purayil Sarabi and others Vs. Union of India and another) and 2009(11) Scale 597 (Sri Venkateswara Syndicate Vs. Oriental Insurance Company). To show this nature of interest and that it could not have retrospective effect, he has relied upon the judgment of Hon'ble Apex Court reported at 2009(3) Scale 115 : [2009 ALL SCR 1147] (M/s. Rampur Fertilizer Ltd Vs. M/s. Vigyan Chemical Industries).

19. Shri. Sundaram, learned counsel for respondent has stated that properties were attached when it was found that, the petitioners were attempting to dispose of the same without paying the P.F. dues, and he further states that the Fax Message dated 04.06.1994 was not received by the local authorities at Nagpur. According to him, grievance in Writ Petition No.1717/1995 is only about excessive attachment. He invites attention to the orders dated 16.06.2005 passed in the matter to show that, now the entire property is sold out and amount of Rs.9 Crores is available for appropriation because of Bank Guarantee. He therefore, states that representation of petitioner made on 28.02.2005 [09.09.2005] should be directed to be disposed of within time bound manner and the Writ Petition may thus be disposed of.

20. Without prejudice to this stand, the learned counsel contends that the rehabilitation scheme sanctioned by BIFR does not contain any reasons why waiver was recommended and hence said recommendation was not at all binding upon the respondent. He has invited attention to the provisions of Clause 7.02 incorporating General Terms and Conditions and its sub-clause [vi] to urge that certain additional compliances were expected from petitioners, and petitioners have not made those compliances. Clause XII is also pressed into service to show that the rehabilitation scheme placed embargo upon the right of the petitioner to dispose of any movable or immovable properties.

21. In this background by placing reliance upon second proviso to Section 14-B of the PF Act, it is urged that the said provision has come into force from 01.09.1991 and paragraph no.32-B of the Statutory P.F. Scheme enables the Central Board to consider waiver only if reasons were recorded by the BIFR. He argues that there is no clause or any reason in BIFR Scheme for waiver of P.F. Damages. He has placed reliance upon the judgment reported at 2001(2) Mh.L.J. 169 (Ralliwolf Ltd. Vs. Regional Provident Fund Commissioner) to urge that the PF Contribution and Scheme has been given precedence and priority. He has invited attention to certain charts produced during hearing to show the nature of amount outstanding. He further states that there were certain meetings between the parties to resolve the controversy and invites attention to the communication dated 13.06.2007 to show the compliances demanded from petitioners. He states that those compliances are still not effected. He relies upon the provisions of Section 11[2] of the P.F. Act to show that the superior pedestal given to the P.F. Fund and its recovery by the parliament. He also relies upon the judgment reported at 2009(13) Scale 280 : [2009 ALL SCR 2578] (Maharashtra State Co-operative Bank Ltd. Vs. The Assistant Provident Fund Commissioner), to support his contentions. He reiterates that provisions of Section 32 of the Sick Industries Companies (Special Provisions) Act, 1985 do not override the P.F. Act in any way, and hence, the attachment for recovery of PF dues and interest/damages cannot be assailed.

22. In Writ Petition No.5440/2005, Shri. Sundaram, learned counsel has contended that the exemption given to the MMPF Scheme is conditional and subject to compliances with conditions specified in Schedule annexed to order dated 22.08.1974. He further states that, it is also subject to provisions of Section 17[1] of the P.F. Act, and hence interest as per paragraph no.60 of the Statutory Scheme is required to be paid by the MM Board of Trustees. He points out that there is no provision about interest under that scheme. Rule 47 of the Rules, framed by the MM Board of Trustees is relied upon to state that in absence of any such provision, the provisions of paragraph 60 of statutory scheme about rate of interest and also about mode and manner of computing and applying it, automatically come into play. He argues that Rule 23 of this MMPF Rules is not in consonance with paragraph no.60. He also relies upon the provisions of Rules 8 and 9 to urge that the petitioners should have shown that the interest payable & earned on their investment was 10% only and not 12%. Attention is invited to provisions of Section 17[1][a] of the P.F. Act to point out that exemption to establishment is because of enjoyment of interest at more rate. He relies upon the provisions of sub-section [1][A][a] of said Section to show that penalty for such violation is upon the establishment i.e. the employer. About duties of its Board of Trustees and the obligation of such Board, Section 17[1][B] is relied upon to show that the P.F. Act contemplates action against Trustees only in limited situations and hence here show cause notice was given to petitioner - employer. For same purpose provisions of Rule 15 of the Rules framed by the MM Board of Trustees are also relied upon.

23. Shri. Sundaram, learned counsel stresses over paragraph nos.27-A and 27-AA, as also clauses 19 and 20 as incorporated in Scheduled appended thereto, and asserts that they have retrospective operation and it is only a declaratory measure. He has drawn support from 1997(3) SCC 472 (Allied Motors (P) Ltd. Vs. Commissioner of Income Tax, Delhi) and 1997(1) SCC 352 (Brij Mohan Das Laxman Das Vs. Commissioner of Income Tax, Amritsar), to substantiate his contentions.

24. He also states that later judgment recognizes payment of interest as a facility formality i.e., benefit. He has attempted to distinguish the judgment on which learned Senior Counsel has placed reliance. He has concluded his arguments by stating that, there is no merit in either of the petitions, and also in grievance made against the local officers by the petitioners.

25. In his reply arguments, Shri. Bhangde, learned Senior Advocate has stated that Asset Sale Committee has been constituted under BIFR Rehabilitation Scheme and the Scheme permits sale of certain properties. He contends that, because of this provision and Section 32, the Provident Fund department cannot object to such sale. He has invited attention to Writ Petition to show the other challenges in writ petition and to provisions as contained in BIFR Scheme which requires PF Authorities i.e. Central Board to consider the issue of waiver. The concession in the matter of repayment as contained in the BIFR scheme are also relied upon by him and he further states that, properties identified for sale by Asset Sale Committee cannot be objected to by anybody. He has in this respect attempted to distinguish the judgment of this Court in the case of Ralliwolf Ltd. [supra], and judgment of Hon'ble Apex Court in the case of Maharashtra State Co-operative Bank Ltd. [2009 ALL SCR 2578] [supra]. He has also relied upon paragraph [c] of letter dated 13.06.2007 to assail the high handed action of respondents.

26. While replying to the arguments of Shri. Sundaram in Writ Petition No.5454/2005, he states that paragraph no.60 of the Statutory Provident Fund Scheme, 1952 cannot be extended to petitioners and the controversy is squarely covered in their favour in view of the division bench judgment of Calcutta High Court in the case of Electric Lamp Manufactures (India) Ltd. (supra), and the judgment of Hon'ble Apex Court mentioned above. He states that section 17[1]A of the P.F. Act consider criminal liability, while in present matter, the Court is required to consider civil liability of employer. He further argues that, there is no plea or contention that paragraph 27-AA of the Statutory Provident Fund Scheme is retrospective or only declaratory. He states that, when liability is imposed for the first time, provision cannot be read as retrospective or merely declaratory. He again points out that there is no show cause notice to petitioner that their P.F. Scheme is in conflict with the Statutory Provident Fund Scheme or any Statutory provisions and the impugned orders also do not contain any reasons on those lines. He states that the validity of impugned action or orders need to be scrutinized in the light of the reasons recorded and those reasons cannot be supplemented. He states that because of Rule 23 in the MMPF Scheme, paragraph 60 of the Statutory scheme cannot apply and there is no decision by the Regional Provident Fund Commissioner on this conflict as required by Rule 47 of the MMPF Scheme. He relies upon the judgment reported at 1970(3) SCC 119 (M/s. D. N. Roy and others Vs. The State of Bihar and others) to urge that, how show cause notice in the present matter is misconceived and also upon the judgment reported at 2003(5) SCC 106 (Union of India Vs. GTC Industries Ltd. Bombay), to show how the orders passed by the Competent Authority or Appellate Tribunal needs to be judged. He points out that Rule 23 of the MMPF Scheme was without any objections and valid from 1974 to 1991 and it cannot became bad after 1992. He states that action of Central Government in declaring the rate of interest at a particular rate is not sufficient to urge that, there is any conflict between the said Rule 23 and paragraph no.60 of the Statutory Scheme. He states that the provisions of Section 17[1][a] of the P.F. Act do not contemplate payment of interest at rate specified in paragraph no.60 as provident fund benefit. He further states that as return and accounts were furnished regularly by the MM Board of Trustees to Provident Fund Department, burden was upon them to show that the petitioners were receiving interest at higher rate, but were paying the same at lower rate to the members/employees. He argues that a show cause notice then ought to have contained such a ground and at least impugned orders ought to have disclosed such reasons. He states that the resolution dated 01.03.1993 deciding the rate of interest to be 10% was never objected to or challenged by the respondents.

27. After Shri. Bhangde, learned Senior Counsel finished his reply arguments, Shri. Sundaram, learned counsel for respondents tried to urge that after nationalization, Central Government was appropriate Government for Model Mills and hence any separate notification about rate of interest was not necessary. He further tried to contend that, the provisions of paragraph no.60 have been incorporated by reference in MMPF Scheme. However, because of strong objection of petitioners and also because of absence of any such plea or reasoning on record, Shri. Sundaram, learned counsel, did not press these arguments.

28. It will be appropriate to first consider the judgment cited by Shri. Sundaram, to show primacy given to recovery of Provident Fund dues. Said judgment reported at Ralliwolf Ltd. Vs. Regional Provident Fund Commissioner [supra], shows that there the learned Single Judge was required to consider the issue in the light of provisions of Section 22[1] of SICA and provisions of Section 32 did not fall for consideration. Facts therein also show that the employees were contending that, the contribution of employees is infact deduction from wages which are due and payable to them. In paragraph no.19, learned Single Judge has considered the powers with the Central Board to reduce or waive damages in relation to Sick Company and in paragraph no.20, it has been noticed that there was no provision by which the liability of employer to pay the contribution of employer or contribution of employee has been excused or exempted. The obligation to deduct employees contribution together with his own contribution of employer of such sick industry continues to subsists and the immunity conferred upon such undertaking needed to be confined to the specifications thereof by the Parliament and not beyond it. Consideration in paragraph no.21 shows that the employer there had deducted contribution of employees, but the same were not paid into the Fund and the money was unlawfully retained by the employer. It is thus apparent that, the question of waiver of damages only was not for consideration before this Court. The observations in paragraph no.25 show that, this court found that, the Provident Fund and other dues payable under the PF Act are part of legitimate Statutory entitlement of workers, and stand of some footing as payment of wages. In present matter, the employer has attempted to show that what is sought to be recovered from it is an amount on account of difference in rate of interest and damages calculated on that account under section 14[B]. During hearing the petitioner have also produced charts which substantiate this stand. Charts also show that some recoveries are stayed by the Appellate Tribunal. These details are not in dispute before me.

29. The petitioners have relied upon the Division Bench judgment in the case of Vadilal Dairy International Ltd., Mumbai Vs. State of Maharashtra [supra], which squarely considers the provisions of Section 32 thereof. Section 32[1] gives overriding effect to the scheme made under SICA in so far as the P.F. Act is concerned. In paragraph no.8, the Division Bench of this Court has found that the nature thereof is clear and once scheme is sanctioned, it has effect not withstanding inconsistent provision therewith contained in any other law. Paragraph no.14 of that scheme before the Division Bench contained certain observations about the relief against the Sales Tax Department. The BIFR noticed that the said relief was in lines with the State Government Policy and the company should follow up matter with the Industries Department. The Division Bench has found that, even if under Sales Tax Act it was open to the department to charge interest and impose penalty, considering the scheme as sanctioned it would not be open to the authorities including the quasi judicial authorities under the Act to order payment of interest or penalty contrary to that scheme. The Second Appellate Authority under Sales Tax Act was found to have acted without jurisdiction to that extent. It is therefore, obvious that, this judgment which considers the scheme sanctioned under the SICA and its overriding effect because of its section 32 applies even to the facts before this Court. It needs to be mentioned that, the recovery from petitioners in dispute before this Court is in relation to amount on account of difference in rate of interest and damages calculated on that account. Provident Fund dues i.e. contribution of employer or employee is not at all in dispute.

30. The judgment of Hon'ble Apex Court in the case of Maharashtra State Co-operative Bank Ltd. Vs. The Assistant Provident Fund Commissioner [2009 ALL SCR 2578] [supra], was in the matter of Sale of Sugar bags pledged by Sugar Factory with a Cooperative Bank as security for repayment of loan. The Provident Fund authorities attached those sugar bags for payment of Provident Fund dues payable by the employer of the factory. In paragraph no.18 the Hon'ble Apex Court has found that, in the shape of Provident Fund Act the legislature made comprehensive provisions for recovery of dues by way of attachment of movable and immovable property. In paragraph no.20, question whether provisions of Section 11[2] of the PF Act applied against other debts like mortgage, pledge etc., has been considered and it has been held that language of Section 11 was very clear and priority given to Provident Fund dues in Section 11 is not hedged with any limitation or condition. In paragraph no.21 and onwards other judgments taking similar view are also considered. Provisions of Section 11 shows that where employer is adjudged insolvent or being Company an order for its winding up is made, amount due from him/it in respect of any contribution payable to Fund, damages recoverable under section 14-B is deemed to be included amongst other debts to be paid in priority to all other debts as per Section 530 of the Companies Act, 1956. The judgment therefore was not required to consider the scheme sanctioned by the BIFR or then effect of Section 32 of the SICA. It is also clear that, the said priority of debt payment does not militate in any way with precedence given to the rehabilitation scheme by Section 32 of the SICA and both operate in distinct fields.

31. The relevant sub-clause [ix] clause [b] of BIFR scheme which deals with reliefs and concessions is already reproduced above. This clause appears in part of BIFR scheme dealing with obligation of Government of India and Ministry of Textiles. It requires the Provident Fund authorities i.e., the Central Board to consider waiving penalties and damages. It is important to note that, it does not expect the Provident Fund authorities to waive Provident Fund contribution to be made by the employer or deducted from wages of the employees. It further requires the Central Board to consider payment of Provident Fund dues in two years after the sanction of rehabilitation scheme by the Board. However, these Provident Fund dues are after waiver of damages and penalties i.e. without damages and penalties. It contemplates that dues towards contribution of un-viable mills are to be paid in first year and dues of viable mills are to be paid in second year. Properties of un-viable mills are to be sold or shifted to help viable mills and hence, after such sale, the P.F. dues (without damages or penalties) of such unviable mills are to be paid within 1 year. For clearing these dues of viable mills, time of 2 years is given. The corresponding obligation on Provident Fund authorities is in second proviso to section 14-B of the PF Act. Section 14-B, second proviso enables the Central Board to reduce or waives such damages in case of present petitioners. Similarly, paragraph no.32-B of the Statutory Provident Fund Scheme, 1952 in its clause-B also expects Central Board to exercise that power in cases where BIFR for reasons to be recorded in a scheme in this behalf recommends. It permits waiver of damages up to 100%. Here BIFR has recommended such waiver of damages and penalties. However, contention of respondent is that, the said recommendation is without any reasons. First of all the Central Board has to consider the representation made by the petitioners for such waiver and then it has to record such conclusions. Such conclusions cannot be reached only by reading sub clause [ix] reproduced above, but entire rehabilitation scheme needs to be looked into for the said purpose. The total number of NTC Mills declared unviable, the number of those mills found viable, mode and manner in which the movable and immovable properties of un-viable mills are to be utilized for restoration of viable mills, constitution of Assets sale Committee for it are some of the relevant factors, which need to weighed for said purpose. At this juncture it is premature for this Court to record any finding in that respect. Shri. Sundaram, learned counsel has fairly stated that, a direction to Board to consider the said application for waiver can be issued in the matter. Hence, I do not find it necessary to delve more into that aspect at this stage.

32. This bring me to the consideration of challenge in relation to automatic application of paragraph no.60 of the Statutory Scheme to the MMPF Scheme. Paragraph No.60 of the Statutory PF Scheme, 1952 requires Commissioner to credit to the account of each member, interest at the rate determined by the Central Government in consultation with the Central Board. It also requires interest to be credited to the members account on monthly running balance basis. Rule 23 of the Rules under MMPF Scheme enables the MM Board of Trustees to determine such rate of interest and it also requires the same to be credited to the account of individual member as on 31st March of the preceding year. The question is, which provision will apply in the present matter.

33. The grant of exemption to Provident Fund of Model Mills under Section 17[1] of the PF Act on 22.08.1974 is not in dispute. The said exemption is subject to the conditions specified in the schedule annexed thereto and those conditions are in addition to the conditions mentioned in Section 17[1]. In schedule annexed along with the said exemption order dated 22.08.1974, the obligation upon the employer is to invest the Provident Fund amounts in securities of Central Government. There is no express provision linking rate of interest in it with rate declared under para 60. Its clause 13, requires employer to enhance rate of Provident Fund contribution proportionately, if the Statutory rate or contribution for it under section 6 of the PF Act is increased. This requirement is followed by a sentence which states that "but the purpose for such proportionate enhancement is to see that the benefits under the scheme of establishment may not become less favorable than the benefits of the Statutory Provident Fund Scheme." This clause 13 therefore, expressly stipulates enhancement in rate of Provident Fund contribution i.e. portion to be deducted from wages of employees. The said clause cannot be read to mean that, it also requires MM Board of Trustees/Employer to give interest at rate declared by the Central Government in paragraph no.60 of the Statutory scheme or to apply interest declared by it in accordance with the scheme of the said paragraph no.60. The other provisions in the schedule deal with the submission of the audited balance sheet, facility for inspection of accounts etc., which do not have any bearing on this issue. The rules framed by the MM Board of Trustees to regulate the Provident Fund are also approved by the Department. As per Rule 3 the MM Board of Trustee have exclusive administration and control of the Provident Fund and income, subject to any instructions issued by the Regional Provident Fund Commissioner. Rule 6 casts obligation upon the employer to hand over monthly contribution to the Fund/BOT on or before 15th day of the next of month and in default there of, the employer is obliged to pay penal interest at such rate as may be levied by the Regional Provident Fund Commissioner. Rule 8 deals with investment of Provident Fund in prescribed Government Securities. Rule 9 states that, all expenses in relation to management of Fund are to be borne by the employer, while any loss arising from any change in investment or from depreciation in market value of investment has to be borne by the Fund. Rule 15 makes the Trustees responsible for any money that, actually came into their hand. Rule 23 which deals with interest is as under -

"Rule No.23 : Interest:

The interest and income actually realized and received on investments during a year ending on 31st March, in each year shall be utilized towards crediting members individual account with interest on the total amount standing to the credit of each member as on 31st March of the preceding year after, deducting non-refunded amount, the interest and income, while settling the accounts or transfer of provident Fund Account, should be paid upto the end of the month preceding that in which the account is settled or transferred. For the broken period interest should be paid at the rate declared for the previous year. The rate of interest shall be determined by the Board of Trustees from year to year after taking into account total actual yield at investment and income."

34. Rule 47 of this Rules is heavily relied upon by the department. It is as under -

"Rule No.[47] : Contribution Irrevocable:

The Trust created by these rules and the contributions to the fund shall be irrevocable, save with the consent of all the beneficiaries for the time being, and the Mills shall not be entitled to claim the returns of any portion of its own contribution whether provisionally or finally.

If the Provident Fund Rules of the Mills/Establishment which are not beneficial and are in conflict with the provisions of the Employees' Provident Fund and Misc. Provisions Act, 1952 and E.P.F. Scheme, 1952 the letter shall prevail. Whether a particular rule of the Mills/Establishment is beneficial or not; shall be decided by the Regional Provident Fund Commissioner, whose decision shall be final. In the absence of any provision the corresponding provisions of the Employees' Provident Fund and Misc. Provisions Act, 1952 and E.P.F. Scheme 1952 shall prevail."

This Rule shows that in case of conflict between the said Rules and P.F. Act, 1952 or Statutory Provident Fund Scheme 1953, the PF Act 1952 and Statutory Scheme prevail. However, it also states that whether PF Rules of employer are more beneficial or then the Statutory provisions are more beneficial is the question to be decided by the Regional Provident Fund Commissioner and his decision is final. Admittedly, in the present matter there is no decision by the Regional Provident Fund Commissioner that, the provisions of paragraph no.60 of the Statutory P.F. Scheme 1952 are more beneficial than Rule 23 of the MM PF Rules. Said Rule 47 also contemplates that, if, there is no provisions in the employers scheme or employers rule, the corresponding provisions of PF Act or Statutory Scheme will prevail. It is also important to note that, employer was not given any show cause notice that provisions of Rule 23 of the MM PF Rules, are less beneficial in the matter of award of interest to the members.

35. The exemption granted is under section 17[1]. Under section 17[1][a] the exemption can be granted when appropriate Government is satisfied that the Rules of the establishment to be exempted are not less favorable than those specified in section 6 in so far as the rates of contribution are concerned and employees are in enjoyment of "other Provident Fund benefits which on the whole are not less favorable" to the employees than the benefits provided under the PF Act or the Statutory scheme. This exemption is already admittedly granted by the appropriate Government to the petitioners and it was in force till the closure of Model Mills on 05.06.2005. It is obvious that the appropriate Government was then satisfied that the employees of Model Mills were in enjoyment of other benefits which were not less favorable. While considering the provisions of Rule 47 above, the requirement of recording a satisfaction by the Regional Provident Fund Commissioner in this respect is already highlighted by me. It is therefore, obvious that unless the Regional Provident Fund Commissioner after hearing the petitioners and the employees and for reasons to be recorded, finds that the provisions of paragraph no.60 are more beneficial, the respondent cannot insist upon payment of interest in terms of the said paragraph no.60 of the Statutory P.F. Scheme. Till such satisfaction is reached, the exemption given to the petitioners and opinion reached or finding reached by the appropriate Government under section 17[1][a] of the P.F. Act has to prevail, and deserves to be honoured. It is equally important to note that, the comparison has to be in relation to the MMPF Scheme and Statutory P.F. Scheme "on the whole". In other words, one has to also find out the other benefits flowing from a particular scheme and its impart jointly on whole scheme and scrutiny cannot be restricted only to one particular paragraph or rule. It is apparent that, the provisions of section 17[1][a], are therefore not sufficient to enable the respondents to import paragraph 60 of the Statutory Scheme of 1952 in MMPF Scheme.

36. The respondents have tried to urge that, the obligation to pay interest as per clause 60 is cast upon the petitioners, because of paragraph 27-AA added to the PF Statutory Scheme. It is to be noted that, the said amendment has come into force from 06.01.2001. Its opening part itself shows that, paragraph 27-AA prescribed terms and conditions for exemption applicable to "all exemptions already granted or to be granted hereinafter" under section 17 of the PF Act. Clause 19, states that the interest to be credited to the account of each employee shall not be lower than the rate declared by the Central Government in paragraph no.60 of the Statutory scheme. Clause 20 states that, if such Board of Trustees of exempted establishment are unable to pay interest at said rate declared by the central Government, the deficiencies is to be made good by the employer. The discussions above, clearly shows that, for the first time such arrangement has been made by the legislature in the field. Clause 19 itself shows that the interest needs to be credited on opening balance as on the first day of the accounting year and it only requires rate of interest declared by the Central Government to be adopted. It does not require mode and manner of crediting interest stipulated in paragraph no.60 i.e. on monthly running balance basis to be followed. This is sufficient to indicate that, the scheme framing authority was aware that, there was no such obligation upon exempted establishment earlier. The limited amendment to add compliance with only some part of para 60 shows the absence of intention to apply entire paragraph 60 of statutory scheme. It also derogates from its alleged clarificatory or declaratory character. It reveals inappropriateness in stand of Respondents to apply the government declared rate of interest also to MMPF Scheme.

37. In Allied Motors (P) Ltd. Vs. Commissioner of Income Tax, (supra), the Hon'ble Apex Court has considered the interpretation of the provision inserted to remedy unintended consequences and to make the proviso workable. It has been held that a proviso which speaks of obvious omission in the section and is required to be read into section to give it a reasonable interpretation, is required to be treated as retrospective in operation so that, a reasonable interpretation can be given to whole section. It is apparent that the respondents have not come up with a case that paragraph no.27-AA has been added or clause nos. 19 and 20 have been added with a view to fill in some omission. The judgment therefore, has no relevance. The consideration of limited effect of paragraph 27-AA in statutory scheme and it being non-declaratory above also shows that this ruling of Hon. Apex Court is not relevant here.

Judgment in the case of Brij Mohan Das Laxman Das Vs. Commissioner of Income Tax, Amritsar (supra), also relied upon by Shri. Sundaram, learned counsel again considers the explanation added to clause [b] of Section 40 of the Income Tax Act, 1941. The explanation no.2, expressly provided that where an individual is partner in firm on behalf of or for the benefit of any other person, any interest paid by the firm to such individual otherwise than as partners, in representative capacity shall not be taken into account for the purpose of clause [b]. The explanation were added from 01.04.1985 and prior to that, there was conflict of opinion amongst several High Courts. The amending Act did not satisfy whether the explanation was to have retrospective effect. After considering the provisions in paragraph no.5 and view reached by majority of High Courts in paragraph no.6, in paragraph no.8 the Hon'ble Apex Court has observed that, the explanation-2 did not preclude an individual who happen to be partner representing the HUF from depositing his personal funds with the partnership and receiving interest thereon. The Hon'ble Apex Court concluded that the amendment was legislative recognition of the theory of different capacities of individual which he may hold and hence such theory and recognition was available for party prior to 01.04.1985 also. It was thus found to take note of already existing feature. The judgment therefore, clearly shows that the amendment was found to be declaratory in nature and therefore, retrospective.

38. 2009(8) Scale 685 : [2009 ALL SCR 1813] (M/s. Delta Engineers Vs. State of Goa and others), considers the relevant Rules were amended in 1992 and first schedule relating to open lands was amended to include the words "and/or open riverine land" after the words "open plots" The Rules were further amended in 1994 by adding Rule 54-A which required user of such riverine land to pay rental charge of Re.1/- per square meter per month in advance. The question before the Hon'ble Apex Court was whether the said rental charges could have been claimed by Port Authorities retrospectively for the period from 05.04.1984 to 03.03.1994. The Hon'ble Apex Court has in paragraph no.22 noticed that there was no such provision earlier and hence for earlier period Port Authorities could not have levied any such fee. In paragraph no.24 question whether 1992 and 1994 amendment to the Rules were retrospective or not, has been considered and it has been held that, the statute has prima facie prospective operation, unless it is expressly or by necessary implication made to have retrospective operation. Where the object of the statutes is to affect vested rights or to impose new burden, it is deemed to be prospective unless there are words in statute sufficient to show the intention of legislature to affect existing rights.

39. In the present matter, paragraph no.27AA clearly states that all exemptions already granted or to be granted after its coming into force under section 17 are subject to the terms and conditions as given in Appendix "A". Thus, the use of word 'shall' and language of this paragraph clearly shows that from 06.01.2001 all exemptions whether already granted or to be granted thereafter are regulated by Appendix "A". The language no where indicates intention of legislature to cast obligation upon the exempted establishment to abide by clause 19 and clause 20, even after period prior to 06.01.2001. I have already found that clauses 19 and 20 cast a new obligation not existing till then, therefore, the contention of respondent that paragraph no.27-AA with its Appendix-A, has got retrospective effect is without any merit.

40. Interest payable to a member under the Scheme is definitely a factor to be considered to find out whether the scheme of exempted establishment or Statutory Provident Fund scheme is better for him. The word 'other Provident Fund benefits' in section 17[1][a], therefore, needs to be given widest possible interpretation. I am therefore, not in a position to accept the contention of learned Senior Advocate that interest declared by the MM Board of Trustees under Rule 23 or declared by the Central Government in paragraph no.60 of the Statutory Provident Fund Scheme is not a "benefit". In this view of the matter, I do not find it necessary to refer to judgment in the case of Thazhathe Purayil Sarabi and others Vs. Union of India and another (supra) and Sri Venkateswara Syndicate Vs. Oriental Insurance Company (supra), cited by him. Even if interest is presumed to be a compensation, still it also has character as a benefit flowing from the investment to the contributory of the Provident Fund. M/s. Rampur Fertilizer Ltd Vs. M/s. Vigyan Chemical Industries [2009 ALL SCR 1147] (supra), also need not to be considered for said purpose. Paragraph no.12 there further, considers the case of retrospective obligation and holds that the transactions with which the Hon'ble High Court was dealing, took place prior to 23.09.1992 and suit itself was filed on 31.10.1991 i.e. before coming into force of Interest on Delayed Payment to Small Scale and Ancillary Industrial Undertaking Act, 1993. The said Act came into force on 23.09.1992.

41. The judgment of Hon. Calcutta High Court in the case of Electric Lamp Manufacturers (India) Ltd. Vs. Regional Provident Fund Commissioner and others (supra), considers some what similar facts. Shri. Sundaram, learned counsel has tried to distinguish this division bench judgment by urging that, the exempted establishment there was admittedly earning interest at less than statutory rate of interest of 12%. However, that cannot be a distinguishing feature at all, and in any case, in present matter the Provident Fund department has never come up with a case that MM Board of Trustees was receiving interest from Government securities at higher rate and still credited to the account of the members interest only at 10%. The MMPF Scheme and Rules framed thereunder, are not alleged to have been violated and department which has received returns of account and audited statements regularly from the MM Board of Trustees has not come up with any such specific case. Show cause notice issued to petitioners is also not containing any such ground.

42. Perusal of the judgment of Hon'ble Division bench of Calcutta High Court above, shows that there the exempted establishment was paying interest at 10% and hence on 02.04.1991, petitioner employer there expressed his difficulty as regards payment of minimum rate of interest as increased by the Central Government periodically. Clarification was sought from the department about the conditions imposed while granting exemption. The department advised the petitioner to surrender exemption granted under section 17[1] and to seek exemption under paragraph no.27A of the Statutory Scheme of 1952. In terms of clause 20 of Appendix of said paragraph no.27A, employer was to make good the deficiencies on account of difference in rate of interest. In paragraph no.13 the Calcutta High Court noticed that, the questions before it was whether, petitioner employer was liable to make good the deficiencies about payment of interest in terms of notification issued by the Central Government. In paragraph no.17 provisions of Section 17 are looked into and it has been noticed that in terms of scheme thereof a pattern of investment was fixed and investment had been made accordingly. The investments also received due recognition. In paragraph no.20 the High Court there observed that, the employer had no other liability once a notification of exemption under section 17 was issued. It also observed that, the liability if any, was only in terms of section 6 or Clause [a] of sub-clause [3] of Section 17. In paragraph no.22 it is found that once a Trust is constituted by such employer, he has no say in the matter. Though the PF Act is beneficial, it cannot be construed so as to operate in a different field and make a person liable for that, for which he is not answerable under the said Act or the scheme framed therein. Paragraph No.60 of the statutory scheme is held to impose duty upon the Commissioner and not upon the trustees. The question whether Board of Trustees is required to pay same interest which may be declared by the Central Government in terms of paragraph no.60 was not considered because action by department was not against the Board of Trustees. Position before me is not different, and here provident fund department has not taken any action against the MM Board of Trustee. However, it is to be noticed that the Division Bench of Calcutta High Court also noticed that, its attention was not drawn to any provisions of the Scheme which require Board of Trustee to declare interest at the same rate. In paragraph no.24 the Hon'ble Division Bench has noticed that in terms of clause 16 of the scheme framed under Section 17 of the P.F. Act, Central Government could have issued a notification imposing additional conditions, but unless it is done, the Board of Trustees or the employer cannot be saddled with additional liability.

43. The Division Bench however, did not accept the contentions of the department that sub-section [1] of Section 17 needed to be construed in a manner conducive to provide for same facilities as would be conferred by the Central Government. It further accepted that, rate of interest is one of the facilities which can be conferred upon, under P.F. Act. In paragraph no.25 while recording reasons for rejecting contention of provident fund department, the Division Bench has noticed that, Board of Trustees is not expected to pay enhanced interest at a rate which they may not earn from their source of investments. It also found that any other construction of Section 17[1] would jeopardized the exempted scheme itself. It found that, to impose any other or further monetary liability, a condition in that respect must be specifically added in the exemption order. The Hon'ble Division Bench concluded that any condition dehors exemption notification cannot be thrust upon the employer.

44. Thus, the judgment clearly shows that matter needs to be examined in the light of order of exemption and here it is not the case of respondents that, the securities in which the MM Board of Trustees invested the amount were not protected by it or then the Model Mills did not shoulder the expenditure of the administration of the scheme. In short the provident fund department is not alleging any breach or violation of exemption order or of MMPF scheme or Rules framed thereunder.

45. In Jiyajeerao Cotton Mills Employees Vs. Dev Kumar Holani and others [supra], the Hon'ble Apex Court has considered some what similar situation. There the Central Government forwarded to appropriate Government revised conditions for granting exemption under Section 17[1] and one such condition was that any amendment to statutory P.F. Scheme more beneficial to the employees than the existing one, shall become automatically applicable. Because of this condition, the provident fund department claimed difference between interest which was given at rate declared by the Board of Trustees and rate of interest declared by the Central Government. The Regional Provident Fund Commissioner, held that the revised condition cannot be implemented unless the same were notified in official gazette by the appropriate Government. The employees challenged the same in Writ Petition before the High Court and the High Court held that, not paying interest at higher rate was in contravention of the P.F. Act and Statutory Scheme. The Hon'ble Apex Court in petition filed before it by the establishment/department, found that the employer had its own Rules and because of exemption, the Statutory P.F. Scheme do not apply to it. In paragraph no.9, the Hon'ble Apex Court found that, the High Court was therefore, clearly wrong in applying paragraph No.60 of the Statutory P.F. Scheme to the said establishment. It also found that the proposed revised terms and conditions do not and could not have become applicable automatically unless they were incorporated by appropriate government in the notification granting exemption under Section 17[1][a] of the P.F. Act. The view of the Regional Provident Fund Commissioner was therefore, upheld by the Hon'ble Apex Court.

46. The judgment of Hon'ble Apex Court above and of Division Bench of Calcutta High Court considers provision of Section 17[1][a], and also paragraph No.60 and it has been held that unless and until obligation to pay interest at rate declared by the Central Government is specifically incorporated in the order of exemption, exempted establishment is not expected to pay interest at that rate. Both these judgments considers the relevant provisions for reaching said conclusion. Efforts of Shri. Sundaram, learned counsel to show that the judgments have been reached because of absence of notification, must be held to be without any substance. The relevant provision considered above, clearly show that petitioners are not statutorily required to pay interest at 12% and therefore action of paying interest at rate declared by the MM Board of Trustees cannot be stated to be either illegal or improper, or in contravention of the provisions of the P.F. Act, 1952 or Statutory P.F. Scheme framed thereunder.

47. Learned Senior Counsel, has relied upon the judgment of Hon'ble Apex Court in the case of M/s. D. N. Roy and others Vs. The State of Bihar and others (supra), to urge that a specific show cause notice and opportunity to MM Board of Trustee in the matter or in the alternative to the petitioner was necessary. He has urged that the arguments about earning more interest by the MM Board of Trustee are without any notice to petitioner. In view of the finding already reached above, though I find that show cause notice under section 7-A does not raise any such ground, it is not necessary to consider the said judgment. In Union of India Vs. GTC Industries Ltd. Bombay (supra), the Hon'ble Apex Court has stated that the quasi judicial order must be evaluated on the basis of reasoning contained therein, and not on the basis of pleas put forward by person seeking to sustain order in its counter affidavit or oral arguments before the court. This is settled legal position and again in view of the finding already reached above, I do not find it necessary to go in to more details here. It may be noted here that recoveries sought here are also for period prior to 6/1/2001 and necessary period-wise breakup or liabilities are not ascertained or crystallized as yet.

48. The provisions of Section 32 of the SICA give overriding effect to the rehabilitation scheme framed for petitioners by BIFR. The Hon'ble Apex Court has already observed that the scheme is accepted by all concerned and it should be implemented. The Director, Recovery of respondents has restrained local authorities from taking any coercive steps against the petitioner establishment. Record show that a Fax Message dated 04.06.2004 was forwarded by the said Authority to all concerned, including the authorities at Nagpur. Inspite of this, the movables of petitioners were attached on 04.06.1994 itself and immovable properties have been attached on 14.03.2005. The stand that Fax Message dated 04.06.2004 was not received is during oral arguments before this Court. There is no affidavit filed for said purpose. The receipt of communication a letter to confirm fax, dated 07.06.2004 is not in dispute. If after receipt of confirmation letter dated 07.06.2004 the Authorities at Nagpur learnt about the error committed by them one fails to understand how/why amends were not made by releasing the said property from attachment. It is not understood why more than 9 months thereafter, immovable properties were attached in its violation. All this shows that there is some substance in the allegations of malafides on the part of the local authorities by the petitioners. It is to be noted that properties for sale wee to be identified by the Assets sale Committee and funds derived from sale thereof were to be utilized for discharging various liabilities and for revival of the viable mills. Thus the entire design in sanctioned BIFR scheme was thus jeopardized because of such high handed action on the part of the local officers/authorities of the respondent. It appears that the employees and their recognized trade union were also opposing the sale of assets and then it had filed proceedings to stall the execution of the scheme sanctioned by the BIFR on 25.07.2002. The said scheme and appellate order dated 20.11.2007 passed by the Appellate Authority for Industrial and Financial Reconstruction, along with the permit of closure dated 01.06.2004 were questioned before this Court by the said Trade Union in Writ Petition No. 5907/2007. The Writ Petition was dismissed summarily on 15.01.2008 by the Division Bench of this Court. In view of this development it cannot be said that the BIFR Scheme could not be implemented only because of the high handed or arbitrary action on the part of the local provident fund authorities. The request for grant of exemplary costs against them in the matter however needs to be considered. It is also to be noted that the petitioners have not joined any individual officer at Nagpur in his personal capacity and have not made any allegations of malafides against him. The intervenor employees are bound by the BIFR Scheme for rehabilitation and can not attempt to defeat or dilute it in any way.

49. The judgment of Hon'ble Apex Court in the case of Dhampur Sugar Mills Ltd. Vs. State of U.P. And others [supra], relied upon by the learned Senior Counsel to show that when an enabling power is conferred upon a particular authority for public reasons and public benefit, duty to exercise that powers can also be inferred. Discussion on various precedents by the Hon'ble Apex Court in paragraph nos. 37 to 57 of this judgment has been relied upon to show that because of second proviso to section 14[B] of the P.F. Act, paragraph no.32[B] of the Statutory P.F. Scheme and Section 32 of the SICA, the Central Board of P.F. Department is under obligation to consider the representation of the petitioners for exemption. The power to waive given to Central P.F. Board is definitely in larger public interest and said Board is therefore obliged to and cannot refuse to exercise that power. It is not necessary for this court to record any finding in this respect because Shri. Sundaram, learned counsel has expressly stated that the Central Board can be directed to consider the same in time bound manner. Perusal of communication dated 13.06.2007 produced before the Court during final arguments and admitted by both the parties, show that there was some discussion going on in the matter between the parties. It also show that the Central Provident Fund Commissioner has directed Regional Provident Fund Commissioner not to take any coercive action against the NTC Mills which includes MM Mills in respect of dues, interest and damages until further instructions from the Head Office. In these circumstances, it is apparent that the directions to decide the said representation dated 09.09.2002 need to be issued in the present matter.

50. In view of this discussion above, it is apparent that the respondents are not entitled to claim alleged amounts on account of difference in rate of interest declared by the Commissioner in paragraph no.60 of the Statutory Scheme and by MM Board of Trustees under Rule 23 of the MM PF Scheme. It therefore, follows that demand for damages on that account is unsustainable. The show cause notice dated 15.04.2004 at Annexure-C with Writ Petition No.5440/2005 or order dated 05.10.2004 based upon it, by the respondent no.1 Assistant Provident Fund Commissioner and further order dated 06.09.2005 passed by the EPF Tribunal at Annexure-H along with the said petition in Appeal No.107[a]/2005 are accordingly quashed and set aside. The said Writ Petition is thus allowed. However, it is made clear that the respondents are free to issue fresh notices as per law giving period wise breakups and after giving opportunity to the petitioners, are free to recover it in accordance with law. This exercise is subject to result of hearing in and consideration of application of petitioner dated 9/9/2002 as per directions below in W.P. 1717/2005.

51. Writ Petition No.1717/2005 is allowed. The order of attachment dated 14.03.2005 and 04.06.2004 issued by the respondent no.3 Recovery Officer therein are quashed and set aside. The respondent no.1 Central Board in that petition is directed to consider the application dated 09.09.2002 submitted by the petitioner for waiver of damages in the light of the BIFR Scheme and orders dated 25.07.2002. The said decision be taken as early as possible and in any case by 31.03.2010, after hearing the petitioners. The Bank guarantee for amount of Rs. 9 Crores furnished by the petitioners in terms of interim order dated 16.06.2005 shall be kept alive till 31.03.2010.

52. Both the Writ Petitions are allowed accordingly with costs, and the cost are quantified at Rs.15,000/- each. Respondents to recover these costs from its officers who ignored fax message and communication dated 7/6/2004 and proceeded with attachment of movables or immovables. Rule accordingly in both the Writ Petition in the aforesaid terms.

Petitions allowed.