Writ Petition No. 70 of 2011

7th February, 2011

Petitioner Counsel: Mr.M.B.SINGH
Respondent Counsel: Mrs.S.V. BHARUCHA

JUDGMENT

JUDGMENT :- The Regional Provident Fund Commissioner had passed an order against the petitioner establishment levying damages in the sum of Rs.50,23,790/- in exercise of his powers under section 14B of the Employees Provident Fund and Miscellaneous Provisions Act, 1952.

2. Aggrieved by the said order, the petitioner establishment filed appeals to the Employees Provident Fund Appellate Tribunal, New Delhi being Appeal Nos.169(9) of 2009 and 170(9) of 2009. The appellate authority by the impugned order dated 5th January 2011 has dismissed these appeals and, therefore, this writ petition under Article 226 of the Constitution of India.

3. Mr.Singh appearing for the petitioner has invited my attention to the judgment and order of this Court in the case of the petitioner itself, in Writ Petition No.1820 of 2003 with Writ Petition No.910 of 2004 decided on 2nd August 2006 wherein the interest under section 7Q and damages under section 14B of the Employees Provident Fund Act imposed vide the orders of the authorities was subject matter of challenge. The establishment was the petitioner itself. This Court after a detailed hearing afforded to both sides had disposed of these writ petitions with directions to the authorities to make a fresh computation in regard to the quantum of interest liability under section 7Q and damages under Section 14-B after the petitioner is given an opportunity of being heard. The petitioners were directed to produce before the Regional Provident Fund Commissioner, a statement of account together with relevant records reflecting the date on which payment of salaries was made, the date on which contribution was deducted and the dates on which the respective remittances were made to the Provident Fund Authority.

4. The petitions were disposed of with a conditional order of remand.

5. Mr.Singh submits that contrary to the directions of this Court in this order and violating the very spirit of section 7Q and section 14B of the Employees Provident Fund Act, the Regional Provident Fund Commissioner passed the order dated 6th October 2008. He submits that there is no reference therein to the applicability of the circulars and what has been decided is that the circular dated 29th May 1990 which provides for different rates of damages for different period of default came into force on 20th September 2008 but the claim pertaining to the petitioner relates to March 2002 to December 2002, which is prior to this circular and, therefore, this circular has no application.

6. Mr.Singh invites my attention to a judgment of the Division Bench of the Hon'ble Delhi High Court reported in 2008 II LLJ 939 (Del) (Systems and Stamping and Anr. and Employees' Provident Fund Appellate Tribunal & Ors) which came to be rendered by the Hon'ble Chief Justice Dr. Mukundakam Sharma.

7. It is also the submission of Mr.Singh that the petitioner is not an habitual defaulter. There is absolutely no discussion in the order as to why the discretion is not exercised in favour of the petitioner as pleaded, inasmuch as prior to March 2002 and even thereafter, there has not been a case of default much less delay in remitting the contributions. For all these reasons, he submits that the impugned orders be set aside and the petition be allowed.

8. On the other hand, Ms.Bharucha appearing for the Regional Provident Funds Commissioner supported the impugned orders. She submits that the matter was remitted back. Thereafter, only the computations and calculations had to be made which have been made by the Regional Provident Fund Commissioner. She invites my attention to the order of the Regional Provident Funds Commissioner dated 6th October 2008 and submits that under separate headings and statement wise, column wise the amounts have been computed. Therefore, the appellate authority was right in dismissing the appeal. In such circumstances, the petition be dismissed.

9. With the assistance of the learned advocates appearing for both sides, I have perused the orders under challenge and the decision brought to my notice by Mr.Singh.

10. I have repeatedly observed that the presiding officer who is presiding over the Employees Provident Fund Appellate Authority is expected to apply his independent judicial mind and render a finding on the basis of materials produced. Repeatedly it has been observed that the conclusion drawn by the appellate authority is mechanical. Every paragraph which is stated to be his conclusion and reasoning opens with the sentence "the applicability of the Act is not questioned". In this case, para 6 of the order opens with this sentence and immediately thereafter it is stated that the notice served on the petitioner shows details of the default and default amounts to more than 20 years. Since the establishment defaulted regularly, it cannot be said that the default is not intentional. The financial problem is common in every industrial establishment and that is not the justifiable ground. There is no material to indicate that the petitioner was not able to pay salary to its employees. At the same time, in the latter part of this paragraph he observed thus:

" ... In this case, the order reveals that the authority dealt all the point raised by the appellant. It is true that findings recorded i.e. the details of the amount involved is an immaterial may not be a correct one. But the order reveals that the order is non-speaking one or unreasoned one. It is true that there was delay in starting the proceeding but there is material to hold that due to delay the appellant changed his position or loss the documents. So there is no material to hold that any prejudice caused to the appellant...."

" ... The Circular dated 29th May 1990 which provides different rates of damages for different period of default came into force on 20th September 2008. As the said circular published on the Gazette on that date. In this cases, the claim relates to March 2002 to December 2002 much prior to the Circular. The Circular has no retrospective effect so not applicable in this case. No inconsistency is noticed in the order of the Authority."

11. A bare perusal of these observations would indicate that they are self defeating and contrary to the least. There is complete non application of mind. There is now enough material to hold that the presiding officer passes laconic, virtually unreasoned orders which exhibit complete non application of mind, as a routine. The exercise appears to dispose of the pending appeals some way or the other. Even if the conclusions drawn are perfunctory and not based on any materials so also the record produced, invariably every order of the Regional Provident Fund Commissioner is upheld by the Appellate Tribunal. Consequently, the matters are carried to the higher courts in writ jurisdiction. The result is either a remand or quashing of the order of the appellate authority. This entails in the object of a beneficial and social Legislation being defeated. Even if it is assumed that an interpretation which promotes this object and purpose is to be placed on the relevant provisions, when can this principle be applied, depends on several factors. If there is absolutely no dispute on facts, then, the appellate tribunal must perform its duty. It must realise that its approach also results in hardship and tremendous financial problems and difficulties for the employees who are already suffering on account of denial of salaries and wages so also their legitimate provident fund dues and lack of any opportunity to work. The employees are also dragged in unnecessary and futile litigation and often end up making an attempt to justify the conclusions of the appellate authority. It is unfortunate that the appellate authority's reasoning and unsatisfactory conclusion is then supported by filing affidavits in reply. This cannot be said to be a satisfactory state of affairs and defeats the very purpose of establishing an appellate tribunal for deciding the disputes pertaining to the applicability of the Act, the liability to make contributions thereunder, the penalty for defaults and damages in relation thereto. This is one more instance where I am compelled to set aside the order of the appellate authority.

12. There is absolutely no justification for not accepting the petitioners request for a remand to the Regional Provident Funds Commissioner and particularly when the appellate tribunal holds that the findings recorded may not be correct. If it is further of the opinion that the order reveals that it is non speaking or unreasoned, then, least that is expected of the appellate authority is to step in and set right all errors by appropriate course permissible in law. Therefore, on the reasoning of the appellate tribunal itself, its order cannot be sustained. It is vitiated by an apparent error and exhibits complete non application of mind. The order cannot be said to be such as any reasonable person would pass in the given circumstances and facts.

13. In the result, the writ petition succeeds. Both sides state that the matter may not be remitted to the Regional Provident Fund Commissioner bu the Appellate Tribunal. The orders of the appellate tribunal dated 5th January 2011 is set aside. The Appeal Nos.169(9) of 2009 and 170(9) of 2009 are restored to the file of the appellate tribunal. However, the appeal shall be decided only if the petitioner deposits, without prejudice to its rights and contentions, a sum of Rs.15 lakhs with the Regional Provident Funds Commissioner within a period of eight weeks from today. On deposit of the said amount and proof thereof being produced, the appellate tribunal shall decide the appeals afresh and without being influenced by any of its conclusions recorded in the orders which are set aside. Needless to add that on the petitioner failing to comply with this condition, the writ petition stands dismissed and consequently the order of the appellate tribunal is confirmed. Since this course has been adopted by me in the number of matters and the errors are grave and serious, a copy of this order be forwarded to the Secretary, Ministry of Labour and also the Secretary, Ministry of Law and Judiciary, Government of India to enable these authorities to take necessary steps so as to prevent the appellate authority from repeating them in future.

Ordered accordingly.