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M.S. RAMACHANDRA RAO, CHIEF JUSTICE –

This Writ petition is preferred by the Central Board of Trustees constituted under the Employees Provident Funds and Miscellaneous Provisions Act, 1952 (in short “the Act), challenging the order 24.03.2023 passed by the Central Government Industrial Tribunal-cum-Labour Court-I, Chandigarh (in short “the Tribunal), in an appeal filed by the respondent under Section 7-I of the said Act.

The show cause notice issued by the Asst. Provident Fund Commissioner

2. The Assistant Provident Fund Commissioner had issued a Show-Cause Notice to the respondent on 20.03.2014, alleging that it had failed to pay dues within prescribed time in respect of various Challan wages months falling between period from 01.08.2011 to 30.09.2013.

3. The details of the defaults committed were furnished alongwith the said Show-Cause Notice and a direction was given to it to deposit the said amount of damages and interest, indicated above, within seven days, on the ground that none on behalf of the respondent attended the proceedings before the Assistant Commissioner on 31.03.2014, 05.05.2014, 02.06.2014 & 23.12.2014. The Assistant Provident Commissioner had proceeded it to ex parte and passed the order assessing the amount of damages under Section 14-B of the Act as Rs.30,36,102/- for the period 01.03.2005 to 31.07.2013 and the amount of interest under section 7-Q of the Act as Rs.13,43,267/-.

The Appeal before the Tribunal

4. Challenging the same, the respondent filed appeal ATA no.147(17)2015 before the Employees Provident Fund Appellate Tribunal, New Delhi.

The conditional interim order of the Tribunal

5. The said Appellate Tribunal, vide order dt. 07.07.2015, stayed the operation of the impugned order qua damages under Section 14-B of the Act, but observed that the respondent was supposed to deposit the assessed amount /interest under Section 7-Q of the Act, as the order passed under Section 7-Q was not appealable.

6. It directed the respondent to pay the assessed amount under Section 7-Q of the Act in two installments of 30 days each, failing which, it directed that the stay would stand vacated automatically.

CWP no.999 of 2016

7. Challenging the said direction, the respondent filed CWP no.999 of 2016 before this Court. It prayed for permission to pay interest under Section 7-Q of the Act in 12 equal monthly installments. This Court vide order dt.18.10.2016 accepted the prayer of the respondent and permitted it to pay the amount in question with up-to-date interest in 12 monthly installments through an order passed on 18.10.2016.

The renumbering of the Appeal and listing before the Tribunal

8. Subsequently, the Employees Provident Fund Appellate Tribunal, New Delhi, came to be abolished and the appeal numbered as ATA no.1076 (17)2015 was listed before the Central Government Industrial Tribunal-cum-Labour Court-I, New Delhi, and was given a new number as EPF no.83 of 2017.

The plea of the respondent in the Appeal before the Tribunal

9. The stand of the respondent in the appeal was that the Show Cause Notice issued by the Assistant Provident Fund Commissioner seeking to levy damages for the period March 2005 to July 2013 was never served upon the respondent; that it had been declared as a Sick Industrial Company under the Sick Industrial Companies (Special Provisions) Act, 1985; that from 2006 onwards, its operations were affected on account of severe shortage of critical raw materials and high procurement costs, resulting in high production costs; and it was performing only skeleton operations with great difficulty due to financial difficulties ; and that on the date of issuing notice or order, the respondent was not in willful default of arrears of provident fund, on which damages had been imposed by the said authority for the period in question.

It also contended that in respect of the declaration of the Sick Unit, matter was still under process before the BIFR. Other contentions on merits were also raised.

The decision of the Tribunal.

10. The Tribunal decided the said appeal on 24.03.2023.

11. It reduced the damages under Section 14-B of the Act to 20% of Rs.30,36,102/-, i.e. it held that only Rs.6,07,220/- had to be paid by the respondent. However, it did not interfere with the direction to pay interest made by the Assistant Provident Fund Commissioner.

12. It held that the BIFR had passed an order on 24.02.2010, observing that there are no valid objections to the respondent-Company’s sickness from the parties present on that day; and that it was satisfied that the Company had become a Sick Industrial Company and it would not be possible for them to work out a scheme under Section 17(2) of the Sick Industrial Companies (Special Provisions) Act, 1985.

13. It held that no scheme had been sanctioned by BIFR with regard to the case of the respondent and in the absence of any final effective order of BIFR, the respondent cannot seek any benefit of having approached the BIFR.

14. It held that since the respondent was a Sick Company, and since it had approached the BIFR for restructuring, it was endeavouring to come out of the sickness, the delay on the part of the respondent was not intentional, but only on account of its poor financial condition

15. It also rejected the plea of the Assistant Provident Fund Commissioner that plea of financial problems and absence of mens rea were not grounds to escape liability.

16. However, it held that the entire damages imposed cannot be waived, but they can be proportionately reduced when the delay in depositing the dues was beyond the control of the respondent.

17. It also held that the Assistant Provident Fund Commissioner in a mechanical manner had passed orders without considering any aspect of the case and the order was a non-speaking order; that the said Assistant Commissioner never dealt with objections with regard to calculation of damages and interest nor gave a finding for arriving at a different conclusion; and that the Adjudicating Authority under the Act is exercising quasi-judicial powers and he is not supposed to pass orders mechanically.

18. It observed that the Adjudicating Authority had failed to appreciate mitigating circumstances and financial crises of the respondent and proceeded to pass the order.

19. It, however, held that on the interest component no interference was called for since the interest component would be for the benefit of the workers.

The instant Writ Petition

20. Challenging the same, the Central Board of Trustees, constituted under the Employees Provident Funds and Miscellaneous Provisions Act, 1952, has filed the instant Writ petition.

21. We find it surprising that the order dt. 03.02.2015 of the Assistant Provident Fund Commissioner shows that notice issued to the respondent was with regard to liability for the period 01.08.2011 to 30.09.2013, but he, in the said order, had altered the period from 01.03.2005 to 31.07.2013 without having issued a Show Cause Notice for such period.

22. Also there is no reference in the order passed on 03.02.2015 by the Assistant Provident Fund Commissioner as to service of the Show Cause Notice issued by him on 20.03.2014 on the respondent prior to passing of the order on 03.02.2015. The respondent had specifically raised a contention in the appeal filed by it that the notice was never served on it.

23. In the absence of any material placed before this Court to show that the Show Cause Notice was dt. 22.03.2014 was served on the respondent at all, it has to be presumed that the action of the Assistant Provident Fund Commissioner in setting the respondent ex parte and proceeding to assess damages and interest, is arbitrary, illegal and violative of principles of natural justice.

24. The counsel for the petitioner contended that in view of the order passed by this Court on 18.10.2016 in CWP no.999 of 2016 recording an undertaking of the respondent to pay the amount in question alongwith up-to-date interest in 12 monthly installments, the Central Government Industrial Tribunal-cum-Labour Court-I, Chandigarh, could not have granted any relief to the respondent.

25. This contention is untenable because in the said Writ petition, the issue was whether while filing an appeal before the Employees Provident Fund Appellate Tribunal, New Delhi, the respondent was required to deposit 75% of the assessed amount or not.

26. Such percentage of deposit was required to be made only if the impugned order was passed by the Commissioner under Section 7-A of Act, but since the appeal was filed against an order passed by him under Section 14-B of the Act, the Employees Provident Fund Appellate Tribunal, New Delhi, held that the amount directed to be paid as interest under Section 7-Q of the Act should alone be deposited in two installments of 30 days each from the date of the passing of the said order.

27. The respondent approached the High Court by filing CWP no.999 of 2016, contending that grant of mere two installments is not enough and it should be granted 12 monthly installments. The High Court, in its order dt. 18.10.2016 accepted the said contention and permitted it as per its undertaking to make the deposit in question in 12 monthly installments.

28. Thus, the order passed by the High Court in CWP no.999 of 2016 was only on the question as to the percentage of the amount to be deposited at the time of filing of the appeal under Section 7-I of the Act and was not an order passed on merits with regard to the liability of the respondent to pay damages or interest.

29. The counsel for the petitioner had tried to mislead the Court by placing reliance on the said order in CWP.No. 999 of 2016 to attack the order passed by the Central Government Industrial Tribunal-cum-Labour Court-I, Chandigarh, in EPF no.83 of 2017 dt. 24.03.2023. We deprecate the said conduct of the counsel for the petitioner.

30. He contended then contended that under 2nd Proviso to Section 14-B of the Act, only the Board of Trustees was empowered to reduce the quantum of damages and that the Central Government Industrial Tribunal-cum-Labour Court-I, Chandigarh, had no such power.

31. We disagree with said plea. As an Appellate Authority, the said Tribunal acting under Section 7-I of the Act, can exercise all the powers of the Primary Authority/ Adjudicating Authority. When the Assistant Provident Fund Commissioner/ Adjudicating Authority, had passed the order dt. 03.02.2015 under Section 14-B read with Section 7-Q of the Act in a mechanical manner without giving any reasons though he is a Quasi-Judicial Authority, and had acted arbitrarily, the said Tribunal was well within its powers to correctly decide the liability of the respondent to pay damages as well as interest.

32. For all the aforesaid reasons, we find no merit in the instant Writ petition. It is accordingly dismissed with costs of Rs.20,000/- to be paid by the petitioner to the respondent within four weeks.

33. Pending miscellaneous application(s), if any, shall also stand disposed of.

Petition dismissed.

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