Case Note & Summary
The petitioner, M/s. K.K. Nag Limited, an employer covered under the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 (PF Act) with effect from 1 July 1969, challenged an order dated 31 March 1995 passed by the Regional Provident Fund Commissioner (Respondent No.1) under Section 14-B of the Act levying damages of Rs.5,85,673/- for delayed remittance of provident fund contributions for the period from March 1975 to February 1984 and for a short period in the financial year 1988-89. The employer was served with a notice dated 24 December 1993, i.e., after a delay of about 19 years from the commencement of the default period. The employer submitted a reply on 18 February 1994, attributing the delays to financial difficulties and precarious financial condition, and also raised the issue of inordinate delay in initiating proceedings. After a personal hearing, the impugned order was passed without considering the delay issue. The respondent filed an affidavit contending that in view of the Supreme Court decision in Regional Provident Fund Commissioner v. K.T. Rolling Mills Pvt. Ltd., (1995) 1 SCC 181, the issue of delay does not survive, and that Para 32-A of the Employees' Provident Fund Scheme was brought into force from 1 September 1991. The court examined the facts and found that the delay of 19 years in issuing the show cause notice was inordinate and unexplained. The court distinguished the K.T. Rolling Mills case, noting that in that case the delay was only 5 years and the employer had not raised the issue, whereas here the delay was 19 years and the employer specifically raised it. The court held that the authority under Section 14-B must consider the question of delay before levying damages, and failure to do so vitiates the order. Consequently, the impugned order was quashed and set aside, and the petition was allowed.
Headnote
A) Employees' Provident Fund - Levy of Damages under Section 14-B - Delay in Initiation of Proceedings - The employer challenged the order levying damages for delayed remittance of provident fund contributions for the period March 1975 to February 1984 and 1988-89, contending that the proceedings were initiated after a delay of 19 years. The court held that the delay of 19 years in issuing the show cause notice was inordinate and unexplained, and the respondent failed to consider this aspect. The impugned order was quashed and set aside. (Paras 1-5) B) Employees' Provident Fund - Section 14-B - Relevance of Delay - The court considered the decision in Regional Provident Fund Commissioner v. K.T. Rolling Mills Pvt. Ltd., (1995) 1 SCC 181, but distinguished it on facts, noting that in that case the delay was only 5 years and the employer had not raised the issue. Here, the delay was 19 years and the employer specifically raised it. The court held that delay is a relevant factor and the authority must consider it before levying damages. (Paras 3-5)
Issue of Consideration
Whether the order levying damages under Section 14-B of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 can be sustained when there was an inordinate delay of 19 years in initiating the proceedings?
Final Decision
The impugned order dated 31/3/1995 passed by the Respondent No.1 under Section 14-B of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 is quashed and set aside. The writ petition is allowed.
Law Points
- Delay in initiating proceedings under Section 14-B of the Employees' Provident Funds and Miscellaneous Provisions Act
- 1952 is a relevant factor for levying damages
- Inordinate delay of 19 years vitiates the order for damages
- Financial difficulties of employer may be considered but not sole ground for waiver of damages
