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TTG INDUSTRIES LIMITED V/S REGIONAL PROVIDENT FUND COMMISSIONER EMPLOYEES PROVIDENT FUND ORGANISATION & OTHERS, decided on Friday, September 19, 2014.
[ In the High Court of Madras, W.A.No.1577 of 2011 in W.P.No.18800 of 2007. ] 19/09/2014
Judge(s) : V. DHANAPALAN & G. CHOCKALINGAM
Advocate(s) : S. Vijayakumar G. Bharadwaj. R1 & R2, K. Vishnu K. Ramu, , R3, No Representation.
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  "2014 (5) CTC 620"  ==   "2014 (4) LLN 461"  ==   ""  







    Constitution of India - Article 20(2) and 226 - Provident Funds and Miscellaneous Provisions Act 1952 - Section 3(I)(O) 7A 7A(2) 7Q 14-B - Sick Industrial Companies Act - Section 3(1)(o) 22 and 22(i) -†quash the recovery certificate - demands payment of damages - losses suffered by the appellant Company during the Nineties resulted delay in payment of its statutory dues to the respondent Employees Provident Fund - appellant received a copy of the communication from the 1st respondent addressed to the 2nd respondent directing him to recover from the appellant an amount towards damages - appellant had committed default in the matter of remittance of provident fund contributions and other charges – Single Judge dismissed the Petition –Held that it is not a case of total omission to make the contributions - There had been only delayed contributions - periods are different and the days of delay are also different - authority levying penal damages is created by the Act and is responsible for the collection of contributions and damages for the Fund - It is not possible to dichotomise and hold that the contributions go into the Provident Fund but the rest of the damages go into the general revenues - Where the Authority is of the opinion that damages under Section 14B need to be imposed - appellant had been directed to show cause as to why damages should not be levied to the extent of amount in arrears and was advised to straight-away remit the said amount or to appear before the authority - appellant neither appeared in person nor made any representation before the Assessing Officer - Writ Appeal is dismissed.(Para:21 25 31 32).Cases Referred:Gowri Spinning Mills (P) Ltd. vs. Assistant Provident Fund Commissioner Salem and another reported in 2006 (4) LLN 441 Employees' State Insurance Corporation vs. H.M.T. Ltd. and another reported in 2008-I-LLJ-814 (SC) Goetze (India) Ltd. vs. Employees' State Insurance Corporation reported in (2008) 8 SCC 705 Star of Gujarat Textile Mills Ltd. vs. Regional P.F.Commissioner and another reported in (1992) I LLJ 1023 Guj Organo Chemical Industries & Anr. v. Union of India & Ors.1979 - II - LLJ - 416 K. A. Subramaniam v. The Commissioner the Regional Provident Fund Tamil Nadu & Pondicherry States & Anr. 1979 Labour and Industrial Cases 981 ESI Corporation vs HMT Limited reported in 2008 (3) SCC 35 in paragraph No.21 Prestolite (India) Ltd. v. Regional Director & Anrreported in 1994 Supp (3) SCC 690 Dilip N.Shroff v. Joint Commissioner of Income Tax Mumbai & Anrreported in 2007 (6) SCC 329 Emp. State Insurance Corpn vs. HMT Ltd. reported in 2008 (1) Scale 341 Mcleod Russel India Limited vs. Reg. Provident Fund Commissioner Jalpaiguri and others reported in 2014 (3) LLN 1 (SC)Universal Paper Mills Limited and another vs. Regional Provident Fund reported in (2001) 3 Callt 186 HC Ralliwolf Limited vs. The Regional Provident Fund reported in (2001) 1 Bomlr 235 Sarvaraya Textiles Limited vs. Commissioner Employees reported in 2002 (1) ALD 705 Feno Fiber Ltd. vs. Employee's Provident Fund reported in 2005 (5) ALD 732 Gowri Spinning Mills (P) Ltd. vs. Assistant Provident Fund Commissioner Salem and another reported in 2006 (5) CTC 1.     (Prayer: Writ Appeal filed under Clause 15 of the Letters Patent seeking to set aside the order dated 07.06.2011 made in W.P.No.18800 of 2007.)V. Dhanapalan J.1. Heard Mr.S.Vijayakumar learned counsel with Mr.G.Bharadwaj learned counsel for the appellant and Mr.K.Vishnu learned counsel for Mr.K.Ramu learned counsel appearing for respondents 1 & 2.2. The Writ Appeal is directed against the judgment dated 07.06.2011 made in W.P.No.18800 of 2007 whereby the relief sought by the petitioner to quash the impugned order bearing No.TN/SRO/AMB/SDC/19910/2006 dated 10.07.2006 as well as the recovery certificate dated 07.04.2007 for recovery of Rs.48 83 968/- from the period 03/1990 to 02/2005 issued by the 1st respondent insofar as it demands payment of damages under Section 14-B of the Employees' Provident Funds and Miscellaneous Provisions Act 1952 (in short “the Act”) to the tune of Rs.48 83 968/- was dismissed by the learned Single Judge.3. The petitioner in W.P.No.18800 of 2007 is the appellant herein. Therefore for the sake of convenience the said petitioner is hereinafter referred to as the appellant. The respondents in the Writ Petition are the same in this appeal also.4. According to the appellant company its original name was T.T.G. Machinery Manufacturing Company Limited and it was changed to T.T.G. Industries Limited vide the Resolution passed at the Extra-ordinary General Meeting held on 13.01.1992 and a fresh Certificate of Incorporation dated 16.03.1992 was obtained from the Registrar of Companies Chennai. The appellant Company remains covered under the Act and Code No.TN/19910 remains allotted to it. As there was recession in the capital goods industry the operating results suffered a serious setback and the Company become a sick company. The Board for Industrial and Financial Reconstruction (BIFR) at its hearing held on 17.08.2005 declared the appellant Company as a Sick Industrial Company in terms of Section 3(1)(o) of the Sick Industrial Companies Act (in short 'SICA') 1985. The losses suffered by the appellant Company during the Nineties resulted in default of payment of dues by the appellant to its creditors and also resulted in delay in payment of its statutory dues to the respondent Employees' Provident Fund (EPF) Organisation. Pursuant thereto in the year 1999 the consortium of Banks classified the accounts of the appellant as 'Non Performing Assets' and refused to advance further loans which further aggravated the financial position of the appellant as even the then ongoing projects could not be completed.5. Later the appellant received a letter bearing No.TN/SRO/AMB/19910/CC1(5)/2006 dated 16.05.2006 addressed to the Directors of M/s.T.T.G. Machinery Manufacturing Company Limited with a copy marked to the General Manager M/s. IFCI Limited (Operating Agency appointed by the BIFR) from the Assistant Provident Fund Commissioner (Compliance & Recovery) informing him to pay an amount of Rs.44 45 577/- towards Damages for the period March 1997 to February 2005 and Rs.14 54 143/- towards interest for the period from June 1997 to February 2005. Shocked by the said demand the appellant replied to the same vide its letter dated 18.05.2006 intimating that it has already made payment upto June 2004 towards interest and damages and requested for break-up details of the demand. In reply the appellant received a letter bearing No.TN/SRO/AMB/19910/PDC/2006 dated 22.05.2006 from the 1st respondent which too did not contain any details regarding the amount of damages and interest claimed.6. Thereafter the appellant received a Notice bearing No.TN/SRO/AMB/19910/SDC/2006 dated 29.05.2006 from the 1st respondent proposing levy of damages totalling Rs.48 28 584/- for the alleged default in payment of contributions for the periods 03/97 to 02/04 and 07/04 to 02/05 stating that the damages leviable work out to Rs.26 51 440/- in A/c No.1; Rs.2 16 712/- in A/c No.2; Rs.18 50 897/- in A/c.No.10; Rs.1 07 429/- in A/c.No.21 and Rs.2 106/- in A/c.No.22. Through the said notice the appellant had been directed to show cause as to why damages should not be levied to the extent of amount in arrears and was advised to straight-away remit the said amount or to appear before the authority on 29.06.2006.7. However as there no response to the request of the appellant for the said details the appellant was not in a position to effectively oppose the proposed levy or damages. While so the appellant received an order bearing No.TN/SRO/AMB/SDC/19910/2006 dated 10.07.2006 from the 1st respondent containing the proceedings of the Regional Provident Fund Commissioner levying damages totalling to Rs.48 83 968/- for the period 03/1990 to 02/2005 and directing payment of the same within 15 days thereof and threatening with recovery of the same under Section 8 of the said Act in the event of failure to deposit as directed. The order further stated that failure to deposit the penal damages within the stipulated period will also attract the provisions of Section 7Q of the Act thereby making the appellant liable to pay simple interest at the rate of 12% per annum on the amount in arrears from the date specified in the impugned order to the date of remittance. Thereafter the appellant received a copy of the communication bearing No.TN/AMB77/19910/RRC No.216/PDC/2007 dated 07.04.2007 from the 1st respondent the original being addressed to the 2nd respondent directing him to recover from the appellant an amount of Rs.48 83 968/- towards damages and an amount of Rs.16 20 826/- towards interest both pertaining to the period 03/1990 to 02/2005.8. Resisting the submissions made by the appellant in his affidavit in W.P.No.18800 of 2007 the respondents/Employees Provident Fund Organisation would submit that an order of interim stay against the operation of the orders impugned in the said Writ Petition was granted on 29.05.2007 in M.P.No.1 of 2007 subject to the condition that the employer remits the total dues demanded under Section 7-Q of the Act i.e. Rs.16 20 826 and a further sum of Rs.10 00 000/- towards penal damages demanded within a period of four weeks then failing which the interim stay shall automatically stand vacated without further reference to the Court and that the respondents were at liberty for recovery of the dues demanded in the event of non-compliance of the direction issued. The condition so imposed by the Court was complied by the said employer on 19.06.2007.9. The respondents would point out that the appellant's admittance in the affidavit that there was a delay in remittance of the statutory provident fund dues is very significant because the dues demanded are payable by the appellant. Further it is stated in the counter that upon receipt of the letter dated 18.05.2006 from the appellant a reply dated 22.05.2006 was sent to the appellant which contained the break-up of the period in relation to the dues demanded the quantum of penal damages recoverable the simple interest charged from the date on which the Provident Fund contribution and other charges payable had become due till the date of its actual payment.10. As the appellant had committed default in the matter of remittance of provident fund contributions and other charges for the period from 03/1997 to 02/2004 and 07/2004 to 02/2005 a summons in Form A dated 29.05.2006 was issued to the appellant by the Assessing Officer directing the appellant to show cause with documentary evidences either in person or through an authorized representative on a hearing then fixed on 29.06.2006 as to why the damages should not be levied to the extent of the amount in arrears. Generally an advice is incorporated in the summons so issued to all such defaulters intimating that it is open for the defaulter concerned to remit the dues quantified in the summons straightaway. That is a defaulter may remit the dues quantified and incorporated in the summons issued in the matter and produce the triplicate copy/copies of paid challans before the date scheduled for hearing and ensure compliance.11. The respondents have further stated that the default in the matter of remittance of Provident Fund Contributions and other charges is a matter of fact based on material evidences and the Assessing Officer has no mandate not to levy/recover the penal damages payable by a defaulter no matter what reasons are put forth. The Assessing Officer has a statutory obligation to levy and recover penal damages in a manner as envisaged in paragraph 32-A of the Employees' Provident Funds Scheme 1952.12. It is also stated by the respondents that generally a statement showing the month-wise details of remittances made in all provident fund accounts by an employer in relation to an establishment and the extent of delay is forwarded to an establishment and the extent of delay is forwarded as an enclosure to the summons issued in the matter. However in the case of the appellant the said enclosure was inadvertently omitted. However before levy of damages payable by the appellant an opportunity was provided to him to cause a representation in the matter on the date originally fixed for hearing i.e. 29.06.2006. The summons issued in the matter i.e. Form – A dated 29.05.2006 is proof of the said exercise. The appellant neither appeared in person nor made any representation before the Assessing Officer. It is the stand of the respondents that the appellant could have availed the opportunity and could have demanded the month-wise break-up of remittance made and the extent of delay in the said remittance. The appellant had wilfully failed to avail the said opportunity and hence the Assessing Officer was forced to decide the matter exparte on 10.07.2006.13. Though the respondents admit that the impugned order dated 10.07.2006 was issued on a printed format an unintentional logistical aberration that manifests out of a transparent exercise does not dilute the fact that the appellant is liable to remit the dues demanded. The respondents admit that the period in relation to the dues payable by the appellant was erroneously mentioned as 03/1990 to 02/2005 but the actual period for which the damages were levied for recovery should be 03/1997 to 02/2004 and 07/2004 to 02/2005 which was a clerical error due to oversight and nothing more which cannot be taken advantage by the appellant moreso when the dates have been clarified by them.14. In the counter it is further stated that the second proviso to Section 14-B of the Act read with clause(b) to paragraph 32-B of the Scheme states that the Central Board of Trustees Employees' Provident Funds Organisation may reduce or waive the damages levied upon a Sick Industrial Company for reasons recorded in a scheme for rehabilitation sanctioned by the BIFR. It is further stated that a rehabilitation scheme has not been formulated by the BIFR in respect of the appellant establishment and hence the question of 'entitlement' does not arise. For the said reasons the respondents sought dismissal of the Writ Petition.15. To the above contentions of the respondents before the Writ Court the appellant filed a reply affidavit wherein no admission was made to refer to any further progress in the matter pending before the BIFR instead some vague allegations were made by the appellant in Paragraph Nos.9 and 10 which would read as under:“9. I further submit that the Petitioner is a Sick Industrial Company under Section 3(I)(O) of the Sick Industrial Companies Act and Board for Industrial and Financial Construction vide its order dated 17th August 2005 declared this Unit as a Sick Unit under the relevant provisions of the SICA Act.10. I further state that the Company has already submitted the Draft Rehabilitation Scheme to the Operating Agency as per the directions of the BIFR and the Operating Agency is in the process of finalizing the DRS which would enable the petitioner to get the relief provided for under the 2nd Proviso of the Section 14-B of the Said Act read with Para 32-B of the EPF Scheme 1952.”16. The Writ Court finding that no such scheme had been framed by the BIFR and taking note of the failure of the appellant to avail appeal remedy by placing reliance on a judgment of a Division Bench of this Court in the case of Gowri Spinning Mills (P) Ltd. vs. Assistant Provident Fund Commissioner Salem and another reported in 2006 (4) LLN 441 dismissed the writ petition. Aggrieved by the same the appellant is once again before this Court by way of this appeal.17. Mr.S.Vijayakumar learned counsel for the appellant would contend that the appellant was not given a reasonable opportunity before passing the impugned order and the damages and the interest levied thereon have been predetermined and that on account of non-furnishing of break-up details he could not file his explanation to the show cause notice and even in the letter dated 07.04.2007 the details of the method of assessment of damages and the interest were not furnished. He would further contend that while fixing the damages under Section 14-B of the Act the Regional Provident Fund Commissioner ought to have considered various factors such as the number of defaults period of delay frequency of defaults and the amount involved but the order has been passed mechanically. It is also his contention that since the appellant company has been declared as a Sick Industrial Company and that the proceedings are still pending before BIFR the appellant is entitled for reduction/waiver of damages levied under Section 14-B of the Act.18. In support of his case learned counsel for the appellant has relied on the following :(i) a decision of the Hon'ble Supreme Court in the case of Employees' State Insurance Corporation vs. H.M.T. Ltd. and another reported in 2008-I-LLJ-814 (SC);“20. We agree with the said view as also for the additional reason that the subordinate legislation cannot override the principal legislative provisions. The statute itself does not say that a penalty has to be levied only in the manner prescribed. It is also not a case where the authority is left with no discretion. The legislation does not provide that adjudication for the purpose of levy of penalty proceeding would be a mere formality or imposition of penalty as also computation of the quantum thereof became a foregone conclusion. Ordinarily even such a provision would not be held to providing for mandatory imposition of penalty if the proceeding is an adjudicatory one or compliance of the principles of natural justice is necessary thereunder.21. Existence of mens rea or actus reus to contravene a statutory provision must also be held to be a necessary ingredient for levy of damages and/or the quantum thereof.22. The Division Bench of the High Court therefore in our opinion was not wrong in opining that Section 85-B provides for an enabling provision. What however cannot be appreciated that is such a construction itself would lead to the conclusion that the High Court is entitled to substitute its view in place of the statutory authority. In our considered view therefore the matter should be considered afresh for determination of quantum of damages etc. in the light of the observations made hereinbefore.”(ii) another decision of the Hon'ble Supreme Court in the case of Bangalore U.R.D. Co-Op. M.Ps. Union Ltd. vs. The Regional Director ESI Corporation and another (Civil Appeal No.1740 of 2009) decided on 17.03.2009;“Learned counsel for the appellant mainly argues before us the question of damages and points out that the High Court has held that the damages cannot be quantified and have to be read as compulsory damages in terms of Section 85-B of the Employees' State Insurance Act 1948 (read with Regulation 31-A of the Employees' State Insurance(General) Regulation 1950). We have seen both the provisions. Learned counsel for the appellant very heavily relies upon a decision reported in (2008) 3 SCC 35 (Employees' State Insurance Corporation vs. HMT Ltd. and another) where this Court is of the view in paragraphs 14 15 and 16 to the effect that there is a discretion in respect of the quantification of the damages. The said paragraphs run as under :-14. Section 85-B of the Act empowers the Corporation to recover damages in the event an employer fails to make the payment of the amount due in respect of contribution; subject however to the condition that the amount thereof would not exceed the amount of arrears as may be specified in the Regulations. The proviso appended thereto incorporates the principles of natural justice.15. Obligation on the part of the employer to deposit the contributions of both the employer and the employee is not in dispute. What is in dispute is as to whether the amount of damages specified in Regulation 31-C of the Regulations is imperative in character or not.16. It is a well-known principle of law that a subordinate legislation must conform to the provisions of the legislative Act. Section 85-B of the Act provides for an enabling provision. It does not envisage mandatory levy of damages. It does not also contemplate computation of quantum of damages in the manner prescribed under the Regulations.We have seen the impugned Judgment of the High Court wherein the High Court in paragraph 6 has observed :-.........In so far as appeal MFA 4036/03 is concerned here again the only circumstance under which the Corporation is vested with the discretion to waive or reduce interest is provided under Section 85-B of the Act and the fact that there was no malafide intention on the part of the respondent is not a circumstance which would require the appellant to consider waiver or reduction of the damages that are likely to be imposed for default in making contributions in time. Accordingly the said appeal deserves to be allowed.It is obvious that the High Court has taken the view that the discretion is prohibited due to the language of Section 85-B of the Act. This Court has already taken a view that the levy of damages is not mandatory and that there is nothing in the Act to suggest imperatively the computation of damages only in the manner prescribed under the Regulation. Under these circumstance we feel that insofar as the damages aspect is concerned the High Court should decide the question of damages in the light of principles laid down by this Court in the case of Employees' State Insurance Corporation vs. HMT Ltd. and another (supra). The High Court is directed accordingly to re-hear the parties on the question of damages alone. Insofar as the interest is concerned we do not think that there is any case for interference particularly in view of the decision in Goetze (India) Ltd. vs. Employees' State Insurance Corporation reported in (2008) 8 SCC 705 and that aspect is closed. The matter is accordingly remitted to the High Court and the High Court will dispose of the matter in the light of the directions given by us in respect of damages alone. The appeal is disposed of accordingly. There shall be no order as to costs.”(iii) a decision of the High Court of Punjab and Haryana in the case of M/s. S.B.Packagings Ltd. vs. Provident Fund Commissioner (CWP No.12561 of 2006) decided on 08.09.2008;8. The judgment of the Madras High Court in Essorpe Mills Ltd.'s case (supra) is clearly distinguishable in as much as the writ petitioner has sought restraint order in respect of adjudication of the proceedings under Section 7A of the E.P.F. Act. It was held that the adjudication proceedings under Section 7A of the E.P.F. Act have not been barred or prohibited nor the contributions to be paid under the EPF Act are suspended. In the said case it was conceded by the learned counsel for the respondents that since the matter is pending before the BIFR the respondents will not take any distress of coercive action against the assets of the Company for the enforcement of the arrears except by following the procedure prescribed under Section 22 of the SICA. The question of stay of coercive or distress action against the Company during the pendency of the proceedings before the BIFR was conceded. But in the judgments referred to above the question has been specifically dealt with and answered to hold that the proceedings under the E.P.F. Act cannot be stayed in view of the amendment in Section 14B of the EPF Act vide Act 33 of 1988 with effect from 1.9.1991 dealing with the situation where the Company has approached the BIFR.”(iv) a decision of the High Court of Gujarat in the case of Star of Gujarat Textile Mills Ltd. vs. Regional P.F.Commissioner and another reported in (1992) I LLJ 1023 Guj.“3. The proceedings subject-matter of challenge in the Special Civil Application is one under Section 14B of the Employees' Provident Funds & Miscellaneous Provisions Act 1952 (hereinafter referred to as the Act). By the proceedings impugned the 1st respondent has chosen to impose 25% damages on the contributions which were delayed for varying periods. The point that is being takenby Mr. Buch learned Counsel for the petitioner is that the adjudication of the question ofimposition of damages by the 1st respondent runs counter to the ratiodecidendi set down in Organo Chemical Industries & Anr. v. Union of India & Ors.1979 - II - LLJ - 416 in that the 1st respondent has notconsidered the various factors that should be normally taken note ofon this question such as the number of defaults the period of delay the frequency of defaults and the amounts involved. Further learned Counsel for the petitioner would submit that the petitioner has beendeclared a sick unit and it is practically facing a financial crisis on account of huge losses and this also is a factor which should be relevantly taken note of on the question of imposition of damages and the 1st respondent was not in order in totally brushing aside this aspects as irrelevant and giving an untenable reason for so brushing aside.5. The fact remains that apart from the sweeping statement in the summing up paragraph of the impugned proceedings factors which have been set down as relevant to be considered while assessing the question of imposition of damages have not been discussed at all by the 1st respondent. In the pronouncement in Organo Chemical Industries & Anr. v. Union of India & Ors. (supra) the Supreme Court observed (p. 427) : xxx Having regard to the punitive nature of the power exercisable under Section 14B and the consequences that ensue therefrom an order under Section 14B must be a 'speaking' order containing the reasons in support of it. The guidelines are provided in the act and its various provisions particularly in the word damages the liability for which in Section 14B arises on the making of default. While fixing the amount of damages the Regional Provident Fund Commissioner usually takes into considerations as he has done here various factors viz. the number of defaults the period of delay the frequency of defaults and the amounts involved. xxxxxHere we find that it is not a case of total omission to make the contributions. There had been only delayed contributions. The periods are different and the days of delay are also different. A glance at the statement of damages annexed to the impugned proceedings shows that the day of delay range from a minimum of 7 days to a maximum of 47 days but a flat rate of 25% has been adopted by the 1st respondent; and certainly we cannot commend the impugned proceedings on the ground that the application of the norms as set down by the pronouncement of the Supreme Court referred to above has been done. This only exposes lack of application of mind on the part of the 1st respondent. As to how the functionary under Section 14B of the Act should discharge the obligations has been expatiated by S. Natarajan J. as he then was of the High Court of Madras in K. A. Subramaniam v. The Commissioner the Regional Provident Fund Tamil Nadu & Pondicherry States & Anr. 1979 Labour and Industrial Cases 981 in the following terms:xxx The authority empowered to impose damages has to first of all decide whether the facts of a case warrant the imposition of damages. If his assessment of the situation results in a finding that imposition of damages is called for then he has to determine the quantum of damages with reference to relevant factors such as the loss suffered by the affected party the hardship caused to the beneficiaries the efforts taken by the enforcement machinery to collect the defaulted payments etc. There is therefore a clear line of distinction between imposition of penalty which is penal in nature and imposition of damages which is compensatory in nature.We cannot straightway say that what has been done by the 1st respondent by the impugned proceedings does respondent by the impugned proceedings does conform to what has been recapitulated by the learned single Judge in the above pronouncement. The petitioner has been declared as sick unit and the 1st respondent declines to take note of it for any consideration on a peculiar reasoning that the concerned authority BIFR has not specifically recommended for partial or total waiver of penal damages under the Act. When we take note of these features we have no other alternative but to interfere in writ powers. Accordingly this Special Civil Application is allowed and the matter stands remitted back to the file of the 1st respondent for him to reconsider the whole question taking note of the norms set down therefore by the pronouncements referred to above as well as other pronouncements throwing light on the subject.”(v) a decision of the Hon'ble Division Bench of this Court in W.A.(MD).Nos.501 and 502 of 2008 in the case of The Regional Provident Fund Commissioner-II Madurai vs. Sree Visalam Chit Funds Ltd. and another decided on 01.11.2010“22. Later on when a similar question arose while examining the scope of Section 85(B) of the ESI Act which is in pari materia to Section 14(B) of the EPF Act the Hon'ble Supreme Court in ESI Corporation vs HMT Limited reported in 2008 (3) SCC 35 in paragraph No.21 has held as follows;- A penal provision should be construed strictly. Only because a provision has been made for levy of penalty the same by itself would not lead to the conclusion that penalty must be levied in all situations. Such an intention on the part of the legislature is not decipherable from Section 85-B of the Act. When a discretionary jurisdiction has been conferred on a statutory authority to levy penal damages by reason of an enabling provision the same cannot be construed as imperative. Even otherwise an endeavour should be made to construe such penal provisions as discretionary unless the statute is held to be mandatory in character.In Prestolite (India) Ltd. v. Regional Director & Anrreported in 1994 Supp (3) SCC 690 the Hon'ble Supreme Court has held as follows:Even if the regulations have prescribed general guidelines and the upper limits at which the imposition of damages can be made it cannot be contended that in no case the mitigating circumstances can be taken into consideration by the adjudicating authority in finally deciding the matter and it is bound to act mechanically in applying the uppermost limit of the table. In the instant case it appears to us that the order has been passed without indicating any reason whatsoever as to why grounds for delayed payment were not to be accepted. There is no indication as to why the imposition of damages at the rate specified in the order was required to be made. Simply because the appellant did not appear in person and produce materials to support the objections the employee's case could not be discarded in limine. On the contrary the objection ought to have been considered on merits. We therefore allow this appeal and set aside the impugned orders. The Regional Director is directed to dispose of the representation of the appellant by indicating reasons after taking into consideration the grounds for delayed payment. Since the matter is going to be reheard the appellant is permitted to make personal representation at the hearing of the show-cause proceeding.In Dilip N.Shroff v. Joint Commissioner of Income Tax Mumbai & Anrreported in 2007 (6) SCC 329 the Hon'ble Supreme Court has held as follows:Thus it appears that there is distinct line of authorities which clearly lays down that in considering a question of penalty mens rea is not a relevant consideration. Even assuming that when the statute says that one is liable for penalty if one furnishes inaccurate particulars it may or may not by itself be held to be enough if the particulars furnished are found to be inaccurate is anything more needed but the question would still be as to whether reliance placed on some valuation of an approved valuer and therefore the furnishing of inaccurate particulars was not deliberate meaning thereby that an element of mens rea is needed before penalty can be imposed would have received serious consideration in the light of a large number of decisions of this Court.23. After having taken note of the above judgments in Prestolite (India) Ltd. and Dilip N.Shroff v's case the Hon'ble Supreme Court in Emp. State Insurance Corpn vs. HMT Ltd. reported in 2008 (1) Scale 341 has agreed with the view in Dilip N.Shroff v's case to hold that an element of mens rea is required before penalty can be imposed. While agreeing with the said view the Hon'ble Supreme Court has given additional reasons also which could be found in Paragraph Nos.20 and 21 of the said Judgment which read as follows :“20. We agree with the said view as also for the additional reason that the subordinate legislation cannot override the principal legislative provisions. The statue itself does not say that a penalty has to be levied only in the manner prescribed. It is also not a case where the authority is left with no discretion. The legislation does not provide that adjudication for the purpose of levy of penalty proceeding would be a mere formality or imposition of penalty as also computation of the quantum thereof became a foregone conclusion. Ordinarily even such a provision would not be held to providing for mandatory imposition of penalty if the proceeding is an adjudicator one or compliance of the principles of natural justice is necessary thereunder.21. Existence of mens rea or actus reus to contravene a statutory provision must also be held to be a necessary ingredient for levy of damages and/or the quantum thereof.”24. A close reading of the above Judgment would make it undoubtedly clear that since what is imposed under Section 14(B) of the Act is not only with a view to compensate the employee but also by way of penalty it is absolutely necessary that it should be proved that there was a mens rea or actus reus to contravene the statutory provision by the employer.25. The learned counsel for the appellant would try to distinguish the said Judgment by contending that though Section 14(B) of the EPF Act and Section 85(B) of the ESI Act are in pari materia they operate in different spheres and the consequences of the failure to pay contribution under both the enactments are altogether different. He would point out that insofar as the ESI Act is concerned if the contribution is not paid in time there is no loss caused to the employee because he gets medical aid from the employer himself whereas under the EPF Act the money which is due to the scheme under the Act is utilized by the employer for a different purpose.26. Though the said argument appears to be attractive we find no substance in the same. A close comparison of both the provisions under the enactments would go to show that they are in all respects in pari materia. Insofar as Section 85(B) of the ESI Act is concerned the damages is levied by way of penalty and the expression by way of penalty was found even in the provision as it was introduced to the Parent Act. But the said expression by way of penalty was not there when Section 14(B) of the EPF Act was introduced to the Parent Act. Since attempts were made to distinguish these provisions and since arguments were advanced that Section 14(B) of the Act does not constitute penalty to obviate the same and in view of the Judgment of the Hon'ble Supreme Court in Emp. State Insurance Corpn vs. HMT Ltd. the expression by way of penalty was incorporated by means of amendment. After the Judgment of the Hon'ble Supreme Court and after the said amendment now there can be no doubt that there is no distinction in any sense between Section 14(B) of the EPF Act and Section 85(B) of the ESI Act. Therefore the law laid down by the Hon'ble Supreme Court in Emp. State Insurance Corpn vs. HMT Ltd. cited supra squarely applies to Section 14(B) of the EPF Act also.27. Now let us consider the facts of the case to examine as to whether there was any mens rea or actus reus on the part of the respondent to commit default in payment of the contribution. At the outset we may say that we do not find any material to hold that there was such mens rea or actus reus. It is the admitted case that under the Pension Scheme of the year 1971 the respondent was paying the contribution without any default. When the new Scheme was introduced and the rate of contribution was enhanced it was not as though the respondent was not prepared to pay the employer's contribution. However it was only the employees who rushed to the Court challenging the new scheme and got an order of interim stay in the Writ Petition filed by them. It was a blanket stay order in respect of the employees contribution' as well as the employers' contribution. That was the reason why the respondent was not in a position to remit the contribution in accordance with the new scheme.28. It is also seen that the respondent continued to pay the same in the rate prescribed under the Old Scheme. Thereafter the matter was clarified by the Writ Court that the employer should remit the contribution as per the Old Scheme. Accordingly the respondent further continued to pay the same. After the said Writ Petition was dismissed the respondent without any default as we have already narrated above paid the contribution as per the New Scheme. When a further demand was made it could be seen that the respondent challenged the same by way of a Writ Petition in W.P.No.2335 of 1996 and after the said Writ Petition was dismissed challenging the same W.A.No.23 of 2001 was filed by the respondent. In the Writ Appeal by Judgment dated 04.11.2004 the Division Bench of this Court directed the Regional Provident Fund Commissioner to decide the quantum and liability under Section 7(A) of the Act and then to make the demand. Thereafter such an order was passed and immediately the respondent paid the amount. Thus absolutely there is nothing to suggest that the respondent had either mens rea or actus reus to breach the provision regarding payment of contribution. As it has been contended by the learned Senior Counsel for the respondent such failure to pay the contribution during the interregnum period was solely attributable to the litigations before the Court and the consequential interim order of stay granted by this Court.29. The learned counsel for the appellant would submit that when the interim stay order stood vacated on the dismissal of the Writ Petition the parties should get relegated to their original position. In order to highlight the said proposition the learned counsel has relied on few Judgments of the Hon'ble Supreme Court. Since it is a well settled law we do not propose to refer to those Judgments. Here in this case the benefit arising out of the stay order granted by this Court was limited only to pay the contribution as per the Old Scheme and not under the new scheme. After the stay order was vacated the parties have been relegated to their original position and accordingly the respondent has paid the entire arrears as per the new scheme. But applying the said principle it cannot be said that because the respondent did not pay the enhanced contribution during the pendency of the Writ Petition and during the stay order it could be held that the respondent is liable to pay the damages.30. In our considered opinion as we have already concluded unless it is established that such failure to pay the contribution was attributable to the mens rea or actus reus on the part of the employer question of levying damages under Section 14(B) of the Act does not arise. It has been repeatedly held by the Hon'ble Supreme Court that simply because the statutory provision enables an authority to impose penalty it does not mean that such penalty should be imposed in a mechanical manner without looking into the attending circumstances and the facts as to whether there was any mens rea or actus reus on the part of the employer.”19. Per contra learned counsel appearing for respondents 1 & 2 would contend that the conduct of the appellant is only to drag on the case under the guise of pendency of application before BIFR. He would also contend that the appellant cannot complain about non-furnishing of particulars when he did not turn up for enquiry and he cannot take advantage of his own wrong by not attending the enquiry. Moreover the appellant was duly furnished with the month-wise payment damages calculation vide letters dated 16.05.2006 and 22.05.2006 and that he would not be prejudiced if the impugned order is confirmed as the appellant can always move the AAIFR/BIFR seeking rehabilitation scheme/package from the respondents in respect of the damages. It is the further contention of the learned counsel for the respondents that the appellant having not availed the alternate remedy of appeal under Section 71 of the Act cannot be permitted to raise factual and disputed question of facts under Article 226 of the Constitution of India when he has remained silent till the order of recovery was passed.20. To substantiate his stand learned counsel appearing for respondents 1 & 2 has relied on the following:(i) a decision of the Hon'ble Supreme Court in the case of Organo Chemical Industries and another vs. Union of India and others reported in (1979) 4 SCC 573;“37. The power under the Section permits award of 'damages' and that word has a wealth of implications and limitations sufficient to serve as guideline in fixing the impost. In Arvinder Singh's case(1) this Court upheld an otherwise unbridled power to levy tax by importing a variety of factors gathered from the statute and relied on many precedents. Likewise in Radhakrishan's case(2) this Court rejected the plea that a power in the Commissioner to choose one of the two remedies was invalid in the absence of guidelines and observed on a review of the case-law:When power is conferred on high and responsible officers they are expected to act with caution and impartiality while discharging their duties and the circumstances under which they will choose either of the remedies available should be left to them. The vesting of discretionary power in the state or public authorities or an officer of high standing is treated as a guarantee that the power will be used fairly and with a sense of responsibility. It has been held by the Privy Council in Province of Bombay v. Bombay Municipal Corporation(3) that every statute must be supposed to be for public good at least in intention and therefore of few laws can it be said that the law confers unfettered discretionary power since the policy of law offers guidance for the exercise of discretionary power.Although our democratic ethos is incongruous with the assumption that highly paid officials are more responsible than low-paid minions the jurisprudence of power must be applied workably and not untouched by reality. More to the point is the decision in Kaushal's case(4). There this Court accepted the submission that the seemingly naked power under Sec. 59 of the Punjab Excise Act was guided by the requirement that it was to be exercised for control of consumption of intoxicants. (The whole scheme of the statute proclaims its purpose of control in time and space and otherwise observed the Court). Here the conceptual limitations of 'damages' serve as guideline and barricade the exercise. The Commissioner cannot award anything more than or unrelated to 'damages'. Nor can he go beyond 100% of the amount defaulted. Such limitations without further guidelines are not uncommon in taxing laws to penalise defaults and suppressions.What do we mean by 'damages'? The expression 'damages' is neither vague nor over-wide. It has more than one signification but the precise import in a given context is not difficult to discern. A plurality of variants stemming out of a core concept is seen in such words as actual damages civil damages compensatory damages consequential damages contingent damages continuing damages double damages excessive damages exemplary damages general damages irreparable damages pecuniary damages prospective damages special damages speculative damages substantial damages unliquidated damages. But the essentials are (a) detriment to one by the wrong-doing of another (b) reparation awarded to the injured through legal remedies and (c) its quantum being determined by the dual components of pecuniary compensation for the loss suffered and often not always a punitive addition as a deterrent-cum-denunciation by the law. For instance 'exemplary damages are damages on an increased scale awarded to the plaintiff over and above what will barely compensate him for his property loss where the wrong done to him was aggravated by circumstances of violence oppression malice fraud or wanton and wicked conduct on the part of the defendant and are intended to solace the plaintiff for mental anguish laceration of his feelings shame degradation or other aggravations of the original wrong or else to punish the defendant for his evil behavior or to make an example of him for which reason they are also called punitive or punitory damages or vindictive damages and (vulgarly) smart-money. (See Black's Law Dictionary 4th Edition p. 467/468). It is sufficient for our present purpose to state that the power conferred to award damages is delimited by the content and contour of the concept itself and if the Court finds the Commissioner travelling beyond the blow will fall. Sec. 14B is good for these reasons.The further submission is that damages being compensatory in character could not exceed the interest the amount defaulted would have carried during the period of delay. The respondent has gone beyond the mere quantum of interest and has rounded it off to a sum equal to the defaulted contribution. Is this excess an illegal extravagance or a legal levy ? This turns on what is 'damages' in the setting of the Act.The measure was enacted for the support of a weaker sector viz. the working class during the superannuated winter of their life. The financial reservoir for the distribution of benefits is filled by the employer collecting by deducting from the workers' wages completing it with his own equal share and duly making over the gross sums to the Fund. If the employer neglects to remit or diverts the moneys for alien purposes the Fund gets dry and the retirees are denied the meagre support when they most need it. This prospect of destitution demoralises the working class and frustrates the hopes of the community itself. The whole project gets stultified if employers thwart contributory responsibility and this wider fall-out must colour the concept of 'damages' when the court seeks to define its content in the special setting of the Act. For judicial interpretation must further the purpose of a statute. In a different context and considering a fundamental treaty the European Court of Human Rights in the Sunday Times Case observed :The Court must interpret them in a way that reconciles them as far as possible and is most appropriate in order to realise the aim and achieve the object of the treaty.A policy-oriented interpretation when a welfare legislation falls for determination especially in the context of a developing country is sanctioned by principle and precedent and is implicit in Art. 37 of the Constitution since the judicial branch is in a sense part of the State. So it is reasonable to assign to 'damages' a larger fulfilling meaning.What are the strands which make the fabric of 'damages' under the Article? I have stated earlier that the composite idea of 'damages' includes more than pecuniary compensation. Moreover the injured party is the Board of Trustees who administer the Fund. That Fund not merely loses the interest consequent on the non-payment but receives a shock in that its scarce resources are further famished by employers' default. There is great social injury to the scheme when employers default in numbers. So the lash of the law is delivered when its object is frustrated. What is more denuciatory is the fact that the employer makes deductions from the poor wages of the workers (and makes them suffer to that extent) and diverts even those sums for his private purposes by failing to make prompt remittances. Thus default in contributions is compounded by embezzlement as it were Naturally damages will take an exemplary character and inflict a heavy blow on the shady defaulter. I am clearly of the view that 'damages' as imposed by Section 14B included a punitive sum quantified according to the circumstances of the case. In 'exemplary damages' this aggravating element is prominent. Constitutionally speaking such a penal levy included in damages is perfectly within the area of implied powers and the legislature may while enforcing collections legitimately and reasonably provide for recovery of additional sums in the shape of penalty so as to see that avoidance is obviated. Such a penal levy can take the form of damages because the reparation for the injury suffered by the default is more than the narrow computation of interest on the contribution.This Court has in R.S. Joshi Sales Tax Officer Gujarat and Others v. Ajit Mills Limited and Another(1) considered the constitutionality of a penal forfeiture and a bench of seven judges in that case has upheld it. A Patna decision where the levy of damages was attacked as violative of Article 20(2) has taken the view that the amount of damages imposed under Section 14B is penal in character. Of course the learned judges repelled the application of Article 20(2) of the Constitution to this situation but made some observations which are misleading. The Court there took the view that the damages imposed under Section 14B are transferred to the general revenues of the appropriate government and went on to observe: In other words the infliction of the damages under section 14B is not meant to provide compensation or redress to the employees whose interest may be injured. It is not meant to provide reparation to such employees and the quantum of damages imposed has no relation to the amount of loss suffered by the employees. I consider that the infliction of the damages under section 14B is penal in its nature. It is a warning to employers in general not to commit a breach of the statutory rule.The above observations in my view are unsound and I am happy to record that my learned brother takes the same view although in his separate judgment this aspect has not been expressly considered. I speak for both of us. The damages are levied under the Act. The authority levying penal damages is created by the Act and is responsible for the collection of contributions and damages for the Fund. It is not possible to dichotomise and hold that the contributions go into the Provident Fund but the rest of the damages go into the general revenues. This is not a fine under the criminal law. Nor is it recovery on behalf of the Government of amounts under a general statute for purposes of revenue. A special statute creating a special fund empowers special officers to recover specially designated contributions and special damages for default. The entire sum belongs to the Fund except perhaps the administrative charges which are usually (as in this case) separately indicated. In our view therefore it is wrong to credit the damages into the general revenues. To that extent it is a breach of the statutory scheme and a deprivation of what belongs to the workers' Provident Fund. Indeed employees are a needy community and if the Fund is replenished by damages the scheme can be improved and the benefits augmented. We therefore express the view that if any State is diverting damages under the Act into its own coffers it is improper. Lazarus can ill-afford to lose even a little. State and citizen alone is subject to the rule of law. I am in full agreement with the concluding statement regarding the disposition of the damages made in my learned brother's judgment:The learned Additional Solicitor General was fair enough to concede that the entire amount of damages awarded under Section 14B except for the amount relatable to administration charges must necessarily be transferred to the Fund constituted under the Act. We hope that those charged with administering the Act will keep this in view while allocating the damages under Section 14B of the Act to different heads. The employees would of course get damages commensurate with their loss that is the amount of interest on delayed payment but the remaining amount should go to augment the Fund constituted under Section 5 for implementing the schemes under the Act.In this view I direct the appropriate Government to credit the sums allocable to the Fund so that the damages may reach where it belongs. I wholly agree with my learned brother for the reasons I have given. The Writ Petition deserves to be dismissed with costs.(ii) another decision of the Hon'ble Supreme Court in the case of Mcleod Russel India Limited vs. Reg. Provident Fund Commissioner Jalpaiguri and others reported in 2014 (3) LLN 1 (SC)“8. In HMT Ltd. this Court noted the beneficial nature of the ESIC Act; that subordinate legislation must conform to the provisions of the parent Act. Despite giving due regard to the use of the words ‚€œmay recover damages by way of penalty‚€? and mindful that mens rea and actus reus to contravene a statutory provision are necessary ingredients for levy of damages this Court set aside the interference of the High Court vis-ŗ-vis the imposition of damages and further held that imposition of damages by way of penalty was not mandated in each and every case. The dispute was remitted back to the High Court for fresh consideration i.e. to proceed on the premise that the levy of penalty under the Act was not a mere formality a foregone conclusion or an inexorable imposition; and that the circumstances surrounding the failure to deposit the contribution of the employees concerned would also have to be cogitated upon. This decision does not prescribe that damages or penalties cannot or ought not to be imposed. Further the presence or absence of mens rea and/or actus reus would be a determinative factor in imposing damages under Section 14B as also the quantum thereof since it is not inflexible that 100 per cent of the arrears has to be imposed in all the cases. Alternatively stated if damages have been imposed under Section 14B it will be only logical that mens rea and/or actus reus was prevailing at the relevant time. We may also note that this Court had yet again reiterated the well-known but oft ignored principle that High Courts or any Appellate Authority created by a statute should not substitute their perspective of discretion on that of the lower Adjudicatory Authority if the impugned Order does not otherwise manifest perversity in the process of decision taking. HMT Ltd. does not proscribe imposition of damages; that would negate the intent of the legislature. The submission of the petitioner before us is that the liability was of the erstwhile management and since the petitioner was not the employer at the relevant time default much less deliberate and wilful default on the part of the petitioner was absent. However it seems to us that once these damages have been levied the quantification and imposition could be recovered from the party which has assumed the management of the concerned establishment.12. We are also not impressed by the argument addressed by Mr. Bhushan to the effect that damages under Section 14B are not jointly and separately recoverable from the erstwhile and the present managements under Section 17B as Section 14B moves in its own and independent orbit. Several amendments have been made to the EPF Act so far as the fasciculous of Sections 7A to Section 7Q is concerned. This is also true of the pandect containing Sections 14A 14AA 14AB 14AC 14B and 14C; and for that matter Sections 17A 17AA and 17B. Where such widespread amendments and changes are incorporated in a statute it is always salutary and advisable to reposition the provisions and number them sequentially and logically. The argument that the phrase determination of amounts due from any employer is found in Section 7A as well as in Section 17B is not factually correct. Section 17B speaks of contributions and other sums dues from the employer under any provision of this Act ; the latter Section is therefore wider in ambit than the previous one. In our opinion Section 14B is complete in itself so far as the computation of damages is concerned. It is conceivable that the money due from an employer would have to be calculated under Section 7A and in the event the default or neglect of the employer is contumacious and contains the requisite mens rea and actus reus yet another exercise of computation has to be undertaken under Section 14B. Where the Authority is of the opinion that damages under Section 14B need to be imposed the computations would come within the purview of Section 14B and it would be recoverable jointly and severally from the erstwhile as well as the current managements. A perusal of the Appeals Section namely 7I is illustrative of the fact that these exercises are distinct from each other as per the enumerations found in the first sub-Section of Section 7I. It also appears logical to us in the wake of the numerous and different dates of amendments that Section 7A(2) would also be available to proceedings under Section 14B of the Act. The applicability of Civil Procedure Code 1908 to proceedings under Section 14B has not specifically been barred by the statute.13. It is necessary to clarify that Eveready Industries (India) Ltd. had in the interregnum of this litigation changed its name to Mcleod Russel India Ltd. In view of our above analysis it is our considered opinion that the impugned Judgment deserves to be upheld. It contains a detailed and logical exposition of facts as well as the law pertaining to the present dispute. We also approve the pithy observations of the RPF Commissioner Jalpaiguri in the subject Order that failure on the part of the employers to make remittances of accumulations and contributions undermines the objectives and purposes of the statute. We underscore that the liability of the Fund to pay interest to subscribers regardless of whether employers have paid their dues runs relentlessly. The Commissioner has specifically recorded that he has taken a lenient view in the matter and has eschewed imposition of damages to the extent of 100 per cent of the arrears even though this is envisaged by the EPF Act. The Appellant-Petitioner has in the circumstances of the case been also rightly burdened with the payment of interest under Section 7Q of the EPF Act. Accordingly the Appeal is dismissed and the interim Orders are recalled. Although it is our opinion that the Appeal is wholly devoid of merit we refrain from imposing costs.(iii) a decision of the Hon'ble Calcutta High Court in the case of Universal Paper Mills Limited and another vs. Regional Provident Fund reported in (2001) 3 Callt 186 HC;“22. After considering the judgments cited before me I do not have any hesitation to hold that the company has no right to take shelter under Section 22 in respect of statutory liabilities and the employees are entitled to have their statutory benefits under the Employees' Provident Fund Act and thereby any default on the part of the employer under the said Act cannot attract the said section or can get away taking an advantage out of the said section and accordingly in my opinion the purpose and object of Section 22 cannot be interpreted in a manner to give a shelter to the petitioners against the orders passed by the respondent authorities.23. Accordingly I am of the view that Section 22(1) of the SICA Act 1985 would not be any assistance to the petitioner in the facts and circumstances of this case having regard to the nature of the payments required by way of Provident Fund and other contributions under the said Act and I do not find any substance in this application and the same is rejected. However there will be no order as to costs.”(iv) a decision of the Hon'ble Bombay High Court in the case of Ralliwolf Limited vs. The Regional Provident Fund reported in (2001) 1 Bomlr 235“9. The submission which has been urged on behalf of the Petitioner is that the action which has been adopted by the authorities under the provisions of the E.P.F. Act 1952 is contrary to the provisions of Section 22(1) of the S.I.C.A. 1985. The learned Counsel appearing on behalf of the Petitioner submitted that though the reference which was filed by the Petitioner under Section 15(1) of the S.I.C.A. 1985 was rejected since an appeal filed against the order of the B.I.F.R. is pending before the A.A.I.F.R. no proceedings for execution distress or the like against the properties of the Petitioner could have been maintainable.19. At the outset it has to be noticed that the Employees' Provident Funds and Miscellaneous Provisions Act 1952 came to be amended by Act 33 of 1988. The amendment of 1988 in so far as it is material for the present purposes expressly notices the position of a Sick Industrial Company under the Sick Industrial Companies (Special Provisions) Act 1985. Section 14-B empowers the Provident Fund Commissioner to levy damages where there is a default in the payment of provident fund dues. The levy of damages presuppose the existence of a default in the payment of a contribution which is due and payable to the Fund. By the Amendment of 1988 the second proviso came to be inserted in Section 14-B as a result of which the Central Board constituted under Section 5A of the Act was empowered to reduce or waive damages in relation to an establishment which is a Sick Industrial Company and in respect of which a scheme for rehabilitation has been sanctioned by the Board for Industrial and Financial Reconstruction under the provisions of the S.I.C.A. 1985 subject to the terms and conditions of the scheme. In order to render the second proviso applicable it is thus necessary that (1) the establishment must be of a Rick Industrial Company (ii) that in respect of the Sick Industrial Company a scheme should have been sanctioned by the B.I.F.R. under the S.I.C.A. 1985 for its rehabilitation and (iii) the reduction or waiver of damages would be subject to the terms and conditions as may be specified in the scheme framed under the S.I.C.A.. 1985. Para 32 of the Employee's Provident Fund Scheme 1952 expounds upon the second proviso to Section 14-B. Clause B of para 32-B postulates that the Central Board may allow a waiver of damages up to 100 per cent in cases where the B.I.F.R. for the reasons to be recorded in the scheme recommends such waiver.20. The amendment to the E.P.F. Act 1952 was enacted by Act 33 of 1988. Parliament was conscious of the existence of the Sick Industrial Companies Act 1985 which had been enacted a few years earlier. In amending the provisions of section 14-B. Parliament empowered the Central Board to reduce the quantum of damages that may be required to be paid under the said Section. There is no provision by which the liability of the employer to pay the contribution of the employer or the contribution of the employee has been excused or exempted. Even in the case of a sick industrial undertaking the obligation of the employer to deduct and pay the employee's contribution together with his own contribution continues to subsist. Parliament as a matter of legislative policy has enacted that the employer shall however be granted a waiver of damages payable under Section 14-B where the undertaking of the employer is a sick industrial undertaking and a scheme for its rehabilitation has been sanctioned. There again it must be noticed that the eligibility to the grant of waiver under section 14-B is subject to those conditions which have been prescribed therein. Parliament having thus amended the E.P.F. Act 1952 to take within its purview the position of a sick industrial undertaking the extent of the immunity which has been conferred upon such undertaking with reference to provident fund dues under the Act must be confined to what has been legislated by Parliament. The extent of the immunity or exemption cannot be extended beyond what was allowed in terms of the amendment to the E.P.F. Act 1952.21. Apart from this position the question that arises for consideration is as to whether a Company which is a sick industrial undertaking can claim the benefit of the provisions of section 22 in respect of the dues payable towards provident fund and other benefits under the E.P.F. Act 1952. In the present case as a matter of fact it must be noticed that the reference to the B.I.F.R. came to be made some time in 1998. The dues which have become payable relate to the period both prior and subsequent to the making of the reference. The dues cover contributions of the employees as well as of the employer. The contributions of the employees have been deducted by the employer in the instant case but have not been paid into the Fund. The moneys have been unlawfully retained by the employer.25. The judgment of the Supreme Court in the Corromandal's case (supra) and judgments of the learned Single Judges which have been adverted to by me earlier lay down the principles which should guide and determine the outcome of the proceedings in this case. The provident fund and other dues payable under the E.P.F. Act 1952 are part of the legitimate statutory entitlements of the workers. The employer is obligated to pay the contribution of the employees a well as his own contribution to the Fund which is set up under the Act. The contribution of the employees is in fact a deduction from the wages which are due and payable to the employees. The deduction which is made from the wages is required to be deposited into the Fund by the Employer. These contributions belong to the employees. The employees are entitled to those contributions and can draw upon them even while they are in service for meeting the unforeseen eventualities and exigencies that may arise in the life of an employee. They constitute an important measure of social security. The circumstances in which withdrawals and even advances can be given to an employee in service are specified in the scheme. No industrial undertaking can work or operate without the work which is rendered by the employees. No work can be demanded save and except for payment of wages and other statutory benefits. The payment of provident fund dues to the Fund therefore stands on the same footing as the payment of wages which is due to the employees. That is an entitlement to which the employees are entitled by dint of the work which they have put in. These are dues which are payable whether or not an undertaking is sick. They constitute an intrinsic part -of the employees' right to life under Article 21 of the Constitution. Having regard to the principles which have been laid down by the Supreme Court in the Corromandal Pharmaceutical's case (supra) and by the learned Single Judges of this Court including those in Baburao P. Tawade's case I am of the view that the recovery of provident fund and other dues under the E.P.F. Act. 1952 does not fall within the scope and purview of Section 22(1) of the S.I.C.A. 1985. In coming to this conclusion I am fortified by the fact that Parliament when it amended the provisions of the E.P.F. Act 1952 granted only a limited protection confined to a waiver of damages under Section 14-B of the Act in the case of a Sick Industrial Company in respect of whom a sanctioned scheme is under implementation.28. In the result I am of the view that the provisions of Section 22(1) of the S.I.C.A. 1985 would not be of any assistance to the Petitioner in the facts and circumstances of the present case having regard to the nature of the payments required to be made by way of provident fund and other contributions under the E.P.F. Act. 1952. I do not find any substance in the present Petition which is accordingly rejected. There shall be no order as to costs.”(v) a decision of the Hon'ble Andhra Pradesh High Court in the case of Sarvaraya Textiles Limited vs. Commissioner Employees reported in 2002 (1) ALD 705“17. The provisions of EPF Act in particular the contributions of the employees towards PF in our opinion would not come within the purview of Section 22(1) of SICA. The provident fund and other dues payable under EPF Act 1952 are part of the legitimate statutory settlements of the workers. The employer is obligated to pay the contribution of the employees as well as its own contribution to the Fund which is set up under the Act and the scheme framed thereunder. The employer is under a statutory obligation to deduct the amounts specified under the scheme from the salary of employees and in terms of the said scheme is required to deposit the said amount within 15 days. The deductions made by the employer are the earnings of the employees. Under the Employees' Provident Fund Scheme 1952 the employer is required to file monthly returns. Can the petitioner in the aforementioned situation refuse to comply with the statutory mandate to pay the contribution made by the employees as also its share which was by way of social security scheme? The answer to the said question must be rendered in negative. Although the object of SICA is laudable but in our view the same should not deprive the hard earnings of the employees. It does not and cannot stay recovery proceedings to which the employees are entitled to by way of social security scheme. The money does not belong to the company. It belongs to the employees. Such amounts having been collected from the wages of the employees the appellant was required to remit the same to the Fund together with its contribution in accordance with the scheme and the failure to deposit the same would attract payment of damages and other penal consequences as provided under Section 14-B of the Act. Initiation of proceedings for damages in terms of Section 14-B are quasi criminal in nature.25. In the light of the provisions of EPF Act and the scheme framed thereunder we are of the view that the rights of the employees under the Provident Scheme are protected and the proceedings under the EPF Act do not come within the purview of the provisions of Section 22(1) of SICA. An amendment to the EFP Act was made by Act 33 of 1988 in terms whereof Section 14-B has been introduced. Under Section 14-B where an employer makes default in the payment of any contribution to the Fund the Central Provident Fund Commissioner has been authoritsed to recover damages by way of penalty not exceeding the amount of arrears. However under the proviso appended thereto the Central Board has been empowered to reduce the quantum of damages that may be required to be paid by a company in relation to an establishment which is a sick industrial company and in respect of which a scheme for rehabilitation has been sanctioned by the BIFR subject to such terms and conditions as may be specified in the scheme. When the provisions of Section 14-B were inserted the Parliament took cognizance of the provisions of the EPF Act and in its wisdom only the recovery of damages was permitted to be reduced or waived subject to the conditions provided thereunder. Even the conditions specified in Para 32-B of the Scheme does not provide for any provision exempting a sick company from withholding the PF contributions collected from the wages of the employees or prohibiting the authority under the EPF Act from proceeding against such employers who defaulted to remit the contributions collected from the wages of the employees to the PF Fund in accordance with the provisions of the EPF Act.26. In this case the default in admitted. Section 14-B clearly provides that the Central Board can reduce or waive the damages levied under the said provision but no provisions has been made in relation to the employees provident fund and in our view having regard to the directive principles of state policy as contained in Part IV of the Constitution of India no such provision could be made. For the purpose of applicability of the second proviso the pre-conditions therefor are (1) the establishment must be a sick industrial company and (2) in respect of such sick company a scheme has been sanctioned by the BIFR for its rehabilitation. Such reduction or waiver of the damages would be subject to the terms and conditions as may be specified thereunder.27. Para 32 of the EPF scheme as noticed hereinbefore has a direct bearing on Section 14-B of EPF Act. Under Para 32-B of EPF Act the Central Board may allow waiver of damages up to 100 per cent but such waiver can be allowed only upon recommendations made by the BIFR in their scheme wherefor the BIFR was required to record reasons for the same.37. We are therefore of the opinion that the provisions of Section 22(1) of SICA have no application to the Provident Fund Scheme framed under the provisions of EPF Act and the dues under the EPF Act does not fall within the purview of Section 22(1) SICA. The respondents are therefore entitled to take recourse to coercive steps for recovery of the dues towards the employees' share of contribution.”(vi) another decision of the Hon'ble High Court of Andhra Pradesh in the case of Feno Fiber Ltd. vs. Employee's Provident Fund reported in 2005 (5) ALD 732“9. None of the above contentions merit acceptance by this Court. As is apparent from the order of the Provident Fund Commissioner dated 5-9-2003 a notice was addressed to the petitioner on 17-7-2003 which was acknowledged by it on 25-7-2003. If the petitioner wanted an adjournment of the hearing of the Section 14B proceedings the petitioner should have specifically sought one. Absence is not a mode of representation. When statutory proceedings are initiated against a citizen it is the bounden duty of the citizen to respond lest he incurs the potential liability to bear the consequences for his non-representation. Statutory proceedings do not go into eclipse on a citizen's disinclination to participate in the proceedings. This principle is too well settled. No reasons have been vouchsafed by the petitioner before the Provident Fund Commissioner for not appearing on the scheduled date despite acknowledgement of the notice dated 17-7-2003. The proceedings dated 5-9-2003 cannot therefore be held to have been in violation of the principles of natural justice.”(vii) a Full Bench decision of this Court in the case of Gowri Spinning Mills (P) Ltd. vs. Assistant Provident Fund Commissioner Salem and another reported in 2006 (5) CTC 1“14. Both the statutes are special statutes. Whereas the object of enactment of the SICA was to provide for the revival and rehabilitation of sick industrial companies the object of the EPF Act as indicated herein before was a measure to provide social security to the employees. The contribution of the employees as well as the employer towards provident fund is not a tax due. It is also not an amount recoverable under a contract. The moneys which have been deducted from the wages of the employees as well as the amounts which the employer is required to pay as its contribution belong to the employees and constitute their rightful and just entitlement for the eventual payment of provident fund benefits.22. In the light of the provisions of the EPF Act and the Scheme framed there under we are of the view that the rights of the employees under the Scheme are protected and the proceedings under the EPF Act do not come within the purview of the provisions of Section 22(1) of the SICA. An amendment to the EPF Act was made by Act 33 of 1988 in terms whereof proviso to Section 14-B has been introduced. Under Section 14-B where an employer makes default in payment of any contribution to the Fund the Central Provident Fund Commissioner has been authorized to recover the damages by way of penalty not exceeding the amount of arrears. However under the proviso appended thereto the Central Board has been empowered to reduce the quantum of damages that may be required to be paid by a company in relation to an undertaking which is a sick industrial undertaking and in respect of which the scheme for rehabilitation has been sanctioned by the BIFR subject to such terms and conditions as may be specified under the scheme. Parliament thus as a matter of legislative policy has enacted that the employer be granted a waiver of damages payable under Section 14-B where the undertaking of the employer is a sick industrial undertaking and the scheme for its rehabilitation has been sanctioned. There again it must be noticed that the eligibility to grant waiver under Section 14-B is subject to those conditions which have been prescribed therein. Parliament having thus amended the EPF Act had taken within its purview the position of a sick industrial undertaking the extent of the immunity which have been conferred upon such undertaking with reference to provident fund dues under the Act must be confined to what has been legitimized by Parliament. The extent of the immunity or exemption cannot be extended beyond what was allowed in terms of the amendment to the EPF Act.23. Paragraph 32-B of the Provident Fund Scheme expounds upon the second proviso to Section 14-B. Clause-B of Paragraph 32-B provides that the Central Board may allow waiver of damages up to 100% in cases where the BIFR for the reasons to be recorded in the scheme recommends such waiver. For the purpose of applicability of the second proviso the pre-conditions therefore are: (1) the establishment must be sick industrial undertaking; and (2) in respect of such sick company a scheme has been sanctioned by the BIFR for its rehabilitation. Such reduction or waiver would be subject to the terms and conditions as may be specified there under. The extent of immunity or exemption thus is limited. The same cannot be extended beyond that to include suspension of proceedings in relation to the provident funds dues recoverable under the EPF Act.36. On behalf of some of the intervenors an alternative submission was advanced that even assuming that the provisions of Section 22(1) of the SICA are inapplicable to the contribution of the employees or employer the provisions for levy of interest on delayed payments and the administrative charges as well as recovery of damages under Section 14-B is covered by Section 22(1) of the SICA. The submission is devoid of any substance. The levy of interest for delayed payment as well as the administrative charges are very much part of provident fund under the scheme framed under the EPF Act. As far as damages under Section 14-B is concerned it would be open for a sick industrial company to request the authorities under the EPF Act to postpone the determination of damages till the reference is finally decided by the BIFR and or the Appellate Authority as the case may be. In case such a request is made the concerned authority shall pass appropriate orders in the light of the provision of Section 14-B of the EPF Act. We may hasten to add that the issue of damages is not involved in any of the matters which have been placed before us.”21. We have heard the learned counsel for the parties and perused the material documents available on record.22. It is seen that the appellant Company was declared as a Sick Industrial Company by the BIFR in terms of Section 3(1)(o) of SICA. The losses suffered by the appellant Company during the Nineties resulted in default of payment of dues by the appellant to its creditors and also resulted in delay in payment of its statutory dues to the respondent Employees' Provident Fund (EPF) Organisation. While so the appellant received a letter bearing No.TN/SRO/AMB/19910/CC1(5)/2006 dated 16.05.2006 from the Assistant Provident Fund Commissioner (Compliance & Recovery) informing him to pay an amount of Rs.44 45 577/- towards Damages for the period March 1997 to February 2005 and Rs.14 54 143/- towards interest for the period from June 1997 to February 2005. Shocked by the said demand the appellant replied to the same vide its letter dated 18.05.2006 intimating that he has already made payment upto June 2004 towards interest and damages and requested for break-up details of the demand. In reply the appellant received a letter bearing No.TN/SRO/AMB/19910/PDC/2006 dated 22.05.2006 from the 1st respondent which did not contain any details regarding the amount of damages and interest claimed. Thereafter the appellant received a Notice bearing No.TN/SRO/AMB/19910/SDC/2006 dated 29.05.2006 from the 1st respondent proposing levy of damages totalling Rs.48 28 584/- for the alleged default in payment of contributions for the periods 03/97 to 02/04 and 07/04 to 02/05 stating that the damages leviable work out to Rs.26 51 440/- in A/c No.1; Rs.2 16 712/- in A/c No.2; Rs.18 50 897/- in A/c.No.10; Rs.1 07 429/- in A/c.No.21 and Rs.2 106/- in A/c.No.22. Through the said notice the appellant had been directed to show cause as to why damages should not be levied to the extent of amount in arrears and was advised to straight-away remit the said amount or to appear before the authority on 29.06.2006. However as there no response to the request of the appellant for the said details the appellant was not in a position to effectively oppose the proposed levy or damages.23. While so the appellant received an order bearing No.TN/SRO/AMB/SDC/19910/2006 dated 10.07.2006 from the 1st respondent containing the proceedings of the Regional Provident Fund Commissioner levying damages totalling to Rs.48 83 968/- for the period 03/1990 to 02/2005 and directing payment of the same within 15 days thereof and informing the recovery of the same under Section 8 of the said Act in the event of failure to deposit as directed. The order further stated that failure to deposit the penal damages within the stipulated period will also attract the provisions of Section 7Q of the Act thereby making the appellant liable to pay simple interest at the rate of 12% per annum on the amount in arrears from the date specified in the impugned order to the date of remittance. Thereafter the appellant received a copy of the communication bearing No.TN/AMB77/19910/RRC No.216/PDC/2007 dated 07.04.2007 from the 1st respondent the original being addressed to the 2nd respondent directing him to recover from the appellant an amount of Rs.48 83 968/- towards damages and an amount of Rs.16 20 826/- towards interest both pertaining to the period 03/1990 to 02/2005.24. The respondents would point out that the appellant's admittance in the affidavit that there was a delay in remittance of the statutory provident fund dues is very significant because the dues demanded are payable by the appellant. It is further stated by the respondents that upon receipt of the letter dated 18.05.2006 from the appellant a reply dated 22.05.2006 was sent to the appellant which contained the break-up of the period in relation to the dues demanded the quantum of penal damages recoverable the simple interest charged from the date on which the Provident Fund contribution and other charges payable had become due till the date of its actual payment. As the appellant had committed default in the matter of remittance of provident fund contributions and other charges for the period from 03/1997 to 02/2004 and 07/2004 to 02/2005 a summons in Form A dated 29.05.2006 was issued to the appellant by the Assessing Officer directing the appellant to show cause with documentary evidences either in person or through an authorized representative on a hearing then fixed on 29.06.2006 as to why the damages should not be levied to the extent of the amount in arrears.25. According to the respondents the Assessing Officer has a statutory obligation to levy and recover penal damages in a manner as envisaged in paragraph 32-A of the Employees' Provident Funds Scheme 1952 and that generally a statement showing the month-wise details of remittances made in all provident fund accounts by an employer in relation to an establishment and the extent of delay is forwarded to an establishment and the extent of delay is forwarded as an enclosure to the summons issued in the matter. However in the case of the appellant the said enclosure was inadvertently omitted. However before levy of damages payable by the appellant an opportunity was provided to him to cause a representation in the matter on the date originally fixed for hearing i.e. 29.06.2006. But the appellant neither appeared in person nor made any representation before the Assessing Officer.26. Further the respondents admit that the impugned order dated 10.07.2006 was issued on a printed format and that the period in relation to the dues payable by the appellant was erroneously mentioned as 03/1990 to 02/2005 but the actual period for which the damages were levied for recovery should be 03/1997 to 02/2004 and 07/2004 to 02/2005 which was a clerical error due to oversight and it cannot be taken advantage by the appellant moreso when the dates have been clarified by them. Above all the respondents would state that a rehabilitation scheme has not been formulated by the BIFR in respect of the appellant establishment and hence the question of 'entitlement' does not arise.27. The learned Single Judge considering the facts and circumstances of the case and finding that no scheme had been framed by the BIFR as also taking note of the failure of the appellant to avail appeal remedy by placing reliance on a judgment of a Division Bench of this Court in the case of Gowri Spinning Mills (P) Ltd. vs. Assistant Provident Fund Commissioner Salem and another reported in 2006 (4) LLN 441 dismissed the writ petition by holding as follows:“9. This itself shows that there was no worthful scheme framed by the BIFR for the last six years and the petitioner is attempting to use the SICA Act as the rules for dodging payment of damages which is a lawful requirement under the provisions of the Act. Further the petitioner had not moved the Tribunal challenging the demand of damages and the case pleaded by the petitioner do not come within the exception provided under Section 14-B of the Act. Already a Full Bench of this Court in dealing with protection under Section 22 of the SICA Act negatived the claim of the employer regarding the impunity granted therein vide its judgment in GOWRI SPINNING MILLS (P) Ltd. vs. ASSISTANT PROVIDENT FUND COMMISSIONER SALEM AND ANOTHER reported in 2006 (4) LLN 441.10. In the light of the above there is no case made out to entertain the writ petition. Hence the writ petition stands dismissed. No costs. Consequently connected miscellaneous petition is closed.”28. What was challenged in the Writ Petition was the impugned order of recovery proceedings of the damages and the interest for the period in question and according to the appellant the order passed by the learned single Judge was mute and not a speaking one especially when a plea was raised that the appellant Company was declared as a Sick Industrial Company in terms of Section 3(1)(o) of the Sick Industrial Companies Act 1985.29. The second proviso to Section 14(b) of the Act contemplates as follows :Provided further that the Central Board may reduce or waive the damages levied under this Section in relation to an establishment which is a sick industrial company and in respect of which a Scheme for rehabilitation has been sanctioned by the Board for Industrial and Financial Reconstruction established under Section 4 of the Sick Industrial Companies (Special Provisions) Act 1985 (1 of 1986) subject to such terms and conditions as may be specified in the Scheme.30. Admittedly as against the proceedings of levy of damages and recovery of amount the appellant had not preferred any appeal before the Appellate Tribunal. In this connection Section 7-I is relevant. The said Section reads as under :7-I. Appeals to Tribunal.—(1) Any person aggrieved by a notification issued by the Central Government or an order passed by the Central Government or any authority under the proviso to sub-section (3) or sub-section (4) of Section 1 or Section 3 or sub-section (1) of Section 7-A or Section 7-B [except an order rejecting an application for review referred to in sub-section (5) thereof] or Section 7-C or Section 14-B may prefer an appeal to a Tribunal against such notification or order.(2) Every appeal under sub-section (1) shall be filed in such form and manner within such time and be accompanied by such fees as may be prescribed.31. Had the appellant been really aggrieved over the said proceedings of the authorities nothing prevented it from approaching the Tribunal under Section 7-I as above. When there is a specific provision under the Act for appeal against the orders of the respondent authorities it was wrong on the part of the appellant to approach the High Court under Article 226 by filing a writ petition which in our considered opinion was not maintainable. In other words the appellant instead of approaching the Appellate Tribunal had moved the High Court by way of a writ petition which was not permissible.32. More importantly the authorities before levying damages and interest had directed the appellant to appear before them on 29.06.2006 either in person or through the authorised representative to put forth his case as against the proposed levy but the appellant did not choose to appear before the authorities. So the appellant was given sufficient opportunity of being heard under Section 14-B and only thereafter the damages were recovered by the authorities as per law which act of the authorities in our view cannot be faulted with. Further though according to the appellant the establishment was declared as a sick unit by BIFR and the matter was pending before it no scheme was framed by BIFR in spite of a lapse of so many years and also the appellant was not able to get any interim order from BIFR or any other appropriate authority as against the recovery. Though interim order was passed by the writ court as against the recovery during the pendency of the writ petition the same was only subject to the condition of deposit of the amount and the said interim order also got vacated virtually by the dismissal of the writ petition.33. Under the circumstances this Writ Appeal is dismissed. No costs. Consequently the connected M.P.No.1 of 2011 is closed. However this order shall not preclude the appellant from approaching the appropriate forum/authority for redressal of its grievance if it is so advised.