w w w . L a w y e r S e r v i c e s . i n


M/s. Amex Garments Pvt. Ltd. Ekkattuthangal, Guindy, Rep. by Director v/s The Employees Provident Fund Appellate Tribunal, New Delhi & Others

    WRIT PETITION NO. 3610 OF 2011 & M.P. NOS. 1 & 2 OF 2011
    Decided On, 06 June 2012
    At, High Court of Judicature at Madras
    By, THE HONOURABLE MR. JUSTICE M. JAICHANDREN
    For the Petitioner: M/s. Gupta & Ravi, Advocate. For the Respondents: R2 - K. Gunasekar, Advocate.


Judgment Text
(Prayer: Petition filed under Article 226 of the Constitution of India, seeking for a Writ of Certiorari, to call for the records and quash the order dated 28.1.2011 passed in A.T.A.221(13) 2008 by the first respondent, Employees PF Appellate Tribunal, New Delhi in so far as it relates to the non-payment of damages under Section 14B of the Act imposed by the 2nd respondent, the Assistant PF Commissioner, Sub Regional Office, Tambaram, Chennai-600 045, by the order in TN/PDC/22286A/56/SRO/TAM 2008, dated 27.2.2008.)

ORDER

1. Heard the learned counsel for the petitioner, as well as the learned counsel appearing on behalf of the second respondent.

2. It has been stated that the petitioner company, which is engaged in the business of manufacturing and exporting readymade garments, is incorporated under the Companies Act, 1956. The petitioner company, which has nearly 300 employees, had commenced commercial productions during the month of May, 1984. The service conditions of the employees of the petitioner company are governed by the settlements entered into between the management and the workmen, under the Industrial Disputes Act, 1947.

3. The petitioner company has been prompt in deducting and remitting the contributions to be made on behalf of its employees, along with the contributions to be made by the employer, as per the provisions of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952. While so, during the year, 1999, due to the recession in the export market and due to non-receipt of orders from foreign customers, the petitioner company had suffered huge financial losses. As there were no prospects of revival of the petitioner company, it had to be closed, temporarily, with effect from 1.12.2004. Prior to the closure of the petitioner company, the wages due to the employees had already been paid. The closure of the petitioner company had also been intimated to the second respondent.

4. It had been further stated that, on 26.9.2007, the second respondent had issued a show cause notice, calling upon the petitioner company to show cause as to why interest and damages should not be levied for the belated remittance, under Sections 7Q and 14B of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952. In the said show cause notice it had been stated that the petitioner company had caused delay in the remittance of the provident fund contributions, from October, 1999 till October, 2004. Consequently, the petitioner company had been called upon to pay a sum of Rs.8,11,923/-, as interest, under Section 7Q of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 and Rs.14,96,868/-, as damages, under Section 14B of the said Act.

5. The petitioner company, upon receipt of the said show cause notice, dated 26.9.2007, had filed a reply and had appeared before the Provident Fund Commissioner, in person, and had placed the facts before him. The petitioner company had requested the second respondent to waive the damages, as the alleged default in payment of the provident fund contributions had happened for the first time and due to the financial losses that had occurred during the course of the business. The said default had not been caused willfully and as such there was no wrongful intention in causing the delay. The balance sheets of the petitioner company had been produced before the second respondent to show that it had suffered severe financial losses due to the recession in the business and due to the decline in the export orders.

6. It had also been pointed out that, in fact, the petitioner company had closed the factory, with effect from 1.12.2004, and there was no production of materials due to its closure. Even though the petitioner company had deposited substantial amounts, on various dates, to prove its bona fides the second respondent had passed an order, on 27.2.2008, confirming the demand made in the show cause notice. By the said order, dated 27.2.2008, the petitioner company had been called upon to pay a sum of Rs.14,96,868/- as damages, under Section 14B of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952, and a sum of Rs.6,86,923/-, as interest, under Section 7Q of the said Act.

7. Aggrieved by the order, dated 27.2.2008, the petitioner had filed an appeal before the first respondent, in ATA No.221(13) of 2008, under Section 7-I of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952. The said appeal had been admitted, on 28.3.2008, on condition that the petitioner deposits a sum of Rs.5,00,000/-. The petitioner company had deposited the amount of Rs.5,00,000/-, as per the interim order of the first respondent and had also deposited a sum of Rs.1,86,923/-. As such, the interest amount of Rs.6,86,923/- had been paid, as per the order of the second respondent. However, the petitioner had contested the appeal, only in so far as it related to the payment of damages, under Section 14B of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952, amounting to Rs.14,96,868/-. It had been further stated that, in spite of the various contentions raised on behalf of the petitioner company, the first respondent had passed the impugned order, dated 28.1.2011, dismissing the appeal filed on behalf of the petitioner company.

8. At this stage of the hearing of the writ petition the learned counsel appearing on behalf of the petitioner company had submitted that the impugned order passed by the first respondent, confirming the order of the second respondent, asking the petitioner company to remit the damages of Rs.14,96,868/-, under Section 14B of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952, is arbitrary and therefore, it is liable to be set aside. He had further submitted that no proper reasons had been given by the respondents, while passing the orders directing the petitioner company to pay the damages, under Section 14B of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952. The respondents have not considered the fact that the non-payment of the provident fund dues was not willful and that there was no wrongful intention in such non-payment. The alleged default is only due to the financial crisis that had occurred in respect of the petitioner company. Further, the authorities concerned had not taken into consideration the decision of the Supreme Court, reported inM/s.Hindustan Times Ltd. Vs. Union of India AIR 1998 SC 688, as well as the decisions of this Court, reported in Terrace Estate, Unit of United Plantation, Ltd. Vs. Asst. P.F.Commr. 2010(2) L.L.N. 196 and V.S.Murugan Vs. The Regional Provident Fund Commissioner 2011 (4) LLN 778 (Mad.). Therefore, the impugned order of the first respondent may be set aside and the matter is to be remitted back to the second respondent to consider the issues arising for his consideration, afresh, after giving an opportunity of hearing to the petitioner company.

9. In the counter filed on behalf of the second respondent the averments and allegations made by the petitioner, in the affidavit filed in support of the writ petition, have been denied. The learned counsel appearing on behalf of the respondents had submitted that the respondents had considered all the relevant aspects before passing the orders under challenge. The petitioner company had been asked to pay the amounts, as per Section 7Q and 14B of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952, only due to the default in payment of provident fund contributions by the petitioner company. As the petitioner company had defaulted in the payment of contributions, on a number of occasions, the second respondent had passed the order, dated 27.2.2008, which had been confirmed by the first respondent, by his order, made in the appeal, in ATA No.221 (13) of 2008, dated 28.1.2011. Therefore, there is no arbitrariness or illegality in the order passed by the respondents. He had further submitted that the financial losses, said to have been suffered by the petitioner company, cannot be a ground for waiving the penal damages. Therefore, the writ petition filed by the petitioner is devoid of merits and hence it is to be dismissed.

10. In view of the submissions made by the learned counsels appearing on behalf of the petitioner and on a perusal of the records available, this Court finds it appropriate to set aside the order of the first respondent, da

Please Login To View The Full Judgment!
ted 28.1.2011, and remit the matter back to the second respondent to consider the same afresh, in view of the decision of the Supreme Court, in M/s.Hindustan Times Ltd. Vs. Union of India AIR 1998 SC 688, and pass appropriate orders thereon, on merits and in accordance with law, after giving an opportunity of hearing to the parties concerned, to put forth their contentions. 11. The learned counsel appearing for the petitioner had also submitted that a sum of Rs.4,75,000/- had already been paid, as per the interim order passed by this Court, on 15.2.2011, as part of the damages to be paid, under Section 14B of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952. Hence, the same shall be taken into account, by the second respondent, while passing final orders, as per the direction of this Court. Accordingly, the writ petition stands allowed. Consequently, connected miscellaneous petitions are closed.
O R