Indukki District Wholesale Co-operative Consumer Stores Ltd v Regional Provident Fund Commissioner, Employees' Provident Fund Organization, Sub Regional Office, Chalakuzhy Building, Kottayam & The Provident Fund Appellate Tribunal, New Delhi

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE S.SIRI JAGAN WEDNESDAY, THE 21ST JULY 2010 / 30TH ASHADHA 1932 WP(C).No. 12692 of 2005(J) -------------------------- PETITIONER(S): --------------- INDUKKI DISTRICT WHOLESALE CO-OPERATIVE CONSUMER STORES LTD NO.K.444, KATTAPPANA REP.BY ITS MANAGING DIRECTOR, KATTAPPANA.P.O., IDUKKI. BY ADV. SRI.JOICE GEORGE RESPONDENT(S): --------------- 1. THE REGIONAL PROVIDENT FUND COMMISSIONER EMPLOYEE'S PROVIDENT FUND ORGANIZATION, SUB REGIONAL OFFICE, CHALAKUZY BUILDING, C.M.S.COLLEGE ROAD, KOTTAYAM. 2. THE PROVIDENT FUND APPELLATE TRIBUNAL, NEW DELHI ADV. SRI.N.N. SUGUNAPALAN, SC, P.F. THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 21/07/2010,THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: PETITIONER'S EXTS: EXT.P1:- COPY OF GO(MS) 24/95/CO-OP. DTD.17.2.1995) EXT.P2:- COPY OF NOTICE NO.KR/KTM 5208/ENF.I(6)/PD/2004/1809 DT.10.9.2004) EXT.P3:- COPY OF REHABILITATION SCHEME DT.13.3.2001 SANCTIONED BY N.C.D.C. EXT.P4:- COPY OF GO NO.113/2001/AD DT.31.3.2001 EXT.P5:- COPY OF ORDER NO.KR/KTM/5208/PD/ENF.I(7)/2004 DT.19.10.2004 EXT.P6:- COPY OF APPEAL NO.ATA 881(7) 04 DT. 18.11.2004 EXT.P7:- COPY OF JUDGMENT DT.26.11.2004 IN WRIT PETITION NO.34417/04 OF THIS COURT. EXT.P8:- COPY OF THE COUNTER AFFIDAVIT FILED BY R1 BEFORE R2 IN APPEAL NO.ATA.881(7) OF 2004. EXT.P9:- COPY OF REJOINDER FILED ON BEHALF OF PETITIONER BEFORE R2 IN ATA 881(7) 04 DT.2.2.2005 EXT.P10:- COPY OF ORDER DT.28.2.2005 IN ATA 881(7) 04 EXT.P11:- COPY OF ORDER NO.KR/KTM, 5208/ENF, 1(7) 05/12961 DT.31.3.05 OF R1. RESPONDENTS EXTS: EXT.R1(a):- COPY OF PROCEEDING OF ASST.PROVIDENT FUND COMMISSIONER, THIRUVANANTHAPURAM, DTD.13.10.1997 EXT.R1(b):- COPY OF LETTER FROM THE PETITIONER TO RESPONDENT DTD.16.10.1997 EXT.R1(c):- COPY OF THE LETTER FROM THE PETITIONER TO THE RESPONDNDENT DTD.27.2.1998 EXT.R1(d) SERIES:- COPY OF ANNUAL RETURNS FOR THE PERIOD 1991-92, 1992-93, 1993-94, 1994-95, 1995-96 /TRUE COPY/ P.A.TO JUDGE ## **S. SIRI JAGAN, J.** ------------------------------ ## W.P.(C) No.12692 OF 2005 ------------------------------Dated this the 21[st] day of July, 2010 ## **J U D G M E N T** The petitioner is a Co-operative Society, registered under the provisions of the Kerala Co-operative Societies Act 1969. The provisions of the Employees' Provident Funds and Miscellaneous Provisions Act 1952, were made applicable to the petitioner Society with effect from 1.4.1981 and the petitioner had been paying contributions to the fund from time to time till September 1991. But from September 1991 to August 1995 the employees of the petitioner Society went on a strike, consequent to which establishment remained closed for that period. The Society restarted functioning in the year 1995, under a rehabilitation scheme framed by the Government of Kerala. As per the scheme, the employees of the Society were not entitled to any salary or monetary benefits or compensation for the period from 9/1991 to 8/1995. But after the restart of the functioning of the Society, the first respondent deducted contributions in respect of 2 W.P.(c)No.12692/05 that period also from the account of the petitioner Society. Subsequently, Ext.P5 order was passed levying damages under Section 14B of the Employees Provident Fund and Miscellaneous Provisions Act, allegedly for delayed payment of contributions for the said period. Against that order, the petitioner filed Ext.P6 appeal before the second respondent appellate tribunal. By Ext.P10 order, the appellate tribunal reduced the damages by 40% and directed the petitioner to pay 60% of the damages levied by Ext.P5. The petitioner is challenging that order in this writ petition. The petitioner’s contention is that the imposition of damages under Section 14B is not an automatic and the liability itself has to be considered taking into account the circumstances under which the contributions were not paid. In so far as the damages are in the nature of a penalty, unless the petitioner is guilty of contumacious conduct in the matter of payment of contributions, the petitioner cannot be saddled with the liability to pay damages is their contention **.** 2. A counter affidavit has been filed on behalf of the first respondent taking the contention that in so far as there is delay in payment of contributions is concerned, the petitioner 3 W.P.(c)No.12692/05 is liable to pay damages at the rate prescribed in paragraph 32A of the Employees' Provident Fund Scheme. In so far as the rate of damages is fixed by the Scheme, the petitioner is statutorily liable to pay the damages accordingly. Therefore, they would support Ext.P10 order. 3. I have considered the rival contentions in detail. The question regarding liability to pay and quantum of, damages under Section 14B had been considered by me in the decision of _**Indian Telephone Industries Ltd**_ . v. _**Asstt. P.F. Commnr. & Ors**_ .[2006(3) KLJ 698]. In that decision, I had considered the entire question elaborately and held that imposition of damages under Section 14B cannot be circumscribed by paragraph 32A or other provisions of this scheme and unless there is contumacious conduct on the part of the employer in the matter of paying the contributions, the employer cannot be saddled with the liability to pay damages. It was also held that the circumstances under which there was delay in payment is also liable to be taken into account for the purpose of deciding the liability as well as the quantum. Therein I had also held that the fact that the industry has been declared sick by the BIFR is a circumstance which should be 4 W.P.(c)No.12692/05 taken into account for the purpose of deciding the question of damages. 4. I shall now examine the liability of the petitioner in this case in the light of the said decision. For the period from 9/91 to 8/95, which is the period for which the damages are demanded, the establishment remained closed. The establishment is now functioning under a rehabilitation scheme of the Government of Kerala. As per that scheme, for the said period no monetary benefits are payable to the employees and have not been paid also. In short, for that period no wages were paid to the employees of the Society. I have considerable doubt, which doubt also I had expressed in the above decision, as to whether the contributions are payable when no wages are paid to the employees, in so far as the employees’ contributions have to be deducted from the wages of the employees at the time of payment of the wages. However, I am not going into that question in detail in this writ petition. But certainly, that is a circumstance which should be taken into account for the purpose of deciding the liability to pay damages and the quantum thereof. In this case, pursuant to interim orders of this Court, the petitioner has 5 W.P.(c)No.12692/05 already paid 50% of the amount quantified as damages by the second respondent tribunal. I am of opinion that in view of the circumstances mentioned above, the damages payable by the petitioner should be confined to the amounts paid by the petitioner in accordance with the interim order dated 15/4/2005. To that extent, Ext.P10 order is quashed. It is declared that as damages, the petitioner is liable to pay only the amount paid as per directions of this court in the interim order dated 15/4/2005. The writ petition is allowed as above **.** ## **S. SIRI JAGAN, JUDGE** acd W.P.(c)No.12692/05 6 W.P.(c)No.12692/05 7