LexORGANO CHEMICAL INDUSTRIES & ANR. versus UNION OF INDIA & ORS.
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' • ,) 61 ORGANO CHEMICAL INDUSTRIES & ANR. v. UNION OF INDIA & ORS. July 23, 1979 (V. R. KRISHNA IYER AND A. P. SEN, JJ.] Employees Provident Fund and Miscellaneous Provisions Aot 1952-S. 14B and Constitution of India 1950, Art. 14-Power to recover darnages- Absence of appellate review-Whether violates Art. 14-Damages whether to be credited to general revenues of State. Words & Phrases-'Dan1ages' meaning of-En1ployees Providenl Fund and C Miscellaneous Provisions-· Act 1952-S. 14B. lnterpreta!ion of Statutes-A policy orientation interpretation necessary for a welfare legislation-Each word, phrase or sentence to be considered in the light of general purpose of the Act. The Provident rund Act 1952 as originally cinactcd provided for the insti- tution of compulsory provident fund f0r employees in factories and other establishments. Under s. 4 of the Act the Central Government framed the EmPloyees Provident Fund Scheme, 1952 and s. 6 of the Act enjoined on every 'employer to make contributions to the Fund. Section 14 of the Act provided penalties for breach of the provisions of the Act viz., failure to pay contributions, failure to submit necessary returns etc., and the penalties ex- tended to various t'erms of imprisonment extending upto 6 months or with fine upto Rs. 1000/-. The Act was a.mended by Parliament by Act XVI of 1971 and it was re- entitled as the "Employees Provident Fund and Miscellaneous Provisions Act, 1952". The 2.mending Act inserted s. 6A in the Act for the establishment of the Family Pension Fund, and in exercise of its powers the Central Govern- ment ~reated the Family Pension Scheme, 1971 and para 9 of th'e S-cheme created a Family Pension Fund and provided that from 2<nd out of contribu- tion payable by the employer and en1ployee9' in each month under s. 6 of the Act, a p<1rt of the co1.1tribution shall be remitted by the employer to the Family Pension Fund. The authoriti"es noticed in the working of the Act and the Scheme that an employer could delay payment of provident fund dues \vithout any addi- tional financial liability, a.mended the Act and inserted s-. l4B for recovery of ·damages on the amount of arrears, the object and purpose b'eiflg to autho- rise the Regional Provident Fund Commissioner to impose exemplary puni- tive damages and thereby to prevent th'e employers from making the defaults. Section 14B as origina.Hy enacted provided. for imposition of ~uch damages 'not exceeding twenty five per cent oo the amount of arrears.' This, however, did not prove sufficiently deterrent and the employers Vi'ere still making d'efaults in making oeontributions to the provident fund and in the meanwhile utilising both their O\VIl contribution as well as the employees' contributions in their business. )) F G B A B c I) G H 62 SUPREME COURT REPORTS [1980] 1 S.C.R. The National Commission on Labour, reoommended that in order to check the growth of arrears, penalties for defa.ult in payment of provid'ent fund dues should be more stringent and that the default should be made cognizable. This view was endorsed by the Estimates Committe'e in its 116th Report to the P·arliament. Actordingly, the Act was further amended by Act No. 40 of 1973, and the words "twenty five per cent" were omitted from s. 14B and the words "not ·exceeding the amount of arrears" were substituted. The employer a. chemical industry failed to deposit the amount of Provi- dent Fund and Family Pension Scheme dues with the Provident Fund Com- missioner. The Regional Provident Fu\1d Commisiion'er after issuing a show- cause notice to the employer, imposed a penalty which \Vas equivalent to the amount pay<1ble by the petitioner company and this penalty cam·e to nearly Rupees one lakh. The employer pleaded before the Provident Fund Commissioner that dis· putes between the partners of the firm, power cut of 60 % necessitating purchase of generating set on loan basis leading to loss were the difficulties in n1aking the contributions in time and these were circumstances beyond their control. The Region&l Provident Fund Commissioner after affording the petitioner the opportunity of a hearing, by a reasoned order, considered in detail each of the grounds taiken in mitigation of the default and came to the conclusion that non'e of the grounds alleged furnished a legal justification for the delay in making contributions in time and held that the petitioner ha
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