HALWASIA VIDYA VIHAR(SR. SEC. SCHOOL), HARYANAversusTHE REGIONAL PROVIDENT FUND COMMISSIONER

          HALWASIA VIDYA VIHAR(SR. SEC. SCHOOL), HARYANA                        A
                                        v.
             THE REGIONAL PROVIDENT FUND COMMISSIONER

                                MARCH 27, 2006

               [ARJJITPASAYAT ANDTARUN CHATTERJEE,JJ.]                          B


          Employees Provident Funds and Miscellaneous Provisions Act, 1952;
    Section 14(B):

          Educational Institution/School affiliated to Education Department of
                                                                                c
    State Government-Contributory Provident Fund Accounts maintained as
    per instructions of the State Government-Transferring of affiliation to Central
    Board ·of Secondary Education-Provident Fund Scheme under 1952 Act
    became applicable-Default in making payment of contributions-levy of
    damage-Waiver-Held: Reduction or waiver can be done in terms of Section D
    14-B of the Act-Since there was no delay on the part of the school in
    question in making the deposit of the Fund with the State Government in terms
    of Scheme and also taking into account the special features involved, the


-   damage imposed shall be restricted to 25% of the amount as levied by the
    Provident Fund Commissioner-Directions issued.
                                                                                 E
           The appellant-school was affiliated to the Education Department of
    the State Government of Haryana and making contribution in a
    Contributory Provident Fund Scheme of the State Government. Appellant
    transferred its affiliatiUon to Central Board of Secondary Education
    (CBSE). As per CBSE bye-laws, appellant-Institution was required to F
    follow the State Government rules regarding salary and service conditions
    of its staff members. Accordingly, the appellant continued the existing
    scheme of contributory provident fund. Later, as per the instructions of
    the Regional Provident Fund Authorities a scheme under the Employees
    Provident Funds and Miscellaneous Provisions Act was required to be G
    adopted by the appellant. But the authorities directed the scheme to be
    made operative retrospectively. The appellant started depositing the
    provident fund contributions in respect of each employee with the Regional
    Provident Fund Commissioner and got transferred the accumulated

                                       455
    456                     SUPREME COURT REPORTS                    [2006] 3 S.C.R.

A   balance with the State Government to the Employees Provident Fund Scheme
    account in terms of the Act However, a notice under Section 14(8) of the Act
    was issued by the Commissioner demanding contribution under the scheme
    retrospectively, for the entire period. The appellant took the stand that since
    the deposit had been made with the State Government Authorities in terms of
B   the then applicable scheme of Contributory Provident Fund of the State
    Government, there was no scope of levy of any damage. The Provident Fund
    Commissioner imposed damages of Rs. 14,50,172/-. Aggrieved, the appellant
    preferred an appeal, which was allowed by the Tribunal. The order was
    challenged by the authorities before the High Court. The High Court relying
    on a decision of this Court in Regional Provident Fund Commissioner v. S.D.
C   College, Hoshiarpur & Ors. held that the penalty as levied by the
    Commissioner was to be maintained. Hence the present appeal.

          The appellant contended that there was absolutely no remiss on their
    part as the scheme had been followed by them scrupulously; that there
D   was transfer of the amount which would show that by no stretch of
    imagination it can be conceived that there was any default, much less
    intentional.

          The respondent-Commissioner submitted that the appellant was
    aware of its liability and had filled up the form to make the deposits with
E   the provident fund authorities but continued to make the deposit with the
    state Government. Thus, the High Court was justified in its conclusion
    allowing the damage.

          Partly allowing the appeal, the Court

F         HELD:l.1. In terms of Section 14-8 of the Employees Provident
    Funds and Miscellaneous Provisions Act, reduction or waiver can be done
    in the indicated circumstances. [459-GJ

          1.2. In the instant case, there was no allegation that there was any delay
    in making the deposit with the Government under the scheme which was being
G   followed by the appellant. Even otherwise in the case of Regional Provident
    Fund Commissioner v. S.D. College, Hoshiarpur & Ors, this Court did not
    maintain the levy of damages at 100% and reduced it to 25%. Taking into
    account the special features involved, the damage imposed shall be restricted
    to 25% of the amount levied by the respondent-Commissioner. (460-A-8(
H
 HAL WASIA VIDY A VIHAR (SR. SEC. SCHOOL)"· THE R.EGlONAL PROVIDENT FUND COMMR [PASA YAT.J.]   457
      Regional Provident Fund Commissioner v. S.D. College, Hoshiarpur &                             A
Ors., (19971 l SCC 241, referred to.

       CIVIL APPELLATE JURISDitTIQN : Civil Appeal No. 3848/2000.

     From the Final Judgment/Order dated 8.10.1999 ()f the High Court of
Punjab and Haryana at Chandigarh in C.W.P. No. 5343 of 1999.                                         B
     Pranab Kumar Mullick, Afzal Ahmmed and Rajesh Gogna for the
Appellant.

       T.S. Doabia, Manish Sharma and S~ail Kumar Dwivedi for the Respondent.                        C
       The Judgment of the Court was delivered by

      ARIJIT PASAYAT, J. Challenge in this appeal is to the judgment rendered
by a Division Bench of the Punjab and Haryana High Court holding that the
appellant was required to pay damages in terms of Section 14(8) of the                               D
Employees Provident Funds and Miscellaneous Provisions Act, 1952 (in short
the 'Act') amounting to Rs. 14,50,172.

       Brief reference to the factual aspects would suffice:-

       The appellant, an educational institution was affiliated to the Education E
Department to the Haryana Government. A scheme of contributory provident
fund was in operation which was under the control and guidance of the
Haryana Government and same was being applied to the appellant-institution.
Under the said scheme of contributory provident fund it was mandated that
an account shall be opened in the name of each subscriber in a Cooperative
Bank approved by the Registrar, Co-operative Societies, Haryana. Appellant F
transferred its affiliation to Central Board of Secondary Education (in short
'CBSE') in April, 1984 after obtaining no objection certificate from the State
Government. As per C.B.S.E. bye-laws, appellant was required to follow the
State Government Rules regarding salary and service conditions of its staff
members. Accordingly, the scheme of contributory provident fund which was G
earlier being followed by the appellant, continued to be operative. On being
asked by the Regional Provident Fund Autorities the scheme under the Act
was adopted by the appellant w.e.f. 1.7.1993; but the same was made operative
retrospectively w.e.f. August 1982 by the authority. Thereafter in respect of
each employee the provident fund contributions were deposited with the H
    458                    SUPREME COURT REPORTS                   [2006] 3 S.C.R.

A Regional Provident Fund Commissioner. The accumulated balance in the
  contributory provident fund accounts of the various employees was transferred
  by the Department of Education, Haryana to the Employees Provident Fund
  Scheme under the Act in May and June, 1995 and an amount of Rs. 17,33,914.60
  was transferred by the Haryana Government. On 5.2.1996, proceedings under
B Section 7(A) of the Act were initiated. Taking into account the amount
  payable on assessment and giving credit to the aforesaid amount, it was held
  that thcrt~ was extra deposit of Rs.44.031.85. Therefore. the proceedings were
  dropped and no recovery was effected. On 14.2.1997 notice under Section
  14(8) of the Act was issued covering the period August, 1982 to June 1993.
  Reply was furnished by the appellant taking the stand that since the deposit
C had been made with the Government Authorities in terms of the applicable
  scheme, there was no scope of levy of any damage. However, the Commissioner
  imposed damages of Rs. 14,50,172 which was about 100% of the alleged
  amount of default. For the purpose of levy reference was made to the table
  contained in Section 32A. An appeal was filed before the Statutory Tribunal,
D i.e. Employees Provident Fund Appellate Tribunal. New Delhi (in short the
  'Appellate Tribunal'). In appeal it was held that there was no default in view
  of the circumstances noted above. A writ petition was filed challenging the
  order before the High Court taking the stand that there was no power to
  waive/reduce the damages except in terms of the circumstances indicated in
  Section 14(B) (prnviso). The High Court placed reliance on a decision of this
E Court in Regional Provident Fund Commissioner v. SD. College, Hoshiarpur
  and Ors., [1997] I SCC 241 and held that the penalty as levied by the
  Commissioner were to be maintained.

           In support of the appeal learned counsel for the appellant submitted
F   that there was absolutely no remiss on the part of the appellant which had
    scrupulously followed the scheme of the State Government. There was a
    transfer of the amount which would show that by no stretch of imagination
    it can be conceived that there was any default, muchless intentional. It was
    pointed that SD. College's case (supra) has no application to the facts of the
    present case. In that case the college in question continued to deposit the
G   amount with the university in spite of the directions of this Court, and there
    the quantum of damages was reduced to 25%.

          Learned counsel for the respondent-Commissioner submitted that the
    appellant was aware of its liability and had filled up the form to make the
    deposits with the provident fund authorities but continued to make the
H
                                           ,,

 HAL IV ASIA VIDYA VIHAR (SR. SEC. SCHOOL)v. THE REGIONAL PROVIDENTFUND COMMR. [PASAYAT.l]   459
deposit with the State Government. That being so, the High Court was                               A
justified in its conclusions.

       Section 14-B reads as follows:-

         "14-B. Power to recover damages. - Where an employer makes default
         in the payment of any contribution to the Fund (the Family Pension                        B
         Fund of the Insurance Fund) or in the transfer of accumulations
         required to be transferred by him under sub-section (2) of Section 15
         [or sub-section (5) of Section 17] or in the payment of any charges
         payable under any other provision of this Act or of any Scheme or
         Insurance Scheme or under any of the conditions specified under                           C
         Section 17, the Central Provident Fund Commissioner or such other
         officer as may be authorised by the Central Government by notification
         in the official Gazette, in this behalf recover from the employer by
         way of penalty such damages, not exceeding the amount of areas, as
         may be specified in the Scheme :
                                                                                                   D
         Provided that before levying and recovering such damages, the
         employer shall be given a reasonable opportunity of being heard :

         Provided further that the Central Board may reduce or waive the
         damages levied under this Section in relation to an establishment                         E
         which is a stick 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 (I of 1986),
         subject to such terms and conditions as may be specified in the
         Scheme."                                                                                  F

      Therefore, reduction or waiver can be done in the indicated
circumstances. In SD. College's case (supra) this Court took note of the fact
that by order dated 29th January, 1988 the respondent-college authorities
were directed to deposit the contribution with the appellant-Commissioner                          G
thereby there could be compliance of statutory obligation to deposit the amount
in the manner as directed, from February 1988 onwards. But the college
authorities continued to deposit the amount with the University. It is to be
noted that the factual background in that case was somewhat different. In the
instant case there was no allegation that there was any delay in making the
deposit with tP.e Government under the scheme which was being followed by                          H
    460                    SUPREME COURT REPORTS                   [2006] 3 S.C.R.

A the appellant. Even otherwise in S. D. College's case (supra) also this Court
    did not maintain the levy of damages at I00% and reduced it to 25%. Taking
    into account the special features involved, we direct that the damage imposed
    shall be restricted to 25% of the amount levied by the respondent-
    Commissioner.

B         Appeal is allowed to the aforesaid extent without any order as to costs.

    S.K.S.                                                Appeal partly allowed.