WA/2570/2005 of M/s. Praga Tools Limited, Vs Employees Provident Fund Organisation, on 28 December 2005

:: ORDER::

Counsel for the appellant : Ms. G. Sudha Counsel for the respondents: R.N. Reddy, standing counsel forEmployees Provident Fund Organisation.

December 28, 2005

Per G.S. Singhvi, CJ.

Dissatisfied with the conditional stay order passed by thelearned Single Judge in Writ Petition No.24496 of 2005, the appellanthas filed this appeal and prayed for staying the proceedings initiatedby the competent authority under section 14-B of the EmployeesProvident Fund and Miscellaneous Provisions Act, 1952 (for short,‘the Act’).

The averments contained in the affidavit filed in support of theWrit Petition No.24496 of 2005 which is pending before the learnedSingle Judge shows that the appellant persistently defaulted inpaying salary to its employees from May, 1998 to June, 2001 andagain from February 2002 to May, 2005. This resulted in initiation ofproceedings under the Act and the competent authority has, fromtime to time, passed orders for levy of penalty under Section 7-Q ofthe Act. The petitioner challenged the demand notices issued underthe Act by filing Writ Petition No.21604 of 2005 which was disposedof by the learned Single Judge, vide his order dated 1.12.2004 with adirection that the petitioners shall be at liberty to approach Chairman,Central Board of Trustees for waiver of penal damages. However,instead of making representation for waiver of penalty and damages,the appellant filed Appeal No.279(1) of 2005, which was dismissedby the Employees Provident Fund Appellate Tribunal, New Delhi videits order dated 25.7.2005 with the following observations:

“2. No order under Section 14-B of the Employees’ ProvidentFund & Miscellaneous Provisions Act, 1952 (for short ‘thesaid Act’) has been passed. The so-called order dated8.10.2001 is nothing but a show cause notice. No appealagainst a show cause notice is maintainable under Section7-I of the said Act. Even the prohibitory notice issued underSection 8 is also not assailable by way of appeal as isevident from perusal of the Section 7-I of the said Act. Thecause of action arises only if an order is passed underSection 14-B of the said Act. But, at the same time, it is alsoobserved that the respondent had no authority under the lawto recover the amount merely on the basis of the showcause notice until and unless an appropriate order passedunder Section 14-B of the said Act, after affording opportunity to the appellant, is passed. In accordance withthe law, no such recovery can be made on the basis ofshow cause notice.

3. With the above observations, the appeal is dismissed asnot maintainable. Appeal file be consigned to record room.Copy of this order be given to both the parties.”

Thereafter, the Regional Provident Commissioner (C & R),Andhra Pradesh, Hyderabad (Respondent No.1) issued notice dated28.10.2005 requiring the appellant to show cause against proposedlevy of damages under section 14-B of the Act and fixed the date ofhearing as 16.11.2005.

The appellant did not file reply to contest the aforementionednotice. Instead, it filed writ petition on 14.11.2005 questioning theorder dated 25.7.2005 passed by the Appellate Tribunal and noticedated 28.10.2005 issued by respondent No.1. Simultaneously, it filedan application for staying the operation of order dated 25.7.2005

The learned Single Judge disposed of the application byrecording the following order:

The learned counsel for the respondents submitthat contrary to the orders of this court in W.P.No.21604of 2004, the petitioner filed appeals before the 2[nd]respondent and the same were dismissed inATA.No.279(1) dt.25.7.2005.

A perusal of the order of the said WP goes toshow that the petitioner is permitted to file applicationunder second provision to section 14-B of theEmployees Provident Fund and MiscellaneousProvisions Act, 1952 before the 3[rd] respondent forwaiver of penal damages, within two weeks.

Admittedly, no applications have been filed forkthe waiver of penal damages before the 3[rd] respondent.The 2[nd] respondent rightly dismissed the appeals filedby the petitioner as they are not maintainable and filedcontrary to directions of this Court in W.P.No.21604 of2004.

In those circumstances, I am of the view that thepetitioner is not entitled to seek stay. However, havingregard to the facts and circumstances of the case, thereshall be interim stay as prayed for, on condition ofpetitioner paying one third of the impugned damagesamount, within a period of six weeks from today.

Ms. Sudha, learned advocate for the appellant invited ourattention to representation dated 3.12.2005, which is said to havebeen made by the appellant to the Board of Trustees for waiver ofpenalty and damages and argued that the direction given by thelearned Single Judge for payment of one third of the damages shouldbe set aside. Learned counsel emphasized that payment of salary tothe employees was delayed on account of non-release of funds bythe Government of India and submitted that the court may takecognizance of the representation dated 3.12.2005 and stay theproceedings initiated for determination of damages till the same isdecided.

We have given serious thought to the arguments of the learnedcounsel but have not felt persuaded to agree with her. In our opinion,the proceedings initiated by respondent No.1 for determination of thedamages do not suffer from any jurisdictional infirmity or error of lawwarranting interference by this court. Indeed, it is not even the case ofthe appellant that the concerned Regional Provident Commissionerdoes not have the jurisdiction to issue notices for taking action undersection 14-B. That apart, there is no provision in the Act under whichthe proceedings initiated by the competent authority for fixingquantum of damages can be deferred during the pendency ofrepresentation made before the Board of Trustees. The learnedsingle Judge has adopted an extremely liberal approach in partiallyentertaining the request made on behalf of the appellant. Therefore,we do not find any valid ground or justification to interfere with thediscretion exercised by him in the matter of grant of stay.

For the reasons stated above, the appeal is dismissed.

R. SUBHASH REDDY, J.

December 28, 2005.

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G.S. SINGHVI, CJ.