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Proper determination of damages under Section 14B of the Employees' Provident Funds Act, 1952. Analysis: The judgment involved Writ Petitions challenging demands made by the Regional Provident Fund Commissioner for default in payment of contributions to the Employees Provident Fund. The petitioners argued that the damages demanded were not properly determined under Section 14B of the Act. Section 14B empowers the appropriate Government to recover damages not exceeding 25% of arrears for default in payment. The State of Mysore delegated this power to the Regional Provident Fund Commissioner through a notification. The Commissioner calculated damages based on a formula in the notification, leading to the demands on the petitioners. The Court held that the State Government must determine damages in each case based on all relevant facts and circumstances. It criticized the rigid formula used by the Commissioner, stating that damages are punitive and should be decided on a case-by-case basis. Section 14B does not mandate damages in every default case or specify amounts; it grants discretion to the Government to decide on recovery and quantum based on case specifics. The Court found the formula in the notification restricting the Government's power to decide on damages, overlooking relevant factors beyond defaults and duration. It emphasized that damages should be estimated independently for each case, considering all relevant aspects. The formula's mechanical computation of damages was deemed contrary to Section 14B's intent, as supported by other High Court judgments. The Court also noted that the determination under Section 14B should afford the defaulter an opportunity to present their case, aligning with principles of natural justice. It set aside the demands, allowing for a fresh determination under Section 14B. The Court clarified that the authority to make such determinations resides with the Government, irrespective of the delegation status, as seen in the recall of the delegation in this case. In conclusion, the Court allowed the petitions, emphasizing the need for a proper case-specific determination of damages under Section 14B and clarifying the authority for such decisions. No costs were awarded in the circumstances.
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