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TMI Blog2013 (10) TMI 1570X X X X Extracts X X X X X X X X Extracts X X X X ..... vident Funds Appellate Tribunal (for short the tribunal ) and, therefore, it was appropriate on the part of the Appellant to take recourse to the alternative remedy and not to approach the High Court under Article 226 of the Constitution of India. 3. The facts giving rise to the present appeal, bereft of unnecessary details, are that the Appellant-company has a textile factory at Kallakurichi and it was established in the year 1964 and with passage of time it took steps for modernization but it suffered a setback in the year 1997 due to slump in the cotton industry affecting the industrial base in South India. The financial constraints compelled the company to make a reference to the Board for Industrial and Financial Reconstruction (BIFR) under Section 15(1) of the Sick Industrial Companies (Special Provisions) Act, 1985 and the BIFR by order dated 4.5.1999 declared the Appellant-company as a sick industrial company and appointed Industrial Development Bank of India (IDBI) as the Operating Agency. Because of the prevalent situation, the Appellant-company defaulted in making contributions towards the Provident Fund and delay occurred in remitting the dues under the Act. On 3.10 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er is the subject-matter of challenge in this appeal by special leave. 6. We have heard Mr. Nikhil Nayyar, learned Counsel appearing for the Appellant, Ms. Aparna Bhat, learned Counsel appearing for Respondent Nos. 1 to 3 and Mr. C.S. Ashri, learned Counsel for Respondent No. 6. 7. At the outset, it obligatory to state that when this matter came up on 20.4.2012, this Court had passed the following order: One of the contentions urged by learned Counsel appearing for the Petitioner is that despite specific request, the detailed working of interest, amount to Rs. 94,27,334/- on account of delay in remission of the statutory dues under the Employees' Provident Fund and Miscellaneous Provisions Act, 1952 had not been provided by the Assistant Provident Fund Commissioner. It is further submitted that in fact an amount of Rs. 34 lakhs has already been deposited by the Petitioner towards the interest under Section 7Q of the said Act. In view of the submission, issue notice. 8. After so stating, the Court restrained the Respondents from taking any further action in terms of public notice dated 21.3.2012 fixing the date for auction of the Appellant-company's property. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f moneys due from employers. Section 7B deals with review of orders passed under Section 7A. Section 7C deals with determination of escaped amount. Section 8 provides for mode of recovery of moneys due from employer. The said provision stipulates that the arrears can be recovered in the manner specified in Section 8B to 8G. Section 8B provides for issue of certificate by the authorised officer in respect of the amount due to the recovery officer so as to unable him to recover the amount by way of attachment and sale of movable and immovable property of the establishment or the employer or take such coercive measurers as provided therein. Section 11 gives a statutory priority of payment of contributions over other debts. Section 11(2) contains non-obstante clause which prescribes for if any amount is due from employer the said amount shall be deemed to be the first charge on the assets of the establishment. Section 14B confers power on the Competent Authority under the Act to recover damages. Section 17 provides for power to exempt. 12. This Court in Maharashtra State Cooperative Bank Limited v. Assistant provident Fund Commissioner and Ors. (2009) 10 SCC 123. while interpreting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 14B of the Act, no appeal is provided for against imposition of interest as stipulated under Section 7Q. It is seemly to note here that Section 14B has been enacted to penalize the defaulting employers as also to provide reparation for the amount of loss suffered by the employees. It is not only a warning to employers in general not to commit a breach of the statutory requirements but at the same time it is meant to provide compensation or redress to the beneficiaries, i.e., to recompense the employees for the loss sustained by them. The entire amount of damages awarded under Section 14B except for the amount relatable to administrative charges is to be transferred to the Employees' Provident Fund. (see Organo Chemical Industries and Anr. v. Union of India and Ors. AIR 1979 SC 1803) 16. Presently we shall refer to 7Q of the Act. It is as follows: 7Q. Interest payable by the employer.- The employer shall be liable to pay simple interest at the rate of twelve per cent per annum or at such higher rate as may be specified in the Scheme on any amount due from him under this Act from the date on which the amount has become so due till the date of its actual payment: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... competent authority under the Act while determining the moneys due from the employee shall be required to conduct an inquiry and pass an order. An order under Section 7A is an order that determines the liability of the employer under the provisions of the Act and while determining the liability the competent authority offers an opportunity of hearing to the concerned establishment. At that stage, the delay in payment of the dues and component of interest are determined. It is a composite order. To elaborate, it is an order passed under Section 7A and 7Q together. Such an order shall be amenable to appeal under Section 7I. The same is true of any composite order a facet of which is amenable to appeal and Section 7I of the Act. But, if for some reason when the authority chooses to pass an independent order under Section 7Q the same is not appealable. 19. Coming to the case at hand, it is evident that the Appellant had sent a communication dated 3.10.2007 to the Regional Provident Fund Commissioner submitting that that establishment could not pay the provision fund dues from 1998 due to financial crisis, etc. and it was remitting Rs. 83,01,037.80 (Rupees eighty three lacs one thous ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e question of affording of an opportunity of hearing to the employer is not warranted. 21. To appreciate the said submission we may refer to the Constitution Bench decision in C.B. Gautam v. Union of India and Ors. (1993) 1 SCC 78. In the said case, the Constitution Bench was dealing with the validity of provision of chapter XX-C inserted in the Income Tax Act, 1961 by the Finance Act of 1986. A contention was advanced by virtue of incorporation of the provision the appropriate authority had been conferred powers of compulsory purchase of immovable property which was punitive in nature. It was submitted on behalf of the Union of India that the said Chapter had been introduced to curb the large-scale evasion of income-tax and to counter the modes of tax evasion adopted by various assesses which deprive the Government of its legitimate tax deals. Section 269UD provided for order by appropriate authority for purchase of immovable property by Central Government. The larger Bench adverted to the issue of natural justice as a contention was raised that there was no provision for giving an opportunity of being heard before an order was passed under the provision of Sub-Section 269UD oc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... address to the nature of the lis that can arise under this provision. There cannot be any dispute that the Act in question is a beneficial social legislation to ensure health and other benefits of the employees and the employer under the Act is under statutory obligation to make the deposit that is due from him. In the event of default committed by the employer Section 14B steps in and calls upon the employer to pay the damages. (See: Regional Provident Fund Commissioner v. S.D. College, Hoshiarpur and Ors. (1997) 1 SCC 241). Section 7Q which provides for interest for belated payment is basically a compensation for payment of interest to the affected employees. This provision has been made to secure just and humane conditions of work as has been opined in Regional Provident Fund Commissioner v. Hooghly Mills Co. Limited and Ors. (2012) 2 SCC 489. The language employed in Section 7Q provides for levy of interest on delayed payment and the rates have been stipulated. When a composite order is passed or order imposing interest becomes a part of the order or levy in any of the provisions of the Act the authority grants a reasonable opportunity of hearing to the employer/affected party ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n and sends a bald order definitely the affected person can ask for clarification and when computation sheet is provided to him he can file an objection. Though, the area of delineation would be extremely limited yet the said opportunity cannot be denied to the affected person. 25. We may state with profit that principles of natural justice should neither be treated with absolute rigidity nor should they be imprisoned in a straight-jacket. It has been held in Ajit Kumar Nag v. General Manager (PJ), Indian Oil Corporation Ltd., Haldia and Ors. (2005) 7 SCC 764 that the maxim audi alteram partem cannot be invoked if the import of such maxim would have the effect of paralyzing the administrative process or where the need for promptitude or the urgency so demands. It has been stated therein that the approach of the Court in dealing with such cases should be pragmatic rather than pedantic, realistic rather than doctrinaire, functional rather than formal and practical rather than presidential. The concept of natural justice sometimes requires flexibility in the application of the rule. What is required to be seen the ultimate weighing on the balance of fairness. The requirements of na ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... statutorily provided regard being had to the range of delay. Beyond that nothing is permissible. We are disposed to think so, for when an independent order is passed making a demand, the employer cannot be totally remediless and would have no right even to file an objection pertaining to computation. Hence, we hold that an objection can be filed challenging the computation in a limited spectrum which shall be dealt with in a summary manner by the Competent Authority. 29. In the present case, it is manifest from the record that the Appellant had already deposited a sum of Rs. 34,00,000/- before the Competent Authority and sought for supply of the calculation sheet the basis on which the computation had been made so that it could reconcile the accounts. We think it appropriate to direct that the computation sheets shall be provided to the Appellant within three weeks and it shall file its objection within two weeks there from and thereafter the Competent Authority shall fix a date for reconciliation of the accounts. However, regard being had to the fact that the Act is a piece of social welfare legislation, we direct the Appellant to deposit a further sum of Rs. 16,00,000/- within ..... X X X X Extracts X X X X X X X X Extracts X X X X
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