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TMI Blog2014 (7) TMI 1382X X X X Extracts X X X X X X X X Extracts X X X X ..... er by way of penalty such damages, not exceeding the amount of arrears, as may be specified in the Scheme . Section 14B is complete in itself so far as the computation of damages is concerned. It is conceivable that the money due from an employer would have to be calculated Under Section 7A, and in the event the default or neglect of the employer is contumacious and contains the requisite mens rea and actus reus yet another exercise of computation has to be undertaken Under Section 14B. Where the Authority is of the opinion that damages Under Section 14B need to be imposed, the computations would come within the purview of Section 14B and it would be recoverable jointly and severally from the erstwhile as well as the current managements. A perusal of the Appeals Section, namely, 7I is illustrative of the fact that these exercises are distinct from each other as per the enumerations found in the first Sub-section of Section 7I. It also appears logical to us, in the wake of the numerous and different dates of amendments, that Section 7A(2) would also be available to proceedings Under Section 14B of the Act. The impugned judgment deserves to be upheld - Appeal is devoid of meri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch request came to be rejected on the predication that the said establishment was neither a sick unit nor the subject of any scheme for rehabilitation sanctioned by the Board for Industrial and Financial Reconstruction. In the duration of those proceedings, the management of M/s. Mathura Tea Estate under the erstwhile ownership of Saroda Tea Company Ltd. was taken over by Eveready Industries (India) Ltd., which thereafter discharged the liability of entire principal sum of Provident Fund dues to the tune of Rs. 75,76,000/- pertaining to the period prior to the takeover in consonance with the Memorandum of Understanding entered into between it and Saroda Tea Company Ltd. Significantly, the said Memorandum of Understanding also included a clause to the effect that any damages payable for the failure to deposit the dues and accumulations under the EPF Act would be the exclusive liability of Saroda Tea Company Ltd. making it palpably evident that the Appellant was fully alive to this liability. It is in these premises that Eveready Industries (India) Ltd. undauntedly contended before the RPF Commissioner, Jalpaiguri, in the event in futility, that proceedings Under Section 14B of the E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... luding damages; (b) the transferor's indebtedness comes to a halt on the date of the transfer but includes the sums computed under both these Sections till the date of transfer; (c) the transfer does not bind either the employees or the Fund; (d) the transferee stands cautioned by virtue of Sections 1(3) and 17B that the erstwhile as well as the current employer remain responsible for liabilities under both the Sections as a consequence of liability being that of the establishment in question of which employers are merely fictional representatives to facilitate recovery of dues; (e) recovery of any amount due is protected Under Section 11(2) of the Act, which grants priority to the amount so due over all other debts under any other statute as being the first charge on the assets of the establishment; (f) the Act has innovated radical and effective modes of recovery as evident from Sections 8B and 8F, which further reinforces the fact that liability to pay dues is of the establishment recoverable through the employer; (g) liability Under Section 14B admits no waiver except as provided; (h) damages could be recovered regardless of any reasonable period of prescription; (i) the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vision of this Act, the Scheme or the [Pension] Scheme or the Insurance Scheme, as the case may be, and for any of the aforesaid purposes may conduct such inquiry as he may deem necessary. Section 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: Provided that higher rate of interest specified in the Scheme shall not exceed the lending rate of interest charged by any scheduled bank. Section 8. Mode of recovery of moneys due from employers- Any amount due - (a) from the employer in relation to an establishment to which any Scheme or the Insurance Scheme applies in respect of any contribution payable to the Fund or, as the case may be, the Insurance Fund damages recoverable Under Section 14B, accumulations required to be transferred Under Sub-section (2) of Section 15 or Under Sub-section (5) of Section 17, or any charges payable by him under any other provision of this Act or of any provision of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stablishment -Where an employer, in relation to an establishment, transfers that establishment in whole or in part, by sale, gift, lease or licence or in any other manner whatsoever, the employer and the person to whom the establishment is so transferred shall jointly and severally be liable to pay the contribution and other sums due from the employer under any provision of this Act or the Scheme or the Pension Scheme or the Insurance Scheme, as the case may be, in respect of the period up to the date of such transfer: Provided that the liability of the transferee shall be limited to the value of the assets obtained by him by such transfer. 6. We shall briefly discuss a decision of this Court namely, Sayaji Mills Ltd. v. Regional Provident Fund Commissioner 1984 (Supp) SCC 610, even though the questions before this Court are disparate in quotient. The management/owners of the Sayaji Mills had contended that since the factory had been purchased in 1955 in certain liquidation proceedings and the period of three years had not elapsed from the date of its establishment, the EPF Act would have no applicability to it under unamended Section 16(1)(b) of the Act. This Court observe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith which we are presently engrossed - 85B. Power to recover damages . - (1) Where an employer fails to pay the amount due in respect of any contribution or any other amount payable under this Act, the Corporation may recover from the employer by way of penalty such damages not exceeding the amount of arrears as may be specified in the Regulations: Provided that before recovering such damages, the employer shall be given a reasonable opportunity of being heard: Provided further that the Corporation may reduce or waive the damages recoverable under this section in relation to an establishment which is a sick industrial company in respect of which a scheme of 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 (1 of 1986), subject to such terms and conditions as may be specified in Regulations. (2) Any damages recoverable Under Sub-section (1) may be recovered as an arrear of land revenue or Under Section 45C to Section 45-I. 8. In HMT Ltd ., this Court noted the beneficial nature of the ESIC Act; that subordinate legislation must confor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asting styles of two of our illustrious predecessors; A.P. Sen J for his erudite, efficient and precise exposition of the law and V.R. Krishna Iyer J for his elegance of expression and verve impregnated with humanism and compassion. Organo involved a petition Under Article 32 of the Constitution challenging the Constitutional vires of Section 14B of the EPF Act. The contention was that the default of the employer/establishment was not wilful, rendering inappropriate the imposition of damages of a penal nature; and since the computation of damages was left totally unguided and untrammelled, violation of Article 14 was plainly and expectedly obvious. The Court while upholding the Constitutional validity of Section 14B held that the raison d'etre for the introduction of Section 14B (by Act 40 of 1973) was to deter and thwart employers from defaulting in forwarding contributions to the Funds, most often with the ulterior motive of misutilizing not only their own but also the employees' contributions. Section 14B originally restricted damages to 25 per cent of the withheld amounts which, having been found to be ineffectual for the attainment to the objectives of the Act, was i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be stated only to be rejected for the reason that Section 17B specifically speaks of the contributions and other sums due from the employer under any provision of this Act or the Scheme (emphasis added). The proviso to Section 17B indeed clarifies the position inasmuch as it restricts and/or limits the liability of the transferee up to the date of the transfer to the value of the assets obtained by him through such transfer. 12. We are also not impressed by the argument addressed by Mr. Bhushan to the effect that damages Under Section 14B are not jointly and separately recoverable from the erstwhile and the present managements Under Section 17B as Section 14B moves in its own and independent orbit. Several amendments have been made to the EPF Act so far as the fasciculous of Sections 7A to Section 7Q is concerned. This is also true of the pandect containing Sections 14A, 14AA, 14AB, 14AC, 14B and 14C; and for that matter Sections 17A, 17AA and 17B. Where such widespread amendments and changes are incorporated in a statute, it is always salutary and advisable to reposition the provisions and number them sequentially and logically. The argument that the phrase determinatio ..... 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