Apex Security and Detective Force Pvt Ltd v. Central Board of Trustees

1. Issue turned on an OM dated May 29, 1990 and its interpretation placed by a Division Bench of this Court in the judgment reported as (2008) 2 LLJ 939 Systems and Stampins & Anr. Vs. Employees Provident Fund Appellate Tribunal & Ors.

2. Before the introduction of Section 7Q in the Employees Provident Fund Miscellaneous Provisions Act, 1952, for late deposit ofprovident fund dues proceedings used to be initiated under Section 14B of the Act for levy of damages, which was interpreted by the Supreme Court as a compensatory amount to be paid by the employer for the benefit of the employees who used to lose benefit of interest if the amount was credited in time; also having the element ofa penalty upon the employer.

3. To lay down guidelines as to how amount under Section 14B should be computed the department had framed a policy as per which maximum amount leviable under Section 14B was restricted to 25% of the amount in default.

4. OM dated May 29, 1990 was issued noting that with the introduction of Section 7Q, 12% simple interest per annum became statutorily payable for late deposit of the amount and therefore the desirability of revising the policy fixing percentage of the amount to be charged under Section 14B. The tabular form ofthe revised policy would thus translate as under:- LPA No.398/2015 & coim.matters Page 2 of[6] r Period of delay Revised rates of damages Interest chargeable under Section &Q Total Existing rate of damages (Percentage Per Annum) (i) 2 months or less 5 12 17 25

(ii) Over 2

(iv) Over. 6

5. In System and Stammns's case the circular, the dispute relating thereto and the decision of the Courtwas in paragraphs 6 to 8, whichread as under;- "6. The circular dated May 29, 1990 provides that all defaulters thereafter shall be liable to pay interest at the rate specified in column 1, that is, from 5 to 25 per cent depending upon the period of default as damages under Section 14-B of the Act. The defaulters in addition are liable to pay interest chargeable under Section 7-Q of the Act at the rate of 12per cent per annum as mentioned in the 2nd column. The rates mentioned in column 3 ofthecircular is thesum total ofcolumn Nos. 1 and 2. The total amount varies between 17 to 37per cent per annum depending upon the period of default: Thus, for default ofless than two months, the defaulter becomes liable to pay damages at the rate of5per centper annum under'Section 14-B and also interest under Section 7-Q ofthe Act at the rate of 12 per cent per annum. Therefore, the defaulter becomes liable to pay damages under Section 14-B and interest under LPANo.398/2015 & conn.matters Page 3 of[6] v. Section 7-Qat the rate of 17 per cent per annum. This is less than theoriginalrate ofdamages of25per centper annum as it existed before the circular dated May 29, 1990 was issued. Similarly, for defaults between two months and less thanfour months the defaulter becomes liable topay damages at the rate of10per centper annum under Section 14-B and interest at the rate of12per centper annum; underSection 7-Q after July 1, 1997 or 22 per cent in all. For defaults of more than four months but less than six months each defaulter becomes liable to pay interest and damages at the rate of 27 per cent per annum and in defaults ofoversix months interestand damages at the rate of37per centper annum. Thusfor defaults beyond[4] months the amountpayable increasedfrom theflat rate of25% per annum.

7. The stand ofthe respondent however, is that even after July 1, 1997 the defaulter is liable to pay 'Total" mentioned in column 3 as well as interest at the rate of 12 per cent per annum under Section 7Q ofthe Act or 29%), 34%, 39% & 49% for the respective periods of default. This stand of the respondents cannot be accepted as it is contrary to their own circular dated May 29, 1990. As per the respondent defaulter will be made to pay interest under Section 7-Q at the rate of12 percent even when he has paid damages as per the rate mentioned in column 3 which includes interest under Section 7-

8. Accordingly, we partly allow the present appeals with the direction to the Regional Provident Funds Commissioner to calculate the amount payable by the appellants for various periods of default in terms of the office memorandum dated LPA No.398/2015 & coiin.matters Page 4 of[6] May 29, 1990 as has been explained above. The appeal is accordingly disposed of.No order as to the costs. "

6. The appellants filed three writ petitions which have been disposed of by the learned Single Judge vide three identically worded, but separate orders, two dated May 08, 2015 and the third dated May 11, 2015; and as we proceeded to hear arguments in the appeal it dawned that the learned Single Judge has decided the three writ petitions without noting the facts on which the decision(s) had to be pronounced. As we proceeded to cull out the relevant facts, learned counsel for the respondent pointed out that there are none. Learned counsel for the appellant concedes that the three writ petitions filed weretotally ill-drafted.

7. With reference to the assessment orders passed and challenged in the writ petitions we find no pleadings to show that apart from the statutory interest @12% per annum chargeable under Section 7Q, while computing amount payable under Section 14B, interest was being charged twice over, as was the case found by the Division Bench in Systems and Stampins^s case. Learned counselfor the appellant concedes to said fact.

8. Faced with the situation aforesaid, prayer made by learned counsel fdt the appellant is that the three impugned orders dated May 08, 2015, May 08, 2015 and May 11, 2015 dismissing W.P.(C) No.2022/2011, W.P.(C) No.2313/2011 and W.P.(C) No.5068/2014 respectively may be set aside and the three writ petitions may be dismissed as withdrawn with liberty granted to the appellant to challenge the orders which were in challenge in the three writ petitions; but after making necessary pleadings.

9. Though learned counsel for the respondent opposes the prayer but since he accepts the fact that actionable averments have not been made in LPA No.398/2015 &conn.matters Page 5of[6] n the writ petition and the impugnedjudgment is theoretical in nature without dealing with the backdrop facts; and indeed there were none to be noted, we are inclined to accept the prayer made by the appellant and recompense the respondent the trouble ofbeing litigated twice.

10. The appeals are disposed of setting aside the three impugned orders dated May 08, 2015 dismissing W.P.(C) No.2313/2011, May 08, 2015 dismissing W.P.(C) No.2022/2011 and May 11, 2015 dismissing W.P.(C) No.5068/2014. The three writ petitions are dismissed as withdrawn with liberty granted to the appellants to challenge the three orders which were challenged in the three writ petitions but upon payment of cost in sum of ^20,000/- each to the respondent.